Rights Agreement - Adobe Systems Inc. and Harris Trust Co. of California
AMENDED AND RESTATED RIGHTS AGREEMENT
This agreement ("Rights Agreement"), dated as of July 11, 1990, and
amended and restated as of April 10, 1996, between Adobe Systems Incorporated, a
California corporation (the "Company"), and Harris Trust Company of California
(the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company on July 11, 1990 (i)
announced that it authorized the issuance and declared a dividend of one right
("Right") for each share of the common stock of the Company ("Common Stock")
outstanding as of the Close of Business (as defined herein) on July 24, 1990,
each Right representing the right to purchase one share of Common Stock of the
Company upon the terms and subject to the conditions hereinafter set forth, and
(ii) further authorized the issuance of one Right with respect to each share of
Common Stock of the Company that shall become outstanding between July 24, 1990,
and the Distribution Date (as defined herein); and
WHEREAS, pursuant to authorization of the Board of Directors at a
meeting properly noticed and convened on April 10, 1996, this Agreement has been
amended and restated as of the date set forth above in accordance with the
provisions of Section 27 hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as defined herein) who
or which, together with all Affiliates (as defined herein) and Associates (as
defined herein) of such Person, without the prior approval of the Board of
Directors, shall be the Beneficial Owner (as defined herein) of 20% or more of
the outstanding Common Stock; provided, however, that in no event shall a Person
who or which, together with all Affiliates and Associates of such Person, is the
Beneficial Owner (as defined herein) of less than 20% of the Company's
outstanding shares of Common Stock, become an Acquiring Person solely as a
result of a reduction of the number of shares of outstanding Common Stock,
including repurchases of outstanding shares of Common Stock by the Company,
which reduction increases the percentage of outstanding shares of Common Stock
beneficially owned by such
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Person, and provided further that an Acquiring Person shall not include an
Exempt Person (as defined herein).
(b) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii)(c) 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 Securities Exchange Act of 1934, as amended ("Exchange Act"), as currently
in effect.
(d) A Person shall be deemed the "Beneficial Owner" of any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates 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, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or (B)
the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", any securities if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting [except as described in clause (B) of
subparagraph (ii) of this Section 1(d)] or disposing of any securities
of the Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of California are authorized
or obligated by law or executive order to close.
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(f) "Close of Business" on any given date shall mean 5:00 P.M.,
California time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the common stock of the Company. "Common Stock" when used with reference to any
Person other than the Company which shall be organized in corporate form shall
mean the capital stock or other equity security with the greatest per share
voting power of such Person or, if such Person is a Subsidiary (as defined
herein) of, or is controlled by another Person, the Person which ultimately
controls such first-mentioned Person. "Common Stock" when used with reference
to any Person other than the Company which shall not be organized in corporate
form shall mean units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power per unit of such Person.
(h) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(j) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(l) "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
(m) "Exchange Act" shall have the meaning set forth in Section 1(c)
hereof.
(n) "Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan or employee stock plan of the Company or of
any Subsidiary of the Company, or any Person, organized, appointed, established
or holding Common Stock for, or pursuant to, the terms of any such plan.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Flip-In Event" shall mean any event described in
Section 11(a)(ii)(A), (B) or (C) hereof.
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(q) "Flip-In Exercise Payment" shall have the meaning set forth in
Section 11(a)(ii)(c).
(r) "Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(s) "Flip-Over Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(t) "Flip-Over Exercise Payment" shall have the meaning set forth in
Section 13(a) hereof.
(u) "NASDAQ" shall have the meaning set forth in Section 9(b) hereof.
(v) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(w) "Principle Party" shall have the meaning set forth in
Section 13(b) hereof.
(x) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(y) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(z) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(aa) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(bb) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(cc) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the directors shall become
aware of the existence of an Acquiring Person.
(dd) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ee) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect
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a majority of the board of directors or other persons performing similar
functions, are beneficially owned, directly or indirectly, by such Person and
any corporation or other entity that is otherwise controlled by such Person.
(ff) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(gg) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(hh) "Triggering Event" shall mean any event described in
Section 11(a)(ii)(A), (B), or (C) or Section 13 hereof.
(ii) "Voting Power" shall mean the voting power of all securities of
the Company then outstanding and generally entitled to vote for the election of
directors of the Company.
Any determination required by the definitions contained in this
Section 1 shall be made by the Board of Directors of the Company in its good
faith judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. With the consent of the Rights Agent, the Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth day
after Stock Acquisition Date or (ii) the Close of Business on the tenth day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence (which intention to commence remains in effect for five (5) business
days after such announcement), a tender or exchange offer upon the successful
consummation of which such Person, together with its Affiliates and Associates,
would be the Beneficial Owner of 20% or more of the outstanding Common Stock
(irrespective of whether any shares are actually purchased pursuant to any such
offer) (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(c) hereof) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock and not
by separate Right certificates, and (y) each Right will be transferable only in
connection with the transfer of a share (subject to adjustment as hereinafter
provided) of
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Common Stock. As soon as practicable after the Distribution Date, the Rights
Agent will mail, by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the Close of Business on the Distribution Date, as shown
by the records of the Company, to the address of such holder shown on such
records, a Right certificate in substantially the form of EXHIBIT A hereto
("Right Certificate") evidencing one Right for each share of Common Stock so
held. As of and after the Distribution Date the Rights will be evidenced solely
by such Right Certificates.
(b) On April 10, 1996 or as soon as practicable thereafter, the
Company sent a copy of a Summary of Rights to Purchase Common Stock,
substantially in the form (Exhibit B having been amended, however, to summarize
the terms of the Rights as amended as of April __, 1996) attached hereto as
EXHIBIT B ("Summary of Rights"), by first-class, postage prepaid mail, to each
record holder of Common Stock as of the Close of Business on July 24, 1990, at
the address of such holder shown on the records of the Company.
(c) With respect to certificates for Common Stock outstanding as of
July 24, 1990, until the Distribution Date (or, if earlier, the Redemption Date
or the Final Expiration Date), the Rights will be evidenced by such certificates
for Common Stock registered in the names of the holders thereof together with a
copy of the Summary of Rights. Until the Distribution Date (or, if earlier, the
Redemption Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Stock outstanding on July 24, 1990, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
(d) (i) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common Stock) after
July 24, 1990 but prior to the earlier of the Distribution Date, the Redemption
Date or the Final Expiration Date, shall have impressed on, printed on, written
on, or otherwise affixed to them, the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Adobe Systems
Incorporated and Manufacturers Hanover Trust Company, as Rights Agent,
dated as of July 11, 1990 (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive office of Adobe Systems Incorporated. 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. Adobe Systems Incorporated will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five (5)
days after receipt by it of a written request therefor. Under certain
circumstances as provided in the Rights Agreement, Rights issued to or
beneficially owned by Acquiring Persons
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or their Associates or Affiliates (as defined in the Rights Agreement) or
any subsequent holder of such Rights may be limited as provided in
Section 11(a)(ii) and Section 24 of the Rights Agreement.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Stock represented by such certificates shall, until
the Distribution Date, be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Stock
represented thereby.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof), when, as and if
issued, shall be substantially in the form set forth in EXHIBIT A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any law or with any rule or regulation made pursuant to thereto,
or with any rule or regulation of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage. Subject to the provisions
of Sections 11 and 22 hereof, the Right Certificates evidencing the Rights
issued on July 24, 1990, whenever such certificates are issued, shall be dated
as of July 24, 1990, and the Right Certificates evidencing Rights to holders of
record of Common Stock issued after July 24, 1990, shall be dated as of July 24,
1990, but shall also be dated to reflect the date of issuance of such Right
Certificate. On their face, Right Certificates shall entitle the holders
thereof to purchase, for each Right, one share of Common Stock, or other
securities or property as provided herein, as the same may from time to time be
adjusted after the date hereof as provided herein, at the price per share of
$115.00, as the same may from time to time be adjusted as provided herein (the
"Purchase Price").
(b) Notwithstanding any other provision of this Rights Agreement, any
Right Certificate that represents Rights that are or were at any time on or
after the earlier of the Stock Acquisition Date or the Distribution Date
beneficially owned by an Acquiring Person or any Affiliate or Associate thereof
(or any transferee of such Rights) shall have impressed on, printed on, written
on or otherwise affixed to it (if the Company or the Rights Agent has knowledge
that such Person is an Acquiring Person or an Associate or Affiliate thereof or
transferee of such Persons or a nominee of any of the foregoing) the following
legend:
The beneficial owner of the Rights represented by this Right Certificate is
an Acquiring Person or an Affiliate or Associate (as defined in the Rights
Agreement) of an Acquiring Person or a subsequent holder of such Right
Certificates beneficially owned by such Persons. Accordingly, under
certain circumstances as provided in the Rights
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Agreement, this Right Certificate and the Rights represented hereby may be
limited as provided in Section 11(a)(ii) and Section 24 of the Rights
Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its President or any Vice President, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, issued and delivered with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices designated for such purposes, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, the date of each of the Right Certificates and the certificate
numbers for each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14(b) hereof, at any time
after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Certificates may be (i) transferred or (ii) split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Common
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Right
Certificate shall surrender the Right Certificate at the office of the Rights
Agent designated for such purposes with the form of assignment on the reverse
side thereof duly endorsed (or enclose with such Right Certificate a written
instrument of transfer in form satisfactory to the Company and the Rights
Agent), duly executed by the registered holder thereof or his attorney, duly
authorized in writing, and with such signature duly guaranteed. Any
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registered holder desiring to split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be split up,
combined or exchanged at the Corporate Agency Service Center of the Rights
Agent. Thereupon the Rights Agent shall countersign (by manual signature) and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall become exercisable, and may be exercised to
purchase Common Stock, except as otherwise provided herein, in whole or in part
at any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed
(with such signature duly guaranteed), to the Rights Agent at 111 West Monroe
Street, 14th Floor, Chicago, Illinois 60606, Attention: Charles Zade, together
with payment of the Purchase Price with respect to each Right exercised, subject
to adjustment as hereinafter provided, at or prior to the Close of Business on
the earlier of (i) July 23, 2000 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (such date being
herein referred to as the "Redemption Date") or (iii) the time at which all such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price and the number of shares of Common Stock or
other securities or consideration to be acquired upon exercise of a Right shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Purchase Price shall be payable in lawful money of the United
States of America, in accordance with Section 7(c) hereof.
(c) Except as provided in Section 7(d) hereof, upon receipt of a
Right Certificate with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price or so much thereof as is necessary
for the shares to be purchased and an amount equal to any applicable transfer
tax, by cash, certified check or official bank check payable to the order of the
Company or the Rights Agent, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Common Stock certificates for the
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number of shares of Common Stock so elected to be purchased and the Company will
comply, and hereby authorizes and directs such transfer agent to comply, with
all such requests, (ii) requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares in accordance with Section 14(b)
hereof, and (iii) promptly after receipt of such Common Stock certificates cause
the same to be delivered to, or upon the order of, the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder, and, when appropriate, after receipt promptly deliver such case to, or
upon the order of, the registered holder of such Right Certificate; provided,
however, that in the case of a purchase of securities, other than Common Stock,
pursuant to Section 13 hereof, the Rights Agent shall promptly take the
appropriate actions corresponding to the foregoing clauses (i) through (iii).
In the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the Provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Right Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate or destruction thereof to the Company.
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SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
(a) The Company covenants and agrees that at all times it will cause
to be reserved and kept available, out of, and to the extent of, is authorized
and unissued shares of Common Stock not reserved for another purpose (and,
following the occurrence of a Triggering Event, other securities) or held in its
treasury, the number of shares of Common Stock (and, following the occurrence of
a Triggering Event, other securities) that, as provided in this Agreement,
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights, provided, however, that the Company shall not
be required to reserve and keep available shares of Common Stock or other
securities sufficient to permit the exercise in full of all outstanding Rights
pursuant to the adjustments set forth Section 11(a)(ii), Section 11(a) (iii) or
Section 13 hereof unless, and only to the extent that, the Rights become
exercisable pursuant to such adjustments.
(b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become exercisable, the Rights and all shares of
Common Stock (and following the occurrence by a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, and if the Common
Stock shall become listed on any national securities exchange, to cause, from
and after such time as the Rights become exercisable, the Rights and all shares
of Common Stock (and, following the occurrence of a Triggering Event, other
securities) issued or reserved for issuance upon exercise thereof to be listed
on such exchange upon official notice of issuance upon such exercise and (ii) if
then necessary, to permit the offer and issuance of such shares of Common Stock
(and, following occurrence of a Triggering Event, other securities), register
and qualify such share of Common Stock (and, following the occurrence of a
Triggering Event, other securities) under the Securities Act and any applicable
state securities or "blue sky" laws (to the extent exemptions therefrom are not
available), cause such registration, statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the Redemption Date or the Final
Expiration Date of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days, the exercisability of the Rights
in order to prepare and file a registration statement under the Securities Act
and permit it to become effective. Upon any such suspension, the Company shall
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. 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 and until a registration statement under the Securities Act (if
required) shall have been declared effective.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock (and
following the occurrence of a Triggering Event, other securities) delivered upon
exercise of Rights shall, at the time of
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delivery of the certificates for such shares (subject to payment of the Purchase
Price in respect thereof), be duly and validly authorized and issued and fully
paid and nonassessable shares in accordance with applicable law.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Common Stock (or other securities, as the case may be) 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
Right Certificates to a Person other than, or the issuance or delivery of
certificates for Common Stock (or other securities, as the case may be) upon
exercise of Rights in a name other than that of, the registered holder of the
Right Certificate, and the Company shall not be required to issue or deliver a
Right Certificate or certificate for Common Stock (or other securities, as the
case may be) to a person other than such registered holder until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. COMMON STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Common stock (or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Stock (or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made.
SECTION 11. ADJUSTMENTS TO NUMBER AND KIND OF SHARES, NUMBER OF
RIGHTS OR PURCHASE PRICE. The number and kind of shares subject to purchase
upon the exercise of each Right, the number of Rights outstanding and the
Purchase Price are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare or pay any dividend on Common Stock payable in
shares of Common Stock, (B) subdivide or split the outstanding shares of Common
Stock into a greater number of shares, (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares or effect a
reverse split of the outstanding shares of Common Stock, or (D) issue any shares
of its capital stock in a reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Common
Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate
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number and kind of shares of Common Stock or capital stock, as the case may be,
which, if such Right had been exercised immediately prior to such date, the
holder thereof would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(1)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to any adjustment
required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, (1) shall consolidate with or merge with and into
the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries, and the Company or such Subsidiary
shall be the continuing or surviving corporation of such consolidation,
merger or combination and the Common Stock of the Company shall remain
outstanding and no shares thereof shall be changed into or exchanged for
stock or other securities of the Company or any other property, or (2)
shall, in one or more transactions, other than in connection with the
exercise of a Right or Rights and other than in connection with the
exercise or conversion of securities exercisable for or convertible into
securities of the Company or of any Subsidiary of the Company, transfer any
assets or property to the Company or any of its Subsidiaries in exchange
(in whole or in part) for any shares of any class of capital stock of the
Company or any of its Subsidiaries or any securities exercisable for or
convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries, or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of any
class of capital stock of the Company or any of its Subsidiaries or any
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries (other than as part
of a pro rata offer or distribution by the Company or such Subsidiary to
all holders of such shares), or (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire (other than as a pro rata
dividend) or dispose, to, from or with, as the case may be, in one
transaction or a series of transactions, the Company or any of its
Subsidiaries, assets (including securities) on terms and conditions less
favorable to the Company or such Subsidiary than the Company or such
Subsidiary would be able to obtain in arm's-length negotiation with an
unaffiliated third party, or (4) shall receive any compensation from the
Company or any of its Subsidiaries for services other than compensation for
employment as a regular or part-time employee, or fees for serving as a
director, at rates in accordance with the Company's (or its Subsidiary's)
past practices, or (5) shall receive the benefit, directly or indirectly
(except proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or tax
advantage provided by the Company or any of its Subsidiaries, or (6) shall
engage in any transaction with the Company (or any of its Subsidiaries)
involving the sale,
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license, transfer or grant of any right in, or disclosure of, any patents,
copyrights, trade secrets, trademarks, know-how or ny other intellectual or
industrial property rights recognized under any country's intellectual
property laws which the Company (including its Subsidiaries) owns or has
the right to use on terms and conditions not approved by the Board; or
(B) any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person other than pursuant to any
transaction set forth in Section 13(a) hereof;
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock
split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an
Acquiring Person or any Affiliate or Associate of such Acquiring Person)
which has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding share of any class of equity
securities of the Company or any of its Subsidiaries, or securities
exercisable for or convertible into equity securities of the Company or any
of its Subsidiaries, which is directly or indirectly beneficially owned by
any Acquiring Person or any Affiliate or Associate of any Acquiring Person,
then, subject to the last sentence of Section 23(a)(i) and except as otherwise
provided in this Section 11, each holder of a Right shall thereafter have a
right to receive for each Right, upon payment of an amount equal to the product
of the then current Purchase Price and the then number of shares of Common Stock
for which a Rights was exercisable immediately prior to the first occurrence of
a Flip-In Event (the "Flip-In Exercise Payment") and exercise of a Right in
accordance with the terms of this Rights Agreement, such number of shares of
Common Stock as shall equal the result obtained by dividing the Flip-In Exercise
Payment by 50% of the Current Market Price per share of Common Stock on the date
of the first occurrence of a Flip-In Event (such number of shares is herein
called the "Adjustment Shares"); provided that the Purchase Price per share and
the number of Adjustment Shares shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of such first
occurrence; and provided further that if the transaction that would otherwise
give rise to the foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13 hereof shall apply and
no adjustment shall be made pursuant to this Section 11(a)(ii). Notwithstanding
the foregoing, the adjustment pursuant to this Section 11(a)(ii) shall not occur
with respect to any Rights that are or were at any time on or after the earlier
of the Stock Acquisition Date or the Distribution Date beneficially owned by the
Acquiring Person or any Associate or Affiliate of the Acquiring Person which is
or was involved in or which caused or facilitated, directly or indirectly, the
event or transaction or transactions listed above in this Section 11(a)(ii) in
respect of which such adjustment occurs (or any subsequent transferee of such
Rights), and upon exercise of
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such Rights, the holders thereof shall continue to receive upon exercise the
number of shares of Common Stock otherwise provided for herein without giving
effect to such adjustment.
(iii) To the extent permitted by applicable law and any agreements
in effect on the date hereof to which the Company is a party, the Company may:
(A) determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") and (B) with respect to each Right, upon exercise of
such Right, make adequate provision to substitute for the Adjustment Shares not
received upon exercise of such Right (1) cash, (2) other equity securities of
the Company (including, without limitation, shares, or units of shares, of
preferred stock which, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the Common Stock, are deemed in good
faith by the Board of Directors of the Company to have substantially the same
value as shares of Common Stock (such shares or units of shares of preferred
stock are herein called "Common Stock Equivalents"), (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing, having a
value which, when added to the value of the shares of Common Stock actually
issued upon exercise of such Right, shall have an aggregate value equal to the
Current Value, where such aggregate value has been determined in good faith by
the Board of Directors of the Company based upon the advice of a nationally
recognized independent investment banking firm selected in good faith by the
Board of Directors of the Company; PROVIDED, HOWEVER, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty days following the later of (x) first occurrence of a Flip-In
Event and (y) the date of 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
"Flip-In Trigger Date") (such thirty day period is herein called the
"Substitution Period"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the excess of
the Current Value over the Purchase Price. To the extent that the Company
determines to take action pursuant to the first sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to the first sentence
of Section 11(a)(ii) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to 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 Stock shall be the Current Market Price per share of the
Common Stock on Flip-In Trigger Date and the per share or per unit value of any
Common Stock Equivalent shall be deemed to equal the Current Market price per
share of the Common Stock on such date. The Board of Directors may, but shall
not be required to, establish procedures to allocate the right to receive Common
Stock upon the exercise of the Rights among holders of Rights pursuant to this
Section 11(a)(iii)..
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(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Common
Stock entitling them to subscribe for or purchase (for a period expiring within
forty-five calendar days after such record date) Common Stock, shares having the
same rights, privileges and preferences as the Common Stock ("Equivalent Common
Stock") or securities convertible into Common Stock or Equivalent Common Stock
at a price per share of Common Stock or Equivalent Common Stock (or having a
conversion price per share, if a security convertible into Common Stock or
Equivalent Common Stock) less than the Current Market Price per share of Common
Stock on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock and/or Equivalent Common Stock (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date, plus the number of additional shares of Common Stock and/or Equivalent
Common Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such non-cash consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Shares of Common Stock owned, by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash, assets (other than a dividend
payable in Common Stock, but including any dividend payable in stock other than
Common Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
Current Market Price per share of Common Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) 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
share of Common Stock and the denominator of which shall be such Current Market
Price per share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
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<PAGE>
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of the Common Stock for the thirty
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purpose of computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing Prices per share
of the Common Stock for the ten consecutive Trading Days immediately following
such date; provided, however, that in the event that the Current Market Price
per share of the Common Stock is determined during a period following the
announcement by the issuer of the Common Stock of (i) any dividend or
distribution on the Common Stock (other than a regular quarterly cash dividend
and other than the Rights), (ii) any subdivision, combination or
reclassification of the Common Stock, and prior to the expiration of the
requisite thirty Trading Day or ten Trading Day period, as set forth above, the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification occurs, then, and in each such
case, the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by NASDAQ or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
as determined in good faith by the Board of Directors of the Company shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange,
a Business Day. If the Common Stock is not publicly held or not so listed or
traded, "Current Market Price" per share shall mean the fair value per share as
determined in good faith by
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<PAGE>
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive of all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Redemption Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in Section
11(a), (b), (c), (g), (h), (i), (j), (k) and (m) hereof, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Common Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Common Stock
(calculated to the nearest ten-thousandth) obtained by (i) multiplying (x) the
number of shares covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of shares of Common Stock for
which a Right may be exercised, to adjust the number of Rights, in lieu of any
adjustment in the
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<PAGE>
number of shares of Common Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Common Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten 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(i), 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
Purchase 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.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Common Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of shares which were
expressed in the initial Rights Certificate issued hereunder.
(k) In the event that shares of the Company's Common Stock have
hereafter par value, then, before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value of the shares of
Common Stock issuable upon exercise of the Rights, the Company shall take any
corporate action, including using its best efforts to obtain any required
shareholder approvals, which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right
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exercised after such record date the shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the shares of Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares of Common Stock and other
capital stock or securities upon the occurrence of the event requiring such
adjustments.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Stock, (ii) issuance for cash of any shares of Common
Stock at less than the current market price, (iii) issuance for cash of shares
of Common Stock or securities which by their terms are convertible into or
exchangeable for shares of Common Stock, (iv) stock dividends or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Common Stock shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company), (ii) merge with or into any other Person (other than
a Subsidiary of the Company), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons (other than the Company and/or any of its Subsidiaries),
if (x) at the time of, or immediately after, such consolidation, merger or sale
there are any rights, warrants or other instruments securities outstanding or
agreements in effect which substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to, simultaneously
with, or immediately after, such consolidation, merger or sale, the shareholders
of the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the Rights.
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SECTION 12. CERTIFICATION OF ADJUSTMENTS. Whenever an adjustment is
made as provided in Sections 11 and 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts giving rise to such adjustment, (b) promptly file with the Rights Agent
and with each transfer agent for the Common Stock a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 26 hereof. Notwithstanding
the foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of, or the force or effect of, or the requirement for, such
adjustment. The Rights Agent shall be fully protected in relying on any
certificate prepared by the Company pursuant to Sections 11 and 13 and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate. Any
adjustment to be made pursuant to Sections 11 and 13 of this Rights Agreement
shall be effective as of the date of the event giving rise to such adjustment.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, at any time on or after the Distribution Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person or Persons and the Company shall not be the surviving
or continuing corporation of such consolidation or merger, or (y) any Person or
Persons shall consolidate with, or merge with and into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or of the Company or each or any
other property [other than, in the case of the transactions described in
subparagraphs (z) or (y), a merger or consolidation which would result in all of
the Voting Power represented by the securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the Voting Power represented by the securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such
transactions], or (z) the Company or one or more of its Subsidiaries shall sell,
mortgage or otherwise transfer to any other Person or any Affiliate or Associate
of such Person, in one transaction, or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event, proper provision shall be made so that (i) each holder of
record of a Right shall thereafter have the right to receive, upon payment of an
amount equal to the product of the then current Purchase Price per share and the
then number of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Flip-Over Event (or, if a Flip-In
Event hereof has occurred prior to the first occurrence
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of a Flip-Over Event, multiplying the Purchase Price per share in effect
immediately prior to the first occurrence of a Flip-In Event by the number of
shares of Common Stock for which a Right was exercisable immediately prior to
such first occurrence of a Flip-In Event (the "Flip-Over Exercise Payment") and
the exercise of a Right in accordance with the terms of this Rights Agreement,
such number of shares of validly issued, fully paid and nonassessable and freely
tradeable Common Stock of the Principal Party (as defined herein) not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by dividing the Flip-Over Exercise Payment
by 50% of the Current Market Price (determined as provided in Section 11(d)
hereof with respect to the Common Stock) per share of the Common Stock of such
Principal Party on the date of consummation of such Flip-Over Event (or the fair
market value on such date of other securities or property of the Principal
Party, as provided for herein); PROVIDED that the Purchase Price per share and
the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in this Agreement
to reflect any events occurring after the date of the first occurrence of a
Flip-Over Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Flip-Over Event, all the obligations and duties
of the Company pursuant to this Rights Agreement; (iii) the term "Company" for
all purposes of this Rights Agreement shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall only apply to such Principal Party following the first
occurrence of a Flip-Over Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; provided, however, that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right, such
cash, shares, warrants and other property which such holder would have been
entitled to receive had he, at the time of such transaction, owned the shares of
Common Stock of the Principal Party purchasable upon the exercise of a Right,
and such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the right in accordance with the terms hereof for such cash, shares,
rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof; (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer the Common Stock
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of which has the greatest market value or (B) if no securities are so
issued, (x) the Person that is the other party to the merger or
consolidation and that survives said merger or consolidation, or, if there
is more than one such Person, the Person the Common Stock of which has the
greatest market value or (y) if the Person that is the other party to the
merger or consolidation does not survive the merger or consolidation, the
Person that does survive the merger or consolidation (including the Company
if it survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined,
whichever of such Persons as is the issuer of Common Stock having the
greatest market value of shares outstanding; provided, however, that in any
such case described in the foregoing (b)(i) or (b)(ii), if the Common Stock
of such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered, the term "Principal
Party" shall refer to such other Person, or if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Stocks of all
of which are and have been so registered, the term "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having
the greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) unless prior thereto the Company and
the Principal Party involved therein shall have executed and delivered to the
Rights Agent an agreement confirming that the requirements of Sections 13(a) and
(b) hereof shall promptly be performed in accordance with their terms and that
such consolidation, merger, sale or transfer of assets shall not result in a
default by the Principal Party under this Rights Agreement as the same shall
have been assumed by the Principal Party pursuant to Sections 13(a) and (b)
hereof and further providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party at its own expense
shall:
(i) prepare and file a registration statement under the Securities
Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and use its best efforts to cause
such registration statement to remain effective (with a prospectus at
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all times meeting the requirements of the Act) until the date of expiration
of the rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal Party
shall become listed on a national securities exchange, to list (or continue
the listing of) the Rights and the securities purchasable upon exercise of
the Rights on such securities exchange and, if the Common Stock of the
Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchased upon exercise of the Rights
to be reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act;
and
(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the shares of Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence of a transaction described in
Section 11(a)(ii) hereof, the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a). The
provisions of this Section 13 shall similarly apply to all successive Flip-Over
Events.
(d) Furthermore, in case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Current
Market Price per share (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then current market price (other than to holders of
Rights pursuant to this Section 13) or (ii) providing for any special payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such Principal Party pursuant to the provisions of Section 13; then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, 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.
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SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the holders of record of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the then current
market value of a whole Right. For the purposes of this Section 14(a), the then
current market value of a Right shall be determined in the same manner as the
Current Market Price of a share of Common Stock shall be determined pursuant to
Section 11(d) hereof.
(b) The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares. In lieu of issuing fractions of shares of Common
Stock, there shall be paid to the holder of record of Right Certificates at the
time such Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the then current market value of a share of Common
Stock. For purposes of this Section 14(b), the then current market value of a
share of Common Stock shall be the Current Market Price thereof as determined
pursuant to Section 11(d) hereof.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares upon
exercise of a Right.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, other than any rights of action vested in the Rights Agent
pursuant to Sections 18 and 20 below, are vested in the respective holders of
record of the Right Certificates (and, prior to the Distribution Date, the
holders of record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company or any other Person to enforce,
or otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in
this 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,
accordingly, that they will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement, Holders of Rights
shall be entitled to recover the reasonable costs and expenses, including
attorneys' fees, incurred by them in any action to enforce the provisions of
this Agreement.
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SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be evidenced
by a Right Certificate and will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the principal offices of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent or the transfer agent
of the Common Stock) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder of a Right, as such, shall be entitled to vote, receive dividends in
respect of or be deemed for any purpose to be the holder of Common Stock or any
other securities of the Company which may at any time be issuable upon the
exercise of the Rights, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote in
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
in respect of any such stock or securities, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
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SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all service rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of the Rights Agreement, including the cost and expenses of
defending against any claim of liability in the premises. The indemnity
provided herein shall survive the expiration of the Rights and the termination
of this Rights Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance upon any Right
Certificate, certificate for Common Stock or other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, guaranteed, verified or acknowledged, by the proper Person or
Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGED 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 or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent, under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and, in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
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(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificate shall have the full
force provided in the Right Certificates and in this Rights Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holder of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted to be taken by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) 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 certificate signed by the President or any Vice President and by
the Chief Financial Officer or 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 Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder 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 Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Right Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any
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Right Certificate; nor shall it be responsible for any adjustment required under
the provisions of Sections 11, 13, 23 or 24 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after receipt of a
certificate furnished pursuant to Section 12 describing any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any shares of Common Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
any Assistant Secretary or the Chief Financial Officer of the Company, and to
apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer. 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.
Subject to Section 20(c) hereof, 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 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 the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other entity.
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(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 contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise 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
Rights Agreement upon 30 days notice in writing, or such earlier period as shall
be agreed to in writing, mailed to the Company and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause) upon 30 days notice in
writing, or such earlier period as shall be agreed to in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the registration or removal of
a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the holder of record of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or any State thereof, in good standing, which is
authorized under such laws to
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exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate controlled by a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the purchase price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; PROVIDED, HOWEVER, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificate
would be issued, and (ii) no such Right Certificate shall be issued, if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
SECTION 23. REDEMPTION.
(a) (i) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (x) the Close of Business on the tenth day
following a Stock Acquisition Date, subject to extension by the Board of
Directors as provided in Section 26 hereof or (y) the Close of Business on the
Final Expiration Date, redeem all but not less than
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all the then outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Flip-In Event until such time as the
Board of Directors' right of redemption under this Section 23(a)(i) has expired.
(ii) Notwithstanding anything contained in this Agreement to the
contrary, the Board of Directors of the Company may redeem all but not less than
all of the then outstanding Rights at the Redemption Price following the
occurrence of a Stock Acquisition Date but prior to any Flip-Over Event in
connection with a Flip-Over Event in which all holders of Common Stock are
treated like and not involving (other than as a holder of Common Stock being
treated like all other such holders) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any other Person in which such Acquiring
Person, Affiliate or Associate has an interest, or any other Person or Persons
acting directly or indirectly on behalf of or in association with any such
Acquiring Person, Affiliate or Associate.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (the date of such action being the
"Redemption Date"), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter or the
holders of Rights shall be to receive the Redemption Price, without any interest
thereon. Within 10 days after the Redemption Date, 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 of the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section 23(b) or any
defect therein shall not affect the legality or validity of the action taken by
the Company.
(c) In the case of a redemption permitted under Section 23(a), the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent of the Common Stock, and upon such action, all
outstanding Right Certificates shall be null and void without any further action
by the Company.
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SECTION 24. EXCHANGE OF RIGHTS FOR COMMON STOCK.
(a) The Board of Directors of the Company may, at its option, at any
time after the occurrence of a Flip-In Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that do not
receive adjustments upon the occurrence of a Flip-In Event) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which do not receive
adjustments upon the occurrence of a Flip-In Event) held by each holder of
Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
share of Common Stock. For the purposes of this paragraph (d), the current
market value of a whole share of Common Stock shall be the Current Market Price
of a share of Common Stock (as defined in Section 11(d) hereof for the
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purposes of computations made other than pursuant to Section 11(a)(iii)) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24.
SECTION 25. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall propose
(i) to effect any of the transactions referred to in Section 11(a)(i) or to pay
any dividend to the holders of record of its Common Stock payable in stock of
any class or to make any other distribution to the holders of record of its
Common Stock (other than a regular periodic cash dividend), or (ii) to offer to
the holders of record of its Common Stock or options, warrants, or other rights
to subscribe for or to purchase shares of Common Stock (including any security
convertible into or exchangeable for Common Stock) or shares of stock of any
class or any other securities, options, warrants, convertible or exchangeable
securities or other rights, or (iii) to effect any reclassification of its
Common Stock or any recapitalization or reorganization of the Company, or (iv)
to effect any consolidation or merger with or into, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of record of a Right Certificate, in accordance with Section 26
hereof, notice of such proposed action, which shall specify the record date for
the purposes of such transaction referred to in Section 11(a)(i), or such
dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of record of the Common Stock for
purposes of such action, and in the case of such other action, at least 10 days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of record of Common Stock, whichever shall
be the earlier.
(b) In case any of the transactions referred to in Section 11(a)(ii)
or Section 13 of this Rights Agreement are proposed, then, in any such case, the
Company shall give to each holder of Rights, in accordance with Section 26
hereof, notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to the holders of Rights under Section 11(a)(ii)
or Section 13 hereof, as the case may be, and, upon consummating such
transaction, shall similarly give notice thereof to each holder of Rights.
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(c) The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
SECTION 26. NOTICES. Notices or demands authorized by the Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on behalf of the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Adobe Systems Incorporated
1585 Charleston Road
P.O. Box 7900
Mountain View, California 94039-7900
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
record of any Right Certificate or Right to or on behalf of 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:
Harris Trust Company of California
111 West Monroe Street, 14th Floor
Chicago, Illinois 60606
Attention: Charles Zade
Notices or demands authorized by this Rights Agreement to be given or made by
the Company of the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company and the Rights
Agent may from time to time supplement or amend this Agreement without approval
of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, (iii) prior to the Close of
Business on the tenth day following the Stock Acquisition Date and subject to
extension by the Board of Directors by amendment hereof, to change or supplement
any of the provisions herein which the Company may deem necessary or desirable
(including, but not limited to, an amendment that provides that the Rights shall
become exercisable or exchangeable for shares or fractions of shares of
Preferred Stock of
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the Company that are economically Common Stock Equivalents), or (iv) following
the time at which the Board of Directors' right of redemption under Section
23(a)(i) has expired, to exchange or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates. Upon
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment
unless the Rights Agent shall have determined in good faith that such supplement
or amendment would adversely affect its interests under this Agreement.
Notwithstanding anything contained in this Rights Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
SECTION 28. SUCCESSORS. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 29. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Stock) any legal
or equitable right, remedy or claim under this Rights Agreement; but this Rights
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the holders of record of the Right Certificates (and, prior to the
Distribution Date, the Common Stock).
SECTION 30. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California (or the laws of the state of incorporation of
any successor of the Company) and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable to contracts to
be made solely by residents of such state and performed entirely within such
state.
SECTION 31. COUNTERPARTS. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same Instrument.
SECTION 32. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
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<PAGE>
SECTION 33. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, illegal or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly amended and restated as of the day and year first above
written.
[SEAL]
ATTEST: ADOBE SYSTEMS INCORPORATED
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
[SEAL]
ATTEST: HARRIS TRUST
COMPANY OF CALIFORNIA
By:_______________________________ By:_______________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. ________ __________________Rights
NOT EXERCISABLE AFTER JULY 23, 2000, OR EARLIER IF REDEEMED OR EXCHANGED. AT
THE OPTION OF THE COMPANY, THE RIGHTS MAY BE REDEEMED AT $.01 PER RIGHT OR
EXCHANGED FOR COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN
THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON
WHO IS AN ACQUIRING PERSON OR A TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED BY
SUCH PERSONS, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE
SUBJECT TO CERTAIN LIMITATIONS IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
ADOBE SYSTEMS INCORPORATED
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 Amended and Restated Rights Agreement dated as of April -, 1996 ("Rights
Agreement") between Adobe Systems Incorporated, a California corporation
("Company"), and Harris Trust Company of California ("Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m. (California time) on
July 23, 2000, at the office of the Rights Agents, or its successors as Rights
Agent, designated for such purposes, one fully paid and nonassessable share of
Common Stock of the Company ("Common Stock") at a purchase price of $115.00 per
share, as the same may
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from time to time after the date of the Rights Agreement be adjusted in
accordance with the Rights Agreement ("Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Common Stock, or other property, may acquired
upon exercise of the Rights evidenced by this Right Certificate, as provided by
the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of record of the Right Certificates. Copies of the
Rights Agreement are on file at the principal executive office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the corporate agency service center of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder of record to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder
shall
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<PAGE>
be entitled to receive upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, at any time prior
to the earlier of (i) the Close of Business on the tenth day following Stock
Acquisition Date and subject to extension by the Board of Directors by amendment
of the Rights Agreement or (ii) the Final Expiration Date, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right if exchanged by the Company at its option in whole or in
part for shares of Common Stock.
No fractional shares of Common Stock shall be issued upon the exercise
or exchange of any Right or Rights evidenced hereby, and in lieu thereof, as
provided in the Rights Agreement, fractions of shares of Common Stock shall
receive an amount in cash equal to the same fraction of the then Current Market
Price (as such term is defined in the Rights Agreement) of a share of Common
Stock.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote in 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 (other than
certain actions specified in the
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<PAGE>
Rights Agreement) or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised or exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________________, 19____.
ATTEST: Adobe Systems Incorporated
By:_______________________________ By:_______________________________
Secretary Title:
COUNTERSIGNED:
Harris Trust Company of California,
As Rights Agent
By:_______________________________
Authorized Signature:
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<PAGE>
EXHIBIT B
ADOBE SYSTEMS INCORPORATED
Summary of Terms of
Rights Agreement
Nature of Right: When exercisable, each Right (a "Right") will
initially entitle the holder to purchase one share
of the Common Stock ("Common Stock") of Adobe
Systems Incorporated (the "Company").
Means of Distribution: The Rights will be distributed to holders of the
Company's outstanding Common Stock as a dividend
of one Right for each share of Common Stock. The
Rights will also be attached to all future
issuances of Common Stock prior to the
Distribution Date (as defined below).
Exercisability: Rights become exercisable on the earlier of: (i)
the Close of Business on the tenth day following a
public announcement by the Company or any person
or group (an "Acquiring Person") that such person
or group has acquired, without the approval of the
Board of Directors, beneficial ownership of 20% or
more of the Company's outstanding Common Stock, or
(ii) the tenth day (unless extended by the Board
prior to the time a person becomes an Acquiring
Person) following the commencement, or
announcement of an intention to commence, by any
person or group, of a tender offer which would
result in such person owning 20% or more of the
outstanding Common Stock of the Company (the
earlier of such dates is referred to as the
"Distribution Date"). Rights may be traded
separately from the Common Stock once the Rights
become exercisable.
Exercise Price: $115.00 per share, which is the amount that in the
judgment of the Board of Directors represents the
long-term value of the Common Stock (the "Exercise
Price").
Term: The Rights will expire ten years after the date of
issuance, or July 23, 2000, unless earlier
redeemed by the Company as described below.
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<PAGE>
Redemption of Rights: Rights are redeemable at a price of $0.01 per
Right, by the vote of the Company's Board of
Directors, at any time until the Close of Business
on the tenth day following the date on which a
person has become an Acquiring Person (the "Stock
Acquisition Date"). After the Stock Acquisition
Date, Rights are also redeemable prior to any
business combination in which all holders of
Common Stock are treated alike and not involving
(except as a holder of Common Stock treated like
all other holders) an Acquiring Person.
Rights in Event If the Company is acquired by any person in a
of Business Combination: merger or other business combination transaction
or 50% or more of its assets or earnings powers
are sold to any person after the Distribution
Date, each holder of a Right shall thereafter have
the right to purchase, upon payment of the then
current Exercise Price, such number of shares of
common stock of the acquiring company having a
current market value equal to twice the Exercise
Price.
Rights in Event of In the event that an Acquiring Person engages in
Self-Dealing Transaction certain self-dealing transactions with the
or Acquisition of Company, or a person becomes the beneficial owner
Substantial Amount of of 20% or more of the outstanding Common Stock,
Common Stock: each holder of a Right thereafter has the right to
purchase, upon payment of the then current
Exercise Price, such number of shares of Common
Stock having a market value at the time of the
transaction equal to twice the Exercise Price. If
insufficient authorized but unissued shares of
Common Stock are available for issuance, the
Company must deliver all the available shares of
Common Stock and an amount of cash or other
property of the Company, so that the aggregate
value received is equal to twice the Exercise
Price. Rights held by the Acquiring Person will
not be entitled to the benefit of such an
adjustment.
Self-dealing transactions are defined to include a
merger of an Acquiring Person into the Company in
which the Common Stock remains outstanding and
unchanged, the issuance of securities of the
Company to an Acquiring Person, the transfer of
assets to an Acquiring Person on other than an
arm's length basis, compensation to an
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<PAGE>
Acquiring Person on a basis inconsistent with the
Company's past practice, a loan or provision of
other financial assistance (except proportionately
as a stockholder) to an Acquiring Person or the
licensing, sale or other transfer of proprietary
technology or know-how from the Company to the
Acquiring Person on terms not approved by the
Board of Directors.
Exchange Option: In the event (i) any person or group becomes an
Acquiring Person or (ii) any of the types of
transactions, acquisitions or other events
described above as self-dealing transactions
occurs, the Board may require all or any portion
of the outstanding Rights to be exchanged for
Common Stock on a pro rata basis at the rate of
one share of Common Stock per outstanding Right.
However, any rights held by an Acquiring Person
would not be entitled to participate in this
exchange.
Fractional Shares: No fractional shares of Common Stock will be
issued upon exercise of the Rights and, in lieu
thereof, a payment in cash will be made to the
holder of such Rights equal to the same fraction
of the current market value of a share of Common
Stock.
Adjustment: The Exercise Price payable, and the number of
Common Shares or other securities or property
issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification
of, the Common Stock, (ii) upon the grant to
holders of the Common Stock or convertible
securities at less than the current market price
of the Common Stock or (iii) upon the distribution
to holders of the Common Stock of evidences of
indebtedness or assets (excluding dividends
payable in Common Stock) or of subscription rights
or warrants (other than those referred to above).
Voting Power of Rights: The Rights themselves do not entitle the holder
thereof to any voting rights.
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Amendment of Rights: Until the Distribution Date, the Company may,
except with respect to the redemption price, amend
the Rights in any manner (including an amendment
that provides that the Rights shall become
exercisable for shares or fractions of shares of
preferred stock that are economically common stock
equivalents). After the Distribution Date, the
Company may amend the Rights in any manner that
does not adversely affect the interests of the
holders of the Rights.
A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE, FREE OF CHARGE, FROM THE COMPANY,
1585 CHARLESTON ROAD, P.O. BOX 7900, MOUNTAIN VIEW, CALIFORNIA, 94039-7900,
ATTENTION: GENERAL COUNSEL. THIS SUMMARY DESCRIPTION OF THE RIGHTS AGREEMENT
DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE RIGHTS AGREEMENT WHICH IS INCORPORATED IN THIS SUMMARY DESCRIPTION BY
REFERENCE.
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