SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
RELATING TO ADOPTION OF A RIGHTS PLAN
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 11, 1998
MYSOFTWARE COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-26008 77-0195362
(Commission File No.) (IRS Employer Identification No.)
2197 E. Bayshore Road
Palo Alto, CA 94303
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (650) 473-3600
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ITEM 5. OTHER EVENTS
On June 10, 1998 the Board of Directors of MySoftware Company (the
"Company") approved the adoption of a Share Purchase Rights Plan (the
"Plan"). Terms of the Plan provide for a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share of
common stock, par value $.001 per share (the "Common Shares"), of the
Company. The dividend is payable on June 26, 1998 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Junior Participating Preferred Stock, par value $.001 per share (the
"Preferred Shares"), at a price of $25.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), subject to adjustment. Each one one-
hundredth of a share of Preferred Shares has designations and powers,
preferences and rights, and the qualifications, limitations and restrictions
which make its value approximately equal to the value of a Common Share. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement"), dated as of June 10, 1998 entered into between the
Company and BankBoston, N.A., as rights agent (the "Rights Agent").
Initially, the Rights will be evidenced by the stock certificates
representing the Common Shares then outstanding, and no separate Right
Certificates, as defined, will be distributed. Until the earlier to occur of
(i) the date of a public announcement that a person, entity or group of
affiliated or associated persons has become an Acquiring Person (as defined
below) or (ii) 10 business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person or entity
becomes an Acquiring Person) following the commencement of, or announcement
of an intention to commence, a tender offer or exchange offer the
consummation of which would result in any person or entity becoming an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate with or without a copy of the Summary of Rights, which is
included in the Rights Agreement as Exhibit C thereof (the "Summary of
Rights"). In general, an "Acquiring Person" is a person, the affiliates or
associates of such person, or a group (excluding specified stockholders
identified by the Company to the extent that such stockholders do not acquire
more than 15% or 20% of the then outstanding Common Shares, respectively),
which has acquired beneficial ownership of 15% or more of the outstanding
Common Shares; provided, however, that the Board of Directors may determine
that certain stockholders acquiring beneficial ownership of more than 5% of
the then outstanding Common Shares will become Acquiring Persons if they
acquire 9.9% or more of the then outstanding Common Shares.
Until the Distribution Date, the Rights will be transferable with and
only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date, upon transfer or new issuance of Common Shares, will
contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender or transfer of any certificates for Common Shares outstanding
as of the Record Date, even without such notation or a copy of the Summary of
Rights being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
<PAGE>
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 10, 2008 (the "Final Expiration Date"), unless the Rights
are earlier redeemed or exchanged by the Company, in each case, as described
below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or other property, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion
price, less than the then current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends paid
out of earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those referred to
above). The exercise of Rights for Preferred Shares is at all times subject
to the availability of a sufficient number of authorized but unissued
Preferred Shares.
The number of outstanding Rights and the number of one one-hundredths of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidation or combinations of the Common Shares occurring, in any case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares would be entitled to a
minimum preferential liquidation payment of $100 per share, but would be
entitled to receive an aggregate payment equal to 100 times the payment made
per Common Share. Each Preferred Share will have 100 votes, voting together
with the Common Shares. Finally, in the event of any merger, consolidation
or other transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 100 times the amount of consideration
received per Common Share. These rights are protected by customary anti-
dilution provisions. Because of the nature of the Preferred Shares' dividend
and liquidation rights, the value of one one-hundredth of a Preferred Share
should approximate the value of one Common Share. The Preferred Shares would
rank junior to any other series of the Company's preferred stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person and its associates and affiliates (which will thereafter be void),
will for a 60-day period have the right to receive upon exercise that number
of Common Shares having a market value of two times the exercise price of the
Right (or, if such number of shares is not and cannot be authorized, the
<PAGE>
Company may issue Preferred Shares, cash, debt, stock or a combination
thereof in exchange for the Rights). This right will terminate 60 days after
the date on which the Rights become nonredeemable (as described below),
unless there is an injunction or similar obstacle to exercise of the Rights,
in which event this right will terminate 60 days after the date on which the
Rights again become exercisable.
Generally, under the Plan, an "Acquiring Person" shall not be deemed to
include (i) the Company, (ii) a subsidiary of the Company, (iii) any employee
benefit or compensation plan of the Company, (iv) any entity holding Common
Shares for or pursuant to the terms of any such employee benefit or
compensation plan, or (v) an Excluded Person (as such term is defined in the
Plan). In addition, except under limited circumstances, no person or entity
shall become an Acquiring Person as the result of the acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such
person or entity to 15% (or 9.9%, as the case may be) or more of the Common
Shares then outstanding. David P. Mans and James F. Willenborg will each be
an Excluded Person so long as each of them holds, in the aggregate, 20% or
less and 15% or less, respectively, of the Company's outstanding Common
Shares.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its associates or affiliates or
certain other persons in which such persons have an interest, proper
provision will be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the Right.
At any time after an Acquiring Person becomes an Acquiring Person and
prior to the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one Common Share, or one
one-hundredth of a Preferred Share, per Right (or, at the election of the
Company, the Company may issue cash, debt, stock or a combination thereof in
exchange for the Rights), subject to adjustment.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other
than fractions which are integral multiples of the number of one one-
hundredths of a Preferred Share issuable upon the exercise of one Right,
which may, at the election of the Company, be evidenced by depositary
receipts), and in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Shares on the last trading day prior to the
date of exercise.
At any time prior to the earliest of (i) the day of the first public
announcement that a person has become an Acquiring Person or (ii) the Final
Expiration Date, the Board of Directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). Following the expiration of the above periods, the Rights become
<PAGE>
nonredeemable. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from
and after such time as the rights are distributed no such amendment may
adversely affect the interest of the holders of the Rights excluding the
interests of an Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be amended to permit
such acquisition or redeemed by the Company at $.01 per Right prior to the
earliest of (i) the time that a person or group has acquired beneficial
ownership of 15% (or 9.9%, as the case may be) or more of the Common Shares
or (ii) the final expiration date of the rights.
ITEM 7. EXHIBITS
99.1 Press Release, dated as of June 11, 1998 entitled "MySoftware
Adopts Preferred Share Purchase Rights Plan."
99.2 Rights Agreement dated as of June 10, 1998 among MySoftware
Company and BankBoston, N.A.
99.3 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock.
99.4 Form of Rights Certificate.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MYSOFTWARE COMPANY
Dated: June 11, 1998 By: /s/ Gregory W. Slayton
---------------------------
Gregory W. Slayton
President and Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
99.1 Press Release, dated as of June 11, 1998 entitled "MySoftware
Adopts Preferred Share Purchase Rights Plan."
99.2 Rights Agreement dated as of June 10, 1998 among MySoftware
Company and BankBoston, N.A.
99.3 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock
99.4 Form of Rights Certificate.
Contacts: Gregory Slayton Sharon Chiu
Chief Executive Officer Chief Financial Officer
(650) 463-3944 (650) 473-3638
[email protected] [email protected]
For Immediate Release
- ---------------------
MYSOFTWARE COMPANY ADOPTS PREFERRED SHARE PURCHASE RIGHTS PLAN
(PALO ALTO, CA) JUNE 11, 1998 - MySoftware Company (Nasdaq: MYSW) announced
today that its Board of Directors has adopted a Preferred Share Purchase
Rights Plan (the "Rights Plan") under which stockholders will receive one
Right to purchase one-hundredth of a share of a new series of Preferred Stock
for each outstanding share of MySoftware Common Stock held of record at the
close of business on June 26, 1998 (the "Record Date").
The Rights Plan, which is similar to plans adopted by a large number of
publicly traded companies, is designed to enable all MySoftware stockholders
to realize the full value of their investment and to provide for fair and
equal treatment of all MySoftware stockholders in the event that an
unsolicited attempt is made to acquire MySoftware. The adoption of the
Rights Plan is intended as a means to guard against abusive takeover tactics
and is not in response to any proposal to acquire MySoftware. In particular,
MySoftware's Rights Plan will serve to protect the Company's ability to enter
into pooling of interests transactions.
The Rights will be distributed as a non-taxable dividend and will expire in
ten years. The Rights will be exercisable only in the event, with certain
exceptions, that a person or group acquires 15% or more of the MySoftware
Common Stock or announces a tender offer for 15% or more of the Common Stock;
provided that the Board of Directors may determine that the Rights will also
be exercisable upon the acquisition of beneficial ownership of 9.9% or more
of the outstanding Common Stock by certain persons or groups. The Rights
will trade with MySoftware's Common Stock, unless and until they are
separated upon the occurrence of certain future events. MySoftware's Board
of Directors may terminate the Rights Plan at any time or redeem the Rights
until the tenth day following the time a person acquires more than 15% (or
9.9%, as the case may be) of MySoftware's Common Stock. Additional details
regarding the Rights Plan will be outlined in a summary to be mailed to all
stockholders following the Record Date. A copy of the summary is available
from MySoftware upon request.
___________________________________________________________
MySoftware Company
and
BankBoston, N.A.
as Rights Agent
Rights Agreement
Dated as of June 10, 1998
___________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 6
Section 3. Issue of Right Certificates 7
Section 4. Form of Right Certificates 9
Section 5. Countersignature and Registration 9
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights 11
Section 8. Cancellation and Destruction of Right Certificates 13
Section 9. Availability of Preferred Shares 13
Section 10. Preferred Shares Record Date 14
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights 14
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 23
Section 14. Fractional Rights and Fractional Shares 27
Section 15. Rights of Action 28
Section 16. Agreement of Right Holders 29
Section 17. Right Certificate Holder Not Deemed a Stockholder 29
Section 18. Concerning the Rights Agent 29
Section 19. Merger or Consolidation or Change of Name of Rights
Agent 30
Section 20. Duties of Rights Agent 31
Section 21. Change of Rights Agent 33
Section 22. Issuance of New Right Certificates 34
Section 23. Redemption 34
Section 24. Exchange 36
Section 25. Notice of Certain Events 38
Section 26. Notices 39
Section 27. Supplements and Amendments 40
Section 28. Determination and Actions by the Board of Directors,
etc 40
<PAGE>
Section 29. Successors 41
Section 30. Benefits of this Agreement 41
Section 31. Severability 41
Section 32. Governing Law 41
Section 33. Counterparts 41
Section 34. Descriptive Headings 41
Exhibit A - Certificate of Designation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
<PAGE>
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT ("Agreement"), dated as of June 10, 1998, between
MYSOFTWARE COMPANY, INC., a Delaware corporation (the "Company"), and
BANKBOSTON, N.A. ("Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common
Share (as such term is hereinafter defined) outstanding at the close of
business on June 26, 1998 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a Preferred Share (as such term is
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between the Record
Date and the earliest to occur of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are hereinafter defined);
provided, however, that Rights may be issued with respect to Common Shares
that shall become outstanding after the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date in accordance
with the provisions of Section 22 hereof.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean (1) any Certain Person (as such
term is hereinafter defined) or (2) any Person (as such term is
hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 15% or more of the Common
Shares then outstanding. Notwithstanding the foregoing,
(A) the term Acquiring Person shall not include (i) the
Company, (ii) any Subsidiary (as such term is hereinafter
defined) of the Company, (iii) any employee benefit or
compensation plan of the Company or any Subsidiary of the
Company, (iv)any entity holding Common Shares for or pursuant
to the terms of any such employee benefit or compensation
plan, or (v) an Excluded Person (as such term is hereinafter
defined) and (B)no Person shall become an "Acquiring Person"
either (x) as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the
Common Shares then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the
Common Shares then outstanding by reason of share purchases by
the Company and shall, following written notice from, or
public disclosure by the Company of such share purchases by the
Company, become the Beneficial Owner of any additional Common
Shares without the prior consent of the Company and shall then
<PAGE>
Beneficially Own more than 15% of the Common Shares then
outstanding, then such Person shall be deemed to be an
"Acquiring Person," or (y) if the Board of Directors
determines in good faith that a Person who would otherwise be
an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently,
and such Person divests, as promptly as practicable (as
determined in good faith by the Board of Directors), but
in any event within five Business Days, following receipt
of written notice from the Company of such event, of Beneficial
Ownership of a sufficient number of Common Shares so that such
Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as in effect on the date of
this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, within the
meaning of Rule 13d-3 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this
Rights Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A)the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (other than customary agreements with
and between underwriters and selling group members with
respect to a bona fide public offering of securities,
or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase
or exchange; or (B)the right to vote pursuant to any
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given
to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
<PAGE>
applicable rules and regulations promulgated under the
Exchange Act and (2)is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to
Section 1(c)(ii)(B) hereof) or disposing of any
securities of the Company; provided, however, an
agreement, arrangement or understanding for purposes of
this Section 1(c)(iii) shall not be deemed to include
actions, including any agreement, arrangement or
understanding, or statements by any member of the
Company's Board of Directors on the date of this
Agreement, any subsequent directors of the Company (the
"Successor Directors") who have been nominated by a
majority of directors who are directors as of the date of
this Agreement or who are Successor Directors, or by any
Person of whom such a director is an Affiliate or
Associate; provided, however, that this exception shall
not apply to a particular Person or Persons if and to the
extent that such Person or Persons, after the date of this
Agreement, acquires Beneficial Ownership of more than an
additional 5% of the then outstanding Common Shares of the
Company unless (A) the shares are acquired directly from
the Company or as part of an employee benefit or
compensation plan of the Company or a subsidiary of the
Company or (B) the Person establishes to the satisfaction
of the directors of the Company that it is acting on its
own behalf and not in concert with any other Person and
will not, upon completion of any purchases, be the
Beneficial Owner of 15% or more of the outstanding Common
Shares.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase, "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, 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 would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of
California are authorized or obligated by law or executive
order to close.
(e) "Certain Person" shall mean:
<PAGE>
(i) any Person declared to be subject to this Section 1(e) by
the Board of Directors after: (A) a determination that such
Person, alone or together with its Affiliates and
Associates, has become the Beneficial Owner of more than
5.0% of the Common Shares and (B) a determination by the
Board of Directors, after reasonable inquiry and
investigation, including such consultation, if any, with
such persons as such directors shall deem appropriate,
that (a) such Beneficial Ownership by such Person is
intended to cause, is reasonably likely to cause or will
cause the Company to repurchase the Common Shares
beneficially owned by such person or to cause pressure on
the Company to take action or enter into a transaction or
series of transactions which would provide such person
with short-term financial gain under circumstances where
the Board of Directors determines that the best long-term
interests of the Company and its stockholders, but for the
actions and possible actions of such Person, would not be
served by taking such action or entering into such
transactions or series of transactions at that time, (b)
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, or (c) such Beneficial Ownership by such Person
is intended to cause, is reasonably likely to cause or
will cause a material adverse impact on the Company's
ability to consummate any merger, consolidation,
recapitalization, sale of substantially all of the assets
of the Company or similar transaction which the Board of
Directors has determined or may in the future determine to
be in the best interests of the Company and its
stockholders; provided, however, that the Board of
Directors of the Company may not declare a Person to be
subject to this Section 1(e) if, prior to the time that
such Person acquired Beneficial Ownership of more than
5.0% of the Common Shares (or, if such Person had
Beneficial Ownership of more than 5.0% of the Common
Shares on the date of this Agreement, then prior to the
time that such Person was declared subject to this Section
1(e)), such Person provided to the Board of Directors in
writing a statement of such Person's acquisition of Common
Shares, together with any other information reasonably
requested of such Person by the Board of Directors, and
based on such statement and reasonable inquiry and
investigation, including such consultation, if any, with
such persons as the directors shall deem appropriate, the
Board of Directors determines to notify and notifies such
Person in writing that it will not declare such Person to
be subject to this Section 1(e); provided, further, that
the Board of Directors may expressly condition in any
manner a determination not to declare a Person subject to
this Section 1(e) on such conditions as the Board of
<PAGE>
Directors may select, including, without limitation, such
Person's not acquiring more than a specified amount of
stock and/or such Person's not taking actions inconsistent
with the purposes and intentions disclosed by such Person
in the statement provided to the Board of Directors; and
(ii) which Person, subsequent to the declaration by the Board
of Directors pursuant to Section 1(e)(i) above that such
Person is subject to this Section 1(e), has become the
Beneficial Owner of 9.9% or more of the outstanding Common
Shares.
No delay or failure by the Board of Directors to declare a
Person to be subject to this Section 1(e) shall in any way waive
or otherwise affect the power of the Board of Directors
subsequently to declare a Person to be subject to this Section
1(e). In the event that the Board of Directors should at any
time determine, upon reasonable inquiry and investigation,
including consultation with such persons as the directors shall
deem appropriate, that such Person has not met or complied with
any condition specified by the Board of Directors, the Board of
Directors may at any time thereafter declare such Person to be
subject to this Section 1(e).
(f) "Close of Business" on any given date shall mean 5:00p.m.,
Eastern Standard Time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00p.m., Eastern
Standard Time, on the next succeeding Business Day.
(g) "Common Shares" shall mean the shares of common stock, par
value $.001 per share, of the Company; provided, however, that,
"Common Shares," when used in this Agreement in connection with
a specific reference to any Person other than the Company, shall
mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Excluded Stockholder" shall mean David P. Mans (including
his Affiliates and Associates) and James F. Willenborg
(including his Affiliates and Associates); provided, however,
that David P. Mans (including his Affiliates and Associates)
shall not be an Excluded Stockholder if David P. Mans (including
his Affiliates and Associates) becomes the Beneficial Owner of
20% or more of the Common Shares then outstanding without the
prior approval of the Board of Directors of the Company;
provided further that James F. Willenborg (including his
Affiliates and Associates) shall not be an Excluded Stockholder
if James F. Willenborg (including his Affiliates and Associates)
becomes the Beneficial Owner of 15% or more of the Common Shares
then outstanding without the prior approval of the Board of
Directors of the Company.
<PAGE>
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Interested Stockholder" shall mean any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or any other
Person in which any such Acquiring Person, Affiliate or Associate
has an interest, or any other Person acting directly or
indirectly on behalf of or in concert with any such Acquiring
Person, Affiliate or Associate.
(l) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or
otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per share, of the
Company having the designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions set
forth in the Form of Certificate of Designation attached to this
Agreement as Exhibit A.
(n) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.
(o) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(p) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an
Acquiring Person has become such provided, however that, if such
Person is determined not to have become an Acquiring Person
pursuant to clause (z) of Subsection 1(a)(B) hereof, then no
Shares Acquisition Date shall be deemed to have occurred.
(q) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or
indirectly, by such Person.
(r) "Transaction" shall mean any merger, consolidation or sale of
assets described in Section 13(a) hereof or any acquisition of
Common Shares which would result in a Person becoming an
Acquiring Person or a Principal Party (as such term is
hereinafter defined).
(s) "Transaction Person" with respect to a Transaction shall mean
(i) any Person who (x) is or will become an Acquiring Person or a
Principal Party (as such term is hereinafter defined) if the
Transaction were to be consummated and (y) directly or
indirectly proposed or nominated a director of the Company which
director is in office at the time of consideration of the
Transaction, or (ii) an Affiliate or Associate of such a Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with
<PAGE>
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable,
upon ten (10) days prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and in no event be
liable for, the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or (ii)
the tenth Business Day (or such later date as may be determined
by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the
commencement (determined in accordance with Rule 14d-2 under the
Exchange Act) by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention
of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence, a
tender or exchange offer (which intention to commence remains
in effect for five Business Days after such announcement), the
consummation of which would result in any Person becoming an
Acquiring Person (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights,
the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced by the
certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and
(y) the Rights (and the right to receive Right Certificates
therefor) will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send)
by first-class, insured, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the
Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held, subject to the
adjustment provisions of Section 11 of this Rights Agreement.
As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send (directly or through the Rights Agent or its
transfer agent) a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto
(the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of
<PAGE>
Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced
by such certificates registered in the names of the holders
thereof. Until the Distribution Date (or the earlier of the
Redemption Date and the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding
on the Record Date shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares
referred to in the last sentence of this paragraph (c)) after
the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between MySoftware Company (the
"Company") and BankBoston, N.A., as Rights Agent
(the "Rights Agent"), dated as of June 10, 1998,
as amended from time to time (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of
which is on file at the principal executive
offices of the Company. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt
of a written request therefor. As described in
the Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights
Agreement) and certain related persons, whether
currently held by or on behalf of such Person or
by any subsequent holder, shall become null and
void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights associated
with the Common Shares which are no longer outstanding.
<PAGE>
Notwithstanding this Section 3(c), the omission of a legend
shall not affect the enforceability of any part of this Rights
Agreement or the rights of any holder of the Rights.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the form of election to purchase
Preferred Shares, the form of assignment and the form of
certification to be printed on the reverse thereof) shall be
substantially the same as ExhibitB hereto and may have such
marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform
to usage. Subject to the provisions of Sections 7, 11 and 22
hereof, the Right Certificates shall entitle the holders thereof
to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-
hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and void
pursuant to Section 11(a)(ii) hereof and any Right Certificate
issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented hereby
are null and void.
The provisions of Section 11(a)(ii) hereof shall be operative
whether or not the foregoing legend is contained on any such
Right Certificate.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, its Vice
Chairman of the Board, its Chief Financial Officer, or any of
its Vice Presidents, either manually or by facsimile signature,
shall have affixed thereto the Company's seal or a facsimile
thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
<PAGE>
signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for
any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before counter-
signature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be counter-
signed by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of
the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although
at the date of the execution of this Agreement any such person
was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose,
books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses
of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 11(a)(ii),
Section 14 and Section 24 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of one one-
hundredths of a Preferred Share as the Right Certificate or
Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates
shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any
such surrendered Right Certificate until the registered holder
shall have completed and signed the certificate contained in the
form of assignment on the reverse side of such Right 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
11(a)(ii), Section 14 and Section 24 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Right
Certificates.
<PAGE>
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will issue, execute and deliver a new
Right Certificate of like tenor to the Rights Agent for counter-
signature and delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Notwithstanding any other provisions hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights
evidenced by Rights Certificates.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment
of the Purchase Price for each one one-hundredth of a Preferred
Share (or such other number of shares or other securities) as
to which the Rights are exercised, at or prior to the earliest
of (i) the Close of Business on June 10, 2008 (the "Final
Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption
Date"), or (iii) the time at which such Rights are exchanged
as provided in Section24 hereof.
(b) The purchase price (the "Purchase Price") for each one one-
hundredth of a Preferred Share pursuant to the exercise of a
Right shall initially be $25.00 and shall be subject to
adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to
be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in
accordance with Section9 hereof by certified check, cashier's
check, bank draft or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent for the Preferred Shares
certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company,
in its sole discretion, shall have elected to deposit the
Preferred Shares issuable upon exercise of the Rights hereunder
<PAGE>
into a depository, requisition from the depositary agent
depositary receipts representing such number of one one-
hundredths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate. In the event that
the Company is obligated to issue securities of the Company
other than Preferred Shares (including Common Shares) of the
Company pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate.
In addition, in the case of an exercise of the Rights by a
holder pursuant to Section11(a)(ii) hereof, the Rights Agent
shall return such Right Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Right Certificate
no longer include the rights provided by Section 11(a)(ii)
hereof, and, if fewer than all the Rights represented by such
Right Certificate were so exercised, the Rights Agent shall
indicate on the Right Certificate the number of Rights
represented thereby which continue to include the rights
provided by Section 11(a)(ii) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to
the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14
hereof.
(e) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares or any Preferred Shares held in its treasury,
the number of Preferred Shares that will be sufficient to permit
the exercise in full of all outstanding Rights in accordance
with this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon
the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i)
completed and signed the certification following the form of
election to purchase set forth on the reverse side of the
<PAGE>
Rights Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent
for cancellation or in canceled form, or, if delivered or
surrendered to the Rights Agent, shall be canceled by it, and no
Right 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 Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at
the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company covenants and
agrees that so long as the Preferred Shares (and, after the time a
person becomes an Acquiring Person, Common Shares or any other
securities) issuable upon the exercise of the Rights may be listed
on any national securities exchange or quotation system, the Company
shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance
to be listed on such exchange or quotation system upon official
notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares (or Common
Shares and other securities, as the case may be) delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or other securities.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery
of the Right Certificates or of any Preferred Shares upon the
exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder
of the Right Certificate evidencing Rights surrendered for exercise
or to issue or to deliver any certificates or depositary receipts
for Preferred Shares upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder
of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no
such tax is due.
<PAGE>
As soon as practicable after the Shares Acquisition Date, the
Company shall use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act of 1933, as amended (the "Act"), with
respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, will use its
best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will
use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting
the requirements of the Act) until the Final Expiration
Date; and
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be
necessary or appropriate.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares or other securities is issued
upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares or
other securities represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered with the forms of
election and certification duly executed and payment of the
Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares or other
securities transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares
on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares or other securities
transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a
holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares
covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this
Section 11.
(a)
(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding
<PAGE>
Preferred Shares into a smaller number of Preferred Shares
or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any
such reclassification in connection with a consolidation
or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in
this Section 11(a), the Purchase Price in effect at the
time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be proportion-
ately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date
and at a time when the Preferred Shares transfer books of
the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclass-
ification; 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 which would require an adjustment under
both Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 hereof and the provisions of the
next paragraph of this Section 11(a)(ii), in the event any
Person shall become an Acquiring Person, each holder of a
Right shall, for a period of 60 days after the later of
such time any Person becomes an Acquiring Person or the
effective date of an appropriate registration statement
under the Act pursuant to Section 9 hereof (provided,
however that, if at any time prior to the expiration or
termination of the Rights there shall be a temporary
restraining order, a preliminary injunction, an injunction,
or temporary suspension by the Board of Directors, or
similar obstacle to exercise of the Rights (the
"Injunction") which prevents exercise of the Rights, a new
60-day period shall commence on the date the Injunction is
removed), have a right to receive, upon exercise thereof at
a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares as shall equal the
result obtained by (A) multiplying the then current
Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per
share market price of the Common Shares (determined
<PAGE>
pursuant to Section 11(d) hereof) on the date such Person
became an Acquiring Person; provided, however, that if the
transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall
apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). In the event that any Person shall
become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which
would eliminate or diminish the benefits intended to be
afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary,
from and after the time any Person becomes an Acquiring
Person, any Rights beneficially owned by (i) such Acquiring
Person or an Associate or Affiliate of such Acquiring
Person, (ii) a transferee of such Acquiring Person (or of
any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person became such, or
(iii) a transferee of such Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person's
becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of
this Section 11(a)(ii), shall become null and void without
any further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure that
the provisions of this Section 11(a)(ii) and Section 4(b)
hereof are complied with, but shall have no liability to
any holder of Right Certificates or other Person as a
result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. No Right Certificate
shall be issued at any time upon the transfer of any
Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the
preceding sentence shall be canceled.
<PAGE>
(iii) In lieu of issuing Common Shares in accordance with
Section 11(a)(ii) hereof, the Company may, if a majority of
the Board of Directors then in office determines that such
action is necessary or appropriate and not contrary to the
interests of holders of Rights, elect to (and, in the event
that the Board of Directors has not exercised the exchange
right contained in Section 24(c) hereof and there are not
sufficient treasury shares and authorized but unissued
Common Shares to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii), the
Company shall) take all such action as may be necessary to
authorize, issue or pay, upon the exercise of the Rights,
cash (including by way of a reduction of the Purchase
Price), property, Common Shares, other securities or any
combination thereof having an aggregate value equal to the
value of the Common Shares which otherwise would have been
issuable pursuant to Section 11(a)(ii) hereof, which
aggregate value shall be determined by a nationally
recognized investment banking firm selected by a majority
of the Board of Directors then in office. For purposes of
the preceding sentence, the value of the Common Shares
shall be determined pursuant to Section 11(d) hereof. Any
such election by the Board of Directors must be made within
60 days following the date on which the event described in
Section 11(a)(ii) hereof shall have occurred. Following
the occurrence of the event described in Section 11(a)(ii)
hereof, a majority of the Board of Directors then in office
may suspend the exercisability of the Rights for a period
of up to 60 days following the date on which the event
described in Section 11(a)(ii) hereof shall have occurred
to the extent that such directors have not determined
whether to exercise their rights of election under this
Section 11(a)(iii). In the event of any such suspension,
the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily
suspended.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same designations and
the powers, preferences and rights, and the qualifications,
limitations and restrictions as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a price
per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as
such term is hereinafter defined) 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
<PAGE>
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number
of Preferred Shares and/or equivalent preferred shares 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 Preferred Shares outstanding on such record date plus
the number of additional Preferred Shares and/or equivalent
preferred shares 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 in a
consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than
a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding
those referred to in Section11(b) hereof), 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 then current per share market price of the Preferred Shares
(as such term is hereinafter defined) on such record date, less
the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which
shall be such current per share market price of the Preferred
Shares; 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 in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to
<PAGE>
be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d)
(i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided,
however, that in the event that the current per share
market price of the Security is determined during a period
following the announcement by the issuer of such Security
of (A) a dividend or distribution on such Security payable
in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or
reclassification of such Security or securities
convertible into such shares, or (C) any subdivision,
combination or reclassification of such Security and prior
to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification,
then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the
current market price per share equivalent of such
Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the
Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the Security is listed or admitted to
trading or as reported on the Nasdaq National Market or,
if the Security is not listed or admitted to trading on
any national securities exchange or reported on the
Nasdaq National Market, the last quoted price or, if not
so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc.
Automated Quotations System ("Nasdaq") or such other
system then in use, or, if on any such date the Security
is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a
professional market maker making a market in the Security
selected by the Board of Directors of the Company or, if
on any such date no professional market maker is making a
market in the Security, the price as determined in good
faith by the Board of Directors. The term "Trading Day"
<PAGE>
shall mean a day on which the principal national
securities exchange on which the Security is listed or
admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted
to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares
shall be determined in accordance with the method set
forth in Section 11(d)(i) hereof. If the Preferred
Shares are not publicly traded, the "current per share
market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to
Section 11(d)(i) hereof (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction
occurring after the date hereof) multiplied by one
hundred. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current
per share market price" shall mean the fair value per share
as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(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 one-hundredth of a Preferred Share or one ten-
thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i)three years from the date of the
transaction which requires such adjustment or (ii)the date of
the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of
such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a)
through 11(c) hereof, inclusive, and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number
<PAGE>
of one one-hundredths of a Preferred Share purchasable from time
to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11(b) and
Section 11(c) hereof, each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a Preferred Share (calculated to the
nearest one one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of one one-hundredths of a Preferred
Share covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitu-
tion for any adjustment in the number of one one-hundredths of a
Preferred Share purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths
of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one 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 Right Certificates have been issued,
shall be at least 10 days later than the date of the public
announcement. If Right 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 Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so
to be distributed shall be issued, executed and countersigned in
the manner provided for herein and shall be registered in the
<PAGE>
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Preferred Share issuable
upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value,
if any, of the Preferred Shares 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 nonassess-
able Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuing to the holder of any
Right exercised after such record date of the Preferred Shares
and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring
such adjustment.
(m) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section
27 hereof, take (or permit any Subsidiary to take) any action the
purpose of which is to, or if at the time such action is taken it
is reasonably foreseeable that the effect of such action is to,
materially diminish or eliminate the benefits intended to be
afforded by the Rights. Any such action taken by the Company
during any period after any Person becomes an Acquiring Person
but prior to the Distribution Date shall be null and void unless
such action could be taken under this Section 11(m) from and
after the Distribution Date.
(n) 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 it in its sole
discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current
market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchange-
able for Preferred Shares, dividends on Preferred Shares payable
in Preferred Shares or issuance of rights, options or warrants
<PAGE>
referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be taxable
to such stockholders.
(o) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare
or pay any dividend on the Common Shares payable in Common Shares
or (ii) effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) into a greater or lesser number of
Common Shares, then in any such case (A) the number of one one-
hundredths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Preferred Share so
purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares outstanding
immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event,
and (B) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such
event had issued with respect to it. The adjustments provided
for in this Section 11(o) shall be made successively whenever
such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
(p) The exercise of Rights under Section 11(a)(ii) hereof shall only
result in the loss of rights under Section 11(a)(ii) hereof to
the extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Agreement, including the
rights represented by Section 13 hereof.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a)prepare a certificate setting
forth such adjustment, and a brief statement of the facts accounting
for such adjustment, (b)file with the Rights Agent and with each
transfer agent for the Common Shares or the Preferred Shares a copy
of such certificate and (c)mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be
deemed to have knowledge of any adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Shares Acquisition Date or, if
a Transaction is proposed, the Distribution Date, directly or
indirectly (x) the Company shall consolidate with, or merge with
and into, any Interested Stockholder, or if in such merger or
consolidation all holders of Common Stock are not treated
alike, any other Person, (y) any Interested Person, or if in
<PAGE>
such merger or consolidation all holders of Common Stock are not
treated alike, any other Person shall consolidate with the
Company, or merge with and into the Company, and the Company
shall be the continuing or surviving corporation of such merger
(other than, in the case of either transaction described in (x)
or (y), a merger or consolidation which would result in all of
the voting power represented by the securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
securities of the surviving entity) all of the voting power
represented by the securities of the Company or such surviving
entity outstanding immediately after such merger or consolida-
tion and the holders of such securities not having changed as a
result of such merger or consolidation), or (z) the Company
shall sell, mortgage or otherwise transfer (or one or more of
its subsidiaries shall sell, mortgage or otherwise transfer), in
one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and
its subsidiaries (taken as a whole) to any Interested Stock-
holder or Stockholders, or if in such transaction all holders of
Common Stock are not treated alike, any other Person, (other
than the Company or any Subsidiary of the Company in one or more
transactions each of which individually and the aggregate does
not violate Section 13(d) hereof) then, and in each such case,
proper provision shall be made so that (i) each holder of a
Right, subject to Section 11(a)(ii) hereof, shall have the right
to receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right is then
exercisable in accordance with the terms of this Agreement and
in lieu of Preferred Shares, such number of freely tradeable
Common Shares of the Principal Party (as such term is herein-
after defined), free and clear of liens, rights of call or first
refusal, encumbrances or other adverse claims, as shall be equal
to the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable (without
taking into account any adjustment previously made pursuant to
Section 11(a)(ii) hereof) and dividing that product by (B) 50%
of the then current per share market price of the Common Shares
of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation,
merger, sale or transfer; (ii)such Principal Party shall there-
after be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of
Section 11 hereof shall apply to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of
its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as
<PAGE>
nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a) hereof, the Person that
is the issuer of any securities into which Common Shares are
converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party
to the merger or consolidation (or, if applicable, the
Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the first
sentence of Section 13(a) hereof, 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 case, (1) if the Common Shares 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 or Affiliate of another Person the Common Shares of
which are and have been so registered, "Principal Party" shall
refer to such other Person; (2) if such Person is a subsidiary,
directly or indirectly, or Affiliate of more than one Person, the
Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest
aggregate market value; and (3) if such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of
the chains of ownership having an interest in such joint venture
as if such party were a "subsidiary" of both or all of such joint
venturers and the Principal Parties in each such chain shall bear
the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a
sufficient number of authorized Common Shares that have not been
issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior
thereto the Company and each Principal Party and each other
Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have (i) executed
and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of
this Section 13 and (ii) prepared, filed and had declared and
remain effective a registration statement under the Act on the
appropriate form with respect to the Rights and the securities
<PAGE>
exercisable upon exercise of the Rights and further providing
that, as soon as practicable after the date of any consolidation,
merger, sale or transfer of assets mentioned in paragraph (a) of
this Section 13, the Principal Party at its own expense will:
(i) cause the registration statement under the Act with respect to
the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form to remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under
the blue sky laws of such jurisdictions as may be necessary or
appropriate;
(iii) list the Rights and the securities purchasable upon exercise
of the Rights on each national securities exchange on which
the Common Shares were listed prior to the consummation of the
Business Combination or on the Nasdaq National Market if the
Common Shares were listed on the Nasdaq National Market or, if
the Common Shares were not listed on a national securities
exchange or the Nasdaq National Market prior to the
consummation of the Business Combination, on a national
securities exchange or the Nasdaq National Market; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
which comply in all material respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
(d) After the Distribution Date, the Company covenants and agrees
that it shall not (i) consolidate with, (ii) merge with or into,
or (iii) sell or transfer to, in one or more transactions, assets
or earning power aggregating more than 50% of the assets or
earning power of the Company and its subsidiaries taken as a
whole, any other Person (other than a Subsidiary of the Company
in a transaction which does not violate Section 11(m) hereof), if
(x) at the time of or after such consolidation, merger or sale
there are any charter or bylaw provisions or any rights, warrants
or other instruments or securities outstanding, agreements in
effect or any other action taken which would diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have received a
<PAGE>
distribution of Rights previously owned by such Person or any of
its Affiliates and Associates. The Company shall not consummate
any such consolidation, merger, sale or transfer unless prior
thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 13(d).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or as reported on the Nasdaq
National Market or, if the Rights are not listed or admitted to
trading on any national securities exchange or reported on the
Nasdaq National Market, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights
or to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred
Share may, at the election of the Company, be evidenced by
depositary receipts; provided, however, that holders of such
depositary receipts shall have all of the designations and the
<PAGE>
powers, preferences and rights, and the qualifications, limita-
tions and restrictions to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market
value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the
current per share market price of the Preferred Shares (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such
exercise (or, if not publicly traded, in accordance with Section
11(d)(ii) hereof).
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to
receive Common Shares, capital stock equivalents (other than Pre-
ferred Shares) or other securities upon the exercise of a Right,
the Company shall not be required to issue fractions of Common
Shares or units of such Common Shares, capital stock equivalents
or other securities upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares, capital
stock equivalents or other securities. In lieu of fractional
Common Shares, capital stock equivalents or other securities, the
Company shall pay to the registered holders of Right Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market
value of one Common Share or unit of such Common Shares, capital
stock equivalents or other securities. For purposes of this
Section14(c), the current market value shall be the current per
share market price (as determined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such
exercise and, if such capital stock equivalent is not traded,
each such capital stock equivalent shall have the value of one
one-hundredth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided
above).
Section 15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under
Sections 18 and 20 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares) and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares), may, in his
own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting the
<PAGE>
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement. Holders of
Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys fees, incurred by them in any action
to enforce the provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by accepting
the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are trans-
ferable (subject to the provisions of this Rights Agreement) only
on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as
such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section
25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it
<PAGE>
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the
Rights Agents, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of
liability in the premises. The indemnity provided herein shall
survive the expiration of the Rights and the termination of this
Agreement.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance
upon any Right Certificate or certificate for the Preferred Shares
or Common Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the
advice of counsel as set forth in Section 20 hereof. In no case
will the Rights Agent be liable for special, indirect, incidental or
consequential or consequential loss or damage at any kind whatsoever
(including but not limited to lost profits), even if the Rights
Agent has been advised of such loss or damage.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the shareholder services 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 that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created
by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been counter-
signed, any successor Rights Agent may countersign such Right
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 Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
<PAGE>
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right
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 Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choice
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of
the Board, the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or
in the Right Certificates (except its countersignature thereof)
or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Right 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 Right
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
<PAGE>
pursuant to Section 11(a)(ii) hereof) or any adjustment in the
terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24 hereof, or
the ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a
certificate pursuant to Section 12 hereof describing such change
or adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred
Shares will, when issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer,
any Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights
Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent with respect
to its duties or obligations under this Agreement and the date
on and/or after which such action shall be taken or omitted and
the Rights Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date
shall not be less than three business days after the date
indicated in such application unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking
or omitting any such action, the Rights Agent has received
written instructions in response to such application specifying
the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
<PAGE>
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in
the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnifi-
cation against such risk or liability is not reasonably assured
to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached
to the form of assignment or form of election to purchase, as the
case may be, has not been executed, the Rights Agent shall not
take any further action with respect to such requested exercise
of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agree-
ment upon 30 days' notice in writing mailed to the Company and to
each transfer agent for the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent for the Common Shares or
Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period
of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered
holder of any Right 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 either (a) a corporation business trust or limited
liability company organized and doing business under the laws of the
United States or of any other state of the United States which is
authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by
<PAGE>
federal or state authority and which has at the time of its appoint-
ment as Rights Agent a combined capital and surplus of at least $50
million or (b) a direct or indirect wholly owned subsidiary of such
an entity or its wholly-owning parent. After appointment, the
successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment
the Company shall file notice thereof in writing with the pre-
decessor Rights Agent and each transfer agent for the Common Shares
or Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the
issuance or sale of Common Shares following the Distribution Date
and prior to the earlier of the Redemption Date and the Final
Expiration Date, the Company (a) shall with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement in existence prior to the
Distribution Date, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company and in
existence prior to the Distribution Date, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors
of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) the Company shall not be obligated
to issue any such Right Certificates if, and to the extent that, the
Company shall be advised by counsel that such issuance would create
a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be
issued, and (ii) no Right Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to Section23 (b) hereof and shall not be redeemed in any
other manner.
(b)
<PAGE>
(i) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of such time as any Person
becoming an Acquiring Person or the Final Expiration Date,
redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption
Price"), and the Company may, at its option, pay the
Redemption Price in Common Shares (based on the "current per-
share market price," as such term is defined in Section11 (d)
hereof, of the Common Shares at the time of redemption), cash
or any other form of consideration deemed appropriate by the
Board of Directors. The redemption of the Rights by the Board
of Directors may be made effective at such time, on such basis
and subject to such conditions as the Board of Directors in
its sole discretion may establish. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall
not be exercisable pursuant to Section 11(a)(ii) hereof prior
to the expiration or termination of the Company's right of
redemption under this Section 23(b)(i).
(ii) In addition, the Board of Directors of the Company may, at its
option, at any time after the time a Person becomes an
Acquiring Person and the expiration of any period during which
the holder of Rights may exercise the rights under Section
11(a)(ii) hereof but prior to any event described in clause
(x), (y) or (z) of the first sentence of Section 13 hereof,
redeem all but not less than all of the then outstanding
Rights at the Redemption Price (x)in connection with any
merger, consolidation or sale or other transfer (in one
transaction or in a series of related transactions) of assets
or earning power aggregating 50% or more of the assets or
earning power of the Company and its subsidiaries (taken as a
whole) in which all holders of Common Shares are treated alike
and not involving (other than as a holder of Common Shares
being treated like all other such holders) an Interested
Stockholder or a Transaction Person or (y)(A)if and for so
long as the Acquiring Person is not thereafter the Beneficial
Owner of 15% or more of the then outstanding Common Shares,
and (B) at the time of redemption no other Persons are
Acquiring Persons.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to
Section 23(b) hereof, and without any further action and without
any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that
the failure to give, or any defect in, any such notice shall
<PAGE>
not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(b) hereof, the
Company shall mail a notice of redemption to all the holders of
the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer
agent for the Common Shares, provided, however, that failure to
give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
(d) The Company may, at its option, discharge all of its obligations
with respect to any redemption of the Rights by (i)issuing a
press release announcing the manner of redemption of the Rights
and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they
appear on the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer
agent for the Common Shares, and upon such action, all outstand-
ing Right Certificates shall be null and void without any
further action by the Company.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, 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 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwith-
standing the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section
<PAGE>
24(a) hereof and without any further action and without any
notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights
Agent; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such
exchange. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state
the method by which the exchange of the Common Shares for Rights
will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In lieu of issuing Common Shares in accordance with Section
24(a) hereof, the Company may, if a majority of the Board of
Directors then in office determines that such action is
necessary or appropriate and not contrary to the interests of
the holders of Rights, elect to (and, in the event that there
are not sufficient treasury shares and authorized but unissued
Common Shares to permit any exchange of the Rights in accordance
with Section 24(a) hereof, the Company shall) take all such
action as may be necessary to authorize, issue or pay, upon the
exchange of the Rights, cash (including by way of a reduction of
the Purchase Price), property, Common Shares, other securities
or any combination thereof having an aggregate value equal to
the value of the Common Shares which otherwise would have been
issuable pursuant to Section 24(a) hereof, which aggregate value
shall be determined by a nationally recognized investment
banking firm selected by a majority of the Board of Directors
then in office. For purposes of the preceding sentence, the
value of the Common Shares shall be determined pursuant to
Section 11(d) hereof. Any election pursuant to this Section
24(c) by the Board of Directors must be made within 60 days
following the date on which the event described in Section
11(a)(ii) hereof shall have occurred. Following the occurrence
on the event described in Section 11(a)(ii) hereof, a majority
of the Board of Directors then in office may suspend the
exercisability of the Rights for a period of up to 60 days
following the date on which the event described in Section
11(a)(ii) hereof shall have occurred to the extent that such
directors have not determined whether to exercise their rights
of election under this Section 24(c). In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporar-
ily suspended.
<PAGE>
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares
would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share.
For the purposes of this Section 24(d), the current market value
of a whole Common Share shall be the closing price of a Common
Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately after the date
of the first public announcement by the Company that an exchange
is to be effected pursuant to this Section24.
(e) The Company shall not be required to issue fractions of Pre-
ferred Shares (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share) upon exchange of the
Rights or to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share). Fractions
of Preferred Shares in integral multiples of one one-hundredth
of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts; provided, however, that
holders of such depositary receipts shall have all of the
designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions to which they are
entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-
hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred
Share. For the purposes of this Section 24(e), the current
market value of a Preferred Share shall be one hundred (100)
times the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately after the date of the first public
announcement by the Company that an exchange is to be effected
pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred
Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassifi-
cation of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares),
(iv) to effect any consolidation or merger into or with, or
<PAGE>
to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole), to any other Person, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Shares payable in Common Shares
or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares), then, in each such case, the
Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purpose 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 Shares and/or the Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least
10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or the Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe the event and the consequences of
the event to holders of Rights under Section11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right
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:
MySoftware Company
2197 E. Bayshore Road
Palo Alto, CA 94303
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right 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:
<PAGE>
BankBoston, N.A.
150 Royall Street
Canton, MA 02021
Attention: Account Manager
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the
approval of any holders of the Rights. From and after the
Distribution Date, the Company and the Rights Agent shall, if the
Company so directs, from time to time supplement or amend any
provision of this Agreement without the approval of any holders
of Right Certificates in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or
(iii) change any other provisions with respect to the Rights which
the Company may deem necessary or desirable; provided, however, that
no such supplement or amendment shall be made which would adversely
affect the interests of the holders of Rights (other than the
interests of an Acquiring Person or its Affiliates or Associates).
Any supplement or amendment adopted during any period after any
Person has become an Acquiring Person but prior to the Distribution
Date shall become null and void unless such supplement or amendment
could have been adopted by the Company from and after the
Distribution Date. Any such supplement or amendment shall be
evidenced by a writing signed by the Company and the Rights Agent.
Upon delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment unless the Rights Agent
shall have determined in good faith that such supplement or
amendment would adversely affect its interest under this Agreement.
Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders
of Common Shares.
Section 28. Determination and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding Common
Shares or any other securities of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement. The Board
of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board, or the Company, or
as may be necessary or advisable in the administration of this
<PAGE>
Agreement, including without limitation, the right and power to
(i)interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration
of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall
(x) be final, conclusive and binding on the Rights Agent and the
holders of the Rights, and (y) not subject the Board to any
liability to the holders of the Rights.
Section 29. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind and
inure to the benefit of their respective successors and assigns
hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 31. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable
to contracts to be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the
provisions hereof.
<PAGE>
In Witness Whereof, parties whereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
ATTEST: MYSOFTWARE COMPANY
By:_________________________ By:___________________________
Sharon Chiu Gregory W. Slayton
Vice President, President and Chief Executive
Chief Financial Officer and Officer
Secretary
ATTEST: BANKBOSTON, N.A.
By: __________________________ By:____________________________
Print Name:___________________ Print Name:____________________
Title:________________________ Title:_________________________
MYSOFTWARE COMPANY
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
(EXHIBIT C TO RIGHTS PLAN)
On June 10, 1998 the Board of Directors of MySoftware Company (the
"Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.001 per
share (the "Common Shares"), of the Company. The dividend is effective as of
June 26, 1998 (the "Record Date") with respect to the stockholders of record
on that date. The Rights will also attach to new Common Shares issued after
the Record Date. Each Right entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $.001 per share (the "Preferred Shares"), of the
Company at a price of $25.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. Each Preferred Share is designed
to be the economic equivalent of 100 Common Shares. The description and
terms of the Rights are set forth in a Rights Agreement dated as of June 10,
1998 (the "Rights Agreement"), between the Company and BankBoston, N.A. (the
"Rights Agent").
DETACHMENT AND TRANSFER OF RIGHTS
Initially, the Rights will be evidenced by the stock certificates
representing Common Shares then outstanding, and no separate Right
Certificates will be distributed. Until the earlier to occur of (i) a public
announcement that a person or group of affiliated or associated persons,
has become an "Acquiring Person" (as such term is defined in the Rights
Agreement) or (ii) 10 business days (or such later date as the Board may
determine) following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer which would result in the beneficial
ownership by an Acquiring Person of 15% or more of the outstanding Common
Shares (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificate. In general, an "Acquiring Person" is a person, the affiliates
or associates of such person, or a group (excluding specified stockholders
identified by the Company to the extent that such stockholders do not acquire
more than 15% or 20% of the then outstanding Common Shares, respectively),
which has acquired beneficial ownership of 15% or more of the outstanding
Common Shares; provided, however, that the Board of Directors may determine
that certain stockholders acquiring beneficial ownership of more than 5% of
the then outstanding Common Shares will become Acquiring Persons if they
acquire 9.9% or more of the then outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferable with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights) the surrender or transfer of any certificates for Common
<PAGE>
Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Right Certificates alone will
evidence the Rights.
EXERCISABILITY OF RIGHTS
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 10, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to
receive dividends.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable or payable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution. The number of
outstanding Rights and the number of one one-hundredths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares, or subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case, prior to the
Distribution Date. With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an adjustment of
at least 1% in such Purchase Price. No fractional Preferred Shares will be
issued (other than fractions which are integral multiples of one one-
hundredth of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
TERMS OF PREFERRED SHARES
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $l per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preferred Share will have 100 votes, voting together with
the Common Shares. Finally, in the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per Common Share.
These rights are protected by customary anti-dilution provisions. Because of
the nature of the Preferred Shares' dividend, liquidation and voting rights,
the value of the one one-hundredth interest in a Preferred Share purchasable
upon exercise of each Right should approximate the value of one Common Share.
The Preferred Shares would rank junior to any other series of the Company's
preferred stock.
<PAGE>
TRIGGER OF FLIP-IN AND FLIP-OVER RIGHTS
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person or any affiliate or associate thereof (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of Common
Shares having a market value of two times the exercise price of the Right.
This right will commence on the date of public announcement that a person has
become an Acquiring Person (or the effective date of a registration statement
relating to distribution of the rights, if later) and terminate 60 days later
(subject to adjustment in the event exercise of the rights is enjoined).
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its affiliates or associates or
certain other persons in which such persons have an interest, proper
provision will be made so that each such holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
REDEMPTION AND EXCHANGE OF RIGHTS
At any time prior to the earliest of (i) the close of business on the day
of the first public announcement that a person has become an Acquiring Person,
or (ii) the Final Expiration Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). In general, the redemption of the Rights may be
made effective at such time on such basis with such conditions as the Board
of Directors in its sole discretion may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding Common
Shares, the Board of Directors of the Company may exchange the Rights (other
than Rights owned by such person or group which will have become void), in
whole or in part, at an exchange ratio of one Common Share, or, under
circumstances set forth in the Rights Agreement, cash, property or other
securities of the Company, including fractions of a Preferred Share (or of a
share of a class or series of the Company's preferred stock having equivalent
designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions), per Right (with value equal to such Common
Shares).
AMENDMENT OF RIGHTS
The terms of the Rights generally may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
except that from and after such time as the Rights are distributed no such
amendment may adversely affect the interests of the holders of the Rights
(excluding the interest of any Acquiring Person).
<PAGE>
ADDITIONAL INFORMATION
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated June
11, 1998. A copy of the Rights Agreement is available from the Company by
writing to: MySoftware Company, 2197 E. Bayshore Road, Palo Alto, CA 94303,
Attn: Chief Executive Officer. This summary description of the Rights is
not intended to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by reference.
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
MYSOFTWARE COMPANY
(EXHIBIT A TO RIGHTS AGREEMENT)
(Pursuant to Section 151 of the
Delaware General Corporation Law)
MYSOFTWARE COMPANY, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was adopted by the
Board of Directors of the Company as required by Section 151 of the General
Corporation Law at a meeting duly called and held on June 10, 1998:
Resolved, that pursuant to the authority granted to and vested
in the Board of Directors of the Company in accordance with
the provisions of its Certificate of Incorporation, the Board
of Directors hereby creates a series of Preferred Stock, par
value $.001 per share, of the Company and hereby states the
designation and number of shares, and fixes the relative
designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions thereof (in
addition to the provisions set forth in the Certificate
of Incorporation of the Company, which are applicable to the
Preferred Stock of all classes and series), as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. Two Hundred Thousand (200,000)
shares of Preferred Stock, $.001 par value, are designated "Series A Junior
Participating Preferred Stock" with the designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
specified herein (the "Junior Preferred Stock"). Such number of shares may
be increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Junior Preferred Stock
to a number less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities
issued by the Company convertible into Junior Preferred Stock.
<PAGE>
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior
to the Junior Preferred Stock with respect to dividends, the holders of
shares of Junior Preferred Stock, in preference to the holders of Common
Stock, par value $.001 per share (the "Common Stock"), of the Company, and of
any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of April, July,
October and January in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Junior Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $l.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Junior Preferred Stock. In the event the Company shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount to which holders of shares
of Junior Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, that in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Junior Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
<PAGE>
dividends shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
shares of Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Junior Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the stockholders of the
Company. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to which
holders of shares of Junior Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate
of Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Junior Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Company having
general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Junior Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
<PAGE>
liquidation, dissolution or winding up) with the Junior Preferred Stock,
except dividends paid ratably on the Junior Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Junior Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other
Certificate of Designation creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Junior
Preferred Stock unless, prior thereto, the holders of shares of Junior
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Junior Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal
to 100 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Junior Preferred Stock, except distributions made ratably on the
Junior Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Company shall at any
time declare or pay dividend on the Common Stock payable in shares of Common
<PAGE>
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the case the Company shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
share of Junior Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Junior Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Junior Preferred Stock shall
not be redeemable.
Section 9. Rank. The Junior Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all
series of any other class of the Company's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the Company
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Junior Preferred Stock, voting
together as a single class.
<PAGE>
In Witness Whereof, the undersigned have executed this certificate as of
June __, 1998.
/s/ Gregory W. Slayton
-------------------------
Gregory W. Slayton
President and Chief Executive Officer
/s/ Sharon Chiu
-------------------------
Sharon Chiu
Vice President, Chief Financial Officer and
Secretary
FORM OF RIGHT CERTIFICATE
(EXHIBIT B TO RIGHTS AGREEMENT)
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER JUNE 10, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
Right Certificate
MySoftware Company
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 June 10, 1998 (the "Rights Agreement"),
between MySoftware Company, a Delaware corporation (the "Company"), and
BankBoston, N.A. (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m., Pacific Time, on June 10, 2008 at the
office of the Rights Agent designated for such purpose, or at the office of
its successor as Rights Agent, one one-hundredth of a fully paid non-
assessable share of Series A Junior Participating Preferred Stock, par value
$.001 per share (the "Preferred Shares"), of the Company, at a purchase price
of $25.00 per one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-hundredths of a Preferred Share
which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of June
10, 1998, based on the Preferred Shares as constituted at such date.
From and after the time any Person becomes an Acquiring Person, (as such
terms are defined in the Rights Agreement), if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate who becomes a transferee after the Acquiring
Person becomes such, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of any such Acquiring Person, Associate or
Affiliate who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such, such Rights shall become null and void
without any further action and no holder hereof shall have any right with
respect to such Rights from and after the time any Person becomes an
Acquiring Person.
<PAGE>
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as amended from time to time, which
terms, provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above-
mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may
be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company, except under limited
circumstances, as detailed in the Rights Agreement, at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.001 per share, or, upon circumstances set
forth in the Rights Agreement, cash, property or other securities of the
Company, including fractions of a share of Preferred Stock.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts) but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
<PAGE>
Witness the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ________________, 1998.
Attest: MySoftware Company
By: /s/Sharon Chiu By: /s/Gregory W. Slayton
------------------------------- --------------------------------
Sharon Chiu Gregory W. Slayton
Vice President, Chief Financial President and Chief Executive and
Officer and Secretary Officer
Countersigned:
/s/BankBoston, N.A.
___________________________________
BankBoston, N.A.
as Rights Agent
By:________________________________
Print Name:________________________
Title:_____________________________
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby
sells, assigns and transfers unto
______________________________________________________________
(Please print name and address of transferee)
______________________________________________________________ this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ____________________
________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
- ---------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf
of a Person who is or was an Acquiring Person, an Interested Stockholder or
an Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement); and (2) after due inquiry and to the best of the knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this
Right Certificate from any Person who is or was an Acquiring Person, an
Interested Stockholder, or an Affiliate or Associate thereof.
________________________________
Signature
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To BankBoston, N.A.
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number: ______________
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: ______________
______________________________________________________________
(Please print name and address)
______________________________________________________________
Dated: _________________
________________________________
Signature
Form of Reverse Side of Right Certificate -- continued
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of
1934, as amended.
- ---------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not beneficially owned by nor are they being exercised
on behalf of an Acquiring Person, an Interested Stockholder or an Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best of the knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person, an Interested
Stockholder, or an Affiliate or Associate thereof.
________________________________
Signature
- ---------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement) and
such Assignment or Election to Purchase will not be honored.
