1
EXHIBIT 99.2
- --------------------------------------------------------------------------------
DATAWORKS CORPORATION
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF OCTOBER 13, 1998
- --------------------------------------------------------------------------------
2
TABLE OF CONTENTS
PAGE
SECTION 1. CERTAIN DEFINITIONS............................................................................ 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT.................................................................... 5
SECTION 3. ISSUE OF RIGHT CERTIFICATES.................................................................... 5
SECTION 4. FORM OF RIGHT CERTIFICATES..................................................................... 7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.............................................................. 9
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES................................................... 9
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.................................. 10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES............................................. 12
SECTION 9. AVAILABILITY OF PREFERRED SHARES............................................................... 12
SECTION 10. PREFERRED SHARES RECORD DATE................................................................... 13
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........................................................ 26
SECTION 15. RIGHTS OF ACTION............................................................................... 28
SECTION 16. AGREEMENT OF RIGHT HOLDERS..................................................................... 28
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......................................................................... 30
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
1
3
SECTION 29. SUCCESSORS..................................................................................... 41
SECTION 30. BENEFITS OF THIS AGREEMENT..................................................................... 41
SECTION 31. SEVERABILITY................................................................................... 41
SECTION 32. GOVERNING LAW.................................................................................. 41
SECTION 33. COUNTERPARTS................................................................................... 42
SECTION 34. DESCRIPTIVE HEADINGS........................................................................... 42
SECTION 35.
Exhibit A - Certificate of Designation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
2
4
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT ("AGREEMENT"), dated as of October 13, 1998,
between DATAWORKS CORPORATION, a Delaware corporation (the "Company"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. ("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
October 28, 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 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, 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
Beneficially Own more than 15% of the Common Shares
1
5
then outstanding, then such Person shall be deemed to be
an "Acquiring Person," or (y) as the result of the
acquisition of Common Shares directly from the Company,
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 directly
from the Company and shall, after that date, become
Beneficial Owner of any additional Common Shares without
the prior written consent of the Company and shall then
Beneficially Own more than 15% of the Common Shares then
outstanding, then such Person shall be deemed to be an
"Acquiring Person," or (z) 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.
In addition, Platinum Software Corporation,
a Delaware corporation ("Platinum"), shall not be deemed
to be an "Acquiring Person" for purposes of this
Agreement so long as (x) Platinum is proceeding and
acting in accordance with that certain Agreement and
Plan of Reorganization dated October 13, 1998 by and
among Platinum, Merger Sub and the Company (the "Merger
Agreement") and (y) such Merger Agreement has not been
terminated.
(b) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement; provided,
however, that the limited partners of a limited
partnership shall not be deemed to be Associates of such
limited partnership solely by virtue of their limited
partnership interests.
(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;
2
6
(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 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
3
7
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) "CLOSE OF BUSINESS" on any given date shall mean 5:00
p.m., Pacific Time, on such date; provided, however,
that if such date is not a Business Day it shall mean
5:00 p.m., Pacific Time, on the next succeeding Business
Day.
(f) "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.
(g) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3 hereof.
(h) "FINAL EXPIRATION DATE" shall have the meaning set forth
in Section 7 hereof.
(i) "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.
(j) "PERSON" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger
or otherwise) of such entity.
(k) "PREFERRED SHARES" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per
share, of the Company having the
4
8
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.
(l) "PURCHASE PRICE" shall have the meaning set forth in
Section 7(b) hereof.
(m) "REDEMPTION DATE" shall have the meaning set forth in
Section 7 hereof.
(n) "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.
(o) "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.
(p) "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).
(q) "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 the terms
and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF 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
5
9
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
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
6
10
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
DataWorks Corporation (the "Company") and
ChaseMellon Shareholder Services, L.L.C. as
Rights Agent (the "Rights Agent"), dated as
of October 13, 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.
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 Exhibit B
hereto and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this
7
11
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.
8
12
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 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
countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such 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.
9
13
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.
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 countersignature 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 October 12,
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 Section
24 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 $60.00 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
10
14
Right Certificate in accordance with Section 9 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 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 Section 11(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
11
15
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 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
12
16
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.
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.
13
17
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 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 proportionately adjusted so
that the holder of any Right exercised after
such time shall be entitled to receive the
aggregate number and kind of shares of
capital stock which, if such Right had been
exercised immediately prior to such date and
at a time when the Preferred 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
reclassification; provided, however, that in
no event shall the consideration to be paid
upon the exercise of one Right be less than
the aggregate par value of the shares of
capital stock of the Company issuable upon
exercise of one Right. If an event occurs
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
14
18
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 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
15
19
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.
(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
16
20
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
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 Section 11(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
17
21
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 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
18
22
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" 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.
19
23
(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 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 substitution 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
20
24
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 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 nonassessable
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
21
25
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 exchangeable for Preferred
Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or
warrants 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
22
26
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 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 consolidation 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 Stockholder 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 hereinafter defined),
free and clear of liens, rights of call or first
refusal, encumbrances or other adverse claims, as shall
be equal to the result obtained by (A) multiplying the
then
23
27
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 thereafter be liable for, and
shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply to such
Principal Party; and (iv) such Principal Party shall
take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its
Common 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 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,
24
28
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
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
25
29
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 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
26
30
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
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 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 Preferred 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
27
31
Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(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
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
transferable (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
28
32
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
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
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses 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.
29
33
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
countersigned, 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
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
30
34
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
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 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
31
35
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 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 indemnification
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.
32
36
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this
Agreement upon 30 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
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at
least $50 million or (b) 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 predecessor 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
33
37
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 Section 23(b) hereof and shall not
be redeemed in any other manner.
(b) (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 $.001 per Right, appropriately
adjusted to reflect any stock split, stock
dividend or similar transaction occurring
after the date hereof (such redemption price
being hereinafter referred to as the
"Redemption Price"), 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 Section 11(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
34
38
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 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
35
39
transfer agent for the Common Shares, and upon such
action, all outstanding 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").
Notwithstanding 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 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
36
40
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 temporarily
suspended.
(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 Section 24.
(e) 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 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
37
41
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
reclassification 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 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,
38
42
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 Section 11(a)(ii)
hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any 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:
DataWorks Corporation
5910 Pacific Center Blvd., Suite 300
San Diego, CA 92121
Attn: 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:
ChaseMellon Shareholder Services, L.L.C.
400 South Hope Street, 4th Floor
Los Angeles, CA 90071
Attn:___________________________________
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
39
43
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
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,
40
44
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.
41
45
IN WITNESS WHEREOF, parties whereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
DATAWORKS CORPORATION
____________________________________
Stuart W. Clifton
Chairman of the Board, President and
Chief Executive Officer
ATTEST:
__________________________________
Bradley J. Thies
General Counsel and Secretary
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:_________________________________
Title:______________________________
ATTEST:
By:_______________________________
Title:____________________________
42
46
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
(EXHIBIT A TO RIGHTS AGREEMENT)
(Pursuant to Section 151 of the
Delaware General Corporation Law)
DATAWORKS CORPORATION, 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 Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on October 13, 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. Three hundred thousand (300,000)
shares of Preferred Stock, par value $.001 per share, 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.
1
47
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.
2
48
(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
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.
3
49
(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
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.
4
50
(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 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 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 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
5
51
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.
6
52
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
October __, 1998.
____________________________________
Stuart W. Clifton
Chairman of the Board, President and
Chief Executive Officer
____________________________________
Bradley J. Thies
General Counsel and Secretary
7
53
FORM OF RIGHT CERTIFICATE
(EXHIBIT B TO RIGHTS AGREEMENT)
CERTIFICATE NO. R- _____ RIGHTS
NOT EXERCISABLE AFTER OCTOBER 12, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
DATAWORKS CORPORATION
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 October 13, 1998 (the "Rights Agreement"), between
DataWorks Corporation, a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C. (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., California time, on October 12, 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 $60.00
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 _______________, 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
1
54
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.
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 at a redemption price of
$.001 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.
2
55
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________, 1998.
DATAWORKS CORPORATION
____________________________________
Stuart W. Clifton
Chairman of the Board, President and
Chief Executive Officer
ATTEST:
__________________________________
Bradley J. Thies
General Counsel and Secretary
COUNTERSIGNED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
By:_______________________________
[Authorized Signature]
3
56
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
4
57
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
5
58
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To __[Rights Agent]__
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
6
59
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.
7
60
DATAWORKS CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
(EXHIBIT C TO RIGHTS PLAN)
On October 13, 1998, the Board of Directors of DataWorks Corporation
(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 October
28, 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
$60.00 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 October 13, 1998 (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.
(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, which has
acquired beneficial ownership of 15% or more of the outstanding Common Shares.
Notwithstanding the foregoing, the Rights Agreement provides that Platinum
Software Corporation ("Platinum") will not be deemed an Acquiring Person as long
as Platinum is acting in accordance with the terms of, and the transactions
contemplated by, the Agreement and Plan of Reorganization dated October 13, 1998
among Platinum, Merger Sub and the Company.
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
1
61
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 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 October 12, 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
2
62
value of one Common Share. The Preferred Shares would rank junior to any other
series of the Company's preferred stock.
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 $.001 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).
3
63
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).
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 October
13, 1998. A copy of the Rights Agreement is available from the Company by
writing to: DataWorks Corporation, 5910 Pacific Center Blvd., Suite 300, San
Diego, CA 92121, Attn: Secretary. 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.
4