SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
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FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ITI TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1340453
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
2266 NORTH SECOND STREET
NORTH ST. PAUL, MINNESOTA 55109
(Address of principal executive offices) (Zip Code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NONE N/A
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. [ ]
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK PURCHASE RIGHTS
(Title of Class)
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On November 27, 1996, the Board of Directors of ITI Technologies, Inc.
(the "Company") declared a dividend distribution of one common share purchase
right (a "Right") for each outstanding share of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), payable to stockholders of record at
the close of business on December 9, 1996 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company at any time
following the Distribution Date (as defined below) one-half of a share of Common
Stock, or a combination of securities and assets of equivalent value, subject to
adjustment, at a purchase price of $25.00 per one-half of a share of Common
Stock (the "Purchase Price"). The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") dated as of November 27,
1996 between the Company and Norwest Bank Minnesota, National Association, as
Rights Agent.
Initially, the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificates, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Stock and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock,
other than as a result of a Permitted Offer, as defined (the "Stock Acquisition
Date"); (ii) the close of business on the tenth business day (or such later date
as the Board may determine prior to such time as any person has become an
Acquiring Person) following the commencement of a tender offer or exchange offer
(other than a Permitted Offer, as defined) that would result in a person or
group beneficially owning 20% or more of the outstanding shares of Common Stock;
or (iii) the close of business on the tenth business day after a determination
by the Board that a Person is an Adverse Person, and that such Person, alone or
together with its Affiliates and Associates, has become the beneficial owner of
a substantial amount of shares of Common Stock (which amount shall in no event
be less than the greater of (a) 15% or (b) the sum of .001% and the largest
percentage of the outstanding shares of Common Stock then known by the Company
to be beneficially owned by the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or any Subsidiary of the Company, or any
Person organized, appointed or established by the Company and holding Common
Stock for or pursuant to the terms of any such plan), and either (y) such
beneficial ownership by such Person is intended to cause the Company to
repurchase the shares of 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 determines that the best long-term
interests of the Company and its stockholders would not be served by taking such
action or entering into such transaction or series of transactions at that time
or (z) 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).
A "Permitted Offer" means a tender or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by the Board to be
fair to the Company's stockholders (taking into account all factors as the Board
deems relevant) and otherwise in the best interests of the Company and its
stockholders (other than the Person or any Affiliate or Associate thereof on
whose behalf the offer is being made) taking into account all factors as the
Board may deem relevant and which the Board, after receiving advice from one or
more investment banking firms selected by the Board, determines to recommend to
the Company's stockholders.
A "Continuing Director" is (i) any person who is a member of the Board
of Directors prior to November 27, 1996, while such person is a member of the
Board of Directors, who is not an Acquiring Person or an Adverse Person, or an
affiliate or associate of either of the foregoing, or a representative or
designee of an Acquiring Person or an Adverse Person or any such affiliate or
associate, or (ii) any person who subsequently becomes a member of the Board of
Directors who is not an Acquiring Person or an Adverse Person, or an affiliate
or associate of either of the foregoing, or a representative, nominee or
designee of an Acquiring Person, an Adverse Person or any such affiliate or
associate, and whose initial nomination or initial election to the Board of
Directors is recommended or approved by a majority of the Continuing Directors.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after December 9, 1996
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificate for shares of Common Stock
outstanding will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and, subject
to extension, will expire at the close of business on November 26, 2006, unless
earlier redeemed or exchanged by the Company as described below (the earliest of
all such dates, the "Expiration Date").
As soon as practical after the Distribution Date, Rights Certificates
will be mailed to holders of record of the shares of Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. All shares of Common Stock issued
prior to the earlier of the Distribution Date and the Expiration Date will be
issued with Rights.
In the event (i) that a person or group, with certain exceptions,
becomes the beneficial owner of more than 20% of the then outstanding shares of
Common Stock, other than as a result of a Permitted Offer or (ii) the Board
determines that a person is an Adverse Person, then each holder of a Right will
thereafter have the right to receive, upon exercise for a purchase price equal
to twice the amount paid to purchase the Right, that number of shares of Common
Stock (or in certain circumstances, cash, property or other securities of the
Company) having a market value equal to twice the amount paid to purchase the
Right. The Rights, however, are not exercisable following the occurrence of
either of the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below. Notwithstanding any of the
foregoing, following the occurrence of either of the events set forth above, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person or Adverse Person
(or certain related persons and transferees) will be null and void. The events
described in this paragraph are referred to as "Section 11(a)(ii) Events."
For example, at a Purchase Price of $25.00 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following a Section 11(a)(ii) Event would entitle its holder to
purchase $100.00 worth of Common Stock (or other consideration as noted above)
for $50.00. If the Common Stock had a per share value of $20.00 at such time,
the holder of each valid Right would be entitled to purchase for $50.00 five
shares of Common Stock with a market value of $100.00.
In the event that, at any time following the Stock Acquisition Date,
other than pursuant to a Permitted Offer, (i) the Company is acquired in a
merger or other business combination transaction in which the Company is not the
surviving corporation or the shares of Common Stock are changed or exchanged or
(ii) 50% 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 thereof for a purchase price equal to two times the current Purchase
Price of the Right, that number of shares of common stock of the acquiring
company or an Affiliate which at the time of such transaction will have a market
value equal to twice the amount paid to purchase the Right. The events set forth
in this paragraph are referred to as "Section 13 Events," and the Section
11(a)(ii) Events and the Section 13 Events are collectively referred to as the
"Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event and prior
to the acquisition of 50% or more of the outstanding shares of Common Stock by a
Person or group, the Company may exchange the Rights (other than Rights which
have become void), in whole or in part, for shares of Common Stock, with each
Right to be exchanged for a number of shares of Common Stock equal to the result
obtained by dividing (x) a number equal to two times the Purchase Price by (y)
the current market price per share of Common Stock (subject to adjustment). In
any such exchange, the Company, at its option, may substitute a series of
preferred stock of the Company with rights, privileges and other terms
substantially the same as the shares of Common Stock to the extent authorized,
unissued and unreserved Common Stock is not available.
The Purchase Price payable and the number of shares of Common Stock
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,
split, combination, consolidation or reclassification of, the shares of Common
Stock, (ii) if all holders of any security of the Company are granted rights,
options or warrants to subscribe for or purchase shares of Common Stock or
convertible securities at less than the current market price of the shares of
Common Stock, or (iii) upon the distribution to holders of shares of Common
Stock of evidences of indebtedness or assets (excluding quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. Subject to certain exceptions, the Company will not be required to issue
fractional shares of Common Stock, and, in lieu of such fractional shares of
Common Stock, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, (ii) ten days after a person is determined
to be an Adverse Person, or (iii) the Final Expiration Date, the Company, acting
by a majority of the Continuing Directors, may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash, stock or other
consideration deemed appropriate by the Board of Directors), provided that no
such redemption may occur after a Person becomes an Acquiring Person or is
designated an Adverse Person unless a majority of the numbers of the Board are
then Continuing Directors. Immediately upon redemption of the Rights, the Rights
will terminate, and the only right of the holders of the Rights will be to
receive the $.001 redemption price. In certain circumstances, the redemption
period may be extended.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or receive dividends. The creation of the Rights should not be taxable
to stockholders. Stockholders may, however, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for
shares of Common Stock (or other consideration) of the Company or for common
stock of an acquiring company or an Affiliate as set forth above.
Most of the provisions of the Rights Agreement, including the
definition of Purchase Price, may be amended by the Board prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of holders of any Rights which have become void).
However, no amendment may be made that lowers the thresholds for an Acquiring
Person or Adverse Person to less than the greater of (i) 15% or (ii) the sum of
.001% and the largest percentage of the outstanding shares of Common Stock then
known by the Company to be beneficially owned by the Company, any Subsidiary of
the Company, or any employee benefit plan of the Company or any Subsidiary of
the Company, or any Person organized, appointed or established by the Company
and holding Common Stock for or pursuant to the terms of any such plan, and no
amendment may be made to extend the redemption period for the Rights unless at
the time of such amendment, no Person has become an Acquiring Person or
designated an Adverse Person or a majority of the members of the Board are
Continuing Directors.
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
filed as an exhibit hereto and is incorporated herein by reference. A copy of
the Rights Agreement is available free of charge from the Company.
ITEM 2. EXHIBITS.
EXHIBIT NO. PAGE
4.1 Rights Agreement, dated as of November 27, 1996, by and between
ITI Technologies, Inc. and Norwest Bank Minnesota, National
Association, as Rights Agent.................................. 8
SIGNATURE
Pursuant to the Requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Dated: December 6, 1996 ITI TECHNOLOGIES, INC.
(Registrant)
By: /s/ Thomas L. Auth
Thomas L. Auth
President and Chief Executive Officer
EXHIBIT 4.1
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 27, 1996
ITI TECHNOLOGIES, INC.
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF NOVEMBER 27, 1996
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions........................................... 1
Section 2. Appointment of Rights Agent................................... 6
Section 3. Issue of Rights Certificates.................................. 6
Section 4. Form of Rights Certificates................................... 9
Section 5. Countersignature and Registration............................. 10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates................................................ 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights...................................................... 11
Section 8. Cancellation and Destruction of Rights Certificates........... 13
Section 9. Reservation and Availability of Common Stock.................. 13
Section 10. Common Stock Record Date...................................... 15
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights............................................ 15
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.... 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power............................................... 23
Section 14. Fractional Rights and Fractional Shares....................... 25
Section 15. Rights of Action.............................................. 26
Section 16. Agreement of Rights Holders................................... 27
Section 17. Rights Certificate Holder Not Deemed a Stockholder............ 27
Section 18. Concerning the Rights Agent................................... 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent..... 28
Section 20. Duties of Rights Agent........................................ 29
Section 21. Change of Rights Agent........................................ 31
Section 22. Issuance of New Rights Certificates........................... 32
Section 23. Redemption and Termination.................................... 32
Section 24. Exchange...................................................... 33
Section 25. Notice of Certain Events...................................... 34
Section 26. Notices....................................................... 35
Section 27. Supplements and Amendments.................................... 35
Section 28. Successors.................................................... 36
Section 29. Determinations and Actions by the Board....................... 36
Section 30. Benefits of this Agreement.................................... 36
Section 31. Severability.................................................. 37
Section 32. Governing Law................................................. 37
Section 33. Counterparts.................................................. 37
Section 34. Descriptive Headings.......................................... 37
Exhibit A: Form of Rights Certificate....................................A-1
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Exhibit B: Summary of Rights Agreement...................................B-1
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RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") is entered into as of November
27, 1996, by and between ITI Technologies, Inc., a Delaware corporation (the
"Company"), and Norwest Bank Minnesota, National Association, a national banking
association (the "Rights Agent").
On November 27, 1996 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company (as the composition of such Board of Directors
may change from time to time, the "Board") authorized and declared a dividend of
one common stock purchase right (individually, a "Right" and collectively, the
"Rights") for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the close of business on December 9, 1996 (the "Record Date"),
each Right initially representing the right to purchase one-half of a share of
Common Stock, upon the terms and subject to the conditions herein set forth, and
has further authorized and directed the issuance of one Right for each share of
Common Stock that shall become outstanding (i) between the Record Date and the
earlier of the Distribution Date or the Expiration Date (as such capitalized
terms are hereinafter defined) or (ii) upon the exercise or conversion, prior to
the Expiration Date, of any option or other security exercisable for or
convertible into Common Stock, which option or other security is outstanding on
the Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, alone or together with all
Affiliates and Associates (as such terms are hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 20% or more of the shares of Common Stock of the Company
then outstanding (other than as a result of a Permitted Offer (as such
term is hereinafter defined), but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the
Company and holding Common Stock for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" (i) as the result of an acquisition of shares of
Common Stock by the Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportionate number of shares
of Common Stock beneficially owned by such Person to 20% or more of the
shares of Common Stock of the Company then outstanding; provided,
however, that if a Person, together with all Affiliates and Associates
of such Person, shall become the Beneficial Owner of 20% or more of the
shares of Common Stock of the Company then outstanding by reason of
purchases of shares of Common Stock by the Company and, together with
all Affiliates and Associates of such Person, shall thereafter become
the Beneficial Owner of any additional shares of Common Stock of the
Company, and immediately after becoming the Beneficial Owner of such
additional shares, such Person, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more
of the Common Stock of the Company then outstanding, then such Person
(unless such Person shall be the Company, any Subsidiary of the
Company, or any employee benefit plan of the Company or any Subsidiary
of the Company, or any Person organized, appointed or established by
the Company and holding Common Stock for or pursuant to the terms of
any such plan) shall be deemed to be an "Acquiring Person;" or (ii) who
beneficially owns 20% or more of the shares of Common Stock of the
Company then outstanding but who acquired Beneficial Ownership of
shares of Common Stock without any plan or intention to seek or affect
control of the Company, but only if such Person promptly enters into an
irrevocable commitment promptly to divest, and thereafter promptly
divests (without exercising or retaining any power, including voting
power, with respect to such shares), sufficient shares of Common Stock
(or securities convertible into, exchangeable into, or exercisable for
shares of Common Stock) so that such Person ceases to be the Beneficial
Owner of 20% or more of the outstanding shares of Common Stock; or
(iii) who beneficially owns shares of Common Stock consisting solely of
one or more (A) shares of Common Stock beneficially owned pursuant to
the grant for exercise of an option granted to such Person by the
Company in connection with an agreement to merge with, or acquire, the
Company entered into prior to a Section 11(a)(ii) Trigger Date (as such
term is hereinafter defined), (B) shares of Common Stock (or securities
convertible into, exchangeable into or exercisable for shares of Common
Stock) beneficially owned by such Person or its Affiliates or
Associates at the time of grant of such option or (C) shares of Common
Stock (or securities convertible into, exchangeable into or exercisable
for shares of Common Stock) acquired by Affiliates or Associates of
such Person after the time of such grant which, in the aggregate,
amount to less than 1% of the outstanding shares of Common Stock.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(d) "Adverse Person" shall mean any Person determined to be an
Adverse Person pursuant to the criteria set forth in Section
11(a)(ii)(B).
(e) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(f)(i) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(A) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(B) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, other rights (other than
these Rights), warrants, options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange, (2) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (3)
securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired
by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 (the "Original Rights") or pursuant
to Section 11(i) in connection with an adjustment made with
respect to any Original Rights;
(C) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right (sole or shared) to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange
Act, or any comparable or successor rule, whether or not the
Company is subject to the Exchange Act), including, without
limitation, pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this Section
1(f)(i)(C) as a result of an oral or written agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from
a revocable proxy or consent given to such Person or any of
such Person's Affiliates or Associates in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General
Rules and Regulations promulgated under the Exchange Act (and
if such provisions are not applicable by law, such proxy or
solicitation is made in substantially the same manner as if
such provisions were applicable), and (2) is not also then
reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report) (and if the
Company is not subject to the Exchange Act, would not be then
reportable if the Company was subject to the Exchange Act); or
(D) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding, whether or not in writing, (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or consent as described
in Section l(f)(i)(C)) or disposing of any securities of the
Company.
(ii) Notwithstanding anything in this definition of Beneficial
Owner to the contrary, the phrase "then outstanding," when used with
reference to a Person's beneficial ownership of securities, shall mean
the number of such securities then issued and outstanding together with
the number of such securities not then actually issued and outstanding
which such Person is deemed to own beneficially hereunder.
(g) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York
or State of Minnesota are authorized or obligated by law or executive
order to close.
(h) "Close of business" on any given date shall mean 5:00
o'clock P.M., Minneapolis, Minnesota time, on such date; provided,
however, that if such date is not a Business Day, it shall mean 5:00
o'clock P.M., Minneapolis, Minnesota time, on the next succeeding
Business Day.
(i) "Common Stock," when used with reference to the Company,
shall mean the shares of Common Stock, par value $.01 per share, of the
Company. "Common Stock," when used with reference to any Person other
than the Company, shall mean: (i) in the case of Persons organized in
corporate form, the shares of capital stock or units of equity security
with the greatest voting power of such Person or, if such Person is a
Subsidiary of another Person, of the Person or Persons which ultimately
control or direct the management of such first-mentioned Person, and
(ii) in the case of Persons not organized in corporate form, the units
of beneficial interest which (A) represent the right to participate
generally in the profits and losses of such Person (including, without
limitation, any flow-through tax benefits resulting from an ownership
interest in such Person) and (B) are entitled to exercise the greatest
voting power of such Person or, in the case of a limited partnership,
shall have the power to remove the general partner or partners.
(j) "Continuing Director" shall mean (i) any Person who is a
member of the Board, while such Person is a member of the Board, who is
not an Acquiring Person or an Adverse Person, or an Affiliate or
Associate of an Acquiring Person or an Adverse Person, or a
representative, nominee or designee of an Acquiring Person or Adverse
Person or of any such Affiliate or Associate, and who was a member of
the Board prior to the date of this Agreement; or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a
member of the Board, who is not an Acquiring Person or an Adverse
Person, or an Affiliate or Associate of an Acquiring Person or an
Adverse Person, or a representative, nominee or designee of an
Acquiring Person or an Adverse Person, or of any such Affiliate or
Associate, if such Person's initial nomination for election or initial
election to the Board is recommended or approved by the Board of
Directors at a time when a majority of the members of the Board are
Continuing Directors.
(k) "Current 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) "Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(a)(iii).
(o) "Exchange Ratio" shall have the meaning set forth in
Section 24(a).
(p) "Expiration Date" shall have the meaning set forth in
Section 7(a).
(q) "Final Expiration Date" shall mean the close of business
on November 26, 2006.
(r) "Original Rights" shall have the meaning set forth in
Section 1(f)(i)(B)(3).
(s) "Permitted Offer" shall mean a tender or exchange offer
which is for all outstanding shares of Common Stock at a price and on
terms determined, prior to the purchase of shares under such tender or
exchange offer, by the Board at a time when a majority of the members
of the Board are Continuing Directors, to be fair to the Company's
stockholders (taking into account all factors as the Board deems
relevant) and otherwise in the best interests of the Company and its
stockholders (other than the Person or any Affiliate or Associate
thereof on whose behalf the offer is being made) taking into account
all factors as the Board may deem relevant and which the Board, after
receiving advice from one or more investment banking firms selected by
the Board, determines to recommend to the stockholders of the Company.
(t) "Person" shall mean any individual, firm, corporation,
partnership, or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(u) "Principal Party" shall have the meaning set forth in
Section 13(b).
(v) "Purchase Price" shall have the meaning set forth in
Section 4(a), and shall initially be as set forth in Section 7(b).
(w) "Redemption Price" shall have the meaning set forth in
Section 23(a).
(x) "Rights Agent" shall have the meaning set forth in the
preamble clause at the beginning of this Agreement until any successor
Rights Agent shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "Rights Agent" shall mean
such successor Rights Agent. If at any time there is more than one
Person appointed by the Company as Rights Agent pursuant to this
Agreement, "Rights Agent" shall mean and include each such Person.
(y) "Rights Certificates" shall have the meaning set forth in
Section 3(a).
(z) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii)(A) or (B).
(aa) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii).
(bb) "Section 13 Event" shall mean any event described in
clauses (i), (ii) or (iii) of Section 13(a).
(cc) "Spread" shall have the meaning set forth in Section
11(a)(iii).
(dd) "Stock Acquisition Date" shall mean the date of first
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(ee) "Subsidiary" shall mean, with reference to any Person,
any other Person of which at least a majority of the voting power of
the voting equity securities or equity interests entitled to vote in
the election of directors (or Persons with comparable responsibilities,
if the entity has no directors) is beneficially owned, directly or
indirectly, or otherwise controlled by such first-mentioned Person.
(ff) "Substitute Consideration" shall have the meaning set
forth in Section 11(a)(iii).
(gg) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(hh) "Trading Day" shall have the meaning set forth in Section
11(d).
(ii) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the shares of Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the first to occur of:
(i) the close of business on the tenth Business Day
after the Stock Acquisition Date (or, if the tenth Business
Day after the Stock Acquisition Date occurs before the Record
Date, the close of business on the Record Date),
(ii) the close of business on the tenth Business Day
(or such later date as may be determined by the Board prior to
such time as any Person has become an Acquiring Person) after
the date that a tender or exchange offer (other than a
Permitted Offer) by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company and
holding 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 (or any comparable or successor rule), if,
upon consummation thereof, such Person would be the Beneficial
Owner of 20% or more of the shares of Common Stock then
outstanding, or
(iii) the close of business on the tenth Business Day
after a determination, pursuant to Section 11(a)(ii)(B), that
a Person is an Adverse Person,
(the first to occur of (i), (ii) and (iii) being herein
referred to as the "Distribution Date"), (A) the Rights will
be evidenced (subject to the provisions of Section 3(b)) by
the certificates for the shares of Common Stock registered in
the names of the holders thereof (which certificates shall
also be deemed to be Rights Certificates where the context so
requires) and not by separate Rights Certificates, and (B) the
Rights (and the right to receive Rights Certificates) will be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested,
send) by first-class, postage-prepaid mail, to each record
holder of 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 Company, one or more Rights
Certificates, in substantially the form of Exhibit A (the
"Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided
herein. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) As promptly as practicable after the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Shares of
Common Stock, in substantially the form attached hereto as Exhibit B
(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. With respect to certificates for the shares of
Common Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the shares
of Common Stock and the registered holders of the shares of Common
Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the
surrender for transfer of any certificate for the shares of Common
Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with the shares of Common Stock
represented thereby. Certificates issued after the Record Date upon the
transfer of shares of Common Stock outstanding on the Record Date shall
bear the legends set forth in Section 3(c).
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date. Rights shall also be
issued to the extent provided in Section 22 in respect of all shares of
Common Stock which are issued after the Distribution Date and prior to
the Expiration Date and upon the exercise or conversion, prior to the
Expiration Date, of any option or other security exercisable for or
convertible into Common Stock, which option or other security is
outstanding on the Distribution Date. Certificates for shares of Common
Stock issued after the Record Date (including, without limitation,
certificates issued upon transfer or exchange of shares of Common
Stock) but prior to the earlier of the Distribution Date or the
Expiration Date, shall also be deemed to be certificates for the
associated Rights and shall have impressed on, printed on, written on
or otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between ITI Technologies, Inc. (the
"Company") and Norwest Bank Minnesota, National
Association, as Rights Agent, dated as of November
27, 1996 (the "Rights Agreement"), as the same may
be amended from time to time, the terms of which
(including restrictions on the transfer of such
Rights) are hereby 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, as
in effect on the date of mailing, without charge
after receipt of a written request therefor from
such holder. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an
Acquiring Person, an Adverse Person or an Affiliate
or Associate thereof (as defined in the Rights
Agreement) and any subsequent holder of such Rights,
whether currently held by or on behalf of such
Person or any subsequent holder, may become null and
void.
Until the earlier of the Distribution Date or the Expiration Date, the
Rights associated with the shares of Common Stock represented by
certificates for shares of Common Stock shall be evidenced by such
certificates alone, and registered holders of shares of Common Stock
shall also be the registered holders of the associated Rights, and the
surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the shares of Common Stock
represented thereby, whether or not containing the foregoing legend. If
the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the earlier of the Distribution Date or the
Expiration Date, any Rights associated with such shares of Common Stock
shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the shares of Common
Stock that are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
exercise, certification and assignment to be printed on the reverse
thereof) shall each be substantially in the form set forth in Exhibit A
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, national market system or
over-the-counter market on which the Rights may from time to time be
listed or quoted, or to conform to usage, or to reflect adjustments to
the Rights made pursuant to this Agreement. Subject to the provisions
of Sections 11 and 22, the Rights Certificates, whenever distributed,
shall entitle the holders thereof to purchase such number and type of
shares of Common Stock as shall be set forth therein at the price per
share of Common Stock set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights beneficially owned by a Person
reasonably believed by the Board to be (i) an Acquiring Person, an
Adverse Person, or any Associate or Affiliate of any such Person, (ii)
a transferee of an Acquiring Person or an Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such, or (iii) a transferee
of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person or Adverse Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person (or from any
such Associate or Affiliate) to holders of equity securities in such
Acquiring Person or Adverse Person (or any such Associate or Affiliate)
or to any Person with whom such Acquiring Person or Adverse Person (or
any such Associate or Affiliate) has any continuing oral or written
plan, agreement, arrangement or understanding pursuant to the
transferred Rights or (B) a transfer which the Board has determined is
part of an oral or written plan, arrangement or understanding that has
as a primary purpose or effect the avoidance of Section 7(e), and any
Rights Certificate issued to any such Person pursuant to Section 6 or
Section 11 upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend, modified as applicable
to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a person who was or became an
[Acquiring] [Adverse] Person or an Affiliate or Associate of
an [Acquiring] [Adverse] Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Agreement shall be
operative whether or not the foregoing legend is contained in
any such Rights Certificate.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman, its President and Chief Executive Officer or
any of its Vice Presidents or its Controller, 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 countersigned, manually or
by facsimile signature, by the Rights Agent for purposes of
authorization only and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed
any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office or offices designated by the
Rights Agent as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the
Rights Certificates, the date of each of the Rights Certificates and
whether each such Rights Certificate contains a legend as set forth in
Section 4(b).
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 14 and Section 20(k), at any time after the close of business
on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Rights Certificates may
be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case
may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged, with the form of
assignment and certificate appropriately executed, at the office or
offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have duly completed and
executed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e), Section 14 and Section 20(k), countersign
and deliver to each 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 transfer tax or
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's or the Rights Agent'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 countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to 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 Section 9(c), Section
11(a)(iii) and Section 23(a)), in whole or in part, at any time after
the Distribution Date, upon surrender of the Rights Certificate, with
the form of election to exercise and the certificate on the reverse
side thereof duly completed and executed, to the Rights Agent at the
office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price for the total
number of shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are
then exercisable, at or prior to the first to occur of: (i) the Final
Expiration Date; (ii) the time at which such Rights expire as provided
in Section 13(d); (iii) the time at which such Rights are redeemed as
provided in Section 23; or (iv) the time at which such Rights are
exchanged as provided in Section 24 (the first to occur of (i) through
(iv) hereof (inclusive) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one-half of a share of Common
Stock purchasable pursuant to the exercise of a Right shall initially
be $25.00, shall be subject to adjustment from time to time as provided
in Section 11 and Section 13(a), and shall be payable in accordance
with Section 7(c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to exercise and
certificate on the reverse side duly completed and executed,
accompanied by payment of the Purchase Price for each one-half of a
share of Common Stock (or other securities, cash or other assets, as
the case may be) to be purchased and an amount equal to any applicable
transfer tax or charge, the Rights Agent shall, subject to Section
14(b) and Section 20(k), thereupon promptly (i) requisition from any
transfer agent of the Common Stock (or make available, if the Rights
Agent is the transfer agent for such Common Stock) certificates for the
total number of shares of Common Stock to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all
such requests, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares
in accordance with Section 14 hereof, (iii) promptly after receipt of
such certificates, 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, promptly after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant
to Section 11(a)(iii)) shall be made by cash, certified bank check or
money order payable to the order of the Company. If the Company
determines to issue other securities of the Company, pay cash and/or
distribute other assets pursuant to Section 11(a)(iii), the Company
will make all arrangements necessary so that such other securities,
cash and/or other assets are available for distribution by the Rights
Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise fewer than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate or
to his duly authorized assigns, registered in such name or names as may
be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event or a Section 13 Event, any Rights that are or were beneficially
owned by (i) an Acquiring Person, an Adverse Person or any Associate or
Affiliate of any such Person, (ii) a transferee of an Acquiring Person
or an Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person or Adverse Person
becomes such, or (iii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person or Adverse Person (or from any such Associate or
Affiliate) to holders of equity interests in such Acquiring Person or
Adverse Person (or any such Associate or Affiliate) or to any Person
with whom the Acquiring Person or Adverse Person (or any such Associate
or Affiliate) has any continuing oral or written plan, agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board has determined is part of an oral or written
plan, agreement, arrangement or understanding that has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action, and any holder of such Rights
shall have no rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to assure that the provisions of this
Section 7(e) and of Section 4(b) are complied with, but shall have no
liability to any holder of a Rights Certificate or other Person as a
result of its failure to make any determinations with respect to an
Acquiring Person or Adverse Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported transfer or exercise as set forth in this
Section 7 unless such registered holder shall have (i) duly completed
and executed the certificate following the form of assignment or
election to exercise set forth on the reverse side of the Rights
Certificate surrendered for such assignment or exercise, and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled 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.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON STOCK.
(a) The Company shall at all times prior to the Expiration
Date cause to be reserved and kept available, out of its authorized and
unissued shares of Common Stock or any shares of Common Stock held in
its treasury, the number of shares of Common Stock that, as provided in
this Agreement but subject to Section 11(a)(iii), will be sufficient to
permit the exercise in full of all outstanding Rights pursuant to
Section 7(a). Upon the occurrence of any events resulting in an
increase in the aggregate number of shares of Common Stock (or other
equity securities of the Company) issuable upon exercise of all
outstanding Rights above the number then reserved, the Company shall
use its best efforts to make appropriate increases in the number of
shares so reserved.
(b) If the Company's shares of Common Stock (or other
securities, if applicable) issuable and deliverable upon the exercise
of the Rights are listed or admitted for trading on any national
securities exchange or included for quotation on any national market
system, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares and other
securities reserved for issuance upon the exercise of the Rights to be
listed or admitted for trading on such national securities exchange or
included for quotation on any such national market system upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event as of which the consideration
to be delivered by the Company upon exercise of the Rights has been
determined pursuant to this Agreement, including in accordance with
Section 11(a)(iii), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement or
statements under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form or forms
of registration statement, (ii) cause such registration statement or
statements to become effective as soon as practicable after such
filing, and (iii) cause such registration statement or statements to
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which
the Rights are no longer exercisable for such securities or (B) the
Expiration Date. The Company shall also take such action as may be
appropriate under, or to ensure compliance with, the securities or blue
sky laws of the various states. The Company may temporarily suspend,
for a period of time not to exceed 90 calendar days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file any required
registration statement or statements and to permit it or them 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. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction unless the requisite qualifications in such
jurisdiction, if any, shall have been obtained or if the exercise
thereof is not permitted under applicable law.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Common
Stock (or other securities, if applicable) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase Price
and any applicable transfer taxes or charges), be duly and validly
authorized and issued and, with respect to shares of Common Stock or
other capital stock, fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for shares of Common
Stock (or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required (i) to pay any
transfer tax or charge that may be payable in respect of any transfer
or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of certificates for a number of shares of Common
Stock (or other securities, as the case may be) in a name other than
that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise or (ii) to issue or to deliver any
certificates for a number of shares of Common Stock (or other
securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until any such tax or
charge shall have been paid (any such tax or charge being payable by
the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no
such tax or charge is due.
SECTION 10. COMMON STOCK RECORD DATE. Each Person in whose name any
certificate for a number of shares of Common Stock (or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of Common Stock (or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, 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 charges) was made; provided, however, that
if the date of such surrender and payment is a date upon which the applicable
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (or other securities as the case may
be), fractional or otherwise, on, and such certificate shall be dated, the next
succeeding Business Day on which the applicable transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate, as such, shall not be entitled to any rights of a
stockholder of the Company with respect to the shares of Common Stock (or other
securities, as the case may be) for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions, or to exercise any preemptive rights, and such holders shall not
be entitled to receive any notice of any proceedings of the Company, except as
provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares of Common
Stock or other 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) If the Company shall at any time after the date of
this Agreement (A) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (B)
subdivide or split the outstanding shares of Common Stock, (C)
combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares of Common Stock or effect a
reserve stock split of the outstanding shares of Common Stock,
or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a) and in Section 7(e), the Purchase Price in effect at the
time of the record date for such dividend or of the effective
date of such subdivision, split, combination, consolidation,
reverse stock split or reclassi- fication, and the number and
kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect and any
applicable transfer taxes or charges, 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 Company's transfer books for the shares of Common Stock
were open, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend,
subdivision, split, combination, consolidation, reverse stock
split or reclassification; provided, however, that in no event
shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one
Right. If an event occurs that 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) Subject to Section 24 of this Agreement, in the
event that:
(A) any Person shall become an Acquiring Person,
unless the event causing such Person to become an
Acquiring Person is a transaction set forth in
Section 13(a), or
(B) the Board shall declare any Person to be an
Adverse Person, upon a determination by the Board
that such Person, alone or together with its
Affiliates or Associates, has become the Beneficial
Owner of a substantial amount of shares of Common
Stock (which amount shall in no event be less than
the greater of (1) 15% of the shares of Common Stock
then outstanding or (2) the sum of .001% and the
largest percentage of the outstanding shares of
Common Stock then known by the Company to be
beneficially owned by the Company, any Subsidiary of
the Company, or any employee benefit plan of the
Company or any Subsidiary of the Company, or any
Person organized, appointed or established by the
Company and holding Common Stock for or pursuant to
the terms of any such plan, and a determination by
the Board, after reasonable inquiry and
investigation, including consultation with such
Persons as such directors shall deem appropriate,
that (x) such beneficial ownership by such Person is
intended to cause the Company to repurchase the
shares of 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 or its
Affiliates or Associates with short-term financial
gain under circumstances where the Board determines
that the best long-term interests of the Company and
its stockholders would not be served by taking such
action or entering into such transaction or series of
transactions at that time or (y) 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,
then, promptly following the first occurrence of a Section
11(a)(ii) Event, proper provision shall be made so that each
holder of a Right (except as provided below and in Section
7(e)) shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then current Purchase
Price if no Section 11(a)(ii) Event or Section 13 Event had
occurred, multiplied by two times the number of one-half of a
share of Common Stock for which a Right would be exercisable
if no Section 11(a)(ii) Event or Section 13 Event had
occurred, in accordance with the terms of this Agreement, in
lieu of the number of one-half of a share of Common Stock for
which such Right was exercisable immediately prior to the
first occurrence of such Section 11(a)(ii) Event, such number
of whole shares of Common Stock of the Company as shall equal
the result obtained by (x) multiplying the then current
Purchase Price if no Section 11(a)(ii) Event or Section 13
Event had occurred by two times the number of one-half of a
share of Common Stock for which such Right would be
exercisable if no Section 11(a)(ii) Event or Section 13 Event
had occurred, and (y) dividing that product (which, following
such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right for all purposes of this
Agreement) by 50% of the Current Market Price per share of the
Company's Common Stock (determined pursuant to Section 11(d)
hereof) on the date of such first occurrence (such number of
whole shares of Common Stock being hereafter referred to as
the "Adjustment Shares").
(iii) If the number of shares of Common Stock that
are authorized by the Company's Certificate of Incorporation
(including treasury shares) but not outstanding or reserved
for issuance for purposes other than upon exercise of the
Rights (the "Available Shares") are not sufficient to permit
the exercise in full of all of the exercisable Rights in
accordance with Section 11(a)(ii), the Company shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase
Price (such excess being hereafter referred to as
"Spread"), and (B) with respect to each Right, use
its best efforts to make adequate provision to
substitute, in lieu solely of the Adjustment Shares,
upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3)
shares of Common Stock and/or other equity security
securities of the Company (including, without
limitation, shares, or units of shares, of preferred
stock of the Company with rights, privileges and
other terms substantially the same as the shares of
Common Stock (such shares of preferred stock are
referred to herein as "Equivalent Preferred Stock
")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing
(whichever substituted, the "Substitute
Consideration"), having an aggregate value equal to
the Current Value, where such aggregate value has
been determined by the Board based upon the advice of
an investment banking firm selected by the Board;
provided, however, if the Company shall not have made
adequate provision to deliver Substitute
Consideration pursuant to clause (B) above within
thirty (30) days following the later of (x) the date
of the occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the
later of (x) and (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company
shall use its best efforts to obtain stockholder
approval for the authorization of such additional
shares of Common Stock or Equivalent Preferred Stock
within ninety (90) days after the Section 11(a)(ii)
Trigger Date (such period, as it may be extended, the
"Substitution Period") to enable each holder of
Rights that have not become void pursuant to Section
7(e) to receive aggregate value equal to the Spread.
To the extent that some action need be taken pursuant
to the first and/or second sentences of this Section
11(a)(iii), the Company (xx) shall provide, subject
to Section 7(e), that such action shall apply
uniformly to all outstanding Rights, (yy) 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, and (zz) shall not provide Substitute
Consideration except to the extent that the aggregate
number of Adjustment Shares for which Rights are then
exercisable exceeds the number of Available Shares.
In the event of any such suspension, the Company
shall give notice to the Rights Agent and either
advise in writing all shareholders of record as of
that date or issue a public announcement stating that
the exercisability of the Rights has been temporarily
suspended, as well as a notice to the Rights Agent
and either written notice to all stockholders of
record or a public announcement at such time as the
suspension is no longer in effect. For purposes of
this Section 11(a)(iii), (xxx) the value of the
shares of Common Stock shall be the Current Market
Price (as determined pursuant to Section 11(d)) per
share of Common Stock on the Section 11(a)(ii)
Trigger Date and (yyy) the value of any "Equivalent
Preferred Stock" shall be deemed to have the same
value as a share of Common Stock on such date.
Notwithstanding anything herein stated, the purchase
price of the Right shall not be less than the
aggregate par value of the shares of Common Stock
that are purchased upon the exercise of a Right. If,
despite the best efforts of the Company, there is
insufficient Substitute Consideration available to
enable each holder of Rights that have not become
void pursuant to Section 7(e) to receive aggregate
value equal to the Spread, neither the Company nor
the members of the Board of Directors shall be liable
in any respect.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of shares of
Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase shares of
Common Stock (or securities convertible into shares of Common Stock) at
a price per share of Common Stock (or having a conversion price per
share of Common Stock, if a security convertible into shares of Common
Stock) less than the Current Market Price per share of Common Stock (as
determined pursuant to Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to
be offered) would purchase, at such Current Market Price, and the
denominator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of additional shares
of Common Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price
may be paid by delivery of consideration, part or all of which is in a
form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares of
Common Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation. Such
adjustments shall be made successively whenever such a record date is
fixed, and if such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of shares 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, cash (other than a regular quarterly cash
dividend out of the earnings or retained earnings of the Company),
non-cash assets (other than a regular quarterly dividend referred to
above, or a dividend payable in shares of Common Stock, but including
any dividend payable in stock other than shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section
11(b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Current Market Price (as determined pursuant to Section 11(d))
per share of Common Stock on such record date, less the fair market
value (as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights) of the
portion of the cash, non-cash assets or evidences of indebtedness so to
be distributed on, or of such subscription rights or warrants
applicable to, one share of Common Stock, and the denominator of which
shall be such Current Market Price; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and if such
distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price which would had been in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii), the "Current Market Price" per share of
Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten consecutive
Trading Days immediately following such date; provided, however, that
if such Current Market Price is determined during a period following
the announcement by the issuer of such shares of Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into such shares (other than
Rights), or (B) any subdivision, split, combination or reclassification
of such Common Stock, and prior to the expiration of the requisite 30
Trading Day or 10 Trading Day period, as set forth above, after the ex-
dividend date for such dividend or distribution, or the record date for
such subdivision, split, combination or reclassification, then, and in
each such case, the "Current Market Price" shall be appropriately
adjusted to take into account ex-dividend trading. The closing price
for each Trading Day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or,
if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last sale price or, if not reported,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq System or such other
system then in use, or, if on any such date the Common Stock is not
quoted or reported by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board. If, on any such
date, no professional market maker is making a market in the Common
Stock, the "Current Market Price" per share shall mean the fair value
per share as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights. 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.
(e) Anything herein to the contrary notwithstanding, except
the last sentence of this Section 11(e), no adjustment in the Purchase
Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandths
of a share of Common Stock or of any other share or security, as the
case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment which would be required by this Section 11, but for the
first sentence of this Section 11(e), shall be made no later than the
earlier of (i) three years from the date of the transaction or the
event which requires such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
of the Company other than shares of Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in
Sections 11(a) through (c) (inclusive), Section 11(e), Sections 11(g)
through (k) (inclusive), Section 11(m), and the provisions of Sections
7, 9, 10, 13 and 14 with respect to the shares of Common Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of shares
of Common Stock (or other securities) purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares of Common Stock (calculated to
the nearest one ten-thousandth of a share of Common Stock) obtained by
(i) multiplying (A) the number of shares of Common Stock covered by a
Right immediately prior to this adjustment by (B) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company, acting by the decision of the Board, may
elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of
shares of Common Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment in the number of Rights
shall be exercisable for the number of shares of Common Stock for which
a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Rights Certificates have been issued,
shall be at least 10 Business Days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14, the additional Rights
to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the
number of shares of Common Stock which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
shares of Common Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of Common Stock at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
any adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the number of shares of Common
Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock
and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares or securities
(fractional or otherwise) upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board shall
determine to be advisable in order that any (i) consolidation or
subdivision of the shares of Common Stock, (ii) issuance wholly for
cash of any shares of Common Stock at less than the Current Market
Price per share of Common Stock, (iii) issuance wholly for cash of
securities which by their terms are convertible into or exchangeable
for shares of Common Stock, (iv) dividends on Common Stock payable in
shares of Common Stock, or (v) issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the
Company to holders of its shares of Common Stock shall not be taxable
to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date and prior to the Expiration Date, (i)
consolidate with any Person, (ii) merge with or into any other Person,
or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons, if (A) at the time of or immediately after
such consolidation, merger, sale or transfer, there are any rights,
warrants or other instruments or securities outstanding or agreements
in effect that would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (B) with respect to a
transaction of the nature listed in Section 11(a)(ii), there are
insufficient Available Shares to permit the exercise of the Rights,
except to the extent that Substitute Consideration has been
substituted.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Stock, a
copy of such certificate, and (c) if such adjustment is made after the
Distribution Date, mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26. The Rights Agent shall be fully
authorized to rely and be protected in relying on any such certificate and on
any adjustment therein described.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge with
and into, any other Person and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger,
(ii) any Person shall consolidate with the Company,
or merge with and into the Company, and the Company shall be
the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock
held by existing stockholders of the Company shall be changed
into or exchanged for stock or other securities of any other
Person (including the Company) or cash or any other property
(except as the result of statutory dissenters' rights), or
(iii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company),
then, and in each such case, except as contemplated by Section
13(d), proper provision shall be made so that: (A) each holder
of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price if no Section
11(a)(ii) Event or Section 13 Event had occurred multiplied by
two times the number of one-half of a share of Common Stock
for which a Right would be exercisable if no Section 11(a)(ii)
Event or Section 13 Event had occurred, in accordance with the
terms of this Agreement, and in lieu of the number of one-half
of a share of Common Stock for which such Right was
exercisable immediately prior to the occurrence of such
Section 13 Event, such number of whole validly authorized and
issued, fully paid, non-assessable 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 (1) multiplying the then current
Purchase Price if no Section 11(a)(ii) Event or Section 13
Event had occurred by two times the number of one-half of a
share of Common Stock for which a Right would be exercisable
if no Section 11(a)(ii) Event or Section 13 Event has occurred
and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the
"Purchase Price" for each Right for all purposes of this
Agreement) by 50% of the then Current Market Price per share
of Common Stock of such Principal Party (determined pursuant
to Section 11(d) hereof) on the date of consummation of such
Section 13 Event; (B) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13
Event, all of the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11
shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (D) such Principal Party
shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common
Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions
thereof shall hereafter be applicable, as nearly as reasonably
may be, in relation to the shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (E) the
provisions of Section 11(a)(ii) shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean (i) in the case of any
transaction described in Section 13(a)(i) or (ii), the Person that is
the issuer of any securities into which shares of Common Stock are
converted in such merger or consolidation, and, if no securities are so
issued, the Person that is the other party to such merger or
consolidation, and (ii) in the case of any transaction described in
Section 13(a)(iii), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any such case,
(A) if the shares of Common Stock of such Person are not at such time
and have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person, the shares of Common
Stock of which are and have been so registered, "Principal Party" shall
refer to such other Person; and (B) in case such Person is the
Subsidiary, directly or indirectly, of more than one Person, the shares
of Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the shares of Common Stock having the greatest
aggregate market value.
(c) (i) The Company shall not consummate any such transaction
constituting a Section 13 Event 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 Sections 13(a) and (b) and further providing that, as soon
as practicable after the date of consummation of any transaction
constituting a Section 13 Event, the Principal Party will (A) prepare
and file a registration statement under the Act with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (1) become effective as soon as practicable
after such filing and (2) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Expiration Date,
and (B) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act or any successor form.
(ii) The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other transfers. If
a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described
in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described
in subparagraphs (i) and (ii) of Section 13(a) if: (i) such transaction
is consummated with a Person or Persons who acquired shares of Common
Stock pursuant to a Permitted Offer (or a wholly-owned Subsidiary of
any such Person or Persons); (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose shares
were purchased pursuant to such Permitted Offer; and (iii) the form of
consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation
of any such transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional
Rights. The Company may, in lieu of such fractional Rights, pay to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national
securities exchange, the last sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the Nasdaq System or such other system then in
use or, if on any such day the Rights are not quoted or reported by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board. If, on any such day, no such market maker is
making a market in the Rights, the fair value of the Rights on such
date shall be as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights
Agent and shall be binding upon the Rights Agent and the holders of the
Rights.
(b) The Company shall not be required to issue fractions of
shares of Common Stock or other capital stock upon exercise of the
Rights or to distribute certificates that evidence fractional shares
(in each case other than, prior to the Stock Acquisition Date, integral
multiples of one-half of a share of Common Stock or, if a Right shall
then be exercisable for a fraction other than one-half, integral
multiples of that fraction). The Company may, in lieu of such
fractional shares, 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 per one
whole share of Common Stock. For the purposes of this Section 14(b),
the current market value per one whole share of Common Stock or other
capital stock shall be the closing price of one whole share of Common
Stock or other share of capital stock (as determined in accordance with
Section 11(d) hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) Every holder of a Right, by the acceptance of the Right,
expressly waives such holder's right to receive any fractional Rights
or any fractional shares of Common Stock upon exercise of a Right,
except as permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations hereunder of any Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the shares of
Common Stock;
(b) on and after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
duly completed and fully executed and otherwise complying with any
other requirements set forth in this Agreement;
(c) subject to Section 6(a) and Section 7(f), the Company and
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e), shall
be required to be affected by any notice or knowledge to the contrary;
and
(d) notwithstanding anything in this Agreement or the Rights
Certificate to the contrary, the Company, the Board and the Rights
Agent shall not have any liability to any holder of a Right or other
Person as a result of the inability of the Company or the Rights Agent
to perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company which may at any time be issuable upon
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability or expense,
incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance, administration and execution
of this Agreement and the exercise and performance of its duties
hereunder, including, without limitation, the costs and expenses of
defending against and appealing any such 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 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,
instruction, direction, consent, certificate, statement or other paper
or document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper Person or
Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(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 or corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the successor to
the Rights Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties
hereto; provided, however, that such 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 a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed, and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates
(or, prior to the Distribution Date, the associated certificates for shares of
Common Stock), by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected
by it (who may be legal counsel for the Company), and the advice 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 advice.
(b) Whenever in the performance of its duties under this
Agreement, the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person or Adverse Person and the determination of "Current
Market Price") be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by any one of the Chairman, the President and Chief Executive
Officer, any of the Vice Presidents, or the Controller of the Company
and delivered to the Rights Agent; and any such certificate shall be
full and complete authorization and protection to the Rights Agent for
any action taken, suffered or omitted in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall not be liable or responsible
hereunder to the Company or any other Person except 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 or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not be under any 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 adjustment required under the provisions of Section 11, Section 13
or Section 24 or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after receipt of a
certificate delivered pursuant to Section 12 describing any such
adjustment); nor shall it be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common
Stock to be issued pursuant to this Agreement or any Rights Certificate
or as to whether any shares of Common Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) 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 or directions with respect to the performance of
its duties hereunder from any one of the Chairman, the President and
Chief Executive Officer, any of the Vice Presidents, or the Controller
of the Company, and to apply to such officers for advice, instructions
or direction in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions or direction of any such officer or for any delay in
acting while waiting for those instructions or direction.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent or any stockholder, director, officer
or employee of 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 liable or responsible for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss or
damages to the Company resulting from any such act, default, neglect or
misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) 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 or powers if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificates surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to exercise, as the case may
be, has either not been duly completed and executed 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 until it has received instructions with respect
thereto from the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock the existence of which the Rights Agent has
received notice from the Company, by registered or certified mail, and, if such
notice is mailed after the Distribution Date, to the registered holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 calendar 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, by registered or certified mail, and, if
such notice if mailed after the Distribution Date, to the registered 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 calendar days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the registered
holder of a Rights Certificate (or, prior to the Distribution Date, the
certificates for the shares of Common Stock) who shall, with such notice, submit
such holder's Rights Certificate (or, prior to the Distribution Date, the
certificates for the shares of Common Stock) for inspection by the Company, then
such registered holder of the Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of Minnesota or the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of Minnesota or the State of New York), in good
standing, having an office in the State of Minnesota or the State of New York,
which is authorized under such laws to exercise corporate trust or 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 an Affiliate of such a
corporation. 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 such 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, if such notice is filed after the Distribution Date, mail
a notice thereof in writing to the registered holders of the Rights Certificates
for the shares of Common Stock by first-class mail. Failure to give any notice
provided for in this Section 21 or to appoint a successor Rights Agent, however,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, but subject
to Section 7(e), the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be specified by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION.
(a) Subject to the provisions of Section 27, the Board may, at
its option, at any time prior to the first to occur of the close of
business on (i) the tenth Business Day following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have occurred prior to
the Record Date, the close of business on the tenth Business Day
following the Record Date), (ii) the tenth Business Day after a
determination, pursuant to Section 11(a)(ii)(B), that a person is an
Adverse Person, or (iii) the Final Expiration Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of
$.001 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price") in cash; provided,
however, that the Board may, at its option, pay the Redemption Price in
shares of Common Stock (based on the "Current Market Price," as defined
in Section 11(d), of the shares of Common Stock at the time of
redemption), shares of Equivalent Preferred Stock, or other form of
consideration redeemed appropriate by the Board. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall
not be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption hereunder
has expired. Any redemption of the Rights hereunder may be made
effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board ordering the
redemption of the Rights pursuant Section 23(a), and without any
further action and without any notice, the right to exercise the Rights
will terminate, and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board ordering redemption of the
Rights, the Company shall give public notice of any such redemption and
shall give notice of such redemption to the Rights Agent and to all the
registered holders of the then outstanding Rights by mailing such
notice to such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner provided in Section 26 shall
be deemed given, whether or not the Rights Agent or the holder receives
the notice, and any failure to give or any defect in any public or
mailed notice given pursuant to this Section 23(b) shall not affect the
validity of such redemption. Each such public or mailed notice of
redemption shall state the method by which the payment of the
Redemption Price will be made.
SECTION 24. EXCHANGE.
(a) The Board may, at its option, at any time after a Section
11(a)(ii) Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become
void pursuant to the provisions of Section 7(e)) for shares of Common
Stock, with each Right to be exchanged for such number of shares of
Common Stock as shall equal the result obtained by dividing (x) a
number equal to the then current Purchase Price if no Section 11(a)(ii)
Event or Section 13 Event had occurred multiplied by two times the
number of one-half of a share of Common Stock for which a Right would
be exercisable if no Section 11(a)(ii) Event or Section 13 Event had
occurred by (y) the Current Market Price per share of Common Stock
(determined pursuant to Section 11(d)) (such number of shares being
hereinafter referred to as the "Exchange Ratio")). The Exchange Ratio
shall be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction affecting the shares of Common Stock
that occurs after a Section 11(a)(ii) Event. Notwithstanding the
foregoing, the Board shall not be empowered to effect such exchange at
any time after an Acquiring Person, together with all Affiliates and
Associates of such Acquiring Person, becomes the Beneficial Owner of
50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the
exchange of any Rights pursuant to Section 24(a), 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
equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. Promptly after the action of the Board ordering an
exchange of the Rights, the Company shall give notice of such exchange
to the Rights Agent and to all of the registered holders of the then
outstanding Rights by mailing such notice to such holders at each
holder's last address as it appears upon the registry books of the
Rights Agent. Any notice which is mailed in the manner provided in
Section 26 shall be deemed given, whether or not the Rights Agent or
the holder receives the notice, and the failure to give or any defect
in any notice given pursuant to this Section 24(b) shall not affect the
validity of such exchange. Each such notice of exchange shall state the
method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number
of Rights that will be exchanged. Any partial exchange shall be
effected pro rata based on the number of outstanding and exercisable
Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Equivalent Preferred Stock for shares of
Common Stock exchangeable for Rights to the extent the Available Shares
are not sufficient to permit the exchange of Rights as contemplated in
accordance with this Section 24.
(d) If there shall not be sufficient shares of Common Stock or
Equivalent Preferred Stock issued but not outstanding or authorized but
unissued and unreserved to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take
all such action as may be necessary to authorize additional shares of
Common Stock or Equivalent Preferred Stock for issuance upon exchange
of the Rights.
(e) 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 may pay to the registered holders of the
Rights Certificates 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 Current Market Value of a whole share of Common
Stock, as determined pursuant to the second sentence of Section 11(d),
for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after
Distribution Date, (i) to pay any dividend payable in stock of any
class (other than the shares of Common Stock) to the holders of its
Common Stock or to make any other distribution to the holders of its
Common Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company); (ii) to offer to the
holders of its shares of Common Stock rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or shares of
stock of any class or any other securities, rights or options; (iii) to
effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares
of Common Stock); (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons (other than a sale or other
transfer to the Company and/or any of its Subsidiaries in one or more
transactions); or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to
each registered holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, 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, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the 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 Section 25(a)(i) or (ii) at least ten Business
Days prior to the record date for determining holders of shares of
Common Stock for purposes of such action, and in the case of any such
other action, at least ten Business Days prior to the date of the
taking of such proposed action or the date of participation therein by
the holders of shares of Common Stock, whichever shall be the earlier.
(b) In case any Triggering Events shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to
each registered holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26, a notice of the occurrence of such
event, which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii) or Section 13.
SECTION 26. NOTICES.
(a) Notices, communications 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:
ITI Technologies, Inc.
2266 North Second Street
North St. Paul, Minnesota 55109
Attention: President and Chief Executive Officer
With a copy to:
Winthrop & Weinstine, P.A.
3000 Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Michele D. Vaillancourt, Esq.
(b) Subject to the provisions of Section 21, notices,
communications or demands 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:
Norwest Bank Minnesota, National Association
Shareowner Services
161 North Concord Exchange, P.O. Box 738
South Saint Paul, Minnesota 55075-0738
Attention: Stock Transfer Manager
(c) Notices, communications or demands authorized by this
Agreement to be given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, prior to the Distribution Date,
the certificate for shares of Common Stock) shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of
the Company maintained by the Company, the Rights Agent or the transfer
agent for the shares of Common Stock, as appropriate.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement, including, without limitation, to extend the Final
Expiration Date, without the approval of any holders of certificates
representing shares of Common Stock and without the approval of any holders of
Rights or holders of Rights Certificates. From and after the Distribution Date,
and subject to the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(a) to cure any ambiguity herein, (b) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, or (c) to otherwise change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Rights
Certificates (other than Rights Certificates evidencing rights that shall have
become null and void pursuant to Section 7(e)). Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which lowers the thresholds for an Acquiring Person or Adverse Person to
less than the greater of (i) 15% or (ii) the sum of .001% and the largest
percentage of outstanding shares of Common Stock then known to the Company to be
beneficially owned by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the Company and
holding Common Stock for or pursuant to the terms of any such plan), and no
supplement or amendment shall be made which extends the period during which
Rights may be redeemed unless at the time of the amendment, no Person has become
an Acquiring Person or designated an Adverse Person or a majority of the members
of the Board of Directors are Continuing Directors. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of shares of Common Stock.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by and for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD. For all purposes
of this Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act, whether or not the shares of Common Stock are registered under the
Exchange Act. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (a) interpret the provisions of this Agreement, and (b) make all
calculations and determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend or supplement this Agreement). All such actions,
calculations, interpretations and determinations (including for purposes of
clause (ii) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith shall (i) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties,
and (ii) not subject the Board or any director to any liability to the holders
of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of 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 registered holders of the Common Stock).
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable for any purpose or under
any set of circumstances or as applied to any Person, such invalid, void or
unenforceable term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons, and the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement or the Rights
to the contrary, if any such term, provision, covenant or restriction is held by
such court or authority to be invalid, void or unenforceable and the Board
determines, at a time when a majority of its directors are Continuing Directors,
in its good faith judgment, that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the close of business on the tenth Business Day following the
date of such determination by such Continuing Directors.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
ITI TECHNOLOGIES, INC.
Attest:
By /s/ Charles A. Durant By /s/ Thomas L. Auth
------------------------------- -------------------------------------
Its Secretary Its President and Chief Executive Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Attest:
By By /s/ Kenneth Swanson
------------------------------- -------------------------------------
Its Its
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER THE CLOSE OF BUSINESS ON NOVEMBER 26, 2006 OR EARLIER IF
REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.001 PER RIGHT, AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN "ACQUIRING PERSON" OR AN "ADVERSE PERSON" OR AN
"AFFILIATE" OR "ASSOCIATE" OF AN "ACQUIRING PERSON" OR AN "ADVERSE PERSON" (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
[ACQUIRING] [ADVERSE] PERSON OR AN AFFILIATE OR ASSOCIATE OF AN [ACQUIRING]
[ADVERSE] PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.] THE RIGHTS SHALL NOT BE EXERCISABLE AND SHALL BE VOID SO LONG AS
HELD BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE.*
- -----------------
*The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person or an Adverse Person, as
applicable, and shall replace the preceding sentence.
ITI TECHNOLOGIES, INC.
------------------
RIGHTS CERTIFICATE
------------------
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of November 27, 1996 (the "Rights Agreement"), between ITI
Technologies, Inc., a Delaware corporation (the "Company"), and Norwest Bank
Minnesota, National Association, a national banking association (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 p.m.
(Minneapolis, Minnesota time) at the close of business on November 26, 2006 at
the office or offices of the Rights Agent designated for such purpose or of its
successors as Rights Agent, one-half of one fully paid and non-assessable share
of the Company's Common Stock, par value $.01 per share (the "Common Stock"), at
a purchase price (the "Purchase Price") of $25.00 per one-half of a share of
Common Stock, upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and related Certificate duly completed and
executed. The Purchase Price shall be paid by cash, certified bank check or
money order payable to the order of the Company. The number of Rights evidenced
by this Rights Certificate (and the number of shares of Common Stock which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of the close of business on
December 9, 1996, based on the Common Stock as constituted at such date.
Capitalized terms used herein without definition shall have the meaning
given to them in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person, (ii)
a transferee of any such Acquiring Person, Adverse Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a Person who, after such transfer, became an
Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
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
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price (in certain
limited circumstances) and the number and kind of shares of Common Stock or
other securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events, including Triggering Events. In certain
circumstances, and as described in the Rights Agreement, cash, property or other
securities may be issued by the Company upon the exercise hereof in lieu of
shares of Common Stock.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent and are also
available upon written request to the Company.
Subject to the provisions of the Rights Agreement, this Rights
Certificate, with or without other Rights Certificates, upon surrender at the
office or offices of the Rights Agent designated for such purpose, with the Form
of Election and Certificate set forth on the reverse side duly executed, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Common Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed at a redemption price of $.001 per Right,
subject to adjustment as provided in the Rights Agreement, at any time prior to
the earlier of the close of business on (i) the tenth Business Day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), (ii) the tenth Business Day after a determination that a
Person is an Adverse Person, or (iii) the Final Expiration Date.
Subject to the provisions of the Rights Agreement, the Company may, at
its option, at any time after a Section 11(a)(ii) Event, exchange all or part of
the Rights evidenced by this Certificate for shares of Common Stock or shares of
a series of preferred stock of the Company with rights, privileges and other
terms substantially the same as the Common Stock.
Subject to certain exceptions, no fractional shares of Common Stock
will be issued upon the exercise of any Right or Rights evidenced hereby if in
lieu thereof a cash payment is made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Common Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of: __________________
ITI TECHNOLOGIES, INC.
By: ________________________________
ATTEST: Title: ________________________________
____________________________________
Countersigned for purposes of authentication only:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: _________________________________
Authorized Signature
[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: _________________
Enter taxpayer identification Tax ID#:______________________
number of transferee
The signature must correspond in every Sign here:____________________
particular, without alteration, with the name(s)
as printed on your certificate(s). If acting in a
special capacity (Executor, Administrator,
Custodian, etc.) the capacity must be indicated.
Your signature must be medallion guaranteed * SIGNATURE GUARANTEED
by an eligible guarantor institution as defined MEDALLION GUARANTEED *
below. (Name of Financial Institution)
______________________________
(Authorized Signature)
* The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange Medallion
Program ("SEMP"), or New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
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, an
Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person.
Dated:__________________________ ____________________________________
Signature
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
(Name of Financial Institution)
________________________________
(Authorized Signature)
NOTICE
-----
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the
Rights represented by the Rights Certificate.)
TO ITI TECHNOLOGIES, INC.:
The undersigned hereby irrevocably elects to exercise
_____________________________ ___________________ Rights represented by this
Rights Certificate to purchase the shares of Common Stock issuable upon the
exercise of such Rights (or other securities or assets of the Company or any
other Person which may be issuable upon exercise of the Rights) and requests
that certificates for such shares of Common Stock be issued in the name of:
Enter taxpayer identification Tax ID#:______________________
number of person in whose name
shares are to registered.
Please print name and address ______________________________
______________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Enter taxpayer identification Tax ID#:_______________________
number of person in whose name
Rights certificate is to be registered.
Please print name and address ______________________________
______________________________
Dated: ___________________
The signature must correspond in every Sign Here:____________________
particular, without alteration, with the name(s)
as printed on your certificate(s). If acting in a
special capacity (Executor, Administrator,
Custodian, etc.) the capacity must be indicated.
Your signature must be medallion guaranteed * SIGNATURE GUARANTEED
by an eligible guarantor institution as defined MEDALLION GUARANTEED *
below. (Name of Financial Institution)
______________________________
(Authorized Signature)
* The signature(s) should be guaranteed by a brokerage firm or a financial
institution that is a member of an approved medallion program, such as
Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchange Medallion
Program ("SEMP"), or New York Stock Exchange, Inc. Medallion Signature Program
("MSP").
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person,
an Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person.
Dated:__________________________ ____________________________________
Signature
SIGNATURE GUARANTEED
MEDALLION GUARANTEED
(Name of Financial Institution)
________________________________
(Authorized Signature)
NOTICES
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without the alteration or enlargement or any change
whatsoever.
If the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Adverse Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
EXHIBIT B
ITI TECHNOLOGIES, INC.
SUMMARY OF RIGHTS AGREEMENT
---------------------------
On November 27, 1996, the Board of Directors of ITI Technologies, Inc.
(the "Company") declared a dividend distribution of one common share purchase
right (a "Right") for each outstanding share of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), payable to stockholders of record at
the close of business on December 9, 1996 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company at any time
following the Distribution Date (as defined below) one-half of a share of Common
Stock, or a combination of securities and assets of equivalent value, subject to
adjustment, at a purchase price of $25.00 per one-half of a share of Common
Stock (the "Purchase Price"). The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") dated as of November 27,
1996 between the Company and Norwest Bank Minnesota, National Association, as
Rights Agent.
Initially, the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificates, and no separate Rights Certificates will be distributed. The
Rights will separate from the Common Stock and will be distributed to the
holders thereof on the "Distribution Date," which shall be the first to occur of
the following: (i) the close of business on the tenth business day following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock,
other than as a result of a Permitted Offer, as defined (the "Stock Acquisition
Date"); (ii) the close of business on the tenth business day (or such later date
as the Board may determine prior to such time as any person has become an
Acquiring Person) following the commencement of a tender offer or exchange offer
(other than a Permitted Offer, as defined) that would result in a person or
group beneficially owning 20% or more of the outstanding shares of Common Stock;
or (iii) the close of business on the tenth business day after a determination
by the Board that a Person is an Adverse Person, and that such Person, alone or
together with its Affiliates and Associates, has become the beneficial owner of
a substantial amount of shares of Common Stock (which amount shall in no event
be less than the greater of (a) 15% or (b) the sum of .001% and the largest
percentage of the outstanding shares of Common Stock then known by the Company
to be beneficially owned by the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or any Subsidiary of the Company, or any
Person organized, appointed or established by the Company and holding Common
Stock for or pursuant to the terms of any such plan), and either (y) such
beneficial ownership by such Person is intended to cause the Company to
repurchase the shares of 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 determines that the best long-term
interests of the Company and its stockholders would not be served by taking such
action or entering into such transaction or series of transactions at that time
or (z) 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).
A "Permitted Offer" means a tender or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by the Board to be
fair to the Company's stockholders (taking into account all factors as the Board
deems relevant) and otherwise in the best interests of the Company and its
stockholders (other than the Person or any Affiliate or Associate thereof on
whose behalf the offer is being made) taking into account all factors as the
Board may deem relevant and which the Board, after receiving advice from one or
more investment banking firms selected by the Board, determines to recommend to
the Company's stockholders.
A "Continuing Director" is (i) any person who is a member of the Board
of Directors prior to November 27, 1996, while such person is a member of the
Board of Directors, who is not an Acquiring Person or an Adverse Person, or an
affiliate or associate of either of the foregoing, or a representative or
designee of an Acquiring Person or an Adverse Person or any such affiliate or
associate, or (ii) any person who subsequently becomes a member of the Board of
Directors who is not an Acquiring Person or an Adverse Person, or an affiliate
or associate of either of the foregoing, or a representative, nominee or
designee of an Acquiring Person, an Adverse Person or any such affiliate or
associate, and whose initial nomination or initial election to the Board of
Directors is recommended or approved by a majority of the Continuing Directors.
Until the Distribution Date, (i) the Rights will be evidenced by Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after December 9, 1996
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificate for shares of Common Stock
outstanding will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and, subject
to extension, will expire at the close of business on November 26, 2006, unless
earlier redeemed or exchanged by the Company as described below (the earliest of
all such dates, the "Expiration Date").
As soon as practical after the Distribution Date, Rights Certificates
will be mailed to holders of record of the shares of Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. All shares of Common Stock issued
prior to the earlier of the Distribution Date and the Expiration Date will be
issued with Rights.
In the event (i) that a person or group, with certain exceptions,
becomes the beneficial owner of more than 20% of the then outstanding shares of
Common Stock, other than as a result of a Permitted Offer or (ii) the Board
determines that a person is an Adverse Person, then each holder of a Right will
thereafter have the right to receive, upon exercise for a purchase price equal
to twice the amount paid to purchase the Right, that number of shares of Common
Stock (or in certain circumstances, cash, property or other securities of the
Company) having a market value equal to twice the amount paid to purchase the
Right. The Rights, however, are not exercisable following the occurrence of
either of the events set forth above until such time as the Rights are no longer
redeemable by the Company as set forth below. Notwithstanding any of the
foregoing, following the occurrence of either of the events set forth above, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person or Adverse Person
(or certain related persons and transferees) will be null and void. The events
described in this paragraph are referred to as "Section 11(a)(ii) Events."
For example, at a Purchase Price of $25.00 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following a Section 11(a)(ii) Event would entitle its holder to
purchase $100.00 worth of Common Stock (or other consideration as noted above)
for $50.00. If the Common Stock had a per share value of $20.00 at such time,
the holder of each valid Right would be entitled to purchase for $50.00 five
shares of Common Stock with a market value of $100.00.
In the event that, at any time following the Stock Acquisition Date,
other than pursuant to a Permitted Offer, (i) the Company is acquired in a
merger or other business combination transaction in which the Company is not the
surviving corporation or the shares of Common Stock are changed or exchanged or
(ii) 50% 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 thereof for a purchase price equal to two times the current Purchase
Price of the Right, that number of shares of common stock of the acquiring
company or an Affiliate which at the time of such transaction will have a market
value equal to twice the amount paid to purchase the Right. The events set forth
in this paragraph are referred to as "Section 13 Events," and the Section
11(a)(ii) Events and the Section 13 Events are collectively referred to as the
"Triggering Events."
At any time after the occurrence of a Section 11(a)(ii) Event and prior
to the acquisition of 50% or more of the outstanding shares of Common Stock by a
Person or group, the Company may exchange the Rights (other than Rights which
have become void), in whole or in part, for shares of Common Stock, with each
Right to be exchanged for a number of shares of Common Stock equal to the result
obtained by dividing (x) a number equal to two times the Purchase Price by (y)
the current market price per share of Common Stock (subject to adjustment). In
any such exchange, the Company, at its option, may substitute a series of
preferred stock of the Company with rights, privileges and other terms
substantially the same as the shares of Common Stock to the extent authorized,
unissued and unreserved Common Stock is not available.
The Purchase Price payable and the number of shares of Common Stock
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,
split, combination, consolidation or reclassification of, the shares of Common
Stock, (ii) if all holders of any security of the Company are granted rights,
options or warrants to subscribe for or purchase shares of Common Stock or
convertible securities at less than the current market price of the shares of
Common Stock, or (iii) upon the distribution to holders of shares of Common
Stock of evidences of indebtedness or assets (excluding quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. Subject to certain exceptions, the Company will not be required to issue
fractional shares of Common Stock, and, in lieu of such fractional shares of
Common Stock, an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
In general, at any time prior to the first to occur of (i) ten days
following the Stock Acquisition Date, (ii) ten days after a person is determined
to be an Adverse Person, or (iii) the Final Expiration Date, the Company, acting
by a majority of the Continuing Directors, may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash, stock or other
consideration deemed appropriate by the Board of Directors), provided that no
such redemption may occur after a Person becomes an Acquiring Person or is
designated an Adverse Person unless a majority of the numbers of the Board are
then Continuing Directors. Immediately upon redemption of the Rights, the Rights
will terminate, and the only right of the holders of the Rights will be to
receive the $.001 redemption price. In certain circumstances, the redemption
period may be extended.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or receive dividends. The creation of the Rights should not be taxable
to stockholders. Stockholders may, however, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for
shares of Common Stock (or other consideration) of the Company or for common
stock of an acquiring company or an Affiliate as set forth above.
Most of the provisions of the Rights Agreement, including the
definition of Purchase Price, may be amended by the Board prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board in order to cure any ambiguity or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of holders of any Rights which have become void).
However, no amendment may be made that lowers the thresholds for an Acquiring
Person or Adverse Person to less than the greater of (i) 15% or (ii) the sum of
.001% and the largest percentage of the outstanding shares of Common Stock then
known by the Company to be beneficially owned by the Company, any Subsidiary of
the Company, or any employee benefit plan of the Company or any Subsidiary of
the Company, or any Person organized, appointed or established by the Company
and holding Common Stock for or pursuant to the terms of any such plan, and no
amendment may be made to extend the redemption period for the Rights unless at
the time of such amendment, no Person has become an Acquiring Person or
designated an Adverse Person or a majority of the members of the Board are
Continuing Directors.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
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.
