EXHIBIT 4.7
NUANCE COMMUNICATIONS, INC.
AND
MELLON INVESTOR SERVICES LLC,
as Rights Agent
RIGHTS AGREEMENT
Dated as of December 10, 2002
TABLE OF CONTENTS
Page
----
1. Certain Definitions .................................................................. 1
2. Appointment of Rights Agent .......................................................... 6
3. Issuance of Right Certificates ....................................................... 6
4. Form of Right Certificates ........................................................... 7
5. Countersignature and Registration .................................................... 8
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates ......................................... 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights ........................ 10
8. Cancellation and Destruction of Right Certificates ................................... 11
9. Reservation and Availability of Shares of Preferred Stock ............................ 11
10. Preferred Stock Record Date .......................................................... 12
11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase Price ......... 13
12. Certification of Adjustments ......................................................... 21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power ................. 22
14. Fractional Rights and Fractional Shares .............................................. 25
15. Rights of Action ..................................................................... 26
16. Agreement of Right Holders ........................................................... 26
17. Right Certificate Holder Not Deemed a Stockholder .................................... 27
18. Concerning the Rights Agent .......................................................... 27
19. Merger or Consolidation or Changed Name of Rights Agent .............................. 28
20. Duties of Rights Agent ............................................................... 28
21. Change of Rights Agent ............................................................... 31
22. Issuance of New Right Certificates ................................................... 31
23. Redemption ........................................................................... 32
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TABLE OF CONTENTS
(continued)
Page
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24. Exchange of Rights for Common Stock ............................. 33
25. Notice of Proposed Actions ...................................... 34
26. Notices ......................................................... 35
27. Supplements and Amendments ...................................... 35
28. Successors ...................................................... 36
29. Benefits of this Rights Agreement ............................... 36
30. Determinations and Actions by the Board of Directors ............ 36
31. Governing Law ................................................... 36
32. Counterparts .................................................... 37
33. Descriptive Headings ............................................ 37
34. Severability .................................................... 37
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RIGHTS AGREEMENT
This Rights Agreement ("Rights Agreement"), is dated as of December 10,
2002, between Nuance Communications, Inc., a Delaware corporation (the
"Company"), and Mellon Investor Services LLC, a New Jersey limited liability
company as rights agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company on December 10, 2002 (i)
authorized the issuance and declared a dividend of one right ("Right") for each
share of the common stock, par value $0.001 per share, of the Company
outstanding as of the Close of Business (as such term is hereinafter defined) on
January 3, 2003 (the "Record Date"), each Right representing the right to
purchase one one-thousandth of a share of Series A Preferred Stock of the
Company having the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A upon the terms and
subject to the conditions hereinafter set forth, and (ii) further authorized the
issuance of one Right with respect to each share of Common Stock of the Company
that shall become outstanding between the Record Date, and the Distribution Date
(as such term is hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties agree as follows:
1. Certain Definitions. For purposes of this Rights Agreement the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person shall be the Beneficial Owner (as such term is hereinafter defined)
of fifteen percent (15%) or more of the outstanding Common Stock of the Company,
without the prior approval of the Company's Board of Directors; provided,
however, that in no event shall a Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of less than
15% of the Company's outstanding Common Stock, become an Acquiring Person solely
as a result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company,
which reduction increases the percentage of outstanding shares of Common Stock
beneficially owned by such Person, provided, further, that if a Person shall
become the Beneficial Owner of 15% or more of the Company's outstanding Common
Stock then outstanding solely by reason of a reduction of the number of shares
of outstanding Common Stock, and shall thereafter become the Beneficial Owner of
any additional shares of Common Stock of the Company, then such Person shall be
deemed to be an Acquiring Person unless upon the consummation of the acquisition
of such additional shares of Common Stock such person does not own 15% or more
of the shares of Common Stock then outstanding. An Acquiring Person shall not
include an Exempt Person (as such term is hereinafter defined). Notwithstanding
the foregoing, if (i) either (X) the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an Acquiring
Person, as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently (including, without limitation, because (A) such Person was
unaware that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an Acquiring Person or (B) such Person was
aware of the extent of its Beneficial Ownership but had no actual knowledge of
the consequences of such Beneficial Ownership under this Rights Agreement) and
without any intention of changing or influencing control of the Company, or (Y)
within two Business Days of being requested by the Company to advise the Company
regarding same, such Person certifies in writing that such Person acquired
Beneficial Ownership of 15% or more of the Company's outstanding Common Stock
inadvertently or without knowledge of the terms of the Rights, and (ii) such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Rights Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Rights Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of 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, directly or indirectly, 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), whether or not in writing, or upon the
exercise of conversion rights, exchange rights, rights (other than the 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 such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, or any comparable or successor
rule), including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to "beneficially own", any securities if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable by such
Person 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 (whether or not in
writing) for the purpose of acquiring, holding, voting except as described in
the proviso to clause (B) of subparagraph (ii) of
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this Section 1(c) or disposing of any securities of the Company; provided,
however, that no Person who is an officer, director or employee of an Exempt
Person shall be deemed, solely by reason of such Person's status or authority as
such, to be the Beneficial Owner of, to have "beneficial ownership" of or to
"beneficially own" any securities that are "beneficially owned" (as defined in
this Section 1(c)), including, without limitation, in a fiduciary capacity, by
an Exempt Person or by any other such officer, director or employee of an Exempt
Person.
For all purposes of this Rights Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including any
calculation for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect on the date
hereof.
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which the New York Stock Exchange or banking institutions in the
State of New York or the State of California are authorized or obligated by law
or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., San
Francisco time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., San Francisco time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company shall mean
the common stock, par value $0.001 per share, of the Company. "Common Stock"
when used with reference to any Person other than the Company which shall be
organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person or, if such
Person is a Subsidiary of or is controlled by another Person, the Person which
ultimately controls such first-mentioned Person. "Common Stock" when used with
reference to any Person other than the Company which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits, losses, deductions and credits of such Person
and which shall be entitled to exercise the greatest voting power per unit of
such Person.
(g) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(h) "Company" shall have the meaning set forth in the preamble
hereto.
(i) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
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(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Exempt Person" shall mean the Company or any Subsidiary of the
Company, including, without limitation, in its fiduciary capacity, any employee
benefit plan or employee or director stock plan of the Company or of any
Subsidiary of the Company, or any Person, organized, appointed, established or
holding Common Stock for or pursuant to the terms of any such plan or any Person
funding other employee benefits for employees of the Company or any Subsidiary
of the Company.
(n) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Flip-In Event" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.
(q) "Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(r) "Flip-Over Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(s) "NASDAQ" shall have the meaning set forth in Section 9(b) hereof.
(t) "Person" shall mean any individual, firm, corporation,
partnership, trust, limited liability company or other entity, and shall include
any successor (by merger or otherwise) thereof or thereto.
(u) "Preferred Stock" shall mean the Series A Preferred Stock, $0.001
par value, of the Company having the rights, powers and preferences set forth in
Exhibit A hereto, and, to the extent that there is not a sufficient number of
shares of Series A Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock, $0.001 par value, of the Company
designated for such purpose containing terms substantially similar to the terms
of the Series A Preferred Stock.
(v) "Preferred Stock Equivalent" shall have the meaning set forth in
Section 11(b) hereof.
(w) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(x) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(y) "Record Date" shall have the meaning set forth in the Recitals
within this Rights Agreement.
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(z) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(aa) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(bb) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(cc) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(dd) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ee) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the directors shall become
aware of the existence of an Acquiring Person.
(ff) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(gg) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person and any corporation or other entity that is otherwise controlled by
such Person.
(hh) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(ii) "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
a Business Day.
(jj) "Triggering Event" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.
(kk) "Voting Power" shall mean the voting power of all securities of
the Company then outstanding and generally entitled to vote for the election of
directors of the Company.
Any determination required by the definitions contained in this Section 1
shall be made by the Board of Directors of the Company in its good faith
judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights. Notwithstanding anything contained herein to the
contrary, the Rights Agent is entitled always to assume that the Company's Board
of Directors acted in good faith and shall be fully protected and incur no
liability in reliance theron.
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2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint a co-Rights Agent as it may deem necessary
or desirable. In the event the Company appoints one or more co-Rights Agent(s),
the respective duties of the Rights Agent and any co-Rights Agent shall be as
the Company shall determine. The Rights Agent shall have not duty to supervise,
and in no event shall be liable for, the acts or omissions of any such co-Rights
Agent.
3. Issuance of Right Certificates.
(a) Until the earlier of (i) the Stock Acquisition Date (or, if the
Stock Acquisition Date occurs before the Record Date, the Close of Business on
the Record Date) or (ii) the tenth Business Day (or such later date as may be
determined by action of the Company's Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than an Exempt Person) of, or of the first public announcement
of the intent of any Person (other than an Exempt Person) to commence (which
intention to commence remains in effect for five business days after such
announcement), a tender or exchange offer upon the successful consummation of
which such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of the outstanding Common Stock (irrespective of
whether any shares are actually purchased pursuant to any such offer) (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(c) hereof) by the certificates for the Common Stock
registered in the names of the holders of the Common Stock and not by separate
Right Certificates, and (y) each Right will be transferable only in connection
with the transfer of a share (subject to adjustment as hereinafter provided) of
Common Stock. As soon as practicable after the Distribution Date and receipt by
the Rights Agent of a list of the record holders of the Common Stock, the Rights
Agent will mail, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Company, to the address of such holder shown on such
records, a Right certificate in substantially the form of Exhibit B hereto (a
"Right Certificate") evidencing one Right for each share of Common Stock so
held. As of and after the Distribution Date the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
substantially in the form attached hereto as Exhibit C (a "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company.
(c) Rights shall be issued in respect of all shares of Common Stock
that are issued (either as an original issuance or from the Company's treasury)
after the Record Date prior to the earlier of the Distribution Date or the
Expiration Date. With respect to certificates representing such shares of Common
Stock, the Rights will be evidenced by such certificates for Common Stock
registered in the names of the holders thereof together with the Summary of
Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the
surrender for transfer of any certificate for Common Stock outstanding on the
Record Date (with or without a copy of
6
the Summary of Rights attached thereto), shall also constitute the surrender for
transfer of the Rights associated with the Common Stock represented thereby.
(d) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock) after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Nuance Communications,
Inc. and Mellon Investor Services LLC, as Rights Agent, dated as of
December 10, 2002, as the same may be amended from time to time (the
"Rights Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal executive office
of Nuance Communications, Inc. 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. Nuance
Communications, Inc. will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt by it of a written
request therefor. Under certain circumstances as provided in the Rights
Agreement, Rights issued to, beneficially owned by or transferred to any
Person who is or becomes an Acquiring Person (as such terms are defined in
the Rights Agreement) or an Associate or Affiliate (as such terms are
defined in the Rights Agreement) thereof and certain transferees thereof
will be null and void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the surrender for transfer of any such certificate shall also
constitute the surrender for transfer of the Rights associated with the Common
Stock represented thereby. In the event that the Company purchases or acquires
any shares of Common Stock after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the Expiration Date, any Rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the shares of Common Stock no longer outstanding.
Notwithstanding this subsection (d), the omission of a legend shall not
affect the enforceability of any part of this Rights Agreement or the rights of
any holder of the Rights.
4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof), when, as and if
issued, shall be substantially in the form set forth in 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 and which do not
affect the rights, duties or responsibilities of the Rights Agent, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or
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regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Sections 11, 13 and
22 hereof, the Right Certificates evidencing the Rights issued on the Record
Date whenever such certificates are issued, shall be dated as of the Record Date
and the Right Certificates evidencing Rights to holders of record of Common
Stock issued after the Record Date shall be dated as of the Record Date but
shall also be dated to reflect the date of issuance of such Right Certificate.
On their face, Right Certificates shall entitle the holders thereof to purchase,
for each Right, one one-thousandth of a share of Preferred Stock, or other
securities or property as provided herein, as the same may from time to time be
adjusted as provided herein, at the price per one one-thousandth of a share of
Preferred Stock of $22.00 as the same may from time to time be adjusted as
provided herein (the "Purchase Price").
(b) Notwithstanding any other provision of this Rights Agreement, any
Right Certificate that represents Rights that are or were at any time on or
after the earlier of the Stock Acquisition Date or the Distribution Date
beneficially owned by an Acquiring Person or any Affiliate or Associate thereof
(or any transferee of such Rights) shall have impressed on, printed on, written
on or otherwise affixed to it (if the Company or the Rights Agent has knowledge
that such Person is an Acquiring Person or an Associate or Affiliate thereof or
transferee of such Persons or a nominee of any of the foregoing) the following
legend:
The beneficial owner of the Rights represented by this Right Certificate is
an Acquiring Person or an Affiliate or Associate (as such terms are defined
in the Rights Agreement) of an Acquiring Person or a subsequent holder of
such Right Certificates beneficially owned by such Persons. Accordingly,
this Right Certificate and the Rights represented hereby are null and void
and will no longer be transferable as provided in the Rights Agreement.
The provisions of Section 11(a)(ii) and Section 24 of this Rights Agreement
shall be operative whether or not the foregoing legend is contained on any such
Right Certificates.
5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, its President or any Vice President, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which 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, either manually or by facsimile, by the
Rights Agent 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,
issued and delivered 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.
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(b) Following the Distribution Date and after receipt by the Rights
Agent of all relevant information, the Rights Agent will keep or cause to be
kept, at one of its offices designated for such purposes, records for
registration and transfer of the Right Certificates issued hereunder. Such
records 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, the date of each of the Right Certificates and the
certificate numbers for each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14
hereof, at any time after the Close of Business on the Distribution Date and at
or prior to the Close of Business on the Expiration Date, any Right Certificate
or Certificates (other than Right Certificates representing Rights that have
become null and void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be (i) transferred or (ii) split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock or other securities as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Right Certificate shall surrender the Right Certificate
at the office of the Rights Agent designated for such purposes with the form of
assignment on the reverse side thereof duly endorsed (or enclose with such Right
Certificate a written instrument of transfer in form satisfactory to the Company
and the Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature guaranteed by a
member of a securities approved medallion program. Any registered holder
desiring to split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be split up, combined or exchanged at the
office of the Rights Agent designated for such purposes. Thereupon the Rights
Agent shall, subject to Sections 4(b), 7(e), 11 and 14 hereof, countersign (by
manual or facsimile signature) 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. The Rights Agent shall have
no duty or obligation under this Section unless and until it is satisfied that
all such taxes and/or governmental charges have been paid.
(b) Subject to the provisions of Section 11(a)(ii) hereof, 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 satisfactory to
them, and, if requested by the Company, reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
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7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 11(a)(ii) hereof, the Rights shall become
exercisable, and may be exercised to purchase Preferred Stock, 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 (with such
signature duly guaranteed), to the Rights Agent at the office of the Rights
Agent designated for such purpose, together with payment of the Purchase Price
with respect to each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the Close of Business on the earlier of (i) December 9,
2012 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (such date being herein referred to as
the "Redemption Date") or (iii) the time at which all such Rights are exchanged
as provided in Section 24 hereof (the earliest of (i), (ii) and (iii) being
herein referred to as the "Expiration Date").
(b) The Purchase Price and the number of shares of Preferred Stock or
other securities or consideration to be acquired upon exercise of a Right shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Purchase Price shall be payable in lawful money of the United States
of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 11(a)(ii) hereof, upon receipt of a
Right Certificate with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) or so much thereof as is necessary for
the shares to be purchased and an amount equal to any applicable tax or
governmental charge, by cash, certified check or official bank check payable to
the order of the Company or the Rights Agent, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly (i) requisition from any transfer agent
of the Preferred Stock (or make available if the Rights Agent is the transfer
agent) certificates for the number of shares of Preferred Stock so elected to be
purchased and the Company will comply and hereby authorizes and directs such
transfer agent to comply with all such requests, (ii) requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14(b) hereof, and (iii) promptly after receipt of
such Preferred Stock certificates 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, when appropriate, after
receipt of the cash requisitioned from the Company promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event of a purchase of securities, other than Preferred Stock, pursuant to
Section 11(a) or Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding to the foregoing clauses (i) through (iii). In
the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when necessary to comply with this Rights Agreement.
(d) Except as otherwise provided herein, 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
10
the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 6 and Section 14
hereof.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company or the Rights Agent shall reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise. transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that at all times it will cause to
be reserved and kept available, out of and to the extent of its authorized and
unissued shares of Preferred Stock not reserved for another purpose (and,
following the occurrence of a Triggering Event, other securities) or held in its
treasury, the number of shares of Preferred Stock (and, following the occurrence
of a Triggering Event, other securities) that, as provided in this Rights
Agreement, including Section 11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights; provided, however, that the Company
shall be required to reserve and keep available shares of Preferred Stock or
other securities sufficient to permit the exercise in full of all outstanding
Rights pursuant to the adjustments set forth in Section 11(a)(ii), Section
11(a)(iii) or Section 13 hereof only if, and to the extent that, the Rights
become exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and after
such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be reported
by the National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or such other system then in use, and if the Preferred Stock
shall become listed on any national securities exchange, to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Preferred Stock (and, following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be listed
on such exchange upon official notice of issuance upon such
11
exercise and (ii) if then necessary, to permit the offer and issuance of such
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
other securities), register and qualify such share of Preferred Stock (and,
following the occurrence of a Triggering Event, other securities) under the
Securities Act and any applicable state securities or "blue sky" laws (to the
extent exemptions therefrom are not available), cause such registration
statement and qualifications to become effective as soon as possible after such
filing and keep such registration and qualifications effective until the
Expiration Date of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days, the exercisability of the Rights in
order to prepare and file a registration statement under the Securities Act and
permit it to become effective. Upon any such suspension, the Company shall
promptly notify the Rights Agent in writing thereof and issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect (with prompt written notice thereof to the Rights Agent).
Notwithstanding any provision of this Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and following
the occurrence of a Triggering Event, other securities) delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price in respect thereof), be duly and
validly authorized and issued and fully paid and nonassessable shares in
accordance with applicable law.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Preferred Stock (or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any tax or
governmental charge which may be payable in respect of any transfer or delivery
of Right Certificates to a Person other than, or the issuance or delivery of
certificates for Preferred Stock (or other securities, as the case may be) upon
exercise of Rights in a name other than that of, the registered holder of the
Right Certificate, and the Company shall not be required to issue or deliver a
Right Certificate or certificate for Preferred Stock (or other securities, as
the case may be) to a Person other than such registered holder until any such
tax and governmental charge shall have been paid (any such tax or governmental
charge being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax or governmental charge is due.
10. Preferred Stock Record Date. Each Person in whose name any certificate
for shares of Preferred Stock (or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares of Preferred Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable taxes
or governmental charges) was made. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate, as such, shall not be entitled to
any rights of a stockholder of the Company with
12
respect to the 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, if any, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
11. Adjustments to Number and Kind of Shares, Number of Rights or Purchase
Price. The number and kind of shares subject to purchase upon the exercise of
each Right, the number of Rights outstanding and the Purchase Price are subject
to adjustment from time to time as follows:
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare or pay any dividend on Preferred Stock payable
in shares of Preferred Stock, (B) subdivide or split the outstanding shares of
Preferred Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Preferred Stock into a smaller number of shares or effect
a reverse split of the outstanding shares of Preferred Stock, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a), the 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 Preferred Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of capital stock or
other securities, which, if such Right had been exercised immediately prior to
such date, the holder thereof would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Rights Agreement, directly
or indirectly, (1) shall consolidate with or merge with and into the Company or
any of its Subsidiaries or otherwise combine with the Company or any of its
Subsidiaries and the Company or such Subsidiary shall be the continuing or
surviving corporation of such consolidation, merger or combination and the
Common Stock of the Company shall remain outstanding and no shares thereof shall
be changed into or exchanged for stock or other securities of the Company or of
any other Person or cash or any other property, or (2) shall, in one or more
transactions, other than in connection with the exercise of a Right or Rights
and other than in connection with the exercise or conversion of securities
exercisable for or convertible into securities of the Company or of any
Subsidiary of the Company, transfer any assets or property to the Company or any
of its Subsidiaries in exchange (in whole or in part) for any shares of any
class of capital stock of the Company or any of its Subsidiaries or any
securities exercisable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries, or otherwise obtain from the
Company or any of its Subsidiaries, with or without consideration, any
additional shares of any
13
class of capital stock of the Company or any of its Subsidiaries or any
securities exercisable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries (other than as part of a pro
rata offer or distribution by the Company or such Subsidiary to all holders of
such shares), or (3) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire (other than as a pro rata dividend) or dispose of,
to, from or with, as the case may be (in one transaction or a series of
transactions), the Company or any of its Subsidiaries, any assets (including
securities) on terms and conditions less favorable to the Company or such
Subsidiary than the Company or such Subsidiary would be able to obtain in
arm's-length negotiation with an unaffiliated third party, or (4) shall receive
any compensation from the Company or any of its Subsidiaries for services other
than compensation for employment as a regular or part-time employee, or fees for
serving as a director, at rates in accordance with the Company's (or its
Subsidiary's) past practices, or (5) shall receive the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or tax
advantage provided by the Company or any of its Subsidiaries, or (6) shall
engage in any transaction with the Company (or any of its Subsidiaries)
involving the sale, license, transfer or grant of any right in, or disclosure
of, any patents, copyrights, trade secrets, trademarks, know-how or any other
intellectual or industrial property rights recognized under any country's
intellectual property laws which the Company (including its Subsidiaries) owns
or has the right to use on terms and conditions not approved by the Board of
Directors of the Company; or
(B) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person; or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock split),
or any recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person or any Affiliate or
Associate of such Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities of the Company or any of
its Subsidiaries, or securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries, which is directly or
indirectly beneficially owned by any Acquiring Person or any Affiliate or
Associate of any Acquiring Person (any of (A), (B) or (C) being referred to
herein as a "Flip-In Event");
then upon the first occurrence of such Flip-In Event (i) the Purchase Price
shall be adjusted to be the Purchase Price in effect immediately prior to the
Flip-In Event multiplied by the number of one one-thousandth of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
Flip-In Event, whether or not such Right was then exercisable, and (ii) each
holder of a Right, except as otherwise provided in this Section 11(a)(ii) and
Section 11(a)(iii) hereof, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Rights Agreement and in lieu of shares of
Preferred Stock, such number of shares of Common Stock as shall equal the result
obtained by dividing the Purchase Price (as so adjusted) by 50% of the Current
Market Price per share of the Common Stock (determined pursuant to Section 11(d)
hereof) on the date of such Flip-In Event; provided, however, that the Purchase
Price (as so adjusted) and the number of
14
shares of Common Stock so receivable upon the exercise of a Right shall,
following the Flip-In Event, be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. Notwithstanding anything in this Rights
Agreement to the contrary, however, from and after the Flip-In Event, any Rights
that are beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring Person (or
any such Affiliate or Associate) who becomes a transferee after the Flip-In
Event or (z) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with the Flip-In
Event pursuant to either (I) a transfer from the Acquiring Person to holders of
its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding, whether written or otherwise, regarding
the transferred Rights or (II) a transfer which the Company's Board of Directors
has determined is part of a plan, agreement, arrangement or understanding,
whether written or otherwise, which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of such Persons, shall
be null and void without any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Rights Agreement. The Company shall notify the Rights Agent in
writing when this Section 11(a)(ii) applies and shall use all reasonable efforts
to ensure that the provisions of this Section 11(a)(ii) are complied with, but
neither the Company nor the Rights Agent shall have any liability to any holder
of Right Certificates or other Person as a result of the Company's failure to
make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. From and after the Flip-In Event, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become null and void pursuant to the
provisions of this paragraph, and any Right Certificate delivered to the Rights
Agent that represents Rights that are or have become null and void pursuant to
the provisions of this paragraph shall be canceled.
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the Current Market Price
of a share of Common Stock. In the event that there shall not be sufficient
shares of Common Stock 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's Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess (such excess, the "Spread") of
(1) the value of the shares of Common Stock issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the "Current Value")
over (2) the Purchase Price (as adjusted in accordance with the foregoing
subparagraph (ii)), and (B) with respect to each Right (other than Rights which
have become null and void pursuant to the foregoing subparagraph (ii)), make
adequate provision to substitute for the shares of Common Stock issuable in
accordance with the foregoing paragraph (ii) upon exercise of the Right and
payment of the Purchase Price (as adjusted in accordance therewith), (1) cash,
(2) a reduction in such Purchase Price, (3) shares of Preferred Stock or other
equity securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having dividend,
voting and liquidation rights substantially comparable to those of the shares of
Common Stock, are deemed in good faith by the Company's Board of Directors to
have substantially the same value as the shares of Common Stock (such shares of
Preferred Stock and shares or fractions of shares of preferred stock being
hereinafter referred to as "Common Stock
15
Equivalents"), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having a value which, when added to the value of
the shares of Common Stock actually issued upon exercise of such Right, shall
have an aggregate value equal to the Current Value (less the amount of any
reduction in such Purchase Price), where such aggregate value has been
determined by the Company's Board of Directors upon the advice of a nationally
recognized investment banking firm selected in good faith by the Company's Board
of Directors; provided, however, that if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within 30 days following
the date of the Flip-In Event (the "Flip-in Trigger Date"), then the Company
shall be obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of such Purchase
Price, shares of Common Stock (to the extent available), and then, if necessary,
such number or fractions of shares of Preferred Stock (to the extent available)
and then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of Common Stock
and/or Common Stock Equivalents could be authorized for issuance upon exercise
in full of the Rights, the 30-day period set forth above may be extended to the
extent necessary, but not more than 90 days after the Flip-In Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares of Common Stock or Common Stock Equivalents (such 30-day
period, as it may be extended being hereinafter referred to as the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this Section 11(a)(iii),
the Company (x) shall provide, subject to the last sentence of Section 11(a)(ii)
hereof, that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to the
first sentence of Section 11(a)(iii) and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
(with prompt written notice thereof to the Rights Agent) stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect (with prompt
written notice thereof to the Rights Agent). For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market Price per
share of the Common Stock on the Flip-In Trigger Date and the per share or per
unit value of any Common Stock Equivalent shall be deemed to equal the Current
Market Price per share of the Common Stock on such date. The Company's Board of
Directors may, but shall not be required to, establish procedures to allocate
the right to receive Common Stock upon the exercise of the Rights among holders
of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase Preferred Stock (for a period
expiring within 45 calendar days after such record date), shares having the same
rights, privileges and preferences as the Preferred Stock (a "Preferred Stock
Equivalent") or securities convertible into Preferred Stock or Preferred Stock
Equivalent at a price per share of Preferred Stock or Preferred Stock Equivalent
(or having a conversion price per share, if a security convertible into
Preferred Stock or Preferred Stock Equivalent) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the
16
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock
which the aggregate offering price of the total number of shares of Preferred
Stock and/or Preferred Stock Equivalent (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
Current Market Price, and the denominator of which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Preferred Stock Equivalent to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which is in a form other
than cash, the value of such non-cash 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 conclusive
for all purposes. Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash, assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) 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 Current Market Price per share of Preferred Stock 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 conclusive for all purposes) of the
portion of the cash, assets or evidences of indebtedness to be distributed or of
such subscription rights or warrants applicable to a share of Preferred Stock
and the denominator of which shall be such Current Market Price per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the 30 consecutive
Trading Days immediately prior to such date, and for purpose of computations
made pursuant to Section 11(a)(iii) hereof, the "Current Market Price" per share
of the Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of the Common Stock for the 10 consecutive Trading Days
immediately following such date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of the Common Stock of (i) any dividend
or distribution on the Common Stock (other than a regular
17
quarterly cash dividend and other than the Rights), (ii) any subdivision,
combination or reclassification of the Common Stock, and prior to the expiration
of the requisite 30 Trading Day or 10 Trading Day period, as set forth above,
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification occurs, then, and in each
such case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. 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 shares of Common Stock 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 shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use,
or, if on any such date the shares of Common Stock 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 Common Stock selected by the
Company's Board of Directors. If on any such date no market maker is making a
market in the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used
and shall be binding on the Rights Agent and shall be conclusive for all
purposes. If the Common Stock is not publicly held or not so listed or traded,
"Current Market Price" per share shall mean the fair value per share as
determined in good faith by the Company's Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current
Market Price" per share (or one one-thousandth of a share) of Preferred Stock
shall be determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(d) (other than the last sentence thereof). If
the Current Market Price per share (or one one-thousandth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the "Current Market Price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Rights Agreement) multiplied by the Current Market Price per
share of the Common Stock and the "Current Market Price" per one one-thousandth
of a share of Preferred Stock shall, be equal to the Current Market Price per
share of the Common Stock (as appropriately adjusted). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded, "Current
Market Price" shall mean the fair value per share as determined in good faith by
the Company's Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which
18
by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or
one-hundred-thousandth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Preferred Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions
of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock 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-thousandth of a
share of Preferred Stock (calculated to the nearest one-hundred-thousandth)
obtained by (i) multiplying (x) the number of one one-thousandth of a share of
Preferred Stock covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price or any adjustment to the number of shares of Preferred Stock for
which a Right may be exercised made pursuant to Sections 11(a)(i), 11(b) or
11(c), to adjust the number of Rights in lieu of any adjustment in the number of
shares of Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one hundred-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall promptly notify the Rights Agent in writing
and 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
19
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 may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of 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 shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of shares which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock, Preferred Stock or other capital stock issuable upon exercise of the
Rights, the Company shall take any corporate action, including using its best
efforts to obtain any required stockholder approvals, which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock, Preferred Stock or
other capital stock at such adjusted Purchase Price. If upon any exercise of the
Rights, a holder is to receive a combination of Common Stock and Common Stock
Equivalents, a portion of the consideration paid upon such exercise, equal to at
least the then par value of a share of Common Stock of the Company, shall be
allocated as the payment for each share of Common Stock of the Company so
received.
(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 (with prompt written notice
thereof to the Rights Agent) until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price 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 of Preferred Stock and other capital stock or securities 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 permitted or required by this Section
11, as and to the extent that in their good faith
20
judgment the Board of Directors of the Company shall determine to be advisable
in order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance for cash of any shares of Preferred Stock at less than the Current
Market Price, (iii) issuance for cash of shares of Preferred Stock or securities
which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person, (ii) merge
with or into any other Person, or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, if (x) at the time of or immediately after such
consolidation, merger or sale there are any charter or by-law provisions or any
rights, warrants or other instruments or securities outstanding or agreements in
effect which substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates. The Company shall not
consummate any such consolidation, merger or sale unless prior thereto the
Company and such other Person shall have executed and delivered to the Rights
Agent a supplemental agreement evidencing compliance with this subsection.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23, Section 24 or Section 27 hereof,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish substantially
or eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Rights Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Record Date and prior
to the Distribution Date (i) declare or pay any dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter, shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such event
equals the result obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event by a fraction, the
numerator or which shall be the number of shares of Common Stock outstanding
immediately prior to the occurrence of such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately following
the occurrence of such event.
12. Certification of Adjustments. Whenever an adjustment is made as
provided in Sections 11 or 13 hereof, the Company shall (a) promptly prepare a
certificate signed by its Chief Executive Officer, its President or any Vice
President and by the Treasurer or any
21
Assistant Treasurer or the Secretary or any Assistant Secretary of the Company
setting forth such adjustment and a brief statement of the facts and
computations giving rise to such adjustment, (b) promptly file with the Rights
Agent and with each transfer agent for the Preferred Stock and the Common Stock
a copy of such certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate (or, if prior to the Distribution Date, to each holder of
a certificate representing shares of Common Stock) in accordance with Section 26
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
give such notice shall not affect the validity of or the force or effect of or
the requirement for such adjustment. The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment or statement therein
contained and shall have no duty or liability with respect to, and shall not be
deemed to have knowledge of any such adjustment or any such event unless and
until it shall have received such a certificate. Any adjustment to be made
pursuant to Sections 11 and 13 of this Rights Agreement shall be effective as of
the date of the event giving rise to such adjustment.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that following the first occurrence of a Flip-In
Event, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person or Persons and the Company, as the case may be,
shall not be the surviving or continuing Person of such consolidation or merger,
or (y) any Person or Persons shall consolidate with, or merge with and into, the
Company, and the Company shall be the continuing or surviving Person of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or of the Company or
cash or any other property other than, in the case of the transactions described
in subparagraphs (x) or (y), a merger or consolidation which would result in all
of the Voting Power represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the Voting Power represented by the securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such
transactions), or (z) the Company or one or more of its Subsidiaries shall sell,
mortgage or otherwise transfer to any other Person or any Affiliate or Associate
of such Person, in one transaction, or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event (a "Flip-Over Event"), proper provision shall be made so that
(i) each holder of a Right (other than Rights which have become null and void
pursuant to Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof), in accordance with the
terms of this Rights Agreement and in lieu of shares of Preferred Stock or
Common Stock of the Company, such number of validly authorized and issued, fully
paid, non-assessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by dividing the Purchase Price (as theretofore adjusted in
accordance with Section 11(a)(ii) hereof) by 50% of the Current Market Price per
share of the Common Stock of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; provided, however, that the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii)
22
hereof) and the number of shares of Common Stock of such Principal Party so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof to reflect any events
occurring in respect of the Common Stock of such Principal Party after the
occurrence of such consolidation, merger, sale or transfer; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
Flip-Over Event, all the obligations and duties of the Company pursuant to this
Rights Agreement; (iii) the term "Company" for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall only apply
to such Principal Party following the first occurrence of a Flip-Over Event; and
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right, such cash, shares, rights,
warrants and other property which such holder would have been entitled to
receive had he, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer the Common Stock of which has the greatest aggregate market value or (B)
if no securities are so issued, (x) the Person that is the other party to the
merger or consolidation and that survives said merger or consolidation, or, if
there is more than one such Person, the Person the Common Stock of which has the
greatest market value or (y) if the Person that is the other party to the merger
or consolidation does not survive the merger or consolidation, the Person that
does survive the merger or consolidation (including the Company if it survives);
and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons that is
the issuer of Common Stock having the greatest aggregate market value of shares
outstanding;
provided, however, that in any such case described in the foregoing paragraphs
(b)(i) or (b)(ii), (1) if the Common Stock of such Person is not at such time
and has not been continuously over
23
the preceding 12-month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, the term "Principal Party" shall
refer to such other Person, or (2) if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of all of which are and
have been so registered, the term "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest market value
of shares outstanding, or (3) if such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
shall apply to each of the owners having an interest in the joint venture as if
the Person owned by the joint venture was a Subsidiary of both or all of such
joint venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its interest in
such Person bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock that have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and the
Principal Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Sections 13(a) and (b)
hereof shall promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer of assets shall not result in a default
by the Principal Party under this Rights Agreement as the same shall have been
assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and
further providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the date of expiration of the Rights, and similarly
comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal
Party shall become listed on a national securities exchange, to list (or
continue the listing of) the Rights and the securities purchasable upon exercise
of the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to cause
the Rights and the securities purchased upon exercise of the Rights to be
reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights.
24
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).
(d) Furthermore, in case the Principal Party which is to be a party to
a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or Bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Current
Market Price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of Section 13; then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
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 holders of record 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 then current
market value of a whole Right. For the purposes of this Section 14(a), the then
current market value of a Right shall be determined in the same manner as the
Current Market Price of a share of Common Stock shall be determined pursuant to
Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock or Preferred Stock Equivalent (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock Equivalent (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock). Fractions of
shares of Preferred Stock in integral multiples of one one-thousandth of a share
of Preferred Stock or Preferred Stock Equivalent 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 shares of Preferred Stock or Preferred Stock Equivalent
represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-thousandth of a share
of Preferred Stock or Preferred Stock Equivalent, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
25
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one one-thousandth of a share of Preferred Stock or
Preferred Stock Equivalent. For purposes of this Section 14(b), the current
market value of one one-thousandth of a share of Preferred Stock or Preferred
Stock Equivalent shall be the Current Market Price of a share of Common Stock
(as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Flip-In Event, the Company shall not
be required to issue fractions of shares or units of Common Stock or Common
Stock Equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of such Common Stock or
Common Stock Equivalents or other securities. In lieu of fractional shares or
units of such Common Stock or Common Stock Equivalents or other securities, the
Company may 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 a share or unit of such Common Stock or
Common Stock Equivalent or other securities. For purposes of this Section 14(c),
the Current Market Value shall be determined in the manner set forth in Section
11(d) hereof for the Trading Day immediately prior to the date of such exercise
and, if such Common Stock Equivalent is not traded, each such Common Stock
Equivalent shall have the value of one one-thousandth of a share of Preferred
Stock.
(d) The holder of a Right by the acceptance of a Right expressly waives
his right to receive any fractional Right or any fractional shares upon exercise
of a Right.
15. Rights of Action. As of the Record Date, all rights of action in
respect of this Right Agreement, other than any rights of action vested in the
Rights Agent, are vested in the respective holders of record of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce, or otherwise act in respect
of, his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this 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, accordingly, that
they 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. Holders of Rights shall be entitled
to recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this Rights
Agreement.
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:
26
(a) prior to the Distribution Date, the Rights will not be evidenced by
a Right Certificate and will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(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 Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent or the transfer agent
of the Common Stock) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Rights Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Rights Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No holder of a
Right, as such, shall be entitled to vote, receive dividends in respect of or be
deemed for any purpose to be the holder of Common Stock or any other securities
of the Company which may at any time be issuable upon the exercise of the
Rights, 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 in 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 in respect
of any such stock or securities, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, delivery, amendment,
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, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense (including,
without limitation, the reasonable fees and expenses of legal counsel) incurred
without gross negligence or bad faith on the part of the
27
Rights Agent (which gross negligence or bad faith must be determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction), for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance, administration, exercise and performance of its
duties under this Rights Agreement. The costs and expenses incurred in enforcing
this right of indemnification shall be paid by the Company. The provisions of
this Section 18 and Section 20 below shall survive the termination of this
Rights Agreement, the exercise or expiration of the Rights and the resignation
or removal of the Rights Agent.
(b) The Rights Agent shall be authorized and protected and shall incur
no liability for, or in respect of any action taken, suffered or omitted by it
in connection with its acceptance and administration of this Rights Agreement
and the exercise and performance of its duties hereunder, in reliance upon any
Right Certificate or certificate for the Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in section 20 hereof.
19. Merger or Consolidation or Changed Name of Rights Agent.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or shareholder services business 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 Person 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 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 such 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 Certificate shall have the full
force provided in the Right Certificates and in this Rights Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes to perform only the
duties and obligations expressly imposed by this Rights Agreement (and no
implied duties) upon the
28
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 or an employee of the Rights Agent), and the advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in good faith and in
accordance with such advice or 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 (including, without limitation, the identity of any Acquiring Person and
the determination of Current Market Price) be proved or established by the
Company prior to taking, suffering or omitting 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
certificate signed by the President or any Vice President and by the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent for any action taken, suffered
or omitted 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 gross negligence or bad faith (which gross
negligence or bad faith must be determined by a final, non-appealable order,
judgment, decree or ruling of a court of competent jurisdiction). Anything to
the contrary notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, consequential or incidental loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage. Any liability
of the Rights Agent under this Rights Agreement will be limited to the amount of
fees paid by the Company to the Rights Agent.
(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 have any liability for, nor 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 or liable 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 or liable for
any adjustment required under the provisions of Sections 11, 13, 23 or 24 hereof
or otherwise responsible or liable for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a Certificate furnished pursuant to Section
12 describing any such adjustment); nor shall it by any act hereunder be
29
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any shares of Common Stock
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 the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary or any Assistant Secretary or the Treasurer or any
Assistant 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, suffered or omitted to be taken by it in good faith in accordance
with instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken, suffered or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective. Subject
to Section 20(c) hereof, the Rights Agent shall not be liable for any action
taken or suffered by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking or suffering any such action (or by the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the 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 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 (through
its directors, officers and employees) or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default, neglect
or misconduct, absent gross negligence or bad faith in the selection and
continued employment thereof (which gross negligence or bad faith must be
determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction.
(j) No provision of this Rights Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any
30
of its duties hereunder or in the exercise of its rights if it believes that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer without first
consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Rights Agreement upon 30
days' notice in writing, or such earlier period as shall be agreed to in
writing, mailed to the Company and to each transfer agent of the Common Stock by
registered or certified mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon 30 days' notice in writing,
or such earlier period as shall be agreed to in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock by registered or certified mail, and 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 such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the holder of record 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) a Person organized and doing business under the laws
of the United States or any State thereof, in good standing, which is authorized
under such laws to exercise stock transfer or shareholder services 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 $50,000,000 or (b) an Affiliate controlled by a Person
described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and 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.
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 Company's Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number
31
or kind or class of shares of stock or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company shall, with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, in each case existing prior to the
Distribution Date, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Right Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
23. Redemption.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (x) the first occurrence of a Flip-In Event or (y)
the Close of Business on the Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of $0.001 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as the
Company's Board of Directors may establish for the effectiveness of such
redemption), 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 written notice to the Rights Agent and shall 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 Company's Board of Directors ordering the redemption of
the Rights (or such later time as the Company's Board of Directors may establish
for the effectiveness of such redemption), 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 Stock. 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 shall state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section 23(b) or any
defect therein shall not affect the legality or validity of the action taken by
the Company.
(c) In the case of a redemption permitted under Section 23(a) hereof,
the Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of redemption of
the Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the
32
registry books of the transfer agent of the Common Stock, and upon such action,
all outstanding Right Certificates shall be null and void without any further
action by the Company.
24. Exchange of Rights for Common Stock.
(a) The Board of Directors of the Company may, at its option, at any
time after the occurrence of a Flip-In Event, exchange all or part of the then
outstanding and exercisable Rights (which (i) shall not include Rights that have
become null and void pursuant to the provisions of Section 11(a)(ii) and (ii)
shall include, without limitation, any Rights issued after the Distribution Date
in accordance with Section 22 hereof) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (the "Exchange Ratio"). Notwithstanding the foregoing, the Company's
Board of Directors shall not be empowered to effect such exchange at any time
after any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Common
Stock aggregating 50% or more of the shares of Common Stock then outstanding.
From and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exchanged pursuant to this Section 24(a)
shall thereafter be exercisable only in accordance with Section 13 and may not
be exchanged pursuant to this Section 24(a).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give the Rights Agent notice and 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 shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become null
and void pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute, and, in the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall substitute to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon exchange of a Right,
a number of shares of Preferred Stock or Preferred Stock Equivalent or fractions
thereof having an aggregate current per share market price (determined pursuant
to Section 11(d) hereof) equal to the current per share market price of one
share of Common Stock (determined pursuant to Section 11(d) hereof) as of the
date of the Flip-In Event.
33
(d) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or 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
shares of Common Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this paragraph (d), the current
market value of a whole share of Common Stock shall be the Current Market Price
of a share of Common Stock (as defined in Section 11(d) hereof for the purposes
of computations made other than pursuant to Section 11(a)(iii)) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose
(i) to effect any of the transactions referred to in Section 11(a)(i) or to pay
any dividend to the holders of record of its Preferred Stock payable in stock of
any class or to make any other distribution to the holders of record of its
Preferred Stock (other than a regular periodic cash dividend), or (ii) to offer
to the holders of record of its Preferred Stock or options, warrants, or other
rights to subscribe for or to purchase shares of Preferred Stock (including any
security convertible into or exchangeable for Preferred Stock) or shares of
stock of any other class or any other securities, options, warrants, convertible
or exchangeable securities or other rights, or (iii) to effect any
reclassification of its Preferred Stock or any recapitalization or
reorganization of the Company, or (iv) to effect any consolidation or merger
with or into, 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 more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of record of a Right
Certificate and the Rights Agent, in accordance with Section 26 hereof, notice
of such proposed action, which shall specify the record date for the purposes of
such transaction referred to in Section 11(a)(i), or such dividend or
distribution, or the date on which such reclassification, recapitalization,
reorganization, consolidation, merger, sale or transfer of assets, liquidation,
dissolution or winding up is to take place and the record date for determining
participation therein by the holders of record of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of record of the Preferred Stock 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 record of Preferred Stock, whichever shall be the earlier.
(b) In case any of the transactions referred to in Section 11(a)(ii)
or Section 13 of this Rights Agreement are proposed, then, in any such case, the
Company shall give to each
34
holder of Rights and to the Rights Agent, in accordance with Section 26 hereof,
notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13 hereof, as the case may be, and, upon consummating such transaction,
shall similarly give notice thereof to each holder of Rights.
(c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
26. Notices. Notices or demands authorized by this Rights Agreement to be
given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right to or on behalf of 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:
Nuance Communications, Inc.
1005 Hamilton Court
Menlo Park, CA 94025
Attention: Corporate Secretary
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on the Rights Agent shall be
sufficiently given or made if in writing and sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:
Mellon Investor Services LLC
235 Montgomery Street, 23rd Floor
San Francisco, California 94104
Attention: Relationship Manager
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right 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 it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
27. Supplements and Amendments. Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable, the
Company may in its sole and absolute discretion, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Rights
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Rights Agreement
without the approval of any holders of Right Certificates in order to (i) cure
any ambiguity, (ii) correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) shorten
or lengthen any time period hereunder, or (iv) change or supplement the
35
provisions hereunder in any manner which the Company may deem necessary or
desirable; provided that no such supplement or amendment shall adversely affect
the interests of the holders of Rights as such (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), and no such amendment may
cause the Rights again to become redeemable or cause this Rights Agreement again
to become amendable other than in accordance with this sentence. Notwithstanding
anything contained herein to the contrary, upon the delivery of a certificate
from an appropriate officer of the Company that states that the proposed
supplement or amendment complies with this Section 27 and provided that such
supplement or amendment does not change or increase the Rights Agent's rights,
duties, liabilities or obligations hereunder, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this Rights
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
28. Successors. All of 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.
29. Benefits of this Rights Agreement. Nothing in this Rights Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock) any legal or equitable right,
remedy or claim under this Rights Agreement; this Rights Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the holders
of record of the Right Certificates (and, prior to the Distribution Date, the
Common Stock).
30. Determinations and Actions by the Board of Directors. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Rights Agreement and to exercise the rights and powers
specifically granted to the Company's Board of Directors of the Company or to
the Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including, without limitation, a determination to redeem or
not redeem the Rights or to amend or not amend this Rights Agreement). All such
actions, calculations, interpretations and determinations that are done or made
by the Board of Directors of the Company in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties. Notwithstanding anything contained
herein to the contrary, the Rights Agent is entitled always to assume that the
Company's Board of Directors acted in good faith and shall be fully protected
and incur no liability in reliance thereon.
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
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such state applicable to contracts to be made solely by
residents of such state and performed entirely within such state.
36
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.
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.
34. 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, illegal 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.
37
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed, and their seals affixed and attested, all as of the date and
year first above written.
ATTEST: NUANCE COMMUNICATIONS, INC.
By: /s/ Monica L. Greenberg By: /s/ Ronald A. Croen
----------------------------------- --------------------------------------
Name: Monica L. Greenberg Name: Ronald A. Croen
Title: Vice President, General Title: President, CEO
Counsel & Secretary
MELLON INVESTOR SERVICES LLC
By: /s/ Cecil D. Bobey
-----------------------------------
Name: Cecil D. Bobey
Title: Assistant Vice President
38
EXHIBIT A
NUANCE COMMUNICATIONS, INC.
CERTIFICATE
OF DESIGNATION, PREFERENCES AND RIGHTS
OF THE TERMS OF THE
SERIES A PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware:
We, the President and Chief Executive Officer and the Secretary,
respectively, of Nuance Communications, Inc., organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the said Corporation, the said Board of
Directors on December 10, 2002, adopted the following resolution creating a
series of 250,000 shares of Preferred Stock designated as Series A Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Restated
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock" (the "Series A Preferred Stock"),
$0.001 par value per share, and the number of shares constituting such series
shall be 250,000.
Section 2. Dividends and Distributions.
(A) The dividend rate on the shares of Series A Preferred Stock
shall be for each quarterly dividend (hereinafter referred to as a "quarterly
dividend period"), which quarterly dividend periods shall commence on January 1,
April 1, July 1 and October 1 each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date") (or in the case of original issuance,
from the date of original issuance) and shall end on and include the day next
preceding the first date of the next quarterly dividend period, at a rate per
quarterly dividend period (rounded to the nearest cent) equal to the greater of
(a) $550.00 or (b) subject to the provisions 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 cash, based upon the fair
market value at the time the non-cash dividend or other distribution is declared
as determined in good faith by the Board of Directors) 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
(but not withdrawn) on the Common Stock, par value $0.001 per share, of the
Corporation (the "Common Stock") during the immediately preceding quarterly
dividend period, or, with respect to the first quarterly dividend period, since
the first issuance of any share or fraction of a share of Series A Preferred
Stock. In the event this Company shall at any time after January 3, 2003 (the
"Rights Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A 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
A 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 A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 45 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A 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.
2
(B) Except as otherwise provided herein, in the Restated Certificate
of Incorporation or Bylaws, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Restated Certificate of
Incorporation and in the Bylaws, holders of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 5. Liquidation, Dissolution or Winding Up.
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Series A
Preferred Stock shall be entitled to receive the greater of (a) $22,000.00 per
share, plus accrued dividends to the date of distribution, whether or not earned
or declared, or (b) an 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 Common Stock. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event
pursuant to 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.
Section 6. 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 the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in 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 after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number
3
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. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
Section 8. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Stock. All payments made with respect to fractional shares
hereunder shall be rounded to the nearest whole cent.
Section 9. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A 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 A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on 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 A
Preferred Stock, except dividends paid ratably on the Series A 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 on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
4
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 9,
purchase or otherwise acquire such shares at such time and in such manner.
Section 10. Ranking. The Series A Preferred Stock shall be junior to all
other Series of the Corporation's preferred stock as to the payment of dividends
and the distribution of assets, unless the terms of any series shall provide
otherwise.
Section 11. Amendment. The Restated Certificate 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 A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
two-thirds or more of the outstanding shares of Series A Preferred Stock voting
together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 10th day of
December, 2002.
____________________________________
Ronald Croen, President and Chief
Executive Officer
Attest:
________________________________, Secretary
5
EXHIBIT B
[Form of Right Certificate]
Certificate No. W- Series A Preferred Stock Rights
NOT EXERCISABLE AFTER DECEMBER 9, 2012, OR EARLIER IF REDEEMED OR
EXCHANGED. AT THE OPTION OF NUANCE COMMUNICATIONS, INC., THE RIGHTS
MAY BE REDEEMED AT $0.001 PER RIGHT OR EXCHANGED FOR COMMON STOCK ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT, DATED DECEMBER 10, 2002,
BETWEEN NUANCE COMMUNICATIONS, INC. AND MELLON INVESTOR SERVICES LLC,
AS RIGHTS AGENT. IN THE EVENT THAT THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR
CERTAIN TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS,
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BE NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
NUANCE COMMUNICATIONS, INC.
This certifies that ____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of December 10, 2002 ("Rights Agreement") between Nuance
Communications, Inc., a Delaware corporation ("Company"), and Mellon Investor
Services LLC, a New Jersey limited liability company, as Rights Agent ("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. (San
Francisco time) on December 9, 2012, at the office of the Rights Agent, or its
successors as Rights Agent, designated for such purposes, one one-thousandth of
a fully paid and nonassessable share of Series A Preferred Stock of the Company
("Preferred Stock") at a purchase price of $22.00 per one one-thousandth of a
share, as the same may from time to time be adjusted in accordance with the
Rights Agreement (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form
1
of Election to Purchase duly executed. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities 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 and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by this
Right Certificate, as provided by the Rights Agreement.
Upon the occurrence of a Flip-In Event, if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a Person who,
after such transfer, became an Acquiring Person, or any Affiliate or Associate
of an Acquiring Person, such Rights shall be null and void and will no longer be
transferable and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Flip-In Events.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
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 of the Rights Agent,
the Company and the holders of record of the Right Certificates, which
limitation of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive office of
the Company and are available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates
2
of like tenor and date evidencing Rights entitling the holder of record to
purchase a like aggregate number of shares of Preferred Stock 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, at any time prior to
the earlier of (i) the occurrence of a Flip-In Event (as such term is defined in
the Rights Agreement) or (ii) the Expiration Date (as such term is defined in
the Rights Agreement), the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of $0.001 per Right. Subject
to the provisions of the Rights Agreement, the Company may, at its option, at
any time after a Flip-In Event, exchange all or part of the Rights evidenced by
this Certificate for shares of the Company's Common Stock or for Preferred Stock
(or shares of a class or series of the Company's preferred stock having the same
rights, privileges and preferences as the Preferred Stock).
In the event (i) any Person or group becomes an Acquiring Person or
(ii) any of the types of transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior to the acquisition by such
person or group of 50% or more of the outstanding shares of Common Stock, the
Board may require all or any portion of the outstanding Rights (other than
Rights owned by such Acquiring Person which have become null and void) to be
exchanged for Common Stock on a pro rata basis, at an exchange ratio of one
share of Common Stock or one one-thousandth of a share of Preferred Stock (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).
No fractional shares of Preferred Stock shall 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 share of Preferred Stock, which
may, at the option of the Company, be evidenced by
3
depositary receipts), and no fractional shares of Common Stock will be issued
upon the exchange of any Right or Rights evidenced hereby, and in lieu thereof,
as provided in the Rights Agreement, fractions of shares of Preferred Stock or
Common Stock shall receive an amount in cash equal to the same fraction of the
then Current Market Price (as such term is defined in the Rights Agreement) of a
share of Preferred Stock or Common Stock, as the case may be.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote in 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 (other than certain actions specified 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 or exchanged 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.
4
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ________________________, ____.
ATTEST: NUANCE COMMUNICATIONS, INC.
________________________________ By:_________________________________
Secretary
Title:______________________________
COUNTERSIGNED: MELLON INVESTOR SERVICES LLC,
as Rights Agent
By:_________________________________
Authorized Officer
5
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of transferee)
___________________________________ (_______________) of the Rights represented
by this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints ___________________
attorney to transfer said Rights on the books of the within-named Company with
full power of substitution.
Dated:___________________, ______ ________________________________________
(Signature)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the rights evidenced by this Right Certificate [ ] are [ ] are not being
sold, assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person (as such capitalized terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:___________________, ______ ________________________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing Certificate,
if applicable, 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, and must be guaranteed by a participant in a Securities
Transfer Association ("STA") recognized signature program.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
Form of Reverse of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To Nuance Communications, Inc.:
The undersigned hereby irrevocably elects to exercise _______________
(__________) of the Rights represented by this Right Certificate to purchase the
shares of the Common Stock of the Company, or other securities or property
issuable upon the exercise of said number of Rights pursuant to the Rights
Agreement.
The undersigned hereby requests that a certificate for any such
securities and any such property be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated:___________________, ______ _________________________________
(Signature)
Signature Guaranteed:
Form of Reverse Side of Right Certificate
(continued)
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Dated:___________________, ______ _________________________________
(Signature)
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of the this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever, and 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.
In the event that the foregoing Certificate is not executed, with signature
guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, DATED
DECEMBER 10, 2002 (THE "RIGHTS AGREEMENT"), BETWEEN NUANCE COMMUNICATIONS, INC.
AND MELLON INVESTOR SERVICES LLC, AS RIGHTS AGENT, RIGHTS ISSUED TO,
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR AN
ASSOCIATE OR AFFILIATE (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
THEREOF AND CERTAIN TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
NUANCE COMMUNICATIONS, INC.
Summary of Terms of
Rights Agreement
Nature of Right: When exercisable, each Right (a "Right") will
initially entitle the holder to purchase one
one-thousandth of a share of Series A Preferred Stock
("Preferred Stock") of Nuance Communications, Inc.
(the "Company").
Means of Distribution: The Rights will be distributed to holders of the
Company's outstanding Common Stock as a dividend of
one Right for each share of Common Stock. The Rights
will also be attached to all future issuances of
Common Stock prior to the Distribution Date (as
defined below).
Exercisability: Rights become exercisable on the earlier of: (i) the
date of public announcement by the Company or by any
person or group (an "Acquiring Person") that such
person or group has acquired beneficial ownership of
15% or more of the Company's outstanding Common
Stock, or (ii) the tenth business day (unless
extended by the Board prior to the time a person
becomes an Acquiring Person) following the
commencement, or announcement of an intention to
commence, by any person or group of a tender or
exchange offer which would result in such person
owning 15% or more of the outstanding Common Stock of
the Company (the earlier of such dates is referred to
as the "Distribution Date"), provided that an
Acquiring Person does not include an Exempt Person
(as such term is defined in the Rights Agreement).
Rights will trade separately from the Common Stock
once the Rights become exercisable.
Purchase Price: $22.00 per share, which is the amount that in the
judgment of the Board of Directors represents the
long-term value of the Common Stock over the term of
the Rights Agreement (the "Purchase Price").
Term: The Rights will expire upon the earlier of (i) ten
years after the date of issuance, or December 9, 2012
or (ii) redemption or exchange by the Company as
described below.
Redemption of Rights: Rights are redeemable at a price of $0.001 per Right,
by the vote of the Company's Board of Directors, at
any time until the occurrence of a Flip-In Event
(defined below).
1
Preferred Stock: The Preferred Stock purchasable upon exercise of the
Rights will be nonredeemable and junior to any other
series of preferred stock the Company may issue
(unless otherwise provided in the terms of such other
series). Each share of Preferred Stock will have a
preferential cumulative quarterly dividend in an
amount equal to the greater of (a) $550.00 or (b)
1,000 times the dividend declared on each share of
Common Stock. In the event of liquidation, the
holders of Preferred Stock will receive a preferred
liquidation payment equal to the greater of (a)
$22,000.00 per share, plus accrued dividends to the
date of distribution whether or not earned or
declared, or (b) an amount per share equal to 1,000
times the aggregate payment to be distributed per
share of Common Stock. Each share of Preferred Stock
will have 1,000 votes, voting together with the
shares of Common Stock. In the event of any merger,
consolidation or other transaction in which shares of
Common Stock are exchanged for or changed into other
securities, cash and/or other property, each share of
Preferred Stock will be entitled to receive 1,000
times the amount and type of consideration received
per share of Common Stock. The rights of the
Preferred Stock as to dividends, liquidation and
voting, and in the event of mergers and
consolidations, are protected by customary
anti-dilution provisions. Fractional shares (in
integral multiples of one one-thousandth) of
Preferred Stock will be issuable; however, the
Company may elect to distribute depositary receipts
in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are
multiples of one one-thousandth of a share, an
adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date
prior to the date of exercise. Because of the nature
of the Preferred Stock's dividend, liquidation and
voting rights, the value of one one-thousandth of a
share of Preferred Stock purchasable upon exercise of
each Right should approximate the value of one share
of Common Stock.
Rights in Event of In the event that an Acquiring Person engages in
Self-Dealing Transaction certain self-dealing transactions with the Company,
or Acquisition of or becomes a beneficial owner of 15% or more of the
Substantial Amount of outstanding Common Stock ("Flip-In Events"), a holder
Common Stock: of V Right thereafter has the right to purchase, upon
payment of the then current Purchase Price, in lieu
of one one-thousandth of a share of Preferred Stock
per outstanding Right, such number of shares of
Common Stock having a market value at the time of the
transaction equal to the Purchase Price divided by
one-half the Current Market Price (as defined in the
Rights Agreement) of the Common Stock.
Notwithstanding the foregoing, Rights held by the
Acquiring Person or any Associate or Affiliate
thereof or certain transferees will be null and void
and no longer be transferable.
Self-dealing transactions are defined to include a
consolidation, merger or other combination of an
Acquiring Person with the Company in which the
Company is the surviving corporation, the transfer of
assets to the Company in exchange for securities of
the Company, the acquisition of securities of the
Company (other than in a pro rata distribution to all
stockholders), the sale, purchase, transfer,
distribution, lease, mortgage, pledge or acquisition
of assets by the Acquiring Person to, from or with
the Company on other than an arm's length basis,
compensation to an Acquiring Person for services
(other than for employment as a regular or part-time
employee or director on a basis consistent with the
Company's past practice), a loan or provision of
other financial assistance (except proportionately as
a stockholder) to an Acquiring Person or the
licensing, sale or other transfer of proprietary
technology or know-how from the Company to the
Acquiring Person on terms not approved
2
by the Board of Directors or a reclassification,
recapitalization or other transaction with the effect
of increasing by more than 1% the Acquiring Person's
proportionate share of any class of securities of the
Company.
Rights in Event of If, following the occurrence of a Flip-In Event, the
Business Combination: Company is acquired by any person in a merger or
other business combination transaction in which the
Common Stock is exchanged or converted or in which
the Company is not the surviving corporation, or 50%
or more of its assets or earnings power are sold to
any person ("Flip-Over Events"), each holder of a
Right (other than an Acquiring Person, or Affiliates
or Associates thereof) shall thereafter have the
right to purchase, upon payment of the then current
Purchase Price, such number of shares of common stock
of the acquiring company having a current market
value equal to the Purchase Price divided by one-half
the Current Market Price of such common stock.
Exchange Option: In the event (i) any person or group becomes an
Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events described
above as self-dealing transactions occur, and prior
to the acquisition by such person or group of 50% or
more of the outstanding shares of Common Stock, the
Board may require all or any portion of the
outstanding Rights (other than Rights owned by such
Acquiring Person which have become null and void) to
be exchanged for Common Stock on a pro rata basis, at
an exchange ratio of one share of Common Stock or one
one-thousandth of a share of Preferred Stock (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).
Fractional Shares: No fractional shares of Common Stock will be issued
upon exercise of the Rights and, in lieu thereof, a
payment in cash will be made to the holder of such
Rights equal to the same fraction of the current
market value of a share of Common Stock.
Adjustment: The Purchase Price payable, and the number of shares
of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a
subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of
the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or convertible
securities at less than the current market price of
the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of
indebtedness or assets (excluding dividends payable
in Preferred Stock) or of subscription rights or
warrants (other than those referred to above). The
number of Rights associated with each share of Common
Stock is also subject to adjustment in the event of a
stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to
the Distribution Date.
Rights as Stockholder: The Rights themselves do not entitle the holder
thereof to any rights as a stockholder, including,
without limitation, voting rights or to receive
dividends.
Amendment of Rights: Until the Rights become nonredeemable, the Company
may, except with respect to the redemption price,
amend the Agreement in any manner. After the Rights
become nonredeemable, the Company may amend the
Agreement to cure any ambiguity, to correct or
supplement any provision which may be
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defective or inconsistent with any other provisions,
to shorten or lengthen any time period under the
Rights Agreement, or to change or supplement any
provision in any manner the Company may deem
necessary or desirable, provided that no such
amendment may adversely affect the interests of the
holders of the Rights (other than the Acquiring
Person or its Affiliates or Associates) or cause the
Rights to again be redeemable or the Agreement to
again be freely amendable.
A copy of the Rights Agreement is available, free of charge, from the
Company, 1005 Hamilton Court, Menlo Park, CA 94025, Attention:
Secretary. This summary description of the Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, as amended from time to time, which is
incorporated in this summary description by reference.
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