EXHIBIT 4.3
ONLINE POWER SUPPLY, INC.
Issuer and Company
and
CORPORATE STOCK TRANSFER, INC.
Rights Agent
RIGHTS AGREEMENT
Rights Record Date: April 25, 2001
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TABLE OF CONTENTS
PAGE
Section 1. Definitions......................................................4
Section 2. Appointment of Rights Agent......................................7
Section 3. Definition of Distribution Date and Offer Date;
When Right Certificates Will Issue...............................7
Section 4. Form of Right Certificates.......................................8
Section 5. Countersignature and Registration................................9
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates................................9
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.......................................10
Section 8. Cancellation and Destruction of Right Certificates..............11
Section 9. Reservation and Availability of Shares; Registration............11
Section 10. Record Date.....................................................12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights (Including Flip-In" Provision)..............12
Section 12. Certification of Adjusted Purchase Price or
Number of Shares................................................17
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power (Including "Flip-Over Provision")..............18
Section 14. Fractional Rights and Fractional Shares.........................20
Section 15. Rights of Action................................................21
Section 16. Agreement of Right Holders......................................21
Section 17. Right Certificate Holder Not Deemed a Stockholder...............21
Section 18. Concerning the Rights Agent.....................................21
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......22
Section 20. Duties of Rights Agent..........................................22
Section 21. Change of Rights Agent..........................................24
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Section 22. Issuance of New Right Certificates..............................24
Section 23. Redemption......................................................24
Section 24. Notice of Proposed Actions......................................25
Section 25. Notices in General .............................................25
Section 26. Supplements and Amendments......................................26
Section 27. Exchange of Rights for Shares of
Common Stock Without Cash Payment...............................26
Section 28. Successors......................................................27
Section 29. Determinations and Actions Taken by the
Board of Directors..............................................27
Section 30. Benefits of this Agreement......................................27
Section 31. Governing Law; Choice of Venue..................................27
Section 32. Counterparts....................................................28
Section 33. Section Headings................................................28
Section 34. Severability....................................................28
Signature Page................................................................28
EXHIBIT A Form of Right Certificate.......................................29
Exhibit B Summary of Rights...............................................34
Exhibit C Certificate of Designation for Series P Preferred Stock.........37
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT is dated as of April 25, 2001, and is entered into by
OnLine Power Supply, Inc., a Nevada corporation (the "Company"), and Corporate
Stock Transfer, Inc. as the Rights Agent.
RECITALS
The board of directors of the Company has determined that provision should
be made to supplement Nevada law, in a manner consistent with that law, to
protect the shareholders by facilitating obtaining a higher value for the
Company through negotiated transactions, in the event of an attempted unfair
takeover of the Company without the consent of the board of directors. Subject
to the express provisions of this Rights Agreement, Exhibit C to this Agreement,
and proceedings of the board of directors of the Company, the general purpose of
this Rights Agreement is to encourage a person or company to discuss a potential
acquisition of the Company through a Qualified Offer, before acquiring more than
15% of the total voting power of the stock of the Company. Under this Agreement,
the Rights would be redeemed in the event a Qualified Offer is made.
Therefore, the board of directors has authorized and declared the
distribution of one Right for every share of Common Stock of the Company
outstanding at the Close of Business on April 25, 2001 (the "Rights Record
Date"), each Right representing the right to purchase one Unit, being (initially
and before any adjustments as provided for herein) one one-thousandth (1/1,000)
of a share of Series P Preferred Stock. Further, the board of directors has
authorized and declared this dividend to cover every additional share of Common
Stock which may become outstanding between the Rights Record Date and the first
to occur of the Distribution Date, or the Expiration Date, or the date, if any,
when the Rights may be redeemed, all upon the terms and subject to the
conditions stated below.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
Section 1. DEFINITIONS.
(a) For purposes of this Agreement, the following terms have the
meanings indicated:
"ACQUIRING PERSON" means any Person who or which, alone or together
with all of the Affiliates and Associates of such Person, is the Beneficial
Owner of a Substantial Block of Voting Stock, but does not include (i) an Exempt
Person or (ii) any Person who or which acquires a Substantial Block of Voting
Stock in connection with a transaction or series of transactions approved prior
to such transaction or transactions by the board of directors of the Company.
However, no person shall become an Acquiring Person solely as a result of a
reduction in the number of shares of Voting Stock outstanding, unless and until
such Person thereafter becomes the Beneficial Owner of additional shares
constituting 1% or more of the general voting power of the Company.
"AFFILIATE" and "ASSOCIATE" have the respective meanings ascribed in
rule 12b-2 of the General Rules and Regulations under the Exchange Act.
"BENEFICIAL OWNER." A Person is deemed to be the Beneficial Owner of
any securities:
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(i) which such Person or any of his or its Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of his or its Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of any conversion, exchange or purchase rights (other than the Rights), warrants
or options, or otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for payment or exchange;
or (B) the right to vote or to direct the voting of, pursuant to any agreement,
arrangement or understanding (whether or not in writing); or (C) the right to
dispose or to direct the disposition of, pursuant to any agreement, arrangement
or understanding (whether or not in writing); 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 or disposing of any
securities of the Company; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from the
grant of a revocable proxy or consent given to such Person in connection with a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act, and (2) is not also
then reportable on Schedule 13(d) or successor report under the Exchange Act;
provided, further, that a Person engaged in business as an underwriter of
securities shall not be deemed the "Beneficial Owner" of securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of the 40-day period immediately following the
date of such acquisition.
"BUSINESS DAY" means any day other than a Saturday, Sunday or day on
which banking institutions in the State of Colorado are authorized or obligated
by law or executive order to close.
"CLOSE OF BUSINESS" means 5:00 p.m., Denver time, on a Business Day;
provided, however, that if such is not a Business Day it shall mean 5:00 p.m.,
Denver time, on the next succeeding Business Day.
"COMMON STOCK" means the Company's Common Stock; and "common stock"
when used with reference to Persons other than the Company means: (i) for
Persons organized in corporate form, the capital stock or equity security with
the greatest voting power of such Person or, if such Person is a Subsidiary of
another Person, of the Person or Persons which ultimately control such Person;
and (ii) in the case of Persons not organized in corporate form, the units of
beneficial interest which (A) represent the right to participate generally in
the profits and losses of such Person (including without limitation any
flow-through tax benefits resulting from an ownership interest in such Person)
and (B) are entitled to exercise the greatest voting power of such Person or, in
the case of a limited partnership, shall have the power to remove the general
partner or partners.
"DISTRIBUTION DATE" has the meaning assigned in Section 3(a).
"EQUIVALENT STOCK" has the meaning assigned in Section 7(a).
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"EXCHANGE ACT" means the Securities Exchange Act of 1934 and its
future amendments.
"EXEMPT PERSON" means the Company, any Subsidiary of the Company and
any employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any trust or other entity organized, established
or holding shares of Common Stock by, for or pursuant to, the terms of any such
plan.
"EXPIRATION DATE" has the meaning assigned in Section 7(a).
"OFFER DATE" has the meaning assigned in Section 3(a).
"PERSON" means any individual, firm, corporation, partnership, trust
or other entity and shall include any of their successors.
"PRINCIPAL PARTY" has the meaning assigned in Section 13(b).
"PURCHASE PRICE" means the price (initially $200.00) payable for one
Unit (1/1,000 share of Series P Preferred Stock) upon exercise of a Right.
"QUALIFIED OFFER" means a tender or exchange offer for all outstanding
Common Stock at a price and on terms determined to be adequate and otherwise in
the best interests of the Company and its stockholders (other than the Person or
an Affiliate or Associate thereof on whose behalf the offer is made) by at least
a majority of the Directors who are not representatives of or affiliated with
the Person making such offer or any Affiliate or Associate of such Person.
"REDEMPTION PRICE" has the meaning assigned in Section 23(a),
initially $0.01 per Right.
"RIGHT" has the meaning assigned in the Recitals to this Agreement.
"RIGHTS RECORD DATE" is defined in the Recitals to this Agreement.
"SUBJECT SHARES" means the class or series of shares then issuable on
exercise of the Rights.
"STOCK ACQUISITION DATE" means the date of the first public
announcement by the Company or an Acquiring Person (which for purposes of this
definition shall include, without limitation, a report filed pursuant to Section
13(d) under the Exchange Act) that an Acquiring Person has become such.
"SUBSIDIARY" means, with respect to any Person, a corporation or other
entity the securities or other ownership interests of which having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are at the time directly or indirectly
owned by such Person and any Affiliate of such Person.
"SUBSTANTIAL BLOCK" means a number of shares of Voting Stock having in
the aggregate 15 percent or more of the general voting power.
"TRADING DAY" has the meaning assigned to it in Section 11(d).
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"UNIT" means the shares or other securities issuable upon exercise of
one Right, initially one one-thousandth of a share of Series P Preferred Stock
of the Company having the rights and preferences stated in Exhibit C, before any
adjustment pursuant to Section 11(a)(ii) or Section 13.
"VOTING STOCK" means shares of the Company's capital stock the holders
of which have general voting power.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agent or Agents as it may
deem necessary or desirable and determine the respective duties of the Rights
Agent and the Co-Rights Agent or Agents.
Section 3. DEFINITION OF DISTRIBUTION DATE AND OFFER DATE; WHEN RIGHT
CERTIFICATES WILL ISSUE.
(a) Until the Close of Business on the earlier of (i) the tenth
Business Day after a Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as the Company's board of directors shall determine) after the
date of the commencement by any Person (other than an Exempt Person) of, or the
date of the first public announcement (such commencement date or announcement is
the "Offer Date") of the intent of any Person (other than an Exempt Person) to
commence 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 percent or more of the then outstanding Voting Stock
(regardless of whether any shares are actually purchased pursuant to such offer)
(the tenth Business Day after the first to occur of a Stock Acquisition Date or
an Offer Date is the "Distribution Date"),
(i) the Rights will automatically attach to, and be evidenced by,
the certificates for Common Stock registered in the names of the holders of
Common Stock (which certificates for Common Stock shall be deemed also to be
Right Certificates) and not by separate Right Certificates, and
(ii) each Right will be transferable only in connection with the
transfer of the underlying shares of Common Stock.
(b) As soon as practicable after the Rights Record Date, the Company
will send by first- class mail to each record holder of Common Stock as of the
Close of Business on the Rights Record Date a copy of the Summary of Rights (see
Exhibit B).
For certificates for Common Stock issued after the Rights Record Date
(including replacement certificates for shares of Common Stock outstanding on or
prior to the Rights Record Date), but prior to the earliest of the Distribution
Date, the Expiration Date and the date, if any, on which the Rights may be
redeemed, the Company will have printed on or otherwise affixed to them the
following legend:
"This certificate also entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between the Company and Corporate Stock
Transfer, Inc. as Rights Agent as the same shall be amended from time to time
(the "Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of
the Company. Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no longer be
evidenced by this Common Stock certificate. The Company will mail to the holder
of this
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certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement) or certain transferees of any thereof, whether
currently held by or on behalf of such Person or by any subsequent holder, may
be limited as provided in Section 7(f) of the Rights Agreement."
For certificates containing the legend, until the Distribution Date,
the Rights associated with Common Stock represented by such certificates shall
be evidenced only by such certificates; transfer of any such certificates also
shall constitute transfer of the Rights associated with the Common Stock.
(c) After the Distribution Date, the Rights will be evidenced solely
by the Right Certificates.
(d) As soon as practicable after the Distribution Date, the Rights
Agent will mail by first- class insured mail to each record holder of Common
Stock as of the Close of Business on the Distribution Date, as shown by the
records of the Company at the Close of Business on the Distribution Date, at the
address of such holder shown on such records, a Right Certificate, in
substantially the form attached hereto as Exhibit A, evidencing one Right for
each share of Common Stock so held.
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of assignment and
certification and of election to purchase shares to be printed on the reverse
thereof) shall be in substantially the form of Exhibit A hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements as are not inconsistent with this Agreement, or as may be required
to comply with any law or to conform to usage.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 that represents Rights Beneficially Owned by: (i) an Acquiring Person or any
Associate or Affiliate of any Acquiring Person; (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such; or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the board of directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(f), and any Right Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement
or adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and reasonably identifiable as such) the
following legend:
"The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement) or certain transferees thereof. Accordingly, under certain
circumstances as provided in the Rights Agreement, this Right Certificate and
the Rights represented hereby may be limited as provided in Section 7(f) of such
Agreement.
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Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any of its Vice Presidents,
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof attested by the Secretary or an Assistant Secretary,
either manually or by facsimile. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer who shall have signed any of the Right
Certificates shall cease to be such officer 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 (as specified above) of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each Right Certificate, the date of each Right Certificate and the
number of each Right Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to Sections 4(b), 7(f) and 14, at any time after the Close
of Business on the Distribution Date, and prior to the Close of Business on the
Expiration Date or the day prior to the day, if any, when the Rights are to be
redeemed under Section 23, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase such number of
Units as the Right Certificate(s) surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, 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(s) to be
transferred, split up, combined or exchanged, with the form of assignment on the
reverse side(s) thereof duly completed and executed, at the stock transfer
office of the Rights Agent. The Rights Agent shall countersign and deliver to
the persons entitled thereto the Right Certificate(s) requested. The Company may
require payment of a sum sufficient to cover any tax or government charge that
may be imposed in connection therewith. However, neither the Rights Agent nor
the Company shall be obligated to take any action with respect to the transfer
of any such surrendered Right Certificate unless and until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incident 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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Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(f), and unless earlier redeemed as provided
in Section 23, the registered holder of any Right Certificate may exercise the
Rights evidenced thereby 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 completed and executed, to the Rights
Agent at the stock transfer office of the Rights Agent, together with payment of
the Purchase Price for each Unit as to which the Rights are exercised, at or
prior to the Close of Business on the tenth anniversary of the Rights Record
Date or such other date to which the Rights may be extended as provided in this
Agreement (the latest of such dates is the "Expiration Date"). If at any time
after the Distribution Date but prior to the Expiration Date the Company is
unable, under its articles of incorporation, to issue the number and class of
shares required to be issued upon the exercise of all of the outstanding Rights,
the Company may issue upon exercise of any of the Rights shares of capital stock
or other securities of the Company of value equivalent to the shares so required
to be issued ("Equivalent Stock"), as determined by the board of directors.
(b) The Purchase Price for each Unit pursuant to the exercise of a
Right initially shall be US$200.00, subject to adjustment from time to time as
provided in Sections 11 and 13.
(c) Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for the
Units to be purchased and an amount equal to any applicable transfer tax in
cash, or by certified check, bank draft or money order payable to the order of
the Company, the Rights Agent shall thereupon promptly (i) requisition from the
Company or any transfer agent of the Company (if different from the Rights
Agent) a certificate for the number of shares to be purchased and the Company
will comply, and hereby irrevocably authorizes its 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 a fractional share, when appropriate, in
accordance with Section 14; and (iii) promptly after receipt of such certificate
from any such transfer agent, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in the
name(s) designated by such holder and cash for any fractional share. These same
procedures shall be followed if Rights are exercised for Equivalent Stock.
(d) The Company shall not be required to pay any transfer tax which
may be payable in respect of any transfer involved in the transfer or delivery
of Right Certificates, or the issuance or delivery of certificates in a name
other than the registered holder, or to issue or deliver any certificates upon
the exercise of any Rights, until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
(e) If the registered holder exercises less than all the Rights, a new
Right Certificate for the remaining unexercised Rights shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to Section 14.
(f) Notwithstanding any provision of this Agreement to the contrary,
upon the occurrence of any of the events described in any of clauses (A), (B),
(C) or (D) of Section 11(a)(ii), the adjustment under Section 11(a)(ii) shall
not apply with respect to any Rights that are at the time Beneficially Owned by
(i) an Acquiring Person or by any Associate or Affiliate of such Acquiring
Person (which Acquiring Person or Affiliate or Associate engages in, or realizes
the benefit of, one or more of the transactions described in clause (A) or (B)
of Section 11(a)(ii), realizes the benefits set forth in clause (C) of Section
11(a)(ii) or, alone or
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together, become the Beneficial Owner(s) of a number of shares of Voting Stock
which equals or exceeds the percentage of the general voting power as provided
in clause (D) of Section 11(a)(ii), as the case may be), or (ii) a transferee of
an Acquiring Person or of any Associate or Affiliate of such Acquiring Person
(which engages in, or realizes the benefit of, one or more of the transactions
described in clause (A) or (B) of Section 11(a)(ii), or realizes the benefits in
clause (C) of Section 11(a)(ii), or, alone or together with such Acquiring
Person or Associate or Affiliate, become the Beneficial Owner(s) of a number of
shares of Voting Stock which equals or exceeds the percentage of the general
voting power as provided in clause (D) of Section 11(a)(ii), as the case may be)
(A) who becomes a transferee after the Acquiring Person becomes such, or (B) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights either by (1) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (2) a transfer which the board of directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(f). Upon the exercise
of such Rights covered by this Section 7(f), the holders shall be entitled to
receive, upon payment of the Purchase Price, the number of Units issuable upon
exercise of such Rights without giving effect to the adjustment provided for
under Section 11(a)(ii). The Company shall use all reasonable efforts to insure
that the provisions of this Section 7(f) and Section 4(b) are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its making or failing to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the 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 shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combi- nation 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 cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES; REGISTRATION.
(a) The Company covenants and agrees that it shall (i) on or prior to
the Rights Record Date, take all such action as shall be necessary to cause to
be reserved and kept available out of its authorized and unissued capital stock,
enough shares of Preferred Stock to permit the exercise in full of all Rights to
be outstanding as of the Rights Record Date, (ii) no later than promptly
following the Distribution Date, take all such action as shall be necessary to
cause to be reserved and kept available out of its authorized and unissued
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capital stock, or its authorized and issued shares held in its treasury, the
number of shares of Common Stock that will, from time to time, be sufficient to
permit the exercise in full of all Rights from time to time outstanding; (iii)
take all such action as may be necessary to insure that all shares delivered
upon exercise of Rights shall be duly and validly authorized and issued and be
fully paid and nonassessable; and (iv) pay when due any transfer taxes and
charges in respect of the issuance or delivery of the Right Certificates or of
any shares upon the exercise of Rights (except as otherwise provided in Section
7(d)).
(b) The Company agrees to use its best efforts as soon as practicable
following the Distribution Date, to file with the Securities and Exchange
Commission a registration statement to permit the issuance of shares on exercise
of the Rights under the Securities Act of 1933, and to take the steps necessary
to permit such issuance under the securities "blue sky" laws of the states where
registered holders reside. The Company may temporarily suspend for up to 90 days
the exercise of the Rights to file a registration statement and other documents
as needed to allow exercise of the Rights. At the start and end of a suspension,
the Company shall issue a public announcement and notify the Rights Agent that
exercise has been suspended and the end of the suspension.
(c) The Rights shall not be exercisable in any jurisdiction if not
there legal.
(d) The Company shall use its reasonable efforts to cause all shares
reserved for issuance upon exercise of Rights to be listed on the Company's
exchange or quotation market.
Section 10. RECORD DATE. Each Person in whose name any stock
certificate is issued upon exercise of Rights shall be deemed to have become the
holder of record of the shares represented thereby on, and such certificate
shall be dated, the date when the Right Certificate was surrendered and the
Purchase Price paid. Prior to exercise of the Rights, the holder of a Right
Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable, including
without limitation the right to vote or to receive dividends or other
distributions, and such holder shall not be entitled to receive any notice of
any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS (INCLUDING "FLIP-IN" PROVISION). The Purchase Price, number and
kind of shares or other securities covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) If the Company shall at any time after the date of this
Agreement (A) declare and pay a dividend on the shares which are subject to the
Rights ("Subject Shares") payable in shares of stock of the Company, (B)
subdivide or split the Subject Shares, (C) combine or consolidate the Subject
Shares into a smaller number of shares or effect a reverse stock split of the
Subject Shares, or (D) issue any shares of its capital stock in a
reclassification of the Subject Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and in each such event, except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for dividend or subdivision, split, reverse split, combination,
consolidation or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the transfer
books of the Company were open, he would have received upon such exercise and
been entitled to receive. If an event occurs which would require an adjustment
under
12
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) If at any time after the date of this Agreement
(A) any Acquiring Person, or any Associate or Affiliate of any
Acquiring Person, directly or indirectly (1) shall merge 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 merger or combination and the Common Stock shall
remain outstanding and the outstanding shares thereof shall not 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 sell or otherwise transfer in one or
more transactions, assets to the Company or any of its Subsidiaries in exchange
for 15 percent or more of the shares of any class of capital stock of the
Company or any of its Subsidiaries, and the Common Stock shall remain
outstanding and unchanged, or
(B) directly or indirectly, any Acquiring Person, or any
Associate or Affiliate of any Acquiring Person, shall (1) in one or more
transactions, transfer assets to the Company or any of its Subsidiaries in
exchange (in whole or in part) for shares of any class of capital stock of the
Company or any of its Subsidiaries or for 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 class
of capital stock of the Company or any of its Subsidiaries or other 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
distribution by the Company or such Subsidiary to all holders of Common Stock),
or (2) sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
dispose (in one or more transactions), to, from or with, as the case may be, the
Company or any of its Subsidiaries, assets 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 (3) receive any compensation from the Company or any of the Company's
Subsidiaries other than compensation for full-time employment as a regular
employee, or fees for serving as director, at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (4) receive the benefit,
directly or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance provided by the
Company or any of its Subsidiaries, 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
(C) during any such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or consolidation of
the Company with any of its Subsidiaries or any other similar 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 one percent the proportionate share of
the outstanding shares of any class of equity securities, or of securities
exercisable for or convertible into equity securities, of the Company or any of
its Subsidiaries which is directly or indirectly owned by any Acquiring Person
or any Associate or Affiliate of any Acquiring Person, or
(D) any Person shall become an Acquiring Person otherwise than
pursuant to a Qualified Offer, then, and in each such case, but subject to
Section 27 (covering exchange of Rights for shares of Common Stock, without
requiring exercise of Rights), proper provision shall be made
13
so that each holder of a Right (except as provided below and in Section 7(f))
shall, on and after the later of (I) the date of the occurrence of an event
described in clause (A), (B), (C) or (D) of this Section 11(a)(ii), or (II) the
expiration of the period within which the Rights may be redeemed under Section
23 (as the same may have been amended under Section 26), have the right to
receive, upon exercise thereof at the then current Purchase Price, the number of
shares of Common Stock equal to the result obtained by (x) multiplying the then
current Purchase Price by the then number of Units for which a Right is then
exercisable and dividing that product by (y) 50 percent of the current market
price per share of Common Stock (determined in accordance with Section 11(d)) on
the date of the occurrence of the relevant event listed above in clause (A),
(B), (C) or (D) of this subparagraph (ii); PROVIDED, HOWEVER, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13, then only the provisions of Section 13
("flip-over" provisions) shall apply and no adjustment shall be made pursuant to
this Section 11(a)(ii). The Company shall not consummate any such merger,
combination, transfer or transaction referred to in any of such clauses (A), (B)
and (C) unless prior thereto there shall be sufficient authorized but unissued
Common Stock to permit the exercise in full of the Rights in accordance with the
foregoing sentence, unless the Board of Directors has determined to issue
Equivalent Stock in accordance with Section 7(a); PROVIDED, HOWEVER, that in no
case may the Company consummate any such merger, combination, transfer or
transaction if at the time of or immediately after such transaction there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
If the Company issues Equivalent Stock upon the exercise of any Rights
pursuant to the immediately preceding paragraph, then, upon any such exercise,
proper provision shall be made so that the holder of a Right (except as provided
in Section 7(f)) shall have the right to receive, upon such exercise at the then
current Purchase Price, such number of shares or other units of Equivalent Stock
of the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of Units for which a Right is then
exercisable and dividing that product by (y) 50 percent of the current market
price per share or other unit of the Equivalent Stock of the Company (determined
on substantially the same basis as is prescribed by Section 11(d) with respect
to the valuation of Common Stock) on the date of occurrence of the relevant
event listed above in clause (A), (B), (C) or (D) of this subparagraph (ii). If
at any time the Company should be prohibited by law, by any provision of its
articles of incorporation, or by any instrument or agreement to which the
Company is a party or by which it is bound, from issuing, or should be unable
under its articles of incorporation to issue, sufficient Equivalent Stock to
permit the exercise of all outstanding Rights in accordance with the foregoing
sentence, then, in lieu of issuing such Equivalent Stock upon such exercise, the
Company shall pay to each holder of a Right (except as provided in Section 7(f))
upon surrender of the Right as provided herein but without payment of the
Purchase Price, an amount in cash for each Right equal to the Purchase Price.
(b) If after the Rights Record Date the Company sets a record date for
the issuance of rights or warrants to all holders of Common Stock or Subject
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Stock or Subject Shares or
securities convertible into Common Stock or Subject Shares at a price per share
(or having a conversion price per share, if a security convertible into Common
Stock) less than the current market price per share (determined with Section
11(d)) on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction; the numerator shall be the total number
of shares of Common Stock and Subject Shares outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator shall be the total
14
number of shares of Common Stock and Subject Shares outstanding on such record
date plus the number of additional shares to be offered for subscription or
purchase (or into which the convertible securities to be offered are initially
convertible). In case such subscription or purchase price may be paid, in whole
or in part, in a form other than cash, the value of such consideration shall be
as determined in good faith by the board of directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and if 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
set.
(c) If the Company at any time after the Rights Record Date sets a
record date for making a distribution on shares of Common Stock or the Subject
Shares, whether by way of a dividend, distribution, reclassification of stock,
recapitalization, reorganization or partial liquidation of the Company or
otherwise (and including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation), of
subscription rights or warrants (excluding those referred to in Section 11(b)),
evidences of indebtedness or other assets (other than (i) regular periodic cash
dividends, (ii) a dividend payable in Common Stock or (iii) a distribution which
is part of or is made in connection with a transaction to which Section
11(a)(ii) or Section 13 applies), then 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, of which the numerator
shall be the current market price per share of Common Stock (determined with
Section 11(d)) on such record date, less the fair market value applicable to one
share of Common Stock (as determined in good faith by the board of directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of such assets or evidences of indebtedness or of such
subscription rights or warrants so to be distributed, and of which the
denominator shall be such current market price per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and
if such distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(d) The "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of such
Common Stock for the 30 consecutive Trading Days (defined below) immediately
prior to such date; provided, however, that if the current market price per
share of Common Stock is determined during a period following the announcement
by the issuer of such Common Stock of a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of Common Stock (other than the Rights), and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or distribution,
then, and in each such case, the current market price shall be appropriately
adjusted to reflect the current market price per share of Common Stock in
connection with ex-dividend trading. The closing price for each day shall be the
last sale price, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, in either case as reported in the principal
consolidated transaction reporting system of the principal market where the
shares of Common Stock are listed or admitted to trading. If the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, then closing price will be determined with reference to the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc., Automated Quotation System
("NASDAQ"). If on any such date the shares of Common Stock are not quoted by any
such organization, the fair market value of such shares on such date as
determined in good faith by the board of directors shall be used. Any such
determination of current market price shall be described in a statement filed
with the Rights Agent.
15
For the purpose of any computation hereunder, the "current market
price" of a Unit shall be deemed to be equal to the current market price per
share of Common Stock, and the "current market price" of a Subject Share shall
be deemed to be equal to the current market price per share of Common Stock
divided by the number of Subject Shares which comprise a Unit.
For purposes of this Agreement, the term "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.
(e) No adjustment in the Purchase Price shall be required unless the
adjustment would require an increase or decrease of at least one percent in
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-thousandth of a share,
as the case may be. Notwithstanding the proviso to the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of three years from the date of the transaction which gives
rise to such adjustment or the date of the expiration of the Rights.
(f) If at any time, as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than shares
of Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Right 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 such shares, contained in Sections 11(a) through (c), inclusive. The
provisions of Sections 7, 9, 10, 13 and 14 with respect to the shares of Common
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall represent the right to
purchase, at the adjusted Purchase Price, the number of shares 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 under Section
11(i), when there is an adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares (calculated to
the nearest one-thousandth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the result by the Purchase Price in effect immediately after such
adjustment.
(i) The Company may elect, on or after the date of adjustment of
the Purchase Price, to adjust the number of Rights, in substitution for any
adjustment in the number of shares purchasable upon the exercise of each Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of Units 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-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust
16
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights the Company shall cause to be
distributed to holders of record of Right Certificates on such record date,
Right Certificates to show (subject to Section 14) the additional Rights to
which the holders shall be entitled as a result of such adjustment. However, at
its option, the Company may shall cause to be distributed in substitution and
replacement for the Right Certificates held by the holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates to evidence all the Rights to which the holders are entitled after
the adjustment.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares 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 Certificates issued hereunder.
(k) If this Section 11 requires that an adjustment in the Purchase
Price be made effective as of the record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuance to the holder
of any Right exercised after such record date the additional shares or
securities of the Company, if any, issuable as a consequence of such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares or securities upon the occurrence of such event.
(l) Notwithstanding the other provisions of this Section 11, the
Company shall be entitled to make such adjustments in the number of shares which
may be acquired upon exercise of the Rights, and such adjustments in the
Purchase Price, in addition to those adjustments expressly required by the other
subsections of this Section 11, as and to the extent that the Company, in its
sole discretion, shall determine to be advisable, in order that (x) the holders
of the Rights shall be treated equitably and in accordance with the purpose and
intent of this Agreement, and (y) to the extent reasonably possible, such event
shall not, in the opinion of counsel for the Company, result in the stockholders
of the Company being subject to any United States federal income tax liability
by such adjustments. The events which would enable the Company to make such
further adjustments include (i) any reclassification, consolidation or
subdivision of the Common Stock; (ii) any reorganization or partial liquidation
of the Company or similar transaction; (iii) any issuance wholly for cash of any
Common Stock at less than the current market price; (iv) any issuance wholly for
cash of Common Stock or securities which by their terms are convertible into or
exchangeable for Common Stock; (v) any stock dividends; or (vi) any issuance of
rights, options or warrants to holders of Common Stock.
Section 12. CERTIFICATION OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. If an adjustment is made under Section 11 or 13, the Company shall (i)
promptly prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment; (ii) promptly file with
the Rights Agent and any different transfer agent for the Common Stock a copy of
such certificate; and (iii) mail a brief summary to each holder of a Right
Certificate in accordance with Section 25. 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, the requirement for such adjustment.
17
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER (INCLUDING "FLIP-OVER PROVISION).
(a) If, at any time after an Acquiring Person has become such,
(i) the Company shall consolidate with, or merge with and into,
any other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(ii) any other Person(s) shall consolidate or merge with and into
the Company, the Company shall be the continuing or surviving corporation of
such merger, and in connection with such consolidation or merger, all or part of
the Common Stock 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
(iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50 percent of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person, (other than a pro rata distribution by the Company of
assets (including securities) of the Company or any of its Subsidiaries to all
holders of the Company's Common Stock), then, on and after the later of (I) the
date of the occurrence of an event described in clause (i), (ii) or (iii) of
this Section 13(a), or (II) the date of the expiration of the period within
which the Rights may be redeemed pursuant to Section 23 (as the same may have
been amended as provided in Section 26):
(A) proper provision shall be made so that each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price, such number of shares of common stock of the
Principal Party as shall be equal to the result obtained by (x) multiplying the
then current Purchase Price by the number of Units for which a Right is then
exercisable and dividing that product by (y) 50 percent of the current market
price per share of the common stock of the Principal Party (determined in the
same manner as the current market price of Common Stock is determined under
Section 11(d)) on the date of consummation of such consolidation, merger, sale
or transfer;
(B) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement, provided that
the Principal Party shall, prior to the first occurrence of an event described
in clause (i), (ii) or (iii) of this Section 13(a), have caused to be reserved
out of its authorized and unissued shares of common stock (or its authorized and
issued shares of common stock held in its treasury), for issuance pursuant to
this Agreement, the number of shares of common stock that will be sufficient to
permit the exercise in full of the Rights after the occurrence of such event;
(C) the term "Company" wherever used in this Agreement shall
thereafter be deemed to refer to such Principal Party; and
(D) the Principal Party shall, in addition to the
reservation of shares of its common stock as provided in the proviso to clause
(B) above, take such steps (including without limitation compliance with the
Company's other obligations as set forth in Section 9) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its 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
18
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Purchase Price, such cash, shares, rights, warrants and other property which
such holder would have been entitled to receive had such holder, 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 be 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) For purposes of this Agreement, "Principal Party" shall mean
(i) in the case of any transaction described in clause (i) or (ii)
of Section 13(a), (A) the Person that is the issuer of the securities into which
shares of Common Stock 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 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 so survive (including the Company
if it survives); and
(ii) in the case of any transaction described in clause (iii) of
Section 13(a), 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 is the issuer of
common stock having the greatest market value of shares outstanding; PROVIDED,
HOWEVER, that in any such case, (1) if the common stock of such Person is not at
such time and has not been continuously over the preceding 12- month period
registered under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another corporation the common stock of which is and has
been so registered, "Principal Party" shall refer to such other corporation; (2)
if the common stock of such Person is not and has not been so registered and
such Person is not a direct or indirect Subsidiary of another corporation the
common stock of which is and has been so registered, "Principal Party" shall
refer to the corporation which ultimately controls such Person; (3) in case such
Person is a Subsidiary, directly or indirectly, of more than one corporation,
the common stocks of all of which are and have been so registered, "Principal
Party" shall refer to whichever of such corporations is the issuer of common
stock having the greatest market value of shares held by the public; and (4) if
the common stock of such Person is not and has not been so registered and 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), (2) and (3) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a "Subsidiary" of both or all of such joint venturers and the Principal
Party in each such chain shall bear the obligations set forth in this Section 13
in the same ratio as its direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and the Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement making
valid provision for the results described in clause (A) of Section 13(a) and
confirming that the Principal Party will perform its obligations under this
Section 13(a); provided, however, that in no case may the Company consummate any
such consolidation, merger, sale or transfer if (i) at the time of or
immediately after such transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits
19
intended to be afforded by the Rights or (ii) prior to, simultaneously with or
immediately after such transaction, the stockholders of the Person which
constitutes, or would constitute, the Principal Party for purposes of this
Section 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. This Section
13 shall not be applicable to a transaction described in Subparagraphs (i), (ii)
or (iii) of Subsection (a) of this Section if (i) such transaction is
consummated with a Person or Persons who acquired Common Stock pursuant to a
Qualified Offer (or a wholly owned subsidiary of any such Person or Persons);
(ii) the price per share of Common Stock offered in such transaction or
distributable to stockholders upon conclusion of such transaction is not less
than the price per share of Common Stock paid to all holders of Common Stock
whose shares were purchased pursuant to such Qualified Offer; and (iii) the form
of consideration being offered to the remaining holders of Common Stock pursuant
to such transaction or distributable to stockholders upon conclusion of such
transaction is the same as the form of consideration paid pursuant to such
Qualified Offer. Upon conclusion of any transaction described in the foregoing
sentence, all Rights shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
distribute Right Certificates which evidence fractional Rights. If the Company
shall elect not to issue such fractional Rights, in lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such Fractional Rights would otherwise be issuable, cash
equal to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ. If on any such
date the Rights are not quoted by any such organization, the fair value of the
Rights on such date as determined in good faith by the board of directors of the
Company shall be used. Any such determination of current market value shall be
described in a statement filed with the Rights Agent.
(b) The Company shall not be required to issue fractions of shares
upon exercise of a Right or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company shall pay to the registered
holders of Right Certificates at the time such Right Certificates are exercised,
cash equal to the same fraction of the current market value of a share of Common
Stock. For purposes of this Section 14, the current market value of a share of
Common Stock shall be the closing price of a share of Common Stock for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance thereof expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
20
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the registered holders of the Right Certificates (and
prior to the Distribution Date, the registered holders of the Common Stock). Any
registered holder of any Right Certificate (or, prior to the Distribution Date,
any registered holder of the Common Stock), without the consent of the Rights
Agent or the holder of any other Right Certificate (or, prior to the
Distribution Date, any other registered holder of the Common Stock), may, on his
own behalf and for his own benefit, enforce, and may institute and maintain, any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) on and after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent and then if
surrendered at the stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common 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 Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever. Neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby. No provision of this Agreement or of any Right
Certificate shall be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate have been exercised.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify
21
the Rights Agent for, and hold it harmless against any loss, liability, or
expense incurred, without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for 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, acting with reasonable care, to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned.
In case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned, and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name, and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by
22
the Chairman of the Board, the President, any Vice President, or the Secretary
of the Company and delivered to the Rights Agent, and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof), nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate, nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
13 or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment), nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of stock to be issued pursuant to this Agreement or
any Right Certificate or as to whether any shares of 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 performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or the Secretary of the Company, and to
apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights
23
Agent shall not take any further action with respect to such requested exercise
or transfer without first obtaining the Company's approval.
Section 21. CHANGE OF RIGHTS AGENT. Unless the Company and the Rights
Agent agree to a shorter time period, the Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 15
days' notice in writing mailed to the Company (and, if different, to each
transfer agent of Common Stock) by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. Unless the Company and
the Rights Agent agree to a shorter time period, the Company may remove the
Rights Agent or any successor Rights Agent upon 15 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of 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 15 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 registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States
having a stock transfer office in the State of Colorado which is subject to
supervision or examination by federal authority. 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 if different, each transfer agent of 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.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its board of directors to reflect any adjustment or change
in the Expiration Date, the Purchase Price per share or the number 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 Agreement.
Section 23. REDEMPTION.
(a) At its complete option and as provided below, the board of
directors of the Company may, in the event of the triggers set forth in Sections
11 and 13, and notwithstanding the operative provisions of those Sections,
instead elect to redeem all but not less than all of the then outstanding Rights
at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend, reclassification or similar transaction occurring
after the date hereof, at any time up to (but not after) the Close of Business
on a Stock Acquisition Date. PROVIDED, HOWEVER, that redemption of the Rights
only may be made in conjunction with the board of directors' determination that
a tender or exchange offer is a Qualified Offer, and provided further that in
its discretion, the board of directors may provide that the Rights
24
shall be reinstated and the redemption price refunded if the Qualified Offer is
materially and adversely changed to the detriment of the Company and its
shareholders, as determined by the board of directors in its reasonable
discretion.
(b) Immediately upon the action of the board of directors electing to
redeem the Rights, the Company shall make a public announcement thereof, and
from and after the date of such announcement, without any further action and
without any further 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. As soon as practicable after the determination of the board of
directors to redeem the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights by mailing such notice to all such
holders 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
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. NOTICE OF PROPOSED ACTIONS. In case the Company, after the
Rights become exercisable, shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Common Stock or the Subject Shares or
to make any other distribution to the holders of its Common Stock or Subject
Shares (other than a regular periodic cash dividend), or (ii) to offer to the
holders of its Common Stock or Subject Shares rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock or Subject Shares (other than a
reclassification involving only the subdivision of outstanding shares of Common
Stock) or any recapitalization or reorganization of the Company, or (iv) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50 percent of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, 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 a Right, in accordance with Section 25, a notice. The notice of such
proposed action shall specify the record date or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is to take place and the date
of participation therein by the holders of Common Stock and/or Subject Shares,
if any such date is to be fixed. The notice shall be given in case of any action
covered by clause (i) or (ii) above at least 20 days prior to the record date
for determining holders of the Common Stock and/or Subject Shares for purposes
of such action; in the case of any other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of Common Stock and/or Subject Shares, whichever shall be the
earlier. The failure to give notice required by this Section 24 or any defect
thereon shall not affect the legality or validity of the action taken by the
Company or the vote upon any such action.
Section 25. NOTICES IN GENERAL. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be given if sent by courier, facsimile,
or first-class mail, postage prepaid, addressed to:
OnLine Power Supply, Inc.
8100 South Akron, Suite 308
Englewood, Colorado 80112 [Fax 303.741.5641]
25
Any notice or demand authorized by this Agreement to be given or made
by the Company or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by courier, facsimile or
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
Corporate Stock Transfer
3200 Cherry Creek Drive South, Suite 430
Denver, Colorado 80209 [Fax 303.282.5800]
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to or on the holder of any Right Certificate
shall be sufficiently given or made if sent by first- class mail, postage
prepaid, addressed to such holder at the address of such holder on the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Right Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period, or (iv) to change or supplement the
provisions hereof in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates; provided, however, this Agreement may not be supplemented or
amended to lengthen (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period, unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary: (1) no
supplement or amendment shall be made which changes the Redemption Price, the
Purchase Price or the number of shares or Units for which a Right is
exercisable; and (2) the duration of the Rights may not be shortened without the
written consent of the registered holders thereof (other than by a redemption of
the Rights). 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.
Section 27. EXCHANGE OF RIGHTS FOR SHARES OF COMMON STOCK WITHOUT CASH
PAYMENT.
(a) The board of directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become subject to Section 7(f)) for 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
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
(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 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
26
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 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 notice of exchange will state the
method by which the exchange of the 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 subject to the provisions of
Section 7(f)) held by each holder of Rights.
(c) If there is not enough authorized Common Stock to permit an
exchange of Rights as contemplated in accordance with this Section, the Company
shall take all such action as may be necessary to authorize additional Common
Stock or Equivalent Stock for issuance upon exchange of the Rights.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. DETERMINATION AND ACTIONS TAKEN BY THE BOARD OF DIRECTORS.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock (or other applicable securities hereunder) outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock (or other securities) of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of rule 13d- 3(d)(1)(i) (as in effect on the date of this Agreement) of
the General Rules and Regulations under the Exchange Act. The board of directors
of the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to such
board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including without limitation the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
Determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
Determinations (including, for purposes of clause (B) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (A) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (B) not subject the board to
any liability to the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the holders of Common Stock) any legal or equitable right,
remedy or claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the holders of
Common Stock).
Section 31. GOVERNING LAW; CHOICE OF VENUE. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Nevada and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State. The rights and obligations of
the Rights Agent under this Agreement shall be governed by and construed in
accordance with the laws in effect
27
in the State of Colorado. The parties to this Agreement, the holders of record
of the Rights, irrevocably agree and acknowledge that all disputes involving the
subject matter of this Agreement are to be resolved in the District Courts,
Second Judicial District, City and County of Denver, Colorado
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. SECTION HEADINGS. Descriptive headings of the Sections of
this Agree- ment are inserted only for convenience and shall not control or
affect the meaning or construction of any of the provisions hereof.
Section 34. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, illegal, or unenforceable, (i) such invalid,
illegal or unenforceable term, provision, covenant or restriction shall
nevertheless be valid, legal and enforceable to the extent, if any, provided by
such court or authority, and (ii) the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
ONLINE POWER SUPPLY, INC.:
-------------------------------
By: Kris M. Budinger
Title: Chairman and Chief Executive Officer
CORPORATE STOCK TRANSFER, INC.
---------------------------------
By:
Title:
28
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- Rights
------------------
THESE RIGHTS ARE NOT EXERCISABLE AFTER PUBLIC ANNOUNCEMENT OF
REDEMPTION IS MADE. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IF
THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN
ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR CERTAIN TRANSFEREES THEREOF, THIS RIGHT CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN LIMITATIONS IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7 OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
This certifies that _________________________________ or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of April 25, 2001 (the "Rights
Agreement") between OnLine Power Supply, Inc., a Nevada corporation (the
"Company"), and Corporate Stock Transfer, Inc. (the "Rights Agent"), to purchase
from the Company, unless the Rights have been previously redeemed, at any time
after the Distribution Date (defined in the Rights Agreement) and prior to the
Expiration Date (defined in the Rights Agreement), or the date, if any, on which
the Rights evidenced by this Certificate may be redeemed, at the stock transfer
office of the Rights Agent, or its successors as Rights Agent, one
one-thousandth (1/1,000th) of one (1) fully paid and nonassessable share of
Series P Preferred Stock, at a purchase price of $200.00 (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly completed and executed. The number of Rights evidenced
by this Right Certificate as set forth above (and the number of shares which may
be purchased upon exercise thereof), and the Purchase Price set forth above, are
the number and Purchase Price as of the date of the Rights Agreement based on
the shares of Common Stock of the Company as constituted at such date.
Upon the occurrence of an event described in clause (A), (B), (C) or
(D) of Section 11(a)(ii) of the Rights Agreement, the holder of any Rights that
are, or were, beneficially owned by an Acquiring Person or an Associate or
Affiliate thereof (as such terms are defined in the Rights Agreement) or certain
transferees thereof which engaged in, or realized the benefit of, an event or
transaction or transactions described in clause (A), (B), (C) or (D) of such
Section 11(a)(ii), shall not be entitled to the benefit of the adjustment
described in such Section 11(a)(ii).
As provided in the Rights Agreement, the Purchase Price and the number
and class of shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof. Reference is
made to the Rights Agreement for a full description of the rights, limitations
of rights,
29
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the office of the Rights Agent and at the principal office of the
Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the stock transfer office of the Rights Agent set forth above, may
be exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase such number of
shares as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at its option at a redemption price
of $.01 per Right.
No fractional shares will be issued upon the exercise of any Rights
evidenced hereby, but in lieu thereof a cash payment may be made, as provided in
the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof. Nothing in this Right Certificate and nothing contained in the
Rights Agreement shall be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the
Company.
Dated as of
---------------------------
Attest:
By
- ---------------------------------------- -------------------------------
Secretary Title
Countersigned:
By:
------------------------------------
Authorized Signature
30
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Right Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
(Please print name and address of transferee) this Right Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________________________ Attorney to transfer
the within Right Certificate on the books of the within- named Corporation, with
full power of substitution.
Dated: ______________________ ______________________________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) the undersigned [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: ______________________ ______________________________________________
Signature
Dated: ______________________ ______________________________________________
Signature
Dated: ______________________ ______________________________________________
Signature
Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
31
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To the Company and the Rights Agent:
The undersigned hereby irrevocably elects to exercise _____________________
Rights represented by this Right Certificate and to purchase the shares issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:
Please insert social security or other identifying number: _____________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number: _____________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _________________ ___________________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate)
Signature Guaranteed:
32
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) 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 an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: _________________ ___________________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
33
EXHIBIT B
SUMMARY OF RIGHTS
This summary is qualified by reference to the detailed provisions of the
Rights Agreement, a copy of which is filed herewith. A copy of the Rights
Agreement is available free of charge from the Company.
As of April 25, 2001, the board of directors of OnLine Power Supply, Inc.
(the "Company") declared a distribution of one Right for each outstanding one
share of common stock (the "Common Shares") of the Company. The distribution is
to be made as of April 25, 2001 (the "Rights Record Date") to the stockholders
of record on that date. All Common Shares issued after the Rights Record Date
also will carry one Right for each share. The Rights are designed to discourage
unfair takeovers of the Company, by encouraging a potential acquiror of the
Company to negotiate with the board of directors a fair price for the Company.
The Rights defined as part of the Rights Agreement between the Company and
Corporate Stock Transfer, Inc. as the Rights Agent. Arrangements adopted by
United States corporations which are similar to the Rights Agreement are often
called "poison pills." As summarized below, if a Qualified Offer is made to
acquire all the stock of the Company, the Rights would be redeemed by the board
of directors, thus causing the poison pill to disappear.
Each Right entitles the registered holder to purchase from the Company,
initially, one one-thousandth (1/1,000th) of one (1) share of Series P Preferred
Stock ("Preferred Shares") at a price of $200.00 (the "Purchase Price") for each
1/1,000th of 1 share, subject to adjustment. Fractional shares may not be
issued, at the discretion of the Company, in which event fractions would be
cashed out. The terms and conditions of the Rights are set forth in a Rights
Agreement between the Company and Corporate Stock Transfer, Inc. as Rights
Agent.
A Preferred Share purchasable upon exercise of the Rights will be entitled
to dividends equal to 1,000 times the dividends, per share, declared on the
Common Shares. In the event of liquidation, a Preferred Share will be entitled
to a minimum preferential liquidating distribution of $1,000 per share and an
aggregate liquidating distribution, per share, equal to 1,000 times the
distribution made per Common Share. The Preferred Shares will vote together with
the Common Shares and in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount received per Common Share.
Because of the Preferred Shares' dividend and liquidation rights, the value
when issued of the 1/1,000th of a Preferred Share purchasable upon exercise of
each Right should approximate the underlying value (but not necessarily the
market value) of one Common Share.
Until the earlier to occur of (i) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
Company's general voting power other than pursuant to a Qualified Offer (as
defined below), the date of such public announcement being called the "Stock
Acquisition Date," or (ii) 10 business days (or such later date as may be
determined by action of the board of directors) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the Company's general voting power (the date of such
earlier occurrence being called the "Distribution Date"), the Rights will be
evidenced by the certificates representing the Common Shares and will be
transferred with and only with the Common Shares. New Common Share certificates
issued after the Rights Record Date upon transfer or new issuance
34
of Common Shares will contain a notation incorporating the Rights Agreement by
reference, and the surrender for transfer of any certificate for Common Shares,
even without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
If there ever is a Distribution Date, then immediately the Company will
mail to holders of record of the Common Shares (as of the close of business on
the Distribution Date) separate certificates evidencing the Rights ("Right
Certificates"), and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on the tenth anniversary of the Rights Record Date (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, as described below.
The Purchase Price payable, the number of shares or other securities or
property issuable upon exercise of the Rights, and the number of outstanding
Rights, are subject to adjustment from time to time to prevent dilution.
A Qualified Offer is a tender offer or exchange offer for all outstanding
Common Shares which is determined by the directors not affiliated with an
Acquiring Person to be fair to and otherwise in the best interests of the
Company and its shareholders.
If any person becomes an Acquiring Person other than by a purchase pursuant
to a Qualified Offer, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which will
not be entitled to the benefit of such adjustment) will thereafter have the
right to receive upon exercise that number of Common Shares or Common Share
equivalents having a market value of two times the exercise price of the Right
(i.e., Common Shares will be issued at one-half or 50% of market value at the
time).
If, at any time after an Acquiring Person has become such, the Company is
acquired in a merger or other business combination transaction (other than a
merger which follows a Qualified Offer at the same or a higher price) or 50% or
more of its consolidated assets or earning power are sold, proper provision will
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right.
At any time after an Acquiring Person has become such, the board of
directors of the Company may exchange the Rights (other than Rights owned by
such person or group), in whole or in part, at an exchange ratio of one Common
Share per one Right (subject to adjustment), termed an "Exchange." Unlike
exercise of a Right with cash (see the preceding paragraph), such an Exchange
would not require payment of cash or other consideration by the holder of the
Right.
At any time up to close of business on a Stock Acquisition Date, the board
of directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). Immediately upon any
redemption of the Rights, the right to exercise them will terminate and the only
right of the holders will be to receive the Redemption Price. However, such
redemption only can be made in conjunction with the board of directors'
determination that there is a Qualified Offer.
35
The terms of the Rights may be amended by the board of directors without
the consent of the holders of the Rights at any time prior to the Distribution
Date. Thereafter the Rights may be amended to make changes which do not
adversely affect the interests of the holders of the Rights, or which shorten or
lengthen time periods, subject to certain limitations set forth in the Rights
Agreement.
Holders of Rights will have no rights as stockholders of the Company, until
Preferred Shares or Common Shares are acquired on exercise or exchange of the
Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a registration statement on Form 8-A.
36
EXHIBIT C
ONLINE POWER SUPPLY, INC.
Certificate of Designation For Series P Preferred Stock
OnLine Power Supply, Inc., a Nevada corporation (the "Corporation"), hereby
certifies that the following resolution has been duly adopted by its board of
directors:
Resolved, that pursuant to authority granted to the board of directors of
the Corporation by the articles of incorporation, a series of shares of the
Preferred Stock of the Corporation is now established. The number of shares in
the series, its designation thereof, and the rights, preferences, privileges and
restrictions of the shares of such series, all are fixed and established as
follow:
I. Designation and Amount
The series is designated the "Series P Preferred Stock." The
number of shares constituting the Series P Preferred Stock is fifty thousand
(50,000). Such number of shares may be increased or decreased by resolution of
the board of directors, but no decrease shall reduce the number of shares of
Series P Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series P
Preferred Stock.
II. Dividends and Distributions
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series P Preferred Stock with respect to dividends, the holders of shares of
Series P Preferred Stock, in preference to the holders of Common Stock of the
Corporation, shall be entitled to receive, when, as and if declared by the board
of directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of March, June, September and December in each
year (a "Quarterly Dividend Payment Date"), starting on the first Quarterly
Dividend Payment Date after the first issuance of a share of Series P Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share of
Series P Preferred Stock. If the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares of Series P 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
37
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series P Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); PROVIDED that, if no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series P
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series P Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series P 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 P 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 P Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
III. Voting Rights
The holders of shares of Series P Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Junior Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, or in any other
resolutions of the board of directors creating a series of Preferred Stock or
any similar stock, or by law, the holders of shares of Series P Preferred Stock
and the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, in the Corporation's articles of
incorporation or as otherwise provided by law, holders of Series P Preferred
Stock shall have no voting rights.
IV. Certain Restrictions
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series P Preferred Stock as provided in Section II
are in arrears, thereafter and until all accrued and unpaid
38
dividends and distributions, whether or not declared, on shares of Series P
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series P Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series P
Preferred Stock, except dividends paid ratably on the Series P Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series P Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such 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 P Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series P Preferred Stock, or any shares of stock
ranking on a parity with the Series P Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the board
of directors) to all holders of such shares upon such terms as the board of
directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The 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 IV purchase or otherwise acquire such shares at such time and in
such manner.
V. Reacquired Shares
Any shares of Series P Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the articles of incorporation, any
other Certificate of Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
VI. Liquidation, Dissolution, or Winding Up
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series P Preferred Stock unless, prior thereto, the holders
of shares of Series P Preferred Stock shall have received $1,000 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the holders
of shares of Series P Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount to be distributed per
39
share to holders of shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series P Preferred Stock, except distri-
butions made ratably on the Series P Preferred Stock and all such parity stock
in proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. If the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series P Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
VII. Consolidation, Merger, Etc.
In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series P Preferred Stock shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. If the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series P
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VIII. Redemption
The shares of Series P Preferred Stock shall not be redeemable.
IX. Rank
The Series P Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.
X. Amendment
The articles of incorporation of the Corporation shall not be
amended in any manner which would alter or change the powers, preferences or
special rights of the Series P Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series P Preferred Stock, voting together as a single
class.
40
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its Chief Executive Officer and attested by its
Secretary, each of whom affirms that the facts stated herein are true this 25th
day of April, 2001.
-----------------------------------------
By: Kris M. Budinger
Title: Chief Executive Officer
Attest:
- ----------------------------------
By: Richard L. Millspaugh
Title: Secretary
County of Arapahoe )
State of Colorado )
On April 25, 2001 personally appeared before me, a Notary Public, Kris M.
Budinger and Richard L. Millspaugh, who acknowledged that they executed the
above instrument.
-----------------------------
Notary Public
SEAL
My Commission Expires: _________
41