EXHIBIT 10.3
PRIVILEGED AND CONFIDENTIAL
FOR DISCUSSION PURPOSES ONLY
COVANSYS CORPORATION
and
[TRUST COMPANY],
as Rights Agent
------------
Rights Agreement
Dated as of [_____], 2004
TABLE OF CONTENTS
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....................................................... 7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates........................................... 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........................... 8
Section 8. Cancellation and Destruction of Right Certificates...................................... 9
Section 9. Availability of Preferred Shares........................................................ 9
Section 10. Preferred Shares Record Date............................................................ 10
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...................... 10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.............................. 17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................... 17
Section 14. Fractional Rights and Fractional Shares................................................. 18
Section 15. Rights of Action........................................................................ 20
Section 16. Agreement of Right Holders.............................................................. 20
Section 17. Right Certificate Holder Not Deemed a Stockholder....................................... 20
Section 18. Concerning the Rights Agent............................................................. 21
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................... 21
Section 20. Duties of Rights Agent.................................................................. 22
Section 21. Change of Rights Agent.................................................................. 23
Section 22. Issuance of New Right Certificates...................................................... 24
Section 23. Redemption.............................................................................. 24
Section 24. Exchange................................................................................ 25
Section 25. Notice of Certain Events................................................................ 26
Section 26. Notices................................................................................. 27
Section 27. Supplements and Amendments.............................................................. 28
Section 28. Successors.............................................................................. 28
Section 29. Benefits of this Rights Agreement....................................................... 28
Section 30. Severability............................................................................ 28
Section 31. Governing Law........................................................................... 28
Section 32. Counterparts............................................................................ 29
Section 33. Descriptive Headings.................................................................... 29
Exhibit A - Form of Certificate of Designations of Series B Junior Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
Rights Agreement
This Rights Agreement is dated as of [_____], 2004 and is made by and
between COVANSYS CORPORATION, a Michigan corporation (the "Company"), and
[_____] (the "Rights Agent").
The Board of Directors of the Company has authorized and directed the
issuance, and declared a dividend, of one preferred share purchase right (a
"Right") for each Common Share outstanding as of the close of business on
[_____], 2004 (the "Record Date"). Each Right represents the right to purchase
one one-thousandth of a Preferred Share, upon the terms and subject to the
conditions set forth in the form of Certificate of Designations attached hereto
as Exhibit A authorized by the Board of Directors of the Company on [_____],
2004 upon the terms and subject to the conditions hereinafter set forth. The
Board of Directors of the Company 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 of the Distribution Date,
the Redemption Date and the Expiration Date.
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 Rights
Agreement, the following terms have the meanings indicated:
(a)"Acquiring Person" means any Person who or which, together with
its Affiliates and Associates, shall be the Beneficial Owner of 15% or more
of the Common Shares then outstanding, but shall not include (i) 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, (ii) any Person who or which becomes
the Beneficial Owner of 15% or more of the Common Shares then outstanding as
the result of a reduction in the outstanding Common Shares resulting from
acquisition of Common Shares by the Company approved by the Board of
Directors, unless and until such Person becomes the Beneficial Owner of any
additional Common Shares, other than pursuant to a stock dividend or stock
split, (iii) any Person who or which the Board of Directors of the Company
determines, in good faith, became an Acquiring Person inadvertently, if such
Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an Acquiring Person or (iv) any
Person who or which the Board of Directors of the Company determines, prior
to the time such Person would otherwise be an Acquiring Person, should be
exempted from the definition of Acquiring Person, provided that the Board of
Directors may make such exemption subject to such conditions, if any, which
the Board may determine. Notwithstanding the foregoing:
(i) Rajendra B. Vattikuti ("Mr. Vattikuti") will not be
deemed an Acquiring Person unless, together with his Affiliates and
Associates (including
but not limited to the Rajendra B. Vattikuti Trust, dated October 19,
1990, as amended and restated on February 1, 1995 (the "Trust")), he shall
be the Beneficial Owner of 25% or more of the Common Shares.
(ii) Fidelity Information Services, Inc. ("FIS") shall not be
deemed an Acquiring Person unless, together with its Affiliates and
Associates, it shall be the Beneficial Owner of 40% or more of the Common
Shares; provided that for purposes of determining whether FIS is an
Acquiring Person, (A) FIS will not be deemed to Beneficially Own the
Common Shares subject to the voting agreements contained in the Vattikuti
Shareholder's Agreement solely by virtue of those voting agreements or
FIS' possession or exercise of any proxy granted to implement those voting
agreements; (B) FIS shall not be deemed to be an Acquiring Person solely
by virtue of its acquisition of Common Shares pursuant to the terms of (1)
the FIS Stock Purchase Agreement or (2) the Vattikuti Stock Purchase
Agreement; and (C) FIS will be deemed to Beneficially Own the Common
Shares that may be acquired upon exercise of the warrants (for up to
4,000,000 shares of Common Stock) issued to FIS pursuant to the FIS Stock
Purchase Agreement only to the extent that such warrants have been
exercised. As used in this Section 1(a)(ii), "Vattikuti Shareholder's
Agreement" means the Shareholder's Agreement dated April 26, 2004 by and
among FIS, Mr. Vattikuti and the Trust, as amended by the Amendment and
Acknowledgement dated as of August 17, 2004; "FIS Stock Purchase
Agreement" means the Stock Purchase Agreement dated as of April 26, 2004
by and between FIS and the Company as amended by the Amendment and
Acknowledgement dated as of August 17, 2004; and "Vattikuti Stock Purchase
Agreement" means the Common Stock Purchase Agreement dated as of April 26,
2004, by and among FIS, Mr. Vattikuti and the Trust, as amended by the
Amendment and Acknowledgement dated as of August 17, 2004.
(b)"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act.
(c)A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right 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
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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)) or disposing of any securities of the Company; provided, however,
that for purposes of determining Beneficial Ownership of securities under this
Rights Agreement, officers and directors of the Company solely by reason of
their status as such shall not constitute a group (notwithstanding that they may
be Associates of one anther or may be deemed to constitute a group for purposes
of Section 13(d) of the Exchange Act) and shall not be deemed to own shares
owned by another officer or director of the Company.
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, means 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 Beneficially Own hereunder.
(d) A determination, approval, consent or other action of the "Board
of Directors" shall require approval or consent of a majority of the Board of
Directors of the Company.
(e)"Business Day" means any day other than a Saturday, a Sunday, or
a day on which banking institutions in New York are authorized or obligated
by law or executive order to close.
(f)"Close of Business" on any given date means 5:00 p.m., New York
City time, on such date, provided, however, that, if such date is not a
Business Day, it means 5:00 p.m., New York City time, on the next succeeding
Business Day.
(g)"Common Shares" means the shares of common stock of the Company,
except that "Common Shares" when used with reference to any Person other than
the Company means 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.
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(h) "Company" has the meaning set forth in the preamble hereof.
(i) "Current per share market price" has the meaning set forth in
Section 11(d) hereof.
(j) "Distribution Date" has the meaning set forth in Section 3(a)
hereof.
(k) "Equivalent preferred shares" has the meaning set forth in
Section 11(b) hereof.
(l) "Exchange Act" means the Securities Exchange Act of 1934.
(m) "Exchange Ratio" has the meaning set forth in Section 24(a)
hereof.
(n) "Expiration Date" means the Close of Business on [_____], 2014.
(o) "NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotations System.
(p) "Non-Company Person" means a 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.
(q)"Person" means any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(r)"Preferred Shares" means shares of Series B Junior Participating
Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the Company's Restated Articles of Incorporation.
(s)"Purchase Price" shall initially be $[_____] for each one
one-thousandth of a Preferred Share purchasable pursuant to the exercise of a
Right, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof.
(t) "Record Date" has the meaning set forth in the second paragraph
hereof.
(u)"Redemption Date" means the time at which the Rights are redeemed
as provided in Section 23 hereof.
(v) "Redemption Price" has the meaning set forth in Section 23(a)
hereof.
(w) "Right" has the meaning set forth in the second paragraph
hereof.
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(x)"Right Certificate" has the meaning set forth in Section 3(a)
hereof.
(y) "Rights Agent" has the meaning set forth in the preamble hereof.
(z) "Security" has the meaning set forth in Section 11(d)(i) hereof.
(aa) "Stock Acquisition Date" means the first date of public
announcement (including, without limitation, by a filing under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the Board shall become
aware of the existence of an Acquiring Person.
(bb) "Subsidiary" of any Person means any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned or otherwise controlled, directly or
indirectly, by such Person.
(cc) "Trading Day" has the meaning set forth in Section 11(d)(i)
hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) 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 the Close of Business on (i) the tenth day
following the Stock Acquisition Date or (ii) such date, if any, as the Board
of Directors of the Company may determine following the commencement by any
Non-Company Person of, or of the first public announcement of the intention
of any Non-Company Person to commence, a tender or exchange offer the
consummation of which would result in any Person becoming an Acquiring
Person, including any such date which is after the date of this Rights
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 (subject to the provisions of Section 3(b) hereof) 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 right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares.
(b) 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
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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. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(c) The Company will make available, as promptly as practicable
following the Record Date, a Summary of Rights to Purchase Preferred Shares,
in substantially the form of Exhibit C hereto, to any holder of Rights who
may so request from time to time prior to the Expiration Date. 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 and
the registered holders of the Common Shares shall also be the registered
holders of the associated Rights. Until the Distribution Date (or the earlier
of the Redemption Date or the Expiration Date), the surrender for transfer of
any certificate for Common Shares in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such Common
Shares.
(d) Rights shall be issued in respect of all Common Shares which are
issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date. Certificates representing such Common
Shares shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement by and between
Covansys Corporation (the "Company") and the Rights Agent thereunder
(the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, rights issued to any person who becomes an Acquiring Person
(as defined in the rights agreement), including such rights held by a
subsequent holder, may 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 cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
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Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Rights
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 or automated quotation system on which the Rights may from time
to time be listed, or to conform to usage. Subject to the provisions of Sections
11 and 22 hereof, the Right Certificates shall entitle the holders thereof to
purchase such number of one one-thousandths of a Preferred Share as shall be set
forth therein at the price per one one-thousandth of a Preferred Share set forth
therein, but the number of one one-thousandths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents or its Treasurer, 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 countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the 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 Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, 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.
(a) Subject to the provisions of Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on
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the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that
have been exchanged pursuant to Section 24 hereof) 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-thousandths 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
principal office of the Rights Agent. Thereupon the Rights Agent shall
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.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a 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 make and
deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
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 principal office of the
Rights Agent, together with payment of the Purchase Price for each one
one-thousandth of a Preferred Share as to which the Rights are exercised, at
or prior to the earliest of (i) the Expiration Date, (ii) the Redemption Date
or (iii) the time at which such Rights are exchanged as provided in Section
24 hereof.
(b) The Purchase Price 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
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transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check, cashier's check or money
order payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Shares
certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with
all such requests or (B) requisition from the depositary agent depositary
receipts representing such number of one one-thousandths 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 of the
Preferred Shares with such depositary agent) and the Company hereby directs
such 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)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder; and (iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less 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 such holder's duly authorized assigns, subject to the provisions of
Section 14 hereof.
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 cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and, in such
case, shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred
Shares or any Preferred Shares held in its treasury, the number of Preferred
Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that
all securities delivered upon exercise of Rights shall, at the time of
delivery
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of the certificates for such securities (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(b) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of (i) any transfer or delivery of Right Certificates to a
Person other than, or (ii) 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. The Company shall not be required 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.
(c) The Company will use its best efforts to ensure that any
securities issued pursuant hereto are issued in compliance with all
applicable laws.
Section 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rig hts was duly surrendered
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 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 transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Rights 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
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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 Share 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.
(ii) Subject to Section 24 of this Rights Agreement, in the
event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter 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-thousandths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Rights 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-thousandths 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 Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event; 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 that 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 occurrence of such event, any Rights that are or were
acquired or Beneficially Owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Rights Agreement. No Right Certificate shall be issued pursuant to Section
3 that represents Rights Beneficially Owned by an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; 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 cancelled.
11
(iii) If there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued 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 additional Common Shares
for issuance upon exercise of the Rights. If the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exercise of a Right, a number of Preferred
Shares or fraction thereof (or a security with substantially similar rights,
privileges, preferences, voting power and economic rights) such that the current
per share market price of one Preferred Share (or such other security)
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares or
fraction thereof (or other security).
(b) This Section 11(b) shall apply in case the Company shall fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences 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 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 the following fraction:
(i) the numerator shall be the number of Preferred Shares
outstanding on the 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 to be offered (and/or the aggregate
initial conversion price of the convertible securities to be offered)
would purchase at the current market price;
(ii) the denominator shall be the number of Preferred Shares
outstanding on the 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 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 the 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 and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of
the Company shall
12
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 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 on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and holders of the Rights) of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one 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
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 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
13
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, if the Security is not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the 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. If on any such date no
such market maker is making a market in the Security, the fair value of the
Security on such date as determined in good faith by the Board of Directors
of the Company shall be used. The term "Trading Day" means 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). 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)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" means 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-millionth
of a Preferred Share or one one-thousandth of any other share or security as
the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise
any Rights.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Shares contained in Section
14
11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10 and 13
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-thousandths
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), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest one millionth
of a Preferred Share) obtained by (A) multiplying (x) the number of one
one-thousandths of a 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 (B) 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-thousandths 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-thousandths 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 millionth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein and
shall
15
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-thousandths 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-thousandths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder, but, nevertheless, shall represent the
Rights as so adjusted.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth 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 over and above 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) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that, in its sole discretion, it 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 in Section 11(b)
above, hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) In the event that at any time after the date of this Rights
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-thousandths of a Preferred Share purchasable after such
event upon proper exercise of each Right shall
16
be determined by multiplying the number of one one-thousandths 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(n) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to make such certification or
give such notice shall not affect the validity of or the force or effect of the
requirement for such adjustment. Any adjustment to be made pursuant to Section
11 or 13 of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, at any time after a Person
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that
(i) each holder of a Right (except as otherwise provided
herein) shall thereafter 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-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Rights Agreement and in lieu of Preferred
Shares, such number of validly issued, fully
17
paid, nonassessable and freely tradable Common Shares of such other Person
(including the Company as successor thereto or as the surviving corporation) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-thousandths 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 of such other Person
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares 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 Rights
Agreement;
(iii) the term "Company" shall thereafter be deemed to refer
to such issuer; and
(iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number 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 the Common Shares thereafter
deliverable upon the exercise of the Rights.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. The provisions of Section 11(a)(ii)
hereof shall be of no effect following the occurrence of any event described in
clause (a), (b) or (c) above of this Section 13.
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
18
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined 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-thousandth 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-thousandth of a
Preferred Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it; provided that such
agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences 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-thousandth 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
closing price of a Preferred Share (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.
(c) 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 holder of the Right Certificates at the time such Rights are
exercised as herein provided an amount of cash equal to the same fraction of
the current market value of a whole Common Share. For the purpose of this
Section 14(c), the current market value of a Common Share (as defined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as expressly provided above).
19
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, except the rights of action given to the Rights Agent
under Section 18 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 such holder's own behalf
and for such holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
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 Rights 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 Rights 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 only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate 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,
20
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
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Rights 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 Rights Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Rights 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.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent
(a) 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 stock transfer or corporate trust powers of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Rights 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 Rights
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
21
Certificates shall have the full force provided in the Right Certificates and
in this Rights Agreement.
(b) 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 Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Rights 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 (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 Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, 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 Rights 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 Rights 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 Rights 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
22
for any breach by the Company of any covenant or condition contained in this
Rights 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
Section 3, 11, 13, 23 or 24, 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 actual notice that
such change or adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Rights
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 Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken 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.
(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 have or obtain a pecuniary interest 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 Rights 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.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30-days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to
23
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 of 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 or which
shall, with such notice, submit such holder's 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 a corporation organized and doing business under the laws of the
United States or of any other state of the United States, in good standing,
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. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common 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 Rights 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 the Board of Directors of the Company 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 Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to the Distribution Date, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
combination, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors
of the Company may be made effective at such time, on such basis
24
and with such conditions as the Board of Directors of the Company, in its
sole discretion, may establish. Notwithstanding anything to the contrary in
this Agreement, the Rights shall not be exercisable after the first
occurrence of the event described in Section 11(a)(ii) until such time as the
Company's right of redemption hereunder has expired. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the current
market price at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, 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 of the Company ordering the redemption of the Rights, 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. 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.
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 adjustment in
the number of Rights pursuant to Section 11(i) (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company 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 paragraph (a) of this
Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to
25
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. 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 the event that there shall not be sufficient Common Shares
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional Common Shares for issuance upon
exchange of the Rights. In the event the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize
such additional Common Shares, the Company shall substitute, for each Common
Share that would otherwise be issuable upon exchange of a Right, a number of
Preferred Shares or fraction thereof (or a security with substantially
similar rights, privileges, preferences, voting power and economic rights)
such that the current per share market price of one Preferred Share (or other
such security) multiplied by such number or fraction is equal to the current
per share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof (or other such security).
(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 paragraph (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 prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company, at
any time after the Distribution Date, 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
26
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 purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least 10 days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or 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 such event and
the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this Rights
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:
Covansys Corporation
32605 West Twelve Mile Road
Farmington Hills, Michigan 48334-3339
Attention: Chief Financial Officer
Attention: General Counsel
Facsimile: 248-848-9741
Telephone: 248-848-2211
27
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights 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:
[______]
[______]
[______]
Notices or demands authorized by this Rights 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. The Board of Directors of
the Company may from time to time supplement or amend this Rights Agreement
without the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Board of Directors of the
Company may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent, provided,
however, from and after the Distribution Date, this Rights Agreement shall not
be amended in any manner which would adversely affect the interests of the
holders of Rights (other than an Acquiring Person or Affiliate or Associate
thereof).
Section 28. Successors. All the covenants and provisions of this
Rights 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 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any Person, other than the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Rights Agreement; but this Rights 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 30. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Michigan 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.
28
Section 32. Counterparts. This Rights 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 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
29
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
COVANSYS CORPORATION
By: _____________________________________
Name:
Title:
[TRUST COMPANY]
By: _____________________________________
Name:
Title:
30
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES B JUNIOR PARTICIPATING
PREFERRED STOCK
of
COVANSYS CORPORATION
(Pursuant to Section 302 of the
Michigan Business Corporation Act)
COVANSYS CORPORATION, a corporation organized and existing under the
Michigan Business Corporation Act (hereinafter called the "Corporation"), DOES
HEREBY CERTIFY that pursuant to the authority vested in the Board of Directors
of the Corporation (hereinafter called the "Board of Directors" or the "Board")
by the Restated Articles of Incorporation of the Corporation, and in accordance
with the provisions of Section 302 of the Michigan Business Corporation Act, the
Board of Directors on [_____], 2004 adopted a resolution providing for the
authorization of a series of preferred stock, as follows:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation in accordance with the provisions of
the Restated Articles of Incorporation, the Board of Directors hereby creates a
series of preferred stock, without par value (the "Series B Junior Participating
Preferred Stock"), of the Corporation and hereby states the designation and
number of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" and the number of
shares constituting the Series B Junior Participating Preferred Stock shall be
[_____]. 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 Series B Junior Participating 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,
A-1
rights or warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into Series B Junior Participating Preferred
Stock.
Section 2. Dividends and Distributions. 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 Series B Junior Participating Preferred Stock
with respect to dividends, the holders of shares of Series B Junior
Participating Preferred Stock, in preference to the holders of common stock (the
"Common Stock") of the Corporation, 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 March, June, September and December 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 Series B Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $10.00 or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock 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 Series B Junior Participating Preferred Stock. In the
event the Corporation 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 Series B Junior Participating
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.
The Corporation shall declare a dividend or distribution on the
Series B Junior Participating Preferred Stock as provided in the first paragraph
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 $10.00 per
share on the Series B Junior Participating Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such
A-2
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 Series B Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series B Junior Participating
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
Series B Junior Participating 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 Series B Junior
Participating Preferred Stock shall have the following voting rights:
Subject to the provision for adjustment hereinafter set forth, each
share of Series B Junior Participating Preferred Stock shall entitle the holder
thereof to one thousand votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation 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 Series B Junior Participating 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.
Except as otherwise provided herein, in any other Certificate of
Designations creating a series of preferred stock or any similar stock, or by
law, the holders of shares of Series B Junior Participating Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
Except as set forth herein, or as otherwise provided by law, holders
of Series B Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
A-3
Section 4. Certain Restrictions. Whenever quarterly dividends or other
dividends or distributions payable on the Series B Junior Participating
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 Series B Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation 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 Series B Junior Participating
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 Series B
Junior Participating Preferred Stock, except dividends paid ratably on the
Series B Junior Participating 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 Series B Junior Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (as to dividends and upon
dissolution, liquidation and winding up) to the Series B Junior Participating
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Junior Participating Preferred Stock, or any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Junior Participating 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.
The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Corporation could, under this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Junior Participating
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled and 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 Restated Articles of
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Incorporation, or in any other Certificate of Designations 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 Corporation, 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 Series B Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series B Junior
Participating Preferred Stock shall have received $1,000 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 Series B Junior Participating Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 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 Series B Junior Participating
Preferred Stock, except distributions made ratably on the Series B Junior
Participating 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 Corporation 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 Series B Junior Participating 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 Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series B Junior Participating 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 1,000 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 Corporation 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 Series B Junior
Participating 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
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number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series B Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series B Junior Participating 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 Corporation's preferred stock.
Section 10. Amendment. The Restated Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least a majority of the outstanding shares
of Series B Junior Participating Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of
the Company by its President and attested by its Secretary this [___] day of
[_____], 2004.
COVANSYS CORPORATION
By: _____________________________________
Attest:
By: _____________________________
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Exhibit B
Form of Right Certificate
Certificate No. R-
_________ Rights
NOT EXERCISABLE AFTER [________], 2014 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
[__________]
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 [_____], 2004 (the "Rights Agreement"), between COVANSYS
CORPORATION, a Michigan corporation (the "Company"), and [_____] (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., New
York time, on [_____], 2014 at the principal office of the Rights Agent, or at
the office of its successor as Rights Agent, one one-thousandth of a fully paid
non-assessable share of Series B Junior Participating Preferred Stock of the
Company, without par value (the "Preferred Shares"), at a purchase price of
$[____] per one one-thousandth 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-thousandths 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 [_____], 2004, based on
the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-thousandths 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, 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 offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Right
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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 Right Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged, in whole or in
part, for Preferred Shares or shares of the Company's Common 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-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in, lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of [_____], 2004.
COVANSYS CORPORATION
By: _______________________
Name:
Title:
COUNTERSIGNED:
By __________________________
Name:
Title:
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
___________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:_______________________
Signature ___________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Certificate
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:_______________________
Signature ___________________
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To: _______________
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 _____________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
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Certificate
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated: ________________________________
Signature _____________________________
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.
B-6
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On [_____], 2004, the Board of Directors of COVANSYS CORPORATION
(the "Company") authorized and declared the issuance of one preferred share
purchase right (a "Right") for each share of common stock (the "Common Shares"),
of the Company outstanding as of the close of business on [_____], 2004 (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series B Junior Participating Preferred
Stock of the Company, without par value (the "Preferred Shares"), at a price of
$[____] per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and [_____] as
Rights Agent (the "Rights Agent").
Distribution Date; Exercisability
Initially, the Rights will be attached to all Common Share
certificates and no separate Right Certificates will be issued. 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. The "Distribution Date" will be the first to occur of the
following:
(i) the tenth day following a public announcement that
(A) a person or group of affiliated or associated persons (other then
Rajendra B. Vattikuti and his affiliates and associates or Fidelity
Information Services, Inc. and its affiliates and associates) has acquired
beneficial ownership of 15% or more of the outstanding Common Shares,
(B) Rajendra B. Vattikuti and his affiliates and associates have acquired
beneficial ownership of 25% or more of the outstanding Common Shares or
(C) Fidelity Information Services, Inc. and its affiliates and associates
have acquired beneficial ownership of 40% or more of the outstanding
Common Shares (each of the persons specified in clauses (A), (B) or (C),
upon acquiring that level of beneficial ownership, is an "Acquiring
Person")
or
(ii) such date, if any, as the Board of Directors of the Company may determine
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership
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(A) by a person or group (other than Rajendra B. Vattikuti and his
affiliates and associates or Fidelity Information Services, Inc. and its
affiliates and associates) of 15% or more of the outstanding Common
Shares, or
(B) by Rajendra B. Vattikuti and his affiliates and associates of 25% or
more of the outstanding Common Shares or
(C) by Fidelity Information Services, Inc. and its affiliates and
associates of 40% or more of the outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Shares, (ii) 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 and (iii) the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on [_____], 2014 (the "Expiration Date"), unless the
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
Flip-In
If a person or group becomes an Acquiring Person, each holder of a Right
will thereafter have the right to receive, upon exercise, Common Shares (or, in
certain circumstances, Preferred Shares or other similar securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the existence of an Acquiring
Person, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
For example, at an exercise price of $50.00 per Right, each Right not
owned by an Acquiring Person following an event set forth in the preceding
paragraph would entitle its holder to purchase $100.00 worth of Common Shares
(or other consideration, as noted above) for $50.00. Assuming a value of $25.00
per Common Share at such time, the holder of each valid Right would be entitled
to purchase four Common Shares for $50.00.
Flip-Over
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 after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a
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market value of two times the exercise price of the Right. In the event that any
person or group 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 (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.
Exchange
At any time after any person or group 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
one one-thousandth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
At any time prior to the Distribution Date, the Board of Directors
of the Company may redeem the Rights, in whole but not in part, at a price of
$.01 per Right (the "Redemption Price"). 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.
Notwithstanding anything in the Rights Agreement, the "flip-in" provision
(described above) would not be triggered until the Board of Directors' right of
redemption described in this paragraph has expired.
Amendment
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that from
and after the Distribution Date no such amendment may adversely affect the
interests of the holders of the Rights (other than the Acquiring Person).
Adjustment
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of each Right are
subject to adjustment under certain circumstances.
Preferred Stock
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
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Rights of Holders
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.
Further 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
[_____], 2004. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
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