Preferred Shares Rights Agreement - 3dfx Interactive Inc. and BankBoston NA
3DFX INTERACTIVE, INC.
and
BANKBOSTON, N.A.
Rights Agent
PREFERRED SHARES RIGHTS AGREEMENT
Dated as of October 30, 1998
TABLE OF CONTENTS Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issuance of Rights Certificates 7
Section 4. Form of Rights Certificates 9
Section 5. Countersignature and Registration 10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates 10
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights 11
Section 8. Cancellation and Destruction of Rights Certificates 13
Section 9. Reservation and Availability of Preferred Shares 13
Section 10. Record Date 14
Section 11. Adjustment of Exercise Price, Number of Shares or
Number of Rights 15
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 21
Section 14. Fractional Rights and Fractional Shares 25
Section 15. Rights of Action 26
Section 16. Agreement of Rights Holders 26
Section 17. Rights Certificate Holder Not Deemed a Shareholder 27
Section 18. Concerning the Rights Agent 27
Section 19. Merger or Consolidation or Change of Name of Rights
Agent 28
Section 20. Duties of Rights Agent 28
Section 21. Change of Rights Agent 30
Section 22. Issuance of New Rights Certificates 31
Section 23. Redemption 31
Section 24. Exchange 32
Section 25. Notice of Certain Events 34
Section 26. Notices 34
Section 27. Supplements and Amendments 35
Section 28. Successors 36
Section 29. Determinations and Actions by the Board of
Directors, etc. 36
Section 30. Benefits of this Agreement 36
Section 31. Severability 36
Section 32. Governing Law 37
Section 33. Counterparts 37
Section 34. Descriptive Headings 37
EXHIBITS
Exhibit A Form of Certificate of Determination
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights
RIGHTS AGREEMENT
Agreement, dated as of October 30, 1998, between 3Dfx Interactive,
Inc., a California corporation, and BankBoston, N.A., a national banking
association.
On October 30, 1998 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend of
one Preferred Share Purchase Right (a "Right") for each Common Share (as
hereinafter defined) of the Company outstanding as of the Close of
Business (as hereinafter defined) on November 16, 1998 (the "Record
Date"), each Right representing the right to purchase one one-thousandth
of a share of Series A Participating Preferred Stock (as such number may
be adjusted pursuant to the provisions of this Agreement), having the
rights, preferences and privileges set forth in the form of Certificate of
Determination attached hereto as Exhibit A, upon the terms and subject to
the conditions herein set forth, and further authorized and directed the
issuance of one Right (as such number may be adjusted pursuant to the
provisions of this Agreement) with respect to each Common Share that shall
become outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined), and in certain circumstances after the Distribution Date.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 12% or more of the Common Shares then outstanding, but
shall not include the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or of any Subsidiary of the Company,
or any entity holding Common Shares for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, no Person shall be deemed to be
an Acquiring Person as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to
12% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of
12% or more of the Common Shares of the Company then outstanding by reason
of share purchases by the Company and shall, after such share purchases by
the Company, become the Beneficial Owner of any additional Common Shares
of the Company (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding Common Shares in Common Shares or
pursuant to a split or subdivision of the outstanding Common Shares), then
such Person shall be deemed to be an Acquiring Person unless upon becoming
the Beneficial Owner of such additional Common Shares of the Company such
Person does not beneficially own 12% or more of the Common Shares of the
Company then outstanding. Notwithstanding the foregoing, (i) if the
Company's Board of Directors determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that
it beneficially owned a percentage of the Common Shares that would
otherwise cause such Person to be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), or (B) such
Person was aware of the extent of the Common Shares it beneficially owned
but had no actual knowledge of the consequences of such beneficial
ownership under this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divested or divests
as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this paragraph (a), then such Person shall
not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement; and (ii) if, as of the date hereof, any Person
is the Beneficial Owner of 12% or more of the Common Shares outstanding,
such Person shall not be or become an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), unless and
until such time as such Person shall become the Beneficial Owner of
additional Common Shares (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Shares
in Common Shares or pursuant to a split or subdivision of the outstanding
Common Shares), unless, upon becoming the Beneficial Owner of such
additional Common Shares, such Person is not then the Beneficial Owner of
12% or more of the Common Shares then outstanding.
(b) "Adjustment Fraction" shall have the meaning set forth
in Section 11(a)(i) hereof.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this
Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 thereunder
(or any comparable or successor law or regulation);
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed pursuant to this Section 1(d)(ii)(A) to be the
Beneficial Owner of, or to beneficially own, (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (2) securities which
a Person or any of such Person's Affiliates or Associates may be deemed to
have the right to acquire pursuant to any merger or other acquisition
agreement between the Company and such Person (or one or more of its
Affiliates or Associates) if such agreement has been approved by the Board
of Directors of the Company prior to there being an Acquiring Person; or
(B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security under this
Section 1(d)(ii)(B) if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding, whether or not in writing
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(d)(ii)(B)) or disposing of any
securities of the Company; provided, however, that in no case shall an
officer or director of the Company be deemed (x) the Beneficial Owner of
any securities beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such persons in their
capacity as officers or directors of the Company or (y) the Beneficial
Owner of securities held of record by the trustee of any employee benefit
plan of the Company or any Subsidiary of the Company for the benefit of
any employee of the Company or any Subsidiary of the Company, other than
the officer or director, by reason of any influence that such officer or
director may have over the voting of the securities held in the plan.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in The Commonwealth of
Massachusetts are authorized or obligated by law or executive order to
close.
(f) "Close of Business" on any given date shall mean
5:00 P.M., Eastern time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Eastern time, on the
next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company
shall mean the shares of Common Stock of the Company. Common Shares when
used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned
Person.
(h) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(i) "Company" shall mean 3Dfx Interactive, Inc., a
California corporation, subject to the terms of Section 13(a)(iii)(C)
hereof.
(j) "Current Per Share Market Price" of any security (a
"Security" for purposes of this definition), for all computations other
than those made pursuant to Section 11(a)(iii) hereof, shall mean the
average of the daily closing prices per share of such Security for the
thirty (30) consecutive Trading Days immediately prior to such date, and
for purposes of computations made pursuant to Section 11(a)(iii) hereof,
the Current Per Share Market Price of any Security on any date shall be
deemed to be the average of the daily closing prices per share of such
Security for the ten (10) consecutive Trading Days immediately prior to
such date; provided, however, that in the event that the Current Per Share
Market Price of the Security is determined during a period following the
announcement by the issuer of such Security of (i) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares or (ii) any subdivision,
combination or reclassification of such Security, and prior to the
expiration of the applicable thirty (30) Trading Day or ten (10) Trading
Day period, after the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification,
then, and in each such case, the Current Per Share Market Price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the
last sale price or, if such last sale price is not reported, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such
date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board of Directors
of the Company. If on any such date no market maker is making a market in
the Security, the fair value of such shares on such date as determined in
good faith by the Board of Directors of the Company shall be used. If the
Preferred Shares are not publicly traded, the Current Per Share Market
Price of the Preferred Shares shall be conclusively deemed to be the
Current Per Share Market Price of the Common Shares as determined pursuant
to this Section 1(j), as appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof, multiplied by 1000. If the Security is not publicly held or so
listed or traded, Current Per Share Market Price shall mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(k) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(l) "Distribution Date" shall mean the earlier of (i) the
Close of Business on the tenth day after the Shares Acquisition Date (or,
if the tenth day after the Shares Acquisition Date occurs before the
Record Date, the Close of Business on the Record Date) or (ii) the Close
of Business on the tenth Business Day (or such later date as may be deter-
mined by action of the Company's Board of Directors) after the date that
a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of
any such plan) is first published or sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act,
if, assuming the successful consummation thereof, such Person would be an
Acquiring Person.
(m) "Equivalent Shares" shall mean Preferred Shares and any
other class or series of capital stock of the Company which is entitled to
the same rights, privileges and preferences as the Preferred Shares.
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(o) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(p) "Exercise Price" shall have the meaning set forth
in Section 4(a) hereof.
(q) "Expiration Date" shall mean the earliest to occur of:
(i) the Close of Business on the Final Expiration Date, (ii) the
Redemption Date, or (iii) the time at which the Board of Directors orders
the exchange of the Rights as provided in Section 24 hereof.
(r) "Final Expiration Date" shall mean October 30, 2008.
(s) "Interested Person" with respect to a Transaction shall
mean any Person who (i) is or will become an Acquiring Person if the
Transaction were to be consummated or an Affiliate or Associate of such a
Person, and (ii) is, or directly or indirectly proposed, nominated or
financially supported a director of the Company in office at the time of
consideration of the Transaction in question who was elected by written
consent of shareholders.
(t) "Nasdaq" shall mean the National Association of
Securities Dealers, Inc. Automated Quotations System.
(u) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(v) "Post-Event Transferee" shall have the meaning set forth
in Section 7(e) hereof.
(w) "Preferred Shares" shall mean shares of Series A
Participating Preferred Stock of the Company.
(x) "Pre-Event Transferee" shall have the meaning set forth
in Section 7(e) hereof.
(y) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(z) "Record Date" shall have the meaning set forth in the
recitals at the beginning of this Agreement.
(aa) "Redemption Date"shall have the meaning set forth in
Section 23(a) hereof.
(bb) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(cc) "Rights Agent" shall mean BankBoston, N.A. or its
successor or replacement as provided in Sections 19 and 21 hereof.
(dd) "Rights Certificate" shall mean a certificate
substantially in the form attached hereto as Exhibit B.
(ee) "Rights Dividend Declaration Date" shall have the
meaning set forth in the recitals at the beginning of this Agreement.
(ff) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(gg) "Section 13 Event" shall mean any event described in
clause (i), (ii) or (iii) of Section 13(a) hereof.
(hh) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(ii) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such; provided that, if such Person is
determined not to have become an Acquiring Person pursuant to Section 1(a)
hereof, then no Shares Acquisition Date shall be deemed to have occurred.
(jj) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(kk) "Subsidiary" of any Person shall mean any corporation or
other entity of which an amount of voting securities sufficient to elect
a majority of the directors or Persons having similar authority of such
corporation or other entity is beneficially owned, directly or indirectly,
by such Person, or any corporation or other entity otherwise controlled by
such Person.
(ll) "Substitution Period" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(mm) "Summary of Rights" shall mean a summary of this
Agreement substantially in the form attached hereto as Exhibit C.
(nn) "Total Exercise Price" shall have the meaning set forth
in Section 4(a) hereof.
(oo) "Trading Day" shall mean a day on which the principal
national securities exchange on which a referenced security is listed or
admitted to trading is open for the transaction of business or, if a
referenced security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(pp) "Transaction" shall mean any merger, consolidation or
sale of assets described in Section 13(a) hereof or any acquisition of
Common Shares which would result in a Person becoming an Acquiring Person.
(qq) A "Triggering Event" shall be deemed to have occurred
upon any Person, becoming an Acquiring Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders
of the Rights (who, in accordance with Section 3 hereof, shall prior to
the Distribution Date also be the holders of the Common Shares) in accor-
dance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable, upon 10 days'
prior written notice to the Rights Agent. The Rights Agent shall have no
duty to supervise, and shall in no event be liable for the acts or
omissions of any such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by
the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates and (ii) the right
to receive Rights Certificates will be transferable only in connection
with the transfer of Common Shares. Until the earlier of the Distribution
Date or the Expiration Date, the surrender for transfer of certificates
for Common Shares shall also constitute the surrender for transfer of the
Rights associated with the Common Shares represented thereby. As soon as
practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares
as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Rights Certificate
evidencing one Right for each Common Share so held, subject to adjustment
as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11 hereof, then
at the time of distribution of the Rights Certificates, the Company shall
make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and
apart from any transfer of Common Shares, and the holders of such Rights
Certificates as listed in the records of the Company or any transfer agent
or registrar for the Rights shall be the record holders thereof.
(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Record Date, at the address of such holder shown
on the records of the Company's transfer agent and registrar. With
respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with
the Summary of Rights. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the
Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Unless the Board of Directors by resolution adopted at
or before the time of the issuance of any Common Shares specifies to the
contrary, Rights shall be issued in respect of all Common Shares that are
issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date or, in certain circumstances provided in
Section 22 hereof, after the Distribution Date. Certificates representing
such Common Shares shall also be deemed to be certificates for Rights, and
shall bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF
TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN
3DFX INTERACTIVE, INC. AND BANKBOSTON, N.A., AS THE RIGHTS
AGENT, DATED AS OF OCTOBER 30, 1998, (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 3DFX INTERACTIVE, INC. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH
RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. 3DFX INTERACTIVE,
INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE
RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES 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), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(d) In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date,
any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase Common Shares and of assignment to be printed on the reverse
thereof) shall be substantially in the form of Exhibit B hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or automated quotation system, on which
the Rights may from time to time be listed or included, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the Record
Date (or in the case of Rights issued with respect to Common Shares issued
by the Company after the Record Date, as of the date of issuance of such
Common Shares) and on their face shall entitle the holders thereof to
purchase such number of one-thousandths of a Preferred Share as shall be
set forth therein at the price set forth therein (such exercise price per
one one-thousandth of a Preferred Share being hereinafter referred to as
the "Exercise Price" and the aggregate Exercise Price of all Preferred
Shares issuable upon exercise of one Right being hereinafter referred to
as the "Total Exercise Price"), but the number and type of securities
purchasable upon the exercise of each Right and the Exercise Price shall
be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an 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 Company's Board of Directors has determined is
part of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS 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). ACCORD-
INGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Financial Officer, its President or any Vice President, either
manually or by facsimile signature, and by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal (if any) or a facsimile
thereof. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless countersigned.
In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Rights Certificates
on behalf of the Company had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certifi-
cate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for such purposes,
books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 14 and 24
hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the Expiration Date, any
Rights Certificate or Rights Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
one-thousandths of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred,
split up, combined or exchanged at the principal office of the Rights
Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment
on the reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall,
subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to the
person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to
them, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate
if mutilated, the Company will make and deliver a new Rights Certificate
of like tenor to the Rights Agent for delivery to the registered holder in
lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) Subject to Sections 7(e), 23(b), 23(c), 24(g), 27(a),
27(b) and 24(b) hereof, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date and
prior to the Close of Business on the Expiration Date by surrender of the
Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office of
the Rights Agent, together with payment of the Exercise Price for each
one-thousandth of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets as the case may be) as to which the
Rights are exercised.
(b) The Exercise Price for each one-thousandth of a
Preferred Share issuable pursuant to the exercise of a Right shall
initially be Sixty-Five Dollars ($65.00), shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Exercise Price for the number of one-
thousandths of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) to be purchased and
an amount equal to any applicable transfer tax required to be paid by the
holder of such Rights Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent for
the Preferred Shares) a certificate or certificates for the number of one-
thousandths of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply
with all such requests or (B) if the Company shall have elected to deposit
the total number of one-thousandths of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may
be) issuable upon exercise of the Rights hereunder with a depositary
agent, requisition from the depositary agent depositary receipts
representing such number of one-thousandths of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets as
the case may be) as are to be purchased (in which case certificates for
the Preferred Shares (or, following a Triggering Event, other securities,
cash or other assets as the case may be) represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and
the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order
of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder and (iv) when appro-
priate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Rights Certificate. The payment of the
Exercise Price (as such amount may be reduced (including to zero) pursuant
to Section 11(a)(iii) hereof) and an amount equal to any applicable
transfer tax required to be paid by the holder of such Rights Certificate
in accordance with Section 9(e) hereof, may be made in cash or by
certified bank check, cashier's check or bank draft payable to the order
of the Company. In the event that the Company is obligated to issue
securities of the Company other than Preferred Shares, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent,
if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such Rights Certificate or to his or her duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an 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 (a "Post-Event Transferee"), (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 the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Company's Board of Directors has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of
this Section 7(e) (a "Pre-Event Transferee") or (iv) any subsequent
transferee receiving transferred Rights from a Post-Event Transferee or a
Pre-Event Transferee, either directly or through one or more intermediate
transferees, shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise.
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with,
but shall have no liability to any holder of Rights Certificates or to any
other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any of such Acquiring Person's
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall, in addition to having complied with the
requirements of Section 7(a), have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or
to any of its agents, be delivered to the Rights Agent for cancellation or
in canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement.
The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will use its
best efforts to cause to be reserved and kept available out of its
authorized and unissued Preferred Shares not reserved for another purpose
(and, following the occurrence of a Triggering Event, out of its
authorized and unissued Common Shares and/or other securities), the number
of Preferred Shares (and, following the occurrence of the Triggering
Event, Common Shares and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) If the Company shall hereafter list any of its Preferred
Shares on a national securities exchange, then so long as the Preferred
Shares (and, following the occurrence of a Triggering Event, Common Shares
and/or other securities) issuable and deliverable upon exercise of the
Rights may be listed on such exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely that the
Rights will be exercised), all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence
of a Triggering Event in which the consideration to be delivered by the
Company upon exercise of the Rights is described in Section 11(a)(ii) or
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement
to become effective as soon as practicable after such filing and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the date of expiration of the
Rights. The Company may temporarily suspend, for a period not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating, and notify the Rights Agent, that the exercisability
of the Rights has been temporarily suspended, as well as a public
announcement and notification to the Rights Agent at such time as the
suspension is no longer in effect. The Company will also take such action
as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction
shall have been obtained, or an exemption therefrom shall be available,
and until a registration statement has been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares (or
other securities of the Company) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such securities (subject
to payment of the Exercise Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the original issuance or
delivery of the Rights Certificates or of any Preferred Shares (or other
securities of the Company) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a person
other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares (or other securities of the Company) in
a name other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares (or other
securities of the Company) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Record Date. Each Person in whose name any certificate
for a number of one-thousandths of a Preferred Share (or other securities
of the Company) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the
Preferred Shares (or other securities of the Company) represented thereby
on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price with respect to which the Rights have been exercised (and
any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the transfer books
of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
holder of Preferred Shares (or other securities of the Company) for which
the Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number of Shares or Number
of Rights. The Exercise Price, the number and kind of shares or other
property 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) Anything in this Agreement to the contrary
notwithstanding, in the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares,
(C) combine the outstanding Preferred Shares (by reverse stock split or
otherwise) into a smaller number of Preferred Shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
then, in each such event, except as otherwise provided in this Section 11
and Section 7(e) hereof: (1) the Exercise Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
Exercise Price thereafter shall equal the result obtained by dividing the
Exercise Price in effect immediately prior to such time by a fraction (the
"Adjustment Fraction"), the numerator of which shall be the total number
of Preferred Shares (or shares of capital stock issued in such reclassi-
fication of the Preferred Shares) outstanding immediately following such
time and the denominator of which shall be the total number of Preferred
Shares outstanding immediately prior to such time; provided, however, that
in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of such Right; and (2) the number of
one-thousandths of a Preferred Share (or share of such other capital
stock) issuable upon the exercise of each Right shall equal the number of
one-thousandths of a Preferred Share (or share of such other capital
stock) as was issuable upon exercise of a Right immediately prior to the
occurrence of the event described in clauses (A)-(D) of this Section
11(a)(i), multiplied by the Adjustment Fraction; provided, however, that,
no such adjustment shall be made pursuant to this Section 11(a)(i) to the
extent that there shall have simultaneously occurred an event described in
clause (A), (B), (C) or (D) of Section 11(n) with a proportionate
adjustment being made thereunder. Each Common Share that shall become
outstanding after an adjustment has been made pursuant to this Section
11(a)(i) shall have associated with it the number of Rights, exercisable
at the Exercise Price and for the number of one-thousandths of a Preferred
Share (or shares of such other capital stock) as one Common Share has
associated with it immediately following the adjustment made pursuant to
this Section 11(a)(i).
(ii) Subject to Section 24 of this Agreement, in the
event a Triggering Event shall have occurred, then promptly following such
Triggering Event each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive for each
Right, upon exercise thereof in accordance with the terms of this Agree-
ment and payment of the Exercise Price in effect immediately prior to the
occurrence of the Triggering Event, in lieu of a number of one-thousandths
of a Preferred Share, such number of Common Shares of the Company as shall
equal the result obtained by multiplying the Exercise Price in effect
immediately prior to the occurrence of the Triggering Event by the number
of one-thousandths of a Preferred Share for which a Right was exercisable
(or would have been exercisable if the Distribution Date had occurred)
immediately prior to the first occurrence of a Triggering Event, and
dividing that product by 50% of the Current Per Share Market Price for
Common Shares on the date of occurrence of the Triggering Event; provided,
however, that the Exercise Price and the number of Common Shares of the
Company so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(e) hereof to
reflect any events occurring in respect of the Common Shares of the
Company after the occurrence of the Triggering Event.
(iii) In lieu of issuing Common Shares in accordance
with Section 11(a)(ii) hereof, the Company may, if the Company's Board of
Directors determines that such action is necessary or appropriate and not
contrary to the interest of holders of Rights and, in the event that the
number of Common Shares which are authorized by the Company's Articles of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights, or if any necessary regulatory approval
for such issuance has not been obtained by the Company, the Company shall:
(A) determine the excess of (1) the value of the Common Shares issuable
upon the exercise of a Right (the "Current Value") over (2) the Exercise
Price (such excess, the "Spread") and (B) with respect to each Right, make
adequate provision to substitute for such Common Shares, upon exercise of
the Rights, (1) cash, (2) a reduction in the Exercise Price, (3) other
equity securities of the Company (including, without limitation, shares or
units of shares of any series of preferred stock which the Company's Board
of Directors has deemed to have the same value as Common Shares (such
shares or units of shares of preferred stock are herein called "Common
Stock Equivalents")), except to the extent that the Company has not
obtained any necessary shareholder or regulatory approval for such
issuance, (4) debt securities of the Company, except to the extent that
the Company has not obtained any necessary shareholder or regulatory
approval for such issuance, (5) other assets or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Company's Board of
Directors based upon the advice of a nationally recognized investment
banking firm selected by the Company's Board of Directors; provided,
however, if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Triggering Event and (y) the date
on which the Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Exercise Price, Common Shares (to the extent available),
except to the extent that the Company has not obtained any necessary
shareholder or regulatory approval for such issuance, and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If the Company's Board of Directors shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights or that any
necessary regulatory approval for such issuance will be obtained, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for
the authorization of such additional shares or take action to obtain such
regulatory approval (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need
be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights
and (y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of
additional shares, to take any action to obtain any required regulatory
approval and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the Current
Per Share Market Price of the Common Shares on the Section 11(a)(ii)
Trigger Date and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Shares on such date.
(b) In case the Company shall, at any time after the date of
this Agreement, fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling such holders (for a
period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Preferred Shares or Equivalent Shares
or securities convertible into Preferred Shares or Equivalent Shares at a
price per share (or having a conversion price per share, if a security
convertible into Preferred Shares or Equivalent Shares) less than the then
Current Per Share Market Price of the Preferred Shares or Equivalent
Shares on such record date, then, in each such case, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
and Equivalent Shares (if any) outstanding on such record date, plus the
number of Preferred Shares or Equivalent Shares, as the case may be, which
the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the
aggregate initial conversion price of the convertible securities to be
offered or issued) would purchase at such current market price, and the
denominator of which shall be the number of Preferred Shares and
Equivalent Shares (if any) outstanding on such record date, plus the
number of additional Preferred Shares or Equivalent Shares, as the case
may be, to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Company's Board
of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares and Equivalent Shares owned by or
held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that
such rights, options or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall, at any time after the date of
this Agreement, fix a record date for the making of a distribution to all
holders of the Preferred Shares or of any class or series of Equivalent
Shares (including any such distribution made in connection with a consoli-
dation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend, if any, or a dividend payable in Preferred
Shares) or subscription rights, options or warrants (excluding those
referred to in Section 11(b)), then, in each such case, the Exercise Price
to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Per Share Market
Price of a Preferred Share or an Equivalent Share on such record date,
less the fair market value per Preferred Share or Equivalent Share (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to
a Preferred Share or Equivalent Share, as the case may be, and the denomi-
nator of which shall be such Current Per Share Market Price of a Preferred
Share or Equivalent Share on such record date; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Exercise Price shall be
adjusted to be the Exercise Price which would have been in effect if such
record date had not been fixed.
(d) Anything herein to the contrary notwithstanding, no
adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Exercise
Price; provided, however, that any adjustments which by reason of this
Section 11(d) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest ten-
thousandth of a Common Share or other share or one hundred-thousandth of
a Preferred Share, as the case may be. Notwithstanding the first sentence
of this Section 11(d), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.
(e) If as a result of an adjustment made pursuant to
Section 11(a) or 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and, if required, the Exercise Price
thereof, shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a), 11(b), 11(c),
11(d), 11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall
apply on like terms to any such other shares.
(f) All Rights originally issued by the Company subsequent
to any adjustment made to the Exercise Price hereunder shall evidence the
right to purchase, at the adjusted Exercise Price, the number of one-
thousandths of a Preferred Share purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Exercise Price as
a result of the calculations made in Section 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 Exercise Price,
that number of Preferred Shares (calculated to the nearest one hundred-
thousandth of a share) obtained by (i) multiplying (x) the number of
Preferred Shares covered by a Right immediately prior to this adjustment,
by (y) the Exercise Price in effect immediately prior to such adjustment
of the Exercise Price, and (ii) dividing the product so obtained by the
Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(h) The Company may elect on or after the date of any
adjustment of the Exercise Price as a result of the calculations made in
Section 11(b) or (c) to adjust the number of Rights, in substitution for
any adjustment in the number of Preferred Shares purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of one-
thousandths of a Preferred Share for which a Right was exercisable immedi-
ately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth) obtained by dividing
the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after
adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount
of the adjustment to be made. This record date may be the date on which
the Exercise Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(h), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for
the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in
the public announcement.
(i) Irrespective of any adjustment or change in the Exercise
Price or the number of Preferred Shares issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Exercise Price per one one-thousandth of a
Preferred Share and the number of one-thousandths of a Preferred Share
which were expressed in the initial Rights Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Exercise Price below the par or stated value, if any, of the
number of one-thousandths of a Preferred Share issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue as fully paid and nonassessable shares such number of
one-thousandths of a Preferred Share at such adjusted Exercise Price.
(k) In any case in which this Section 11 shall require that
an adjustment in the Exercise Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence
of such event the issuing to the holder of any Right exercised after such
record date of the number of one-thousandths of a Preferred Share and
other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the number of one-thousandths of a Preferred
Share and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) upon the occurrence of the event requiring such
adjustment.
(l) Anything in this Section 11 to the contrary notwith-
standing, prior to the Distribution Date, the Company shall be entitled to
make such reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that it in its sole discretion shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred or Common
Shares, (ii) issuance wholly for cash of any Preferred or Common Shares at
less than the current market price, (iii) issuance wholly for cash of
Preferred or Common Shares or securities which by their terms are
convertible into or exchangeable for Preferred or Common Shares,
(iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders
of its Preferred or Common Shares shall not be taxable to such
shareholders.
(m) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23, 24 or
27 hereof, take (or permit to be taken) any action if at the time such
action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(n) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares payable
in Common Shares, (B) subdivide the outstanding Common Shares, (C) combine
the outstanding Common Shares (by reverse stock split or otherwise) into
a smaller number of Common Shares, or (D) issue any shares of its capital
stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such
event, except as otherwise provided in this Section 11(a) and Section 7(e)
hereof: (1) each Common Share (or shares of capital stock issued in such
reclassification of the Common Shares) outstanding immediately following
such time shall have associated with it the number of Rights as were
associated with one Common Share immediately prior to the occurrence of
the event described in clauses (A)-(D) above; (2) the Exercise Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall
be adjusted so that the Exercise Price thereafter shall equal the result
obtained by multiplying the Exercise Price in effect immediately prior to
such time by a fraction, the numerator of which shall be the total number
of Common Shares outstanding immediately prior to the event described in
clauses (A)-(D) above, and the denominator of which shall be the total
number of Common Shares outstanding immediately after such event;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of such
Right; and (3) the number of one-thousandths of a Preferred Share (or
shares of such other capital stock) issuable upon the exercise of each
Right outstanding after such event shall equal the number of one-
thousandths of a Preferred Share (or shares of such other capital stock)
as were issuable with respect to one Right immediately prior to such
event. Each Common Share that shall become outstanding after an adjustment
has been made pursuant to this Section 11(n) shall have associated with it
the number of Rights, exercisable at the Exercise Price and for the number
of one-thousandths of a Preferred Share (or shares of such other capital
stock) as one Common Share has associated with it immediately following
the adjustment made pursuant to this Section 11(n). If an event occurs
which would require an adjustment under both this Section 11(n) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(n) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent
for the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of
the Company to make such certification or give such notice shall not
affect the validity of such adjustment or the force or effect of the
requirement for such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment
contained therein and shall not be deemed to have knowledge of such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following a Triggering Event,
directly or indirectly:
(i) the Company shall consolidate with, or merge with
and into, any other Person (other than a wholly-owned Subsidiary of the
Company in a transaction the principal purpose of which is to change the
state of incorporation of the Company and which complies with
Section 11(m) hereof);
(ii) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection
with such merger, all or part of the Common Shares shall be changed into
or exchanged for stock or other securities of any other person (or the
Company); or
(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 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person or Persons (other than the Company or one or
more of its wholly owned Subsidiaries in one or more transactions, each of
which individually (and together) complies with Section 11(m) hereof),
then, concurrent with and in each such case,
(A) each holder of a Right (except as provided
in Section 7(e) hereof) shall thereafter have the right to receive, upon
the exercise thereof at a price equal to the Total Exercise Price
applicable immediately prior to the occurrence of the Section 13 Event in
accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable
Common Shares of the Principal Party (as hereinafter defined), free of any
liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by dividing such Total Exercise
Price by 50% of the Current Per Share Market Price of the Common Shares of
such Principal Party on the date of consummation of such Section 13 Event,
provided, however, that the Exercise Price and the number of Common Shares
of such Principal Party so receivable upon exercise of a Right shall be
subject to further adjustment as appropriate in accordance with
Section 11(e) hereof;
(B) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
(C) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event;
(D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
its Common Shares thereafter deliverable upon the exercise of the Rights;
and
(E) upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right
shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Total Exercise Price as provided in this Section 13(a),
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 Common Shares of the Principal Party receivable
upon the exercise of such Right pursuant to this Section 13(a), 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.
(F) For purposes hereof, the "earning power" of
the Company and its Subsidiaries shall be determined in good faith by the
Company's Board of Directors on the basis of the operating earnings of
each business operated by the Company and its Subsidiaries during the
three fiscal years preceding the date of such determination (or, in the
case of any business not operated by the Company or any Subsidiary during
three full fiscal years preceding such date, during the period such
business was operated by the Company or any Subsidiary).
(b) For purposes of this Agreement, the term "Principal
Party" shall mean:
(i) in the case of any transaction described in clause
(i) or (ii) of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which the Common Shares are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer
the Common Shares of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the Person
that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the Common
Shares of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger
does not survive the merger, the Person that does survive the merger
(including the Company if it survives) or (z) the Person resulting from
the consolidation; and
(ii) in the case of any transaction described in clause
(iii) of Section13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if more than one Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred and each such portion would, were
it not for the other equal portions, constitute the greatest 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 Shares having the
greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Shares of such Person are not at such
time or have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect Subsidiary of another Person the Common Shares of
which are and have been so registered, the term "Principal Party" shall
refer to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Shares of
which are and have been so registered, the term "Principal Party" shall
refer to whichever of such Persons is the issuer of Common Shares having
the greatest aggregate market value of shares outstanding, or (3) if such
Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly by the same
Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person
owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its interest
in such Person bears to the total of such interests.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized
Common Shares that have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that
such Principal Party shall, upon consummation of such Section 13 Event,
assume this Agreement in accordance with Sections 13(a) and 13(b) hereof,
that all rights of first refusal or preemptive rights in respect of the
issuance of Common Shares of such Principal Party upon exercise of
outstanding Rights have been waived, that there are no rights, warrants,
instruments or securities outstanding or any agreements or arrangements
which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded
by the Rights and that such transaction shall not result in a default by
such Principal Party under this Agreement, and further providing that, as
soon as practicable after the date of such Section 13 Event, such
Principal Party will:
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the Expiration
Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on Nasdaq and list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on
Nasdaq; and
(iii) deliver to holders of the Rights historical
financial statements for such Principal Party which comply in all respects
with the requirements for registration on Form 10 (or any successor form)
under the Exchange Act.
In the event that at any time after the occurrence of a Triggering
Event some or all of the Rights shall not have been exercised at the time
of a transaction described in this Section 13, the Rights which have not
theretofore been exercised shall thereafter be exercisable in the manner
described in Section 13(a) (without taking into account any prior
adjustment required by Section 11(a)(ii)).
(d) In case the "Principal Party" for purposes of
Section 13(b) hereof has provision in any of its authorized securities or
in its certificate of incorporation or by-laws or other instrument
governing its corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue (other than to holders of Rights
pursuant to Section 13 hereof), in connection with, or as a consequence
of, the consummation of a Section 13 Event, Common Shares or Equivalent
Shares of such Principal Party at less than the then Current Per Share
Market Price thereof or securities exercisable for, or convertible into,
Common Shares or Equivalent Shares of such Principal Party at less than
such then Current Per Share Market Price, or (ii) providing for any
special payment, tax or similar provision in connection with the issuance
of the Common Shares of such Principal Party pursuant to the provisions of
Section 13 hereof, then, in such event, the Company hereby agrees with
each holder of Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall
have been canceled, waived or amended, or that the authorized securities
shall be redeemed, so that the applicable provision will have no effect in
connection with or as a consequence of, the consummation of the proposed
transaction.
(e) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, effect or permit to occur any
Section 13 Event, if (i) at the time or immediately after such Section 13
Event 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,
(ii) prior to, simultaneously with or immediately after such Section 13
Event, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.
(f The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable, as determined pursuant to the second sentence of
Section 1(j) hereof.
(b The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other
than fractions that are integral multiples of one one-thousandth of a
Preferred Share). Interests in fractions of Preferred Shares in integral
multiples of one one-thousandth of a Preferred Share may, at the election
of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-thousandth of a
Preferred Share, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of
a Preferred Share. For purposes of this Section 14(b), the current market
value of a Preferred Share shall be one thousand times the closing price
of a Common Share (as determined pursuant to the second sentence of
Section 1(j) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares upon the exercise or exchange of Rights. In lieu of such
fractional Common Shares, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of a Common Share. For purposes of this Section 14(c), the
current market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of
Section 1(j) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d The holder of a Right by the acceptance of the Right
expressly waives his or her right to receive any fractional Rights or any
fractional shares (other than fractions that are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders
of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his or her own behalf and for his or her 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 or her right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights 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 Rights Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms and
certificates fully executed; and
(c subject to Sections 6(a) and 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Distribution Date, the associated
Common Shares certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common
Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose to be the holder of the
Preferred Shares or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the
rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting shareholders
(except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of
the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of
liability in the premises. In no event will the Rights Agent be liable
for special, indirect, incidental or consequential loss or damage of any
kind whatsoever, even if the Rights Agent has been advised of the
possibility of such loss or damage.
(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 Rights Certificate or certificate for the Preferred Shares or
Common Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or
document reasonably believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however,
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights 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
Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights 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 Rights Certificates shall have the full
force provided in the Rights 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 Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force
provided in the Rights 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 Rights
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 written advice or 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 written advice or 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 (including, without limitation, the identity of any
Acquiring Person and the determination of Current Per Share Market Price)
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Chief Financial Officer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence, bad faith
or willful misconduct.
(d The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or
in the Rights 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 Rights 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 Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to
Section 12 describing such change or adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any Preferred
Shares will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer,
the Secretary or any Assistant 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 by it in good
faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken
or omitted by the Rights Agent under this Rights Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by,
or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application
(which date shall not be less than five (5) Business Days after the date
any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.
(j No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k If, with respect to any Rights 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 Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company and to each transfer agent of the Preferred Shares and the Common
Shares by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Preferred Shares and the Common Shares
by registered or certified mail, and to the holders of the Rights
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 thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Rights Certificate (who shall, with such notice,
submit his or her Rights Certificate for inspection by the Company), then
the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws
of the United States or of any state of the United States, in good
standing, which is authorized under such laws to exercise corporate trust
or shareholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100 million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Preferred Shares and the
Common Shares, and mail a notice thereof in writing to the registered
holders of the Rights 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 Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing
Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise Price and the number or
kind or class of shares or other securities or property purchasable under
the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to Common
Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement or upon the exercise, conversion or
exchange of other securities of the Company outstanding at the date hereof
or upon the exercise, conversion or exchange of securities hereinafter
issued by the Company and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued and this sentence shall be null and void ab
initio if, and to the extent that, such issuance or this sentence would
create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate
would be issued or would create a significant risk of or result in such
options' or employee plans' or arrangements' failing to qualify for
otherwise available special tax treatment and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a The Company may, at its option and with the approval of
the Board of Directors, at any time prior to the earlier of (i) the
Distribution Date or (ii) the Close of Business on the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being herein referred to as the
"Redemption Price") and the Company may, at its option, pay the Redemption
Price either in Common Shares (based on the Current Per Share Market Price
thereof at the time of redemption) or cash. Such redemption of the Rights
by the Company may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion may
establish. The date on which the Board of Directors elects to make the
redemption effective shall be referred to as the "Redemption Date."
(b Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give public notice of any
such redemption; provided, however, that the failure to give or any defect
in, any such notice shall not affect the validity of such redemption.
Within ten (10) days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and 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 or, prior to
the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment
of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in
this Section 23 or in Section 24 hereof, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
(c Notwithstanding the provisions of Section 23(a), in the
event that a majority of the Board of Directors of the Company is elected
by shareholder action by written consent, then until the earlier to occur
of (i) 180th day following the effectiveness of such election or (ii) the
next regular annual meeting of shareholders of the Company following the
effectiveness of such election (including any postponement or adjournment
thereof), the Rights shall not be redeemed if such redemption is
reasonably likely to have the purpose or effect of facilitating a
Transaction with an Interested Person.
Section 24. Exchange.
(a Subject to applicable laws, rules and regulations, and
subject to subsection 24(c) below, the Company may, at its option, by
action of the Board of Directors, at any time after the occurrence of a
Triggering Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to
as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection 24(a) and
without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of
such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall 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 shall mail a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with Section 24(a), the
Company shall either take such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights or
alternatively, at the option of a majority of the Board of Directors, with
respect to each Right (i) pay cash in an amount equal to the Current Value
(as hereinafter defined), in lieu of issuing Common Shares in exchange
therefor, or (ii) issue debt or equity securities or a combination
thereof, having a value equal to the Current Value, in lieu of issuing
Common Shares in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment
banking firm selected by majority vote of the Board of Directors, or
(iii) deliver any combination of cash, property, Common Shares and/or
other securities having a value equal to the Current Value in exchange for
each Right. For purposes of this Section 24(c) only, the Current Value
shall mean the product of the Current Per Share Market Price of Common
Shares on the date of the occurrence of the event described above in
subparagraph (a), multiplied by the number of Common Shares for which the
Right otherwise would be exchangeable if there were sufficient shares
available. To the extent that the Company determines that some action
need be taken pursuant to clauses (i), (ii) or (iii) of this
Section 24(c), the Board of Directors may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days
following the date on which the event described in Section 24(a) shall
have occurred, in order to seek any authorization of additional Common
Shares and/or to decide the appropriate form of distribution to be made
pursuant to the above provision and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended.
(d The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, there shall be
paid to the registered holders of the Rights Certificates with regard to
which such fractional Common Shares would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a whole
Common Share (as determined pursuant to the second sentence of
Section 1(j) hereof).
(e The Company may, at its option, by majority vote of the
Board of Directors, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and with good
faith by the Board of Directors, based upon the advice of one or more
nationally recognized investment banking firms.
(f Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection 24(e) of this
Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of
rights in exchange therefor as has been determined by the Board of
Directors in accordance with subsection 24(e) above. The Company shall
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 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 transfer agent for the Common
Shares of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Rights will be effected.
(g Notwithstanding the provisions of this Section 24, in
the event that a majority of the Board of Directors of the Company is
elected by shareholder action by written consent, then until the earlier
to occur of (i) the 180th day following the effectiveness of such election
or (ii) the next regular annual meeting of shareholders of the Company
following the effectiveness of such election (including any postponement
or adjournment thereof), this Rights shall not be exchanged pursuant
hereto if such exchange would be reasonably likely to have the purpose or
effect of facilitating a Transaction with an Interested Person.
Section 25. Notice of Certain Events.
(a In case the Company shall propose to effect or permit to
occur any Triggering Event or Section 13 Event, the Company shall give
notice thereof to each holder of Rights in accordance with Section 26
hereof at least twenty (20) days prior to occurrence of such Triggering
Event or such Section 13 Event.
(b In case any Triggering Event or Section 13 Event shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights
under Sections 11(a)(ii) and 13 hereof.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the holder of
any Rights Certificate to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
3Dfx Interactive, Inc.
4435 Fortran Drive
San Jose, California 95134
Attention: Chief Financial Officer
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Robert P. Latta, Esq.
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
BankBoston, N.A.
c/o Boston Equiserve Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall
be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments.
(a Prior to the occurrence of a Distribution Date, the
Company may supplement or amend this Agreement in any respect without the
approval of any holders of Rights and the Rights Agent shall, if the
Company so directs, execute such supplement or amendment. From and after
the occurrence of a Distribution Date, the Company and the Rights Agent
may from time to time supplement or amend this Agreement without the
approval of any holders of Rights in order to (i) cure any ambiguity,
(ii) correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) shorten
or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders
of Rights (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person); provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (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 (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Upon the delivery of a certificate from an appropriate officer of the
Company that states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares.
(b Notwithstanding the provisions of Section 27(a), in the
event that a majority of the Board of Directors of the Company is elected
by shareholder action by written consent, then until the earlier to occur
of (i) the 180th day following the effectiveness of such election or (ii)
the next regular annual meeting of shareholders of the Company following
the effectiveness of such election (including any postponement or
adjournment thereof), this Rights Agreement shall not be supplemented or
amended in any manner reasonably likely to have the purpose or effect of
facilitating a Transaction with an Interested Person.
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. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding Common Shares
of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the Board,
or the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith, shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights Certificates and
all other parties and (y) 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 Rights Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the Close of Business on the tenth day following the date
of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement and each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
"COMPANY" 3DFX INTERACTIVE, INC.
By: /S/ DAVID ZACARIAS
David Zacarias
Chief Financial Officer & VP Administration
"RIGHTS AGENT" BANKBOSTON, N.A.
By: /S/ GEOFFREY D. ANDERSON
Geoffrey D. Anderson
Director
<PAGE>
CERTIFICATE OF DETERMINATION
OF 3DFX INTERACTIVE, INC.
The undersigned, L. Gregory Ballard and David Zacarias do hereby
certify:
1. That they are the duly elected and acting President and
Secretary, respectively, of 3Dfx Interactive, Inc., a California
corporation (the "Corporation").
2. That, pursuant to the resolutions set forth in Paragraph 4
hereof, the Board of Directors of the Corporation has authorized the
issuance of, and designated the rights, preferences, privileges and
restrictions of 60,000 shares of Series A Participating Preferred Stock.
3. That none of the shares of Series A Participating Preferred Stock
have been issued by the Corporation.
4. That pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation of the said Corporation, the
said Board of Directors on October 30, 1998 adopted the following
resolution creating a series of 60,000 shares of Preferred Stock
designated as Series A Participating Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by its Articles of Incorporation, the Board
of Directors does hereby provide for the issue of a series of Preferred
Stock of the Corporation and does hereby fix and herein state and express
the designations, powers, preferences and relative and other special
rights and the qualifications, limitations and restrictions of such series
of Preferred Stock as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Participating Preferred Stock." The number of
shares constituting such series shall be 60,000.
Section 2. Proportional Adjustment. In the event the Corporation
shall at any time after the issuance of any share or shares of Series A
Participating Preferred Stock (i) declare any dividend on Common Stock of
the Corporation ("Common Stock") payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the Corporation shall simultaneously effect a proportional
adjustment to the number of outstanding shares of Series A Participating
Preferred Stock.
Section 3. Dividends and Distributions.
(a Subject to the prior and superior right of the holders
of any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series A Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Participating Preferred Stock
shall be entitled to receive when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July and
October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of
a share of Series A Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of Common Stock or a subdivision
of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series A Participating Preferred Stock.
(b The Corporation shall declare a dividend or distribution
on the Series A Participating Preferred Stock as provided in paragraph (a)
above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock).
(c Dividends shall begin to accrue on outstanding shares of
Series A Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Series A
Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Series A Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Participating
Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
Section 4. Voting Rights. The holders of shares of Series A
Participating Preferred Stock shall have the following voting rights:
(a Each share of Series A Participating Preferred Stock
shall entitle the holder thereof to 1,000 votes on all matters submitted
to a vote of the shareholders of the Corporation.
(b Except as otherwise provided herein or by law, the
holders of shares of Series A Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(c Except as required by law, holders of Series A
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 5. Certain Restrictions.
(a The Corporation shall not declare any dividend on, make
any distribution on, or redeem or purchase or otherwise acquire for
consideration any shares of Common Stock after the first issuance of a
share or fraction of a share of Series A Participating Preferred Stock
unless concurrently therewith it shall declare a dividend on the Series A
Participating Preferred Stock as required by Section 3 hereof.
(b Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as
provided in Section 3 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Participating Preferred Stock outstanding shall have been paid in
full, the Corporation shall not
(i declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A
Participating Preferred Stock;
(ii) declare or pay dividends on, 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 Series A
Participating Preferred Stock, except dividends paid ratably on the
Series A Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Participating Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration
any shares of Series A Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(c) 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 5, purchase or otherwise acquire such shares at such
time and in such manner.
Section 6. Reacquired Shares. Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein and, in the Articles of
Incorporation, as then amended.
Section 7. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, the assets of
the Corporation available for distribution shall be distributed as
follows: First, the holders of shares of Series A Participating Preferred
Stock shall be entitled to receive, prior and in preference to any payment
to holders of Common Stock, an aggregate amount per share equal to
$1000.00 plus an amount equal to any accrued and unpaid dividends on such
shares of Series A Participating Preferred Stock. Following such payment,
the holders of shares of Common Stock shall be entitled to receive an
aggregate amount per share equal to $1.00 plus an amount equal to any
accrued and unpaid dividends on such shares of Common Stock. Following
the payment of the aforesaid preferential amounts, the remaining assets of
the Corporation available for distribution shall be distributed to the
holders of Common Stock and Series A Participating Preferred Stock, with
the holders of Series A Participating Preferred Stock entitled to receive
for each such share 1000 times the aggregate amount to be distributed per
share to holders of shares of Common Stock.
Section 8. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property,
then in any such case the shares of Series A Participating Preferred Stock
shall at the same time be similarly exchanged or changed in an amount per
share 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.
Section 9. No Redemption. The shares of Series A Participating
Preferred Stock shall not be redeemable.
Section 10. Ranking. The Series A Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 11. Amendment. The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would
materially alter or change the powers, preference or special rights of the
Series A Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority of the
outstanding shares of Series A Participating Preferred Stock, voting
separately as a class.
Section 12. Fractional Shares. Series A Participating Preferred
Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A Participating
Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they
hereby are, authorized and directed to prepare and file a Certificate of
Determination in accordance with the foregoing resolution and the
provisions of California law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing
resolution."
We further declare under penalty of perjury that the matters set
forth in the foregoing Certificate of Determination are true and correct
of our own knowledge and that the foregoing Certificate of Determination
has been duly approved by the Board of Directors of the Corporation.
Executed at San Jose, California, on October 30, 1998.
L. Gregory Ballard, President
David Zacarias, Secretary
<PAGE>
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER THE EARLIER OF (i) OCTOBER 30, 2008 (ii)
THE DATE TERMINATED BY THE COMPANY OR (iii) THE DATE THE
COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE RIGHTS AGREEMENT.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENE-
FICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS
AGREEMENT.]*
------------------
* The portion of the legend in bracket shall be inserted only if applicable
and shall replace preceding sentence.
RIGHTS CERTIFICATE
3DFX INTERACTIVE, INC.
This certifies that ______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement dated as of October 30, 1998, (the
"Rights Agreement"), between 3Dfx Interactive, Inc., a California
corporation (the "Company"), and BankBoston, N.A. ( the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as
such term is defined in the Rights Agreement) and prior to 5:00 P.M., New
York time, on October 30, 2008 at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-
thousandth (1/1,000) of a fully paid non-assessable share of Series A
Participating Preferred Stock (the "Preferred Shares"), of the Company, at
an Exercise Price of Sixty-Five Dollars ($65.00) per one-thousandth of a
Preferred Share (the "Exercise Price"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one-thousandths of a Preferred Share which
may be purchased upon exercise hereof) set forth above are the number and
Exercise Price as of October 30, 1998 based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the
Exercise Price and the number and kind of Preferred Shares or other
securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific circum-
stances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the principal executive offices of the Company and the
above-mentioned office of the Rights Agent.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate (i) may be redeemed by the Company,
at its option, at a redemption price of $0.001 per Right or (ii) may be
exchanged by the Company in whole or in part for Common Shares,
substantially equivalent rights or other consideration as determined by
the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the Rights Agent,
may be exchanged for another Rights Certificate or Rights Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate amount of securities as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole
Rights not exercised.
No fractional portion of less than one one-thousandth of a
Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the
holder of the Preferred Shares or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors or upon
any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______________, 19____.
ATTEST: 3DFX INTERACTIVE, INC.
By:
David Zacarias, Secretary
Its:
Countersigned:
BANKBOSTON, N.A.
as Rights Agent
By:
Its:
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED hereby
sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
__________________________ Attorney, to transfer the within Rights
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _______________, 19____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights 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 any such Person (as such
terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: _______________, 19____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate)
To: ___________________________
The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Rights Certificate to
purchase the number of one-thousandths of a Preferred Share issuable upon
the exercise of such Rights and requests that certificates for such number
of one-thousandths of a Preferred Share 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
Rights Certificate, a new Rights 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: ___________________ , 19____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: _______________, 19____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
Form of Reverse Side of Rights Certificate -- continued
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
EXHIBIT C
SHAREHOLDER RIGHTS PLAN
3DFX INTERACTIVE, INC.
Summary of Rights
Distribution and
Transfer of Rights;
Rights Certificate: The Board of Directors has declared a dividend
of one Right for each share of 3Dfx
Interactive, Inc. Common Stock outstanding.
Prior to the Distribution Date referred to
below, the Rights will be evidenced by and
trade with the certificates for the Common
Stock. After the Distribution Date, 3Dfx
Interactive, Inc. (the "Company") will mail
Rights certificates to the Company's
shareholders and the Rights will become
transferable apart from the Common Stock.
Distribution Date: Rights will separate from the Common Stock and
become exercisable following (a) the tenth
day after a person or group acquires
beneficial ownership of 12% or more of the
Company's Common Stock or (b) the tenth
business day (or such later date as may be
determined by the Company's Board of
Directors) after a person or group announces
a tender or exchange offer, the consummation
of which would result in ownership by a
person or group of 12% or more of the
Company's Common Stock.
Preferred Stock
Purchasable Upon
Exercise of Rights: After the Distribution Date, each Right will
entitle the holder to purchase for $65.00
(the "Exercise Price"), a fraction of a
share of the Company's Preferred Stock with
economic terms similar to that of one share
of the Company's Common Stock.
Flip-In: If an acquiror (an "Acquiring Person") obtains
12% or more of the Company's Common Stock
then each Right (other than Rights owned by
an Acquiring Person or its affiliates) will
entitle the holder thereof to purchase, for
the Exercise Price, a number of shares of
the Company's Common Stock having a then
current market value of twice the Exercise
Price.
Flip-Over: If, after an Acquiring Person obtains 12% or
more of the Company's Common Stock, (a) the
Company merges into another entity, (b) an
acquiring entity merges into the Company or
(c) the Company sells more than 50% of the
Company's assets or earning power, then each
Right (other than Rights owned by an
Acquiring Person or its affiliates) will
entitle the holder thereof to purchase, for
the Exercise Price, a number of shares of
Common Stock of the person engaging in the
transaction having a then current market
value of twice the Exercise Price.
Exchange Provision: At any time after the date an Acquiring Person
obtains 12% or more of the Company's Common
Stock and prior to the acquisition by the
Acquiring Person of 50% of the outstanding
Common Stock, the Company's Board of
Directors may exchange the Rights (other
than Rights owned by the Acquiring Person or
its affiliates), in whole or in part, for
shares of Common Stock of the Company at an
exchange ratio of one share of Common Stock
per Right (subject to adjustment). However,
if a majority of the Company's Board of
Directors is elected by shareholder action
by written consent, then for a period of 180
days following such election the Rights
cannot be exchanged if such exchange is
reasonably likely to have the purpose or
effect of facilitating an acquisition of the
Company by a person or entity who proposed,
nominated or supported a director of the
Company so elected by written consent (an
"Interested Person").
Redemption of
the Rights: Rights will be redeemable at the Company's
option for $0.001 per Right at any time on
or prior to public announcement that a
Person has acquired beneficial ownership of
12% or more of the Company's Common Stock
(the "Shares Acquisition Date"). However,
if a majority of the Company's Board of
Directors is elected by shareholder action
by written consent, then for a period of 180
days following such election the Rights
cannot be redeemed if such redemption is
reasonably likely to have the purpose or
effect of facilitating an acquisition of the
Company by an Interested Person.
Expiration of
the Rights: The Rights expire on the earliest of (a)
October 30, 2008 or (b) exchange or
redemption of the Rights as described above.
Amendment of
Terms of Rights: The terms of the Rights and the Rights
Agreement may be amended in any respect
without the consent of the Rights holders on
or prior to the Distribution Date;
thereafter, the terms of the Rights and the
Rights Agreement may be amended without the
consent of the Rights holders in order to
cure any ambiguities or to make changes
which do not adversely affect the interests
of Rights holders (other than the Acquiring
Person). However, if a majority of the
Company's Board of Directors is elected by
shareholder action by written consent, then
for a period of 180 days following such
election the Rights Agreement cannot be
amended in any manner reasonably likely to
have the purpose or effect of facilitating
an acquisition of the Company by an
Interested Person.
Voting Rights: Rights will not have any voting rights.
Anti-Dilution
Provisions: Rights will have the benefit of certain
customary anti-dilution provisions.
Taxes: The Rights distribution should not be taxable
for federal income tax purposes. However,
following an event which renders the Rights
exercisable or upon redemption of the
Rights, shareholders may recognize taxable
income.
The foregoing is a summary of certain principal terms of the Shareholder
Rights Plan only and is qualified in its entirety by reference to the
detailed terms of the Rights Agreement dated as of October 30, 1998,
between the Company and the Rights Agent.
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT BETWEEN
3DFX INTERACTIVE, INC. AND BANKBOSTON, N.A. DATED AS OF OCTOBER 30, 1998.