UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________________
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report:
(Date
of
earliest event reported)
December
15, 2005
____________________________
FORGENT
NETWORKS, INC.
(Exact
name of registrant as specified in charter)
|
Delaware
(State
or other jurisdiction of incorporation or organization)
|
0-20008
(Commission
File Number)
|
74-2415696
(IRS
Employer Identification No.)
|
|
108
Wild Basin Road
Austin,
Texas 78746
(Address
of principal executive offices and zip code)
|
(512)
437-2700
(Registrant's
telephone number,
including area code)
N/A
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the Registrant under any of the following
provisions (see General Instruction A.2. below):
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR
230.425).
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17
CFR
240.14a-12).
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR
240.14d-2(b)).
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR
240.13e-4(c)).
|
Section
1 - Registrant's Business and Operations
Item
1.01 Entry
into a Material Definitive Agreement.
In
connection with the expiration of the Rights Agreement between Forgent Networks,
Inc. f/k/a VTEL Corporation (the "Company") and First National Bank of Boston,
dated July 10, 1996 (the "Expiring Rights Agreement"), and the December 31,
2005
expiration of the associated rights issued thereunder, on December 15, 2005,
the
Board of Directors of the Company approved the execution of a new Rights
Agreement (the "New Rights Agreement") between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent").
To
implement the purpose of the new Rights Agreement, on December 15, 2005,
the
Board of Directors of the Company declared a dividend distribution of one
Right
for each outstanding share of common stock, par value $0.01 per share, of
the
Company (the "Common Stock"). The distribution is payable to the stockholders
of
record at the close of business on December 31, 2005, and is effective
simultaneous with the expiration of the rights granted under the Expiring
Rights
Agreement.
Each
newly issued Right will entitle the registered holder to purchase from the
Company one one-thousandth of a share of Series A Preferred Stock, $0.01
par
value (the "Preferred Stock"), subject to adjustment, at a purchase price
of
$13, subject
to adjustment (the "Purchase Price"). The description and terms of the Rights
are set forth in the New Rights Agreement, a copy of which is attached hereto
as
Exhibit 1.
Initially,
the Rights will be attached to all Common Stock certificates representing
shares
then outstanding, and no separate Rights Certificates will be distributed.
The
Rights will separate from the Common Stock and a distribution date (the
"Distribution Date") will occur upon the earlier of (i) 10 days following
the date (the "Stock Acquisition Date") of a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more
of the outstanding shares of Common Stock or (ii) 10 business days
following the commencement of a tender offer or exchange offer that would
result
in a person or group beneficially owning 15% or more of such outstanding
shares
of Common Stock. Until the Distribution Date, (i) the Rights will
be
evidenced by the Common Stock certificates (together with a copy of this
Summary
of Rights or bearing the notation referred to below) and will be transferred
with and only with such Common Stock certificates, (ii) Common Stock
certificates issued after December 31, 2005 will contain a notation
incorporating the New Rights Agreement by reference and (iii) the
surrender
for transfer of any certificate for Common Stock outstanding (with or without
a
copy of this Summary of Rights) will also constitute the transfer of the
Rights
associated with the Common Stock represented by such certificate.
The
Rights are not exercisable until the Distribution Date and will expire at
the
close of business on December 31, 2015, unless that date is extended
or the
Rights are earlier redeemed or exchanged by the Company as described below.
As
soon as practicable after the Distribution Date, Rights Certificates will
be
mailed to holders of record of the Common Stock as of the close of business
on
the Distribution Date and, thereafter, the separate Rights Certificates alone
will represent the Rights.
2
Ten
business days after any person or group announces a tender offer for 15%
or more
of the Company's outstanding Common Stock, the Rights will become exercisable.
Thereafter, the Rights will trade separately from the Company's Common Stock
and
separate certificates representing the Rights will be issued, which will
entitle
the holder of a Right to purchase from the Company one one-thousandth of
a share
of Preferred Stock for the Purchase Price.
In
addition, if any person or group acquires 15% or more of the Common Stock,
each
Right not owned by the acquiror would become exercisable for the number of
shares of the Company's Common Stock that at the time have a market value
of two
times the Purchase Price of the Right. For example, at a Purchase Price of
$13
per Right, each Right not owned by an Acquiring Person (or by certain related
parties) following an event set forth in the preceding paragraph would entitle
its holder to purchase $26 worth of Common Stock (or other consideration,
as
noted above) for $13. Assuming that the Common Stock had a per share value
of $2
at such time, the holder of each valid Right would be entitled to purchase
13
shares of Common Stock for $13.
If,
after
any person or group acquires 15% or more of the Common Stock, the Company
is (i)
acquired in a merger or other business transaction in which the Company is
not
the surviving corporation or the capital stock of the Company is exchanged
for
the capital stock of the acquiring company, or (ii) involved in a sale of
at
least 50% of its assets, then the Rights, under certain circumstances, will
be
modified so as to entitle the holder to buy a number of the acquiring company's
common shares having a market value of two times the Purchase Price of each
Right.
The
Purchase Price payable, and the number of 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 or Preferred Stock,
(ii) if holders of the Common Stock or Preferred Stock are granted
certain
rights or warrants to subscribe for shares or convertible securities at less
than the current market price, or (iii) upon the distribution to holders
of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to
above).
With
certain exceptions, no adjustment in the Purchase Price will be required
until
cumulative adjustments amount to at least 1% of the Purchase Price. No
fractional Units will be issued and, in lieu thereof, an adjustment in cash
will
be made based on the market price of the Preferred Stock on the last trading
date prior to the date of exercise.
In
general, at any time until 10 days after the Stock Acquisition Date, the
Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
in
cash, shares of Common Stock or other consideration approved by the Board.
Immediately upon the action of the Board of Directors ordering redemption
of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.0l redemption price.
In
addition, the Company may, at any time after any person or group acquires
15% or
more
of the Common Stock, exchange all or a portion of the outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one
share
of Common Stock per Right, subject to adjustment to reflect stock splits,
stock
dividends or similar transactions. Immediately upon the action of the Board
of
Directors ordering an exchange of Rights, the Rights so exchanged will terminate
and the only right of the holders of such Rights will be to receive the shares
of Common Stock in exchange.
3
Until
a
Right is exercised, the holder thereof, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to vote
or
to receive dividends. While the distribution of the Rights will not be taxable
to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other
than those provisions relating to the rights and duties of the Rights Agent,
any
of the provisions of the New Rights Agreement may be amended by the Board
of
Directors of the Company prior to the Distribution Date. After the Distribution
Date, the provisions of the New Rights Agreement may be amended by the Board
in
order to cure any ambiguity, to make changes which do not adversely affect
the
interests of holders of Rights (excluding the interest of any Acquiring Person),
or to shorten or lengthen any time period under the New Rights Agreement;
provided, however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not
redeemable.
The
Rights have certain anti-takeover effects. Exercise of the Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The existence
of
Rights, however, should not affect an offer at a price which is fair to all
stockholders and otherwise in the best interests of the Company and its
stockholders as determined by the Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board
of
Directors since the Board of Directors may, at its option, at any time until
ten
days following the Stock Acquisition Date (as such period may be extended
or
shortened by the Board of Directors) redeem all but not less than all of
the
then outstanding Rights at the $.01 redemption
price.
A
copy of
the New Rights Agreement specifying the terms of the Rights is included as
Exhibit 4.1 to this filing and is incorporated herein by reference.
This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such exhibit. A copy of the New
Rights
Agreement is available free of charge from the Company for record holders
of the
Company's common stock.
Section
3 - Securities and Trading Markets
Item
3.03 Material
Modification of Rights of Security Holders
The
information required by this item is included in Item 1.01.
4
Section
9 -
Financial Statements and Exhibits
Item
9.01(c) Exhibits.
|
4.1*
|
Rights
Agreement, dated as of December 19, 2005, between Forgent
Networks,
Inc. and American Stock Transfer & Trust Company, which includes the
form of Series A Preferred Stock, $0.01 par value, as Exhibit A,
the
form of Rights Certificate as Exhibit B, and the Summary
of Rights as
Exhibit C.
|
*
Filed
herewith
5
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| FORGENT NETWORKS, INC. | ||
| |
|
|
| Date: December 19, 2005 | By: | /s/ Jay C. Peterson |
|
Chief Financial Officer |
||
6
EXHIBIT
4.1
Rights
Agreement with Exhibits
RIGHTS
AGREEMENT
Between
FORGENT
NETWORKS, INC.
and
AMERICAN
STOCK TRANSFER & TRUST COMPANY,
as
Agent
December
19, 2005
TABLE
OF CONTENTS
| Section 1. Certain Definitions | 1 |
| Section 2. Appointment of Rights Agent | 4 |
| Section 3. Issue of Rights Certificates | 4 |
| Section 4. Form of Rights Certificates | 6 |
| Section 5. Countersignature and Registration | 7 |
| Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates | 7 |
| Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights | 8 |
| Section 8. Cancellation and Destruction of Rights Certificate | 10 |
| Section 9. Reservation and Availability Of Capital Stock | 10 |
| Section 10. Preferred Stock Record Date | 12 |
| Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights | 12 |
| Section 12. Certificate of Adjusted Purchase Price or Number of Shares | 19 |
| Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earnings Power | 20 |
| Section 14. Fractional Rights and Fractional Shares | 22 |
| Section 15. Rights of Action | 23 |
| Section 16. Agreement of Rights Holders | 23 |
| Section 17. Rights Certificate Holder Not Deemed a Shareholder | 24 |
| Section 18. Concerning the Rights Agent | 24 |
| Section 19. Merger or Consolidation or Change of Name of Rights Agent | 25 |
| Section 20. Duties of Rights Agent | 25 |
| Section 21. Change of Rights Agent | 27 |
| Section 22. Issuance of New Rights Certificates | 28 |
| Section 23. Redemption and Termination | 28 |
| Section 24. Notice of Certain Events | 29 |
| Section 25. Notices | 31 |
| Section 26. Supplements and Amendments | 31 |
| Section 27. Successors | 32 |
| Section 28. Determinations and Actions by the Board Of Directors, Etc | 32 |
| Section 29. Benefits of this Agreement | 32 |
| Section 30. Severability | 32 |
| Section 31. Governing Law | 32 |
| Section 32. Counterparts | 33 |
| Section 33. Descriptive Headings | 33 |
i
RIGHTS
AGREEMENT
RIGHTS
AGREEMENT, dated as of December 19, 2005 (the "Agreement"),
between Forgent Networks, Inc., a Delaware corporation (the "Company"),
and
American Stock Transfer & Trust Company, a New York corporation (the
"Rights
Agent").
On
December 15, 2005 (the "Rights
Dividend Declaration Date"),
the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of common
stock, par value $.01 per share, of the Company (the "Common
Stock")
outstanding at the close of business on December 31, 2005 (the "Record
Date"),
and
has authorized the issuance of one Right (as such number may hereinafter
be
adjusted pursuant to the provisions of SECTION 11(p) hereof) for each share
of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date
(as
hereinafter defined), each Right initially representing the right to purchase
one one-thousandth of a share of Series A Preferred Stock of the Company
having
the rights, powers and preferences set forth in the form of Certificate of
Designations for Series A Preferred Stock attached hereto as Exhibit A,
upon
the terms and subject to the conditions hereinafter set forth (singularly,
a
"Right," collectively "Rights").
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 have the meanings
indicated:
(a) "Acquiring
Person" shall mean any Person who or which, together with all Affiliates
and
Associates of such Person, shall be the Beneficial Owner of 15% or more of
the
shares of Common Stock then outstanding, but shall not include (i) any Exempt
Person, (ii) a Qualified Institutional Investor,
or
(iii)
any Person, who alone or together with its Affiliates and Associates, shall
become the Beneficial Owner of 15% or more of the shares of Common Stock
then
outstanding solely as a result of a reduction in the number of shares of
Common
Stock outstanding due to the repurchase of Common Stock by the Company, unless
and until such time as such Person or any Affiliate or Associate of such
Person
shall purchase or otherwise become the Beneficial Owner of additional shares
of
Common Stock constituting 1% or more of the then outstanding shares of Common
Stock, or any other Person (or Persons) who is (or collectively are) the
Beneficial Owner(s) of shares of Common Stock, constituting 1% or more of
the
then outstanding shares of Common Stock, shall become an Affiliate or Associate
of such Person, unless, in either such case, such Person, together with its
Affiliates and Associates, is not then the Beneficial Owner of 15% or
more
of the shares of Common Stock then outstanding. Notwithstanding the foregoing,
if the Board of Directors of the Company determines in good faith that any
Person that would otherwise be an "Acquiring Person" has become such
inadvertently (including, without limitation, because (i) such Person
was
unaware that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an "Acquiring Person" or (ii) such Person
was
aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement), and without any intention of changing or influencing control
of the
Company, and if any such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of shares of Common
Stock
so that such Person would no longer be an "Acquiring Person," then such Person
shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement.
1
(b) "Affiliate"
and "Associate" shall have the respective meanings ascribed to such terms
in
Rule l2b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended and in effect on the date of this Agreement (the
"Exchange
Act").
(c) A
Person
shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially
own," any securities:
(i) which
such Person or any of such Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise
of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of,
or to "beneficially own," (A) 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) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities issuable upon exercise
of
Rights from and after the occurrence of a Triggering Event which Rights were
acquired by such Person or any of such Person's Affiliates or Associates
prior
to the Distribution Date or pursuant to SECTION 3(a) or SECTION 22 hereof
(the
"Original
Rights")
or
pursuant to SECTION 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which
such Person or any of such Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has "beneficial ownership"
of
(as determined pursuant to Rule 13d-3 of the General Rules and Regulations
under
the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person
shall
not be deemed the "Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in response
to a
public proxy or consent solicitation made pursuant to, and in accordance
with
the applicable provisions of the General Rules and Regulations under the
Exchange Act and (B) is not also then reportable by such Person on Schedule
l3D
under the Exchange Act (or any comparable or successor report); or
(iii) which
are
beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this PARAGRAPH (D)), or disposing of any voting
securities of the Company; provided, however, that nothing in this PARAGRAPH
(D)
shall cause a person engaged in business as an underwriter of securities
to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
2
(d) "Business
Day" shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of Texas or in the state of the Rights Agent's
principal place of business are authorized or obligated by law or executive
order to close.
(e) "Close
of
Business" on any given date shall mean 4:00 p.m., Dallas time, on such date;
provided, however, that if such date is not a Business Day it shall mean
4:00
p.m., Dallas time, on the next succeeding Business Day.
(f) "Common
Stock" shall mean the common stock, par value $.0l per share, of the Company
except that "Common Stock" when used with reference to any Person other than
the
Company shall mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest having power to
control
or direct the management, of such Person
(g) "Distribution
Date" shall mean any date described in SECTION 3(a).
(h) "Exempt
Person" shall mean the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant
to
the terms of any such plan.
(i) "Flip-in
Event" shall mean any event described in SECTION 11(a)(ii).
(j) "Flip-over
Event" shall mean any event described in CLAUSES (x), (y) or (z) of SECTION
13(a) hereof.
(k) "Person"
shall mean any individual, firm, corporation, partnership, association, group
or
other entity.
(l) "Preferred
Stock" shall mean shares of Series A Preferred Stock, $0.01 par value, of
the
Company and, to the extent that there are not a sufficient number of shares
of
Series A Preferred Stock authorized to permit the full exercise of
the
Rights, any other series of Preferred Stock, $0.01 par value, of the Company
designated for such purpose containing terms substantially similar to the
terms
of the Series A Preferred Stock.
(m) “Qualified
Institutional Investor” shall mean, as of any time of determination, a Person
that is described in Rule 13d-1(b)(1) promulgated under the Exchange
Act
(as such Rule is in effect on the date hereof) and is eligible to report
(and,
if such Person is the Beneficial Owner of greater than 5% of the Common Stock
of
the Corporation, does in fact report and continues to report) beneficial
ownership of Common Stock of the Corporation on Schedule 13G, and
such
Person (i) is not required to file a Schedule 13D (or any successor
or
comparable report) with respect to its beneficial ownership of Common Stock
of
the Corporation, (ii) shall be the Beneficial Owner of less than 15%
of the
Common Stock of the Corporation then outstanding (including in such calculation
the holdings of all of such Person’s Affiliates and Associates other than those
which, under published interpretations of the SEC or its Staff, are eligible
to
file separate reports on Schedule 13G with respect to their beneficial
ownership of the Common Stock of the Corporation) and (iii) shall
be the
Beneficial Owner of less than 25% of the Common Stock of the Corporation
then
outstanding (including in such calculation the holdings of all of such Person’s
Affiliates and Associates, including those which, under published
interpretations of the SEC or its Staff, are eligible to file separate reports
on Schedule 13G with respect to their beneficial ownership of the
Common
Stock of the Corporation).
3
(n) "Stock
Acquisition Date" shall mean the first date of public announcement (which,
for
purposes of this definition, shall include, without limitation, a report
filed
pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(o) "Subsidiary"
shall mean, with reference to any Person, any corporation or other entity
of
which a majority of the voting power of the equity securities or a majority
of
the equity interest is beneficially owned, directly or indirectly by such
Person, or otherwise controlled by such Person.
(p) "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.
(q) "Triggering
Event" shall mean any Flip-in Event or any Flip-over Event.
Section
2. Appointment
of Rights Agent.
The
Company hereby appoints the Rights Agent to act as agent for the Company
in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section
3. Issue
of Rights Certificates.
(a) Until
the
earlier of (i) the close of business on the tenth day after the Stock
Acquisition Date or (ii) the close of business on the tenth Business Day
after
the date that a tender or exchange offer by any Person (other than an Exempt
Person) is first published or sent or given within the meaning of Rule 14d-2(a)
of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof such Person would be an Acquiring Person (the earlier
of
(i) and (ii) being herein referred to as the "Distribution
Date"),
(x)
the Rights will be evidenced (subject to the provisions of Subsection
(b) of this SECTION 3) by the certificates for the Common Stock registered
in the names of the holders of the Common Stock and not by separate certificates
and (y) the Rights will be transferable only in connection with the transfer
of
the underlying shares of Common Stock (including a transfer to the Company);
provided that, if the foregoing results in a Distribution Date being prior
to
the Record Date, the Distribution Date shall be the Record Date and provided
further that if any tender or exchange offer referred to in CLAUSE (ii) of
this
SECTION 3(a) is canceled, terminated or otherwise withdrawn prior to the
Distribution Date, such offer shall be deemed, for purposes of this SECTION
3(a), never to have been made. As soon as practicable after the Distribution
Date, the Rights Agent will send by first- class, insured, postage prepaid
mail
to each record holder of the Common Stock as of the close of business on
the
Distribution Date, at the address of such holder shown on the records of
the
Company, one or more rights certificates, in substantially the form of
Exhibit
B hereto
(the "Rights Certificates"), evidencing one Right for each share of Common
Stock
so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to SECTION 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with SECTION 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and
cash
is paid in lieu of any fractional Rights. As of and after the Distribution
Date,
the Rights will be evidenced solely by such Rights Certificates.
4
(b) As
promptly as practicable following the Record Date the Company will send a
copy
of a Summary of Rights, in substantially the form attached hereto as
Exhibit
C
(the
"Summary
of Rights"),
by
first-class, postage prepaid mail, to each record holder of the Common Stock
as
of the close of business on the Record Date, at the address of such holder
shown
on the records of the Company. With respect to certificates for the Common
Stock
outstanding as of the Record Date, until the Distribution Date or the earlier
transfer or exchange thereof, the Rights associated with the shares of Common
Stock represented by such certificates shall be evidenced by such certificates
for the Common Stock together with a copy of the Summary of Rights and the
registered holders of the Common Stock shall also be the registered holders
of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as such term is defined in SECTION 7 hereof), the transfer
of
any of the certificates for the Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
(c) Rights
shall be issued in respect of all shares of Common Stock that become outstanding
(whether originally issued or from the Company treasury) after the Record
Date
but prior to the earlier of the Distribution Date or the Expiration Date
or, in
certain circumstances provided in SECTION 22 hereof, after the Distribution
Date. Certificates issued for shares of Common Stock that shall become
outstanding or shall be transferred or exchanged after the Record Date but
prior
to the earlier of the Distribution Date or the Expiration Date shall also
be
deemed to be certificates for Rights, and shall bear the following
legend:
THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
AS
SET FORTH IN THE RIGHTS AGREEMENT BETWEEN FORGENT NETWORKS, INC. (THE "COMPANY")
AND AMERICAN STOCK TRANSFER & TRUST COMPANY, AS IT MAY BE AMENDED FROM TIME
TO TIME (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE INCORPORATED HEREIN
BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH
RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE
EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE REGISTERED HOLDER
OF
THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE
OF
MAILING, WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS MAY
BE
REDEEMED. RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES
AN
ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED IN THE
RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
5
With
respect to such certificates containing the foregoing legend, until the earlier
of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section
4. Form
of Rights Certificates.
(a) The
Rights Certificates (and the forms of election to purchase and of assignment
to
be printed on the reverse thereof) shall each be substantially in the form
set
forth in Exhibit
B
hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as
may be
required to comply with any applicable law or with any rule or regulation
made
pursuant thereto or with any rule or regulation of any stock exchange or
inter-dealer quotation system of a registered national securities association
on
which the Rights may from time to time be listed, traded or quoted or to
conform
to usage. Subject to the provisions of SECTION 11 and SECTION 22 hereof,
the
Rights Certificates, whenever distributed, shall be dated as of the Record
Date
and on their face shall entitle the holders thereof to purchase such number
of
one one-thousandths of a share of Preferred Stock as shall be set forth therein
at the price set forth therein (such exercise price per one one-thousandth
of a
share, the "Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any
Rights Certificate issued pursuant to SECTION 3(a) or SECTION 22 hereof that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person's becoming such and receives such
Rights
pursuant to either (A) a transfer (whether or not for consideration) from
the
Acquiring Person to holders of equity interests in such Acquiring Person
or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of SECTION 7(e) hereof, and any Rights Certificate issued pursuant to SECTION
6,
SECTION 11 or SECTION 22 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence,
shall
contain (to the extent feasible) the following legend:
6
THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.
Section
5. Countersignature
and Registration.
(a) The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President or any Vice President, either manually or by
facsimile signature, and shall 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
Rights
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 Rights Certificates shall cease
to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the
Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificate may be signed on behalf of the Company by any person who, at
the
actual date of the execution of such Rights Certificate shall be a proper
officer of the Company to sign such Rights Certificate, although at the date
of
the execution of this Agreement any such person was not such an
officer.
(b) Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at
its
principal office or offices designated as the appropriate place for surrender
of
Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show
the
names and addresses of the holders of the Rights Certificates, the number
of
Rights evidenced on its face by each of the Rights Certificates and the date
of
each of the Rights Certificates.
Section
6. Transfer,
Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.
(a) Subject
to the provisions of SECTION 4(b), SECTION 7(e) and SECTION 14 hereof, at
any
time after the close of business on the Distribution Date, and at or prior
to
the close of business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or other Rights Certificates, entitling the registered
holder
to purchase a like number of one one-thousandths of a share of Preferred
Stock
(or, following a Triggering Event, Common Stock, other securities, cash or
other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split
up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take
any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights
Agent shall, subject to SECTION 4(b), SECTION 7(e) and SECTION 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate
or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
7
(b) Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent
of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company
will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent
for countersignature and delivery to the registered owner in lieu of the
Rights
Certificate so lost, stolen, destroyed or mutilated.
Section
7. Exercise
of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject
to SECTION 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth
in
SECTION 9(c), SECTION 11(a)(iii), SECTION 23(b), and SECTION 24(b) hereof),
in
whole or in part at any time after the Distribution Date upon surrender of
the
Rights Certificate, with the form of election to purchase and the certificate
on
the reverse side thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together
with
payment of the aggregate Purchase Price with respect to the total number
of one
one-thousandths of a share (or other securities, cash or other assets, as
the
case may be) as to which such surrendered Rights are then exercisable, at
or
prior to the earliest of (i) the close of business on December 31, 2015 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed
as
provided in SECTION 23 hereof, and (iii) the time at which the Rights are
exchanged as provided in SECTION 24 hereof, (the earliest of (i), (ii), and
(iii) being herein referred to as the "Expiration
Date").
8
(b) The
Purchase Price for each one one-thousandth of a share of Preferred Stock
pursuant to the exercise of a Right shall initially be $13 and shall be subject
to adjustment from time to time as provided in SECTIONS 11 and 13(a) hereof
and
shall be payable in accordance with SECTION 7(c) below.
(c) Upon
receipt of a Rights Certificate representing exercisable Rights, with the
form
of election to purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per
one
one-thousandth of a share of Preferred Stock (or other shares, securities,
cash
or other assets, as the case may be) to be purchased as set forth below and
an
amount equal to any applicable transfer taxes, the Rights Agent shall, subject
to SECTION 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the
total
number of one one-thousandths of a share of Preferred Stock to be purchased,
and
the Company hereby irrevocably authorizes its transfer agent to comply with
all
such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depository agent, requisition from the depository agent
depository receipts representing such number of one one-thousandths of a
share
of Preferred Stock as are to be purchased (in which case certificates for
the
shares of Preferred Stock represented by such receipts shall be deposited
by the
transfer agent with the depository agent), and the Company will direct the
depository agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with SECTION 14 hereof, (iii) after receipt of such certificates
or
depository receipts, cause the same to be delivered to or upon the order
of the
registered holder of such Rights Certificate, registered in such name or
names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such
Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to SECTION 11(a)(iii) hereof) may be made in cash or by certified
bank
check or money order payable to the order of the Company. In the event that
the
Company is obligated to issue other securities (including Common Stock) 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 Rights Certificate shall exercise less than
all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of SECTION 14 hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Triggering Event, any Rights beneficially owned by (i) an Acquiring
Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee
of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Persons becoming such
and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of the plan, arrangement or understanding which has as
a
primary purpose or effect the avoidance of this SECTION 7(e), shall become
null
and void without any further action and no holder of such Rights shall have
any
rights whatsoever with respect to such Rights, whether under any provision
of
this Agreement or otherwise. The Company shall use all reasonable efforts
to
ensure that the provisions of this SECTION 7(e) and SECTION 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
9
(f) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor
the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this
SECTION 7 unless such registered holder shall have (i) completed and signed
the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise, and
(ii)
provided such additional evidence of the identity of the Beneficial Owner
(or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section
8. Cancellation
and Destruction of Rights Certificate.
All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled
form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Agreement. The Company shall deliver to the
Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel
and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver
all
canceled Rights Certificates to the Company, or shall, at the written request
of
the Company, destroy such canceled Rights Certificates, and in either such
case
shall deliver a certificate of destruction or a certificate of cancellation,
as
may be appropriate, thereof to the Company.
Section
9. Reservation
and Availability Of Capital Stock.
(a) The
Company covenants and agrees that it will use reasonable efforts to cause
to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out
of its
authorized and unissued shares of Common Stock and/or other securities or
out of
its authorized and issued shares held in its treasury), the number of shares
of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or 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.
(b) So
long
as the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities exchange
or
inter-dealer quotation system of a registered national securities association
on
which the Preferred Stock may from time to time be listed, traded or quoted,
the
Company shall use its best efforts to cause, from and after such time as
the
Rights become exercisable, all shares reserved for such issuance to be listed
on
such exchange or quotation system upon official notice of issuance upon such
exercise.
10
(c) To
the
extent legally required, the Company shall use its best efforts to (i) file,
as
soon as practicable following the earliest date after the first occurrence
of a
Flip-in Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined pursuant to this Agreement (including
in accordance with SECTION 11(a)(iii) hereof), a registration statement under
the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under,
or
to ensure compliance with, the securities or "blue sky' laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed 120 days after the
date
set forth in CLAUSE (i) of the first sentence of this SECTION 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating 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 that the Rights are currently
exercisable. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective.
Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained or the exercise thereof shall not
be
permitted under applicable law.
(d) The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all one one-thousandths of a share of Preferred
Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or
other
securities) delivered upon exercise of Rights shall, at the time of delivery
of
the certificates for such shares (subject to payment of the Purchase Price),
be
duly and validly authorized and issued and fully paid and
nonassessable.
(e) The
Company further covenants and agrees that it will pay when due and payable
any
and all federal and state transfer taxes and charges which may be payable
in
respect of the issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-thousandths of a share of Preferred
Stock
(or Common Stock and/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 Rights
Certificates to a Person other than, or the issuance or delivery of a number
of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or
other
securities, as the case may be) in respect of a name other than that of,
the
registered holder of the Rights Certificates evidencing Rights surrendered
for
exercise or to issue or deliver any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid
(any
such tax being payable by the holder of such Rights Certificate at the time
of
surrender) or until it has been established to the Company's satisfaction
that
no such tax is due.
11
Section
10. Preferred
Stock Record Date.
Each
Person in whose name any certificate for a number of one one-thousandths
of a
share of Preferred Stock (or Common Stock and/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 such fractional shares of Preferred
Stock
(or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the
Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may
be)
transfer books of the Company are closed, such Person shall be deemed to
have
become the record holder of such shares (fractional or otherwise) on, and
such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may
be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled
to
any rights of a shareholder of the Company with respect to shares for which
the
Rights shall be exercisable, including, without limitation, the right to
vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings
of
the Company, except as provided herein.
Section
11. Adjustment
of Purchase Price, Number and Kind of Shares or Number of Rights.
The
Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time
as
provided in this SECTION 11.
(a) (i)
In
the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Stock payable in shares of
Preferred Stock (or other capital stock), (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification
in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this SECTION 11(a)
and SECTION 7(e) hereof, the Purchase Price in effect at the time of the
record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of Preferred Stock
or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such
time shall be entitled to receive, upon payment of the Purchase Price then
in
effect, the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books
of the
Company were open he would have owned upon such exercise and been entitled
to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this SECTION 11 (a)(i) and SECTION 11 (a)(ii) hereof, the adjustment
provided for in this SECTION 11 (a)(i) shall be in addition to, and shall
be
made prior to any adjustment required pursuant to SECTION 11 (a)(ii)
hereof.
12
(ii) Subject
to action of the Board of Directors of the Company pursuant to SECTIONS 23
or 24
hereof, in the event any Person shall become an Acquiring Person, then each
holder of a Right (except as provided below and in SECTION 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price as it may have been adjusted in accordance with the terms
of this
Agreement (which, following the first occurrence of a Flip-In Event, shall
thereafter be the "Purchase
Price"
for
each Right and for all purposes of this Agreement), in lieu of the number
of one
one-thousandths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying
the
then current Purchase Price by the then number of one one-thousandths of
a share
of Preferred Stock for which a Right was exercisable immediately prior to
the
first occurrence of a Flip-in Event, and (y) dividing that product by 50%
of the
current market price determined pursuant to SECTION 11(d) hereof per share
of
Common Stock on the date of such first occurrence (such number of shares,
the
"Adjustment
Shares").
(iii) In
the
event that the number of shares of Common Stock that is authorized by the
Company's Certificate of Incorporation but not outstanding or not reserved
for
issuance for purposes other than upon exercise of the Rights is insufficient
to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this SECTION 11(a), the Company shall (A) determine
the
excess of (1) the value of the Adjustment Shares issuable upon the exercise
of a
Right (computed using the current market price used to determine the number
of
Adjustment Shares) (the "Current
Value")
over
(2) the Purchase Price (such excess, the "Spread"), and (B) with respect
to each
Right, make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) Preferred Stock, (2) cash,
(3) a
reduction in the Purchase Price, (4) Common Stock or other equity securities
of
the Company that the Board of Directors of the Company has deemed to have
the
same economic value as shares of Common Stock (such equity securities, "common
stock equivalents")), (5) debt securities of the Company, (6) other assets,
or
(7) any combination of the foregoing having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board
of
Directors of the Company; provided, however, if the Company shall not have
made
adequate provisions to deliver value pursuant to CLAUSE (B) above within
30 days
following the later of (x) the first occurrence of a Flip-in Event and (y)
the
date on which the Company's right of redemption pursuant to SECTION 23(a)
expires (the later of (x) and (y) being referred to herein as the "Flip-in
Trigger Date"), 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 Spread.
If
the Board of Directors of the Company shall determine in good faith that
it is
likely that sufficient additional shares of Common Stock could be authorized
for
issuance upon exercise in full of the Rights, the 30-day Period set forth
above
may be extended to the extent necessary but not more than 120 days after
the
Flip-in Trigger Date, in order that the Company may seek shareholder approval
for the authorization of such additional shares (such period, as it may be
extended, the "Substitution
Period").
To
the extent that the Company determines that some action needs be taken pursuant
to the first and/or second sentences of this SECTION 11(a)(iii), the Company
(x)
shall provide, subject to SECTION 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of
the Rights until the expiration of the Substitution Period in order to seek
any
authorization of additional shares and/or to decide the appropriate form
of
distribution to be made pursuant to such first sentence and to determine
the
value thereof. In the event of any such suspension, the Company shall issue
a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this SECTION 11(a)(iii),
the
value of the Common Stock to be received pursuant to the proviso above shall
be
the current market price (as determined pursuant to SECTION 11(d) hereof)
per
share of the Common Stock on the Flip-in Trigger Date and the value of any
"common stock equivalent" shall be deemed to have the same value as the Common
Stock on such date.
13
(b) In
case
the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for
or
purchase (for a period expiring within 45 calendar days after such record
date)
Preferred Stock (or shares having the same rights, privileges and preferences
as
the shares of Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or "equivalent preferred stock" at a price
per
share of Preferred Stock or per share of "equivalent preferred stock" (or
having
a conversion price per share, if a security convertible into Preferred Stock
or
"equivalent preferred stock") less than the current market price (as determined
pursuant to SECTION 11(d) hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior
to such
record date by a fraction, the numerator of which shall be the number of
shares
of Preferred Stock outstanding on such record date, plus the number of shares
of
Preferred Stock which the aggregate offering price of the total number of
shares
of Preferred Stock and/or equivalent preferred stock so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to
be
offered, including the price required to be paid to purchase such convertible
security) would purchase at such current market price, and the denominator
of
which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
"equivalent preferred 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 consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the Rights.
Shares of Preferred Stock owned by or held for the account of the Company
shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed,
and
in the event that such rights or warrants are not so issued, the Purchase
Price
shall be adjusted to be the Purchase Price which would then be in effect
if such
record date had not been fixed.
(c) In
case
the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with
a
consolidation or merger in which the Company is the continuing corporation)
of
evidences of indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets (other than
a
dividend payable in Preferred Stock, but including any dividend payable in
stock
other than Preferred Stock) or subscription rights or warrants (excluding
those
referred to in SECTION 11(b) hereof), the Purchase Price to be in effect
after
such record date shall be determined by multiplying the Purchase Price in
effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to SECTION 11(d)
hereof) per share of Preferred Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) 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
Preferred Stock and the denominator of which shall be such current market
price
(as determined pursuant to SECTION 11(d) hereof) per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in
effect
if such record date had not been fixed.
14
(d) (i) For
the
purpose of any computation hereunder, other than computations made pursuant
to
SECTION 11 (a)(iii) hereof, the "current market price" per share of Common
Stock
on any date shall be deemed to be the average of the daily closing prices
per
share of such Common Stock for the 30 consecutive Trading Days (as such term
is
hereinafter defined) immediately prior to such date, and for purposes of
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 such 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 such Common Stock
of
(A) a dividend or distribution on such Common Stock payable in shares of
such
Common Stock or securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination or reclassification
of
such Common Stock, and prior to the expiration of the requisite 30-Trading-Day
or ten-Trading-Day period, as set forth above, after the ex-dividend date
for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, 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
or Nasdaq National Market System 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 or Nasdaq National
Market System, the last quoted price or, if not so quoted, the average of
the
high bid and low asked prices in the over-the-counter market as reported
by the
National Association of Securities Dealers, Inc. Automated Quotation System
("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 and described in a statement filed with the Rights
Agent shall be used, and shall be conclusive for all purposes.
15
(ii) For
the
purpose of any computation hereunder, the "current market price" per share
of
Preferred Stock shall be determined in the same manner as set forth above
for
the Common Stock in CLAUSE (i) of this SECTION 11(d) (other than the last
sentence thereof) . If the current market price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred Stock
is
not publicly held or listed or traded in a manner described in CLAUSE (i)
of
this SECTION 11(d), the "current market price" per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such number
may
be appropriately adjusted for such events as stock splits, stock dividends
and
recapitalizations with respect to the Common Stock occurring after the date
of
this Agreement) multiplied by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred Stock is publicly held
or
so listed or traded, "current market price" per share of the Preferred Stock
shall mean the fair value per share as determined in good faith by the Board
of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. For
all
purposes of this Agreement, the "current market price" of one one-thousandth
of
a share of Preferred Stock shall be equal to the "current market price" of
one
share of Preferred Stock divided by 1,000.
(e) Anything
herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the Purchase Price; provided, however, that
any
adjustments which by reason of this SECTION 11(e) are not required to be
made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this SECTION 11 shall be made to the nearest cent
or to
the nearest ten thousandth of a share of Common Stock or other share or
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this SECTION 11(e) any adjustment required by this
SECTION
11 shall be made no later than the earlier of (i) three years from the date
of
the transaction which mandates such adjustment, or (ii) the Expiration
Date.
16
(f) If
as a
result of an adjustment made pursuant to SECTION 11(a)(ii) or SECTION 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled
to
receive any shares of capital stock other than Preferred Stock, thereafter
the
number of such other shares so receivable upon exercise of any Right and
the
Purchase Price thereof shall be subject to adjustment from time to time in
a
manner and on terms as nearly equivalent as practicable to the provisions
with
respect to the Preferred Stock contained in SECTIONS 11(a), (b), (c), (e),
(g),
(h), (i), (j), (k) and (l), and the provisions of SECTIONS 7, 9, 10, 13 and
14
hereof with respect to the Preferred Stock shall apply on like terms to any
such
other shares.
(g) All
Rights originally issued by the Company subsequent to any adjustment made
to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of one one-thousandths of a share of Preferred
Stock
purchasable from time to time hereunder upon exercise of the Rights, all
subject
to further adjustment as provided herein.
(h) Unless
the Company shall have exercised its election as provided in SECTION (11)(i),
upon each adjustment of the Purchase Price as a result of the calculations
made in SECTIONS 11(b) and (c), each Right outstanding immediately prior
to the
making of such adjustment shall thereafter evidence the right to purchase,
at
the adjusted Purchase Price, that number of one one-thousandths of a share
of
Preferred Stock (calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one one-thousandths of a share covered by a
Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (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
to adjust the number of Rights, in lieu of any adjustment in the number of
one
one-thousandths of a share of Preferred Stock purchasable upon the exercise
of a
Right. Each of the Rights outstanding after the adjustment in the number
of
Rights shall be exercisable for the number of one one-thousandths of a share
of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of
Rights shall become that number of Rights (calculated to the nearest one
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 Rights 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 holder 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.
17
(j) Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise
of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per one one-thousandth of a share and the number
of one one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before
taking any action that would cause any adjustment reducing the Purchase Price
below the then stated value, if any, of the number of one one-thousandths
of a
share of Preferred Stock issuable upon exercise of the Rights, the Company
shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable such number of one one-thousandths of a share of Preferred
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 exercised after such record date the number of one one-thousandths
of a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
one
one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis
of
the Purchase Price in effect prior to such adjustment; provided, however,
that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything
in this SECTION 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly 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
Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock
at less than the current market price, (iii) issuance wholly for cash of
shares
of Preferred Stock or securities which by their terms are convertible into
or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this SECTION 11, hereafter
made by
the Company to holders of its Preferred Stock shall not be taxable to such
shareholders.
18
(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 in a transaction which complies with SECTION 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary
of
the Company in a transaction which complies with SECTION 11(o) hereof), or
(iii)
sell, lease or transfer (or permit any Subsidiary to sell, lease or transfer),
in one transaction, or a series of related transactions, assets aggregating
more
than 50% of the assets (measured by either book value or fair market value)
or
generating more than 50% of the operating income or cash flow 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 in one or more transactions each
of
which complies with SECTION 11(o) hereof), if (x) at the time of or immediately
after such consolidation, merger, sale or lease there are any rights, warrants
or other instruments or securities outstanding or agreements in effect that
would substantially diminish or otherwise eliminate the benefits intended
to be
afforded by the Rights, (y) prior to, simultaneously with or immediately
after
such consolidation, merger, sale or lease, 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 or (z) the form or nature
of
organization of the Principal Party would preclude or limit the exercise
of
Rights.
(o) The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by SECTION 23 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 otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company
shall at any time after the Rights Dividend Declaration Date and prior to
the
Distribution Date (i) declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares
of Common Stock, (iii) combine the outstanding shares of Common Stock into
a
smaller number of shares, or (iv) 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), the number of Rights associated with each share
of
Common Stock then outstanding, or issued or delivered thereafter but prior
to
the Distribution Date, shall be proportionately adjusted so that the number
of
Rights thereafter associated with each share of Common Stock following any
such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event
by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section
12. Certificate
of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in SECTION 11 or SECTION 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for
the
Preferred Stock and the Common Stock, a copy of such certificate, and (c)
mail a
brief summary thereof to each holder of a Rights 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. The Rights Agent shall
be
fully protected in relying on any such certificate and on any adjustment
therein
contained.
19
Section
13. Consolidation,
Merger or Sale or Transfer of Assets or Earnings Power.
(a) In
the
event that, on or after the Stock Acquisition Date, directly or indirectly,
(x)
the Company shall consolidate or otherwise combine with, or merge with and
into,
any other Person (other than a Subsidiary of the Company in a transaction
which
complies with SECTION 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation, combination or merger, (y)
any
Person (other than a Subsidiary of the Company in a transaction which complies
with SECTION 11(o) hereof) shall consolidate or otherwise combine with, or
merge
with and into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation, combination 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
the
Company or any other Person or cash or any other property, or (z) the Company
shall sell, lease or otherwise transfer (or one or more of its Subsidiaries
shall sell, lease or otherwise transfer), in one transaction or a series
of
related transactions, assets aggregating more than 50% of the assets (measured
by either book value or fair market value) or generating more than 50% of
the
operating income or cash flow of the Company and its Subsidiaries (taken
as a
whole) to any Person or Persons (other than the Company or any Subsidiary
of the
Company in one or more transactions each of which complies with SECTION 11(o)
hereof), then, and in each such case (except as may be contemplated by SECTION
13(d) hereof), proper provision shall be made so that (i) each holder of
a
Right, except as provided in SECTION 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase
Price
as it may have been adjusted in accordance with the terms of this Agreement
(which, following the first occurrence of a Flip-over Event, shall be the
"Purchase
Price"
for
each Right and for all purposes of this Agreement), such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable shares
of
common stock of the Principal Party (as such term is hereinafter defined),
not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the
first
occurrence of a Flip-over Event (or, if a Flip-in Event has occurred prior
to
the first occurrence of a Flip-over Event, multiplying the number of such
one
one-thousandths of a share for which a Right was exercisable immediately
prior
to the first occurrence of a Flip-in Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing the product by
(2) 50%
of the current market price (determined pursuant to SECTION 11(d)(i) hereof)
per
share of the common stock of such Principal Party on the date of consummation
of
such 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 Agreement; (iii) the term "Company"
shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of SECTION 11 hereof shall apply only to such
Principal Party following the first occurrence of a 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 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.
20
(b) "Principal
Party" shall mean
(i) in
the
case of any transaction described in CLAUSE (x) or (y) of the first sentence
of
SECTION 13(a), (A) the Person that is the issuer of any 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 of the
common stock of which has the greatest aggregate market value, or (B) if
no
securities are so issued, (x) the Person that survives such consolidation
or is
the other Party to the merger and survives such merger, or, if there is more
than one such Person, the Person the common stock of which has the greatest
aggregate market value or (y) if the Person that is the other party to the
merger does not survive the merger, the Person that does survive the merger
(including the Company if it survives); and
(ii) in
the
case of any transaction described in CLAUSE (z) of the first sentence of
SECTION
13(a), the Person that is the party receiving the greatest portion of the
assets, operating income or cash flow 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, operating income or
cash
flow so transferred, or, if the Person receiving the greatest portion of
the
assets, operating income or cash flow cannot be determined, the Person the
common stock of which has the greatest aggregate market value;
provided,
however, that in any such case, 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 if (1) such Person is
a
direct or indirect Subsidiary of another Person the common stock of which
is and
has been so registered, "Principal Party" shall refer to such other Person;
(2)
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, "Principal
Party" shall refer to whichever of such Persons is the issuer of the common
stock having the greatest aggregate market value; and 3) such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons
that
are not owned, directly or indirectly, by the same Person, the rules set
forth
in (1) and (2) above shall apply to each of the chains of ownership having
an
interest in such joint venture as if such party were a "Subsidiary" of both
or
all of such joint venturers, and the Principal Parties in each such chain
shall
bear the obligations set forth in this SECTION 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
Interests.
(c) The
Company shall not consummate any such consolidation, merger, sale, lease
or
transfer unless the Principal Party shall have a sufficient number of authorized
shares of its common stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this SECTION
13
and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in Subsections (a) and (b) of this SECTION 13 and
further providing that, as soon as practicable after the date of any
consolidation, merger, sale or lease of assets mentioned in Subsection (a)
of
this SECTION 13, the Principal Party will
21
(i) prepare
and file a registration statement under the Act, with respect to the Rights
and
the securities purchasable upon exercise of the Rights on an appropriate
form,
and will use its best efforts to cause such registration statement to (A)
become
effective as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act) until
the
Expiration Date; and
(ii) will
deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates which comply in all respects with
the
requirements for registration on Form 10 under the Exchange Act.
The
provisions of this SECTION 13 shall similarly apply to successive mergers,
consolidations, sales, leases or other transfers. In the event that a Flip-over
Event shall occur at any time after the occurrence of a Flip-in Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in SECTION 13 (a).
Section
14. Fractional
Rights and Fractional Shares.
(a) The
Company shall not be required to issue fractions of Rights except prior to
the
Distribution Date as provided in SECTION 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable,
an
amount in cash equal to the same fraction of the current market value of
a whole
Right. For purposes of this SECTION 14(a), the current market value of a
whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as
reported in the principal consolidated transaction reporting system with
respect
to securities listed or admitted to trading on the New York Stock Exchange
or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system
with respect to securities listed on the principal national securities exchange
or the Nasdaq National Market System on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on any
national securities exchange or the Nasdaq National Market System, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any
such
organization, the average of the closing bid and asked prices as furnished
by a
professional market maker making a market in the Rights selected by the Board
of
Directors of the Company. If on any such date no such market maker is making
a
market in the Rights the fair value of the Rights on such date as determined
in
good faith by the Board of Directors of the Company shall be used.
22
(b) The
Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of
a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates that evidence fractional shares of Preferred Stock (other than
fractions that are integral multiples of one one-thousandth of a share of
Preferred Stock) . In lieu of fractional shares of Preferred Stock that are
not
integral multiples of one one-thousandth of a share of Preferred Stock the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this SECTION 14(b), the current market value
of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth
of
the closing price of a share of Preferred Stock (as determined pursuant to
SECTION 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of
such exercise.
(c) Following
the occurrence of a Triggering Event, the Company shall not be required to
issue
fractions of shares of Common Stock upon exercise or exchange of the Rights
or
to distribute certificates that evidence fractional shares of Common Stock.
In
lieu of fractional shares of Common Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of this SECTION 14(c),
the
current market value of one share of Common Stock shall be the closing price
of
one share of Common Stock (as determined pursuant to SECTION 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) The
holder of a Right by the acceptance of the Rights expressly waives his right
to
receive any fractional Rights or any fractional shares upon exercise or exchange
of a Right, except as permitted by this SECTION 14.
Section
15. Rights
of Action.
All
rights of action in respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any registered holder
of
any Rights 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
Rights 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 to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such
Rights Certificate in the manner provided in such Rights Certificate and
in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement
and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any person subject to this Agreement.
Section
16. Agreement
of Rights Holders.
Every
holder of a Right by accepting the same consents and agrees with the Company
and
the Rights Agent and with every other holder of a Right that
(a) prior
to
the Distribution Date, the Rights will be transferable only in connection
with
the transfer of Common Stock;
23
(b) after
the
Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices
of
the Rights Agent designated for such purposes duly endorsed or accompanied
by a
proper instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject
to SECTION 6(a) and SECTION 7(f) hereof, the Company and the Rights Agent
may
deem and treat the person in whose name a Rights 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 Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of SECTION 7(e) hereof, shall be required
to
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. Rights
Certificate Holder Not Deemed a Shareholder.
No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandth of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as
such, any of the rights of a shareholder of the Company or any right to vote
for
the election of directors or upon any matter submitted to shareholders at
any
meeting thereof, or to give or withhold consent to any corporate action,
or to
receive notice of meetings or other actions affecting shareholders (except
as
provided in SECTION 24 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section
18. Concerning
the Rights Agent.
(a) The
Company agrees to pay to the Rights Agent reasonable compensation pursuant
to a
schedule provided to the Company for all services rendered by it hereunder
and,
from time to time, on demand of the Rights Agent, its reasonable expenses
and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights
Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with
the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
24
(b) The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate
or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and where necessary,
verified or acknowledged, by the proper Person or Persons.
Section
19. Merger
or Consolidation or Change of Name of Rights Agent.
(a) Any
entity into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any entity resulting from any merger
or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a
party, or any entity 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 Agreement without the execution
or
filing of any paper or any further act on the part of any of the parties
hereto;
provided, however, that such entity would be eligible for appointment as
a
successor Rights Agent under the provisions of SECTION 21 hereof. In case
at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been countersigned but
not
delivered, any such successor Rights Agent may adopt the countersignature
of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the
name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In
case
at any time the name of the Rights Agent shall be changed and at such time
any
of the Rights Certificates shall have been countersigned but not delivered,
the
Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the
Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name,
and in
all such cases such Rights Certificates shall have the full force provided
in
the Rights Certificates and in this Agreement.
Section
20. Duties
of Rights Agent.
The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and
the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The
Rights Agent may consult with legal counsel (who may be legal counsel for
the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
25
(b) Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
"current market price") be proved or established by the Company prior to
taking
or suffering any action hereunder, such fact or matter (unless other evidence
in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman
of
the Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to
the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The
Rights Agent shall be liable hereunder only for its own negligence, bad faith
or
willful misconduct. The Company shall indemnify the Rights Agent for, and
hold
it harmless against, any loss, liability or expense incurred without negligence
or bad faith on its part arising out of or in connection with its agency
under
this Agreement, including the costs and expenses of defending itself against
any
claim or liability in connection with its exercise or performance of any
of its
duties under this Agreement. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including
but
not limited to lost profits), even if the Rights Agent has been advised of
the
likelihood of such loss or damage and regardless of the form of the
action.
(d) The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the Rights Certificates
or be
required to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed
to
have been made by the Company only.
(e) The
Rights Agent shall not be under any responsibility in respect of the validity
of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of
any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible
for
any adjustment required under the provisions of SECTION 11 or SECTION 13
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 Rights Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization
or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
shares
of Common Stock or Preferred Stock will, when so issued be validly authorized
and issued, fully paid and nonassessable.
(f) The
Company agrees that it will perform, execute, acknowledge and deliver or
cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
26
(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, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to
apply
to such officers for advice or instructions in connection with its duties,
and
it shall not be liable for any action taken or suffered to be taken by it
in
good faith in accordance with instructions of any such officer.
(h) The
Rights Agent and any shareholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the
Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The
Rights Agent may execute and exercise any of the rights or powers hereby
vested
in it or perform any duty hereunder either by 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, however, reasonable care was exercised in the selection
and continued employment thereof.
(j) No
provision of this Agreement shall require the Rights Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured
to
it.
(k) If,
with
respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to CLAUSE 1 and/or 2 thereof, the Rights
Agent
shall not take any further action with respect to such requested exercise
of
transfer without first consulting with the Company.
Section
21. Change
of Rights Agent.
The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon 30 days advance notice in writing mailed
to the
Company and to each transfer agent of the Common Stock and Preferred Stock,
by
registered or certified mail, and to the holders of the Rights Certificates
by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days advance notice in writing, mailed to the Rights
Agent
or successor Rights Agent, as the case may be, and to each transfer agent
of the
Common Stock and Preferred Stock, by registered or certified mail, and to
the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting,
the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail
to make such appointment within a period of 30 days after giving notice of
such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder
of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (i) a corporation organized and
doing
business under the laws of the United States or of the States of Texas or
New
York (or of any other state of the United States so long as such corporation
is
authorized to do business as a banking institution in the States of Texas
or New
York), in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent an equity of at least $100,000,000, or (ii) an
affiliate of a corporation described in CLAUSE (i) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held
by it hereunder, and execute and deliver any further assurance, conveyance,
act
or deed necessary for the purpose. Not later than the effective date of any
such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
SECTION 21, however, or any defect therein, shall not affect the legality
or
validity of the resignation or removal of the Rights Agent or the appointment
of
the successor Rights Agent, as the case may be.
27
Section
22. Issuance
of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to
reflect any adjustment or change in the Purchase Price and the number or
kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of 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 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 Rights Certificates representing the appropriate number or
Rights
in connection with such issuance or sale; provided, however, that (i) no
such
Rights Certificate shall be issued if, and to the extent that, the Company
shall
be advised by counsel for the Company that such issuance more likely than
not
would (a) cause any incentive stock option plan of the Company to not or
to no
longer meet or satisfy the requirements of Section 422 of the Code or (b)
otherwise create a risk of material adverse tax consequences to the Company,
to
the Person to whom such Rights Certificates would be issued, or to other
employees or former employees of the Company, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section
23. Redemption
and Termination.
(a) The
Board
of Directors of the Company may, at its option, at any time prior to the
earlier
of (i) the close of business on the tenth day after the
Stock
Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior
to
the Record Date, the
close
of business on the tenth day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights
at
a price of $.0l 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"), and the Company may, at its option, pay the Redemption
Price in shares of Common Stock (based on the "current market value," as
defined
in SECTION 11(d)(i) hereof, of the shares of Common Stock at the time of
redemption), cash or any other form of consideration deemed appropriate by
the
Board of Directors.
28
(b) Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights, evidence of which shall have been filed with the Rights Agent
and
without any further action and without any notice, the right to exercise
the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. The Company
shall promptly give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, such notice shall not affect
the
validity of such redemption. Following the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights
by
mailing such notice to all such holders at each holder's last address 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 for the Common
Stock. Any notice which is mailed in the manner herein provided shall be
deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made.
Section
24. Exchange.
(a) The
Board
of Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding
and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of SECTION 7(e) hereof) for shares of Common Stock
at
an exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to
as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall
not be empowered to effect such exchange at any time after any Person (other
than an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the shares of Common
Stock then outstanding.
(b) Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this SECTION 24 and without any
further action and without any notice, the right to exercise such Rights
shall
terminate and the only right thereafter of a holder of such Rights shall
be to
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 have become void pursuant to the provisions of SECTION 7(e)
hereof)
held by each holder of Rights.
29
(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. In the event the Company shall, after
good
faith effort, be unable to take all such action as may be necessary to authorize
such additional shares of Common Stock, the Company shall substitute, for
each
share of Common Stock that would otherwise be issuable upon exchange of a
Right,
a number of Preferred Shares or fraction thereof such that the current per
share
market price of one Preferred Share multiplied by such number or fraction
is
equal to the current per share market price of one share of Common Stock
as of
the date of issuance of such Preferred Shares or fraction thereof.
Section
25. Notice
of Certain Events.
(a) In
case
the Company shall propose, at any time after the Distribution Date, (i) to
pay
any dividend payable in stock of any class to the holders of Preferred Stock
or
to make any other distribution to the holders of Preferred Stock (other than
a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Stock rights or warrants
to subscribe for or to purchase any additional shares of Preferred Stock
or
shares of stock of any class or any other securities, rights or options,
or
(iii) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with
any
other Person (other than a Subsidiary of the Company in a transaction which
complies with SECTION 11(o) hereof), or to effect any sale, lease or other
transfer (or to permit one or more of its Subsidiaries to effect any sale,
lease
or other transfer), in one transaction or a series of related transactions,
of
assets aggregating more than 50% of the assets (measured by either book value
or
fair market value) or generating more than 50% of the operating income or
cash
flow 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 in one
or more
transactions each of which complies with SECTION 11(o) hereof), or (v) to
effect
the liquidation, dissolution or winding up of the Company then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with SECTION 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of
such
stock dividend, distribution of rights or warrants, or the date on which
such
reclassification, consolidation, merger, sale, lease, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date
is to
be fixed, and such notice shall be so given in the case of any action covered
by
CLAUSE (i) or (ii) above at least 20 days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior
to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock whichever shall be the
earlier.
30
(b) In
case
any of the events set forth in SECTION 11(a)(ii) hereof shall occur, then,
in
any such case, (i) the Company shall as soon as practicable thereafter give
to
each holder of a Rights Certificate, to the extent feasible and in accordance
with SECTION 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights
under
SECTION 11(a)(ii) hereof, and (ii) all references in the preceding subsection
to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or,
if
appropriate, other securities.
Section
26. Notices.
Notices
or demands authorized by this Agreement to be given or made by the Rights
Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as
follows:
American
Stock
Transfer & Trust Company
59
Maiden
Lane
New
York, NY
10038
Subject
to the provisions of SECTION 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made
if
sent by first-class mail, postage prepaid, addressed (until another address
is
filed in writing with the Company) as follows:
Forgent
Networks,
Inc.
108
Wild Basin
Road
Austin,
Texas
78746
Attn:
President
Notices
or demands authorized by this Agreement to be given or made by the Company
or
the Rights Agent to the holder of any Rights Certificate (or, if prior to
the
Distribution Date, to the holder of certificates representing shares of Common
Stock) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown
on the
registry books of the Company.
Section
27. Supplements
and Amendments.
Prior
to the Distribution Date, the Company and the Rights Agent shall, if the
Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, the Company and the Rights Agent shall,
if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any ambiguity,
(ii)
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder or (iv) to change 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 Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate
of an
Acquiring Person); provided, this Agreement may not be supplemented or amended
to lengthen pursuant to CLAUSE (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not
then redeemable, or (B) any other time period unless lengthening such other
time
period is for the purpose of protecting, enhancing or clarifying the rights
of,
and/or the benefits to the holders of Rights. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this SECTION 27,
the
Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes rights or duties of the Rights Agent under this
Agreement without the consent of the Rights Agent. 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.
31
Section
28. Successors.
All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section
29. Determinations
and Actions by the Board Of Directors, Etc.
For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the
last
sentence of Rule l3d-(d)(1)(i) of the General Rules and Regulations under
the
Exchange Act in effect on the date hereof. he Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement
and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including
a
determination to redeem or not to redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of CLAUSE (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith, shall be final, conclusive
and binding on the Rights Agent and the holders of the Rights, and all other
parties, and (y) not subject the Board to any liability to the holders of
the
Rights.
Section
30. Benefits
of this Agreement.
Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the
Distribution Date, registered holders of the Common Stock).
Section
31. Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section
32. Governing
Law.
This
Agreement, each Right and each Rights Certificate issued hereunder shall
be
deemed to be a contract made under the laws of the State of Delaware and
for all
purposes shall be governed by and construed in accordance with the laws of
such
State applicable to contracts made and to be performed entirely within such
State.
32
Section
33. Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all
such
counterparts shall together constitute but one and the same
instrument.
Section
34. Descriptive
Headings.
Descriptive headings of the several sections of this Agreement are inserted
for
convenience only and shall not control or affect the meaning or construction
of
any of the provisions hereof.
33
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
| Attest: | FORGENT NETWORKS, INC. | ||
| By: /s/ Paul Tesluk | By: /s/ Jay C. Peterson | ||
|
|
|
||
| Name:
Paul Tesluk Title: Assistant Treasurer |
Name:
Jay C. Peterson Title: Chief Financial Officer |
| Attest: | AMERICAN STOCK TRANSFER & TRUST COMPANY | ||
| By: /s/ Susan Silber | By: /s/ Herbert J. Lemmer | ||
|
|
|
||
| Name:
Susan Silber Title: Assistant Secretary |
Name:
Herbert J. Lemmer Title: Vice President |
34
EXHIBIT
A
CERTIFICATE
OF DESIGNATIONS
FOR
DESIGNATING SERIES A
PREFERRED
STOCK OF
FORGENT
NETWORKS, INC.
(f.k.a.
VTEL Corporation)
To
the
Secretary of State
of
the
State of Delaware:
Pursuant
to the provisions of the Delaware General Corporation Law, the undersigned
corporation submits the following certificate for the purpose of designating
series of its preferred stock and fixing and determining the relative rights
and
preferences thereof:
1. The
name
of the corporation is Forgent Networks, Inc. (f.k.a. VTEL
Corporation).
2. The
following resolution establishing and designating the Series A Preferred
Stock
and fixing and determining the relative rights and preferences thereof was
duly
adopted by the Board of Directors of the Corporation on July 10,
1996:
RESOLVED,
that pursuant to the authority vested in the Board of Directors of this Company
in accordance with the provisions of its Certificate of Incorporation, a
series
of Preferred Stock of the Corporation be and it hereby is created, and that
the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as
follows:
SECTION
1. Designation
and Amount.
The
shares of such series shall be designated as "Series A Preferred Stock,"
shall
have $0.01 par value per share, and the number of shares constituting such
series shall be 150,000.
SECTION
2. Dividends
and Distributions.
(A)
Subject to the prior and superior rights of the holders of any shares of
any
series of Preferred Stock ranking prior and superior to the shares of Series
A
Preferred Stock with respect to dividends, if any, the holders of shares
of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of March, June, September
and December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest
cent)
equal to 1,000 times the aggregate per share amount of all cash dividends,
and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares
of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par value $.01
per
share, of the Corporation (the "Common Stock") subject to the provision for
adjustment hereinafter set forth, since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series
A
Preferred Stock. In the event the Corporation shall at any time after July
10,
1996 (the "Rights Declaration Date"), (i) declare any dividend on Common
Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number
of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
A-1
(B)
The
Corporation shall declare a dividend or distribution on the Series A Preferred
Stock as provided in paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable
in
shares of Common Stock).
(C)
Dividends shall begin to accrue (if payable pursuant to PARAGRAPH (A) above)
and
be cumulative on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares
of Series A Preferred Stock, unless the date of issue of such shares is prior
to
the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of
such
shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a
date after the record date for the determination of holders of shares of
Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount
of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment
of
a dividend or distribution declared thereon, which record date shall be no
more
than 30 days prior to the date fixed for the payment thereof.
A-2
SECTION
3. Voting
Rights.
The
holders of shares of Series A Preferred Stock shall have the following voting
rights:
(A) Subject
to the provisions for adjustment hereinafter set forth, each one one-thousandth
share of Series A Preferred Stock shall entitle the holder thereof to one
vote
on all matters submitted to a vote of the shareholders of the Corporation.
In
the event the Corporation shall at any time after the Rights Declaration
Date
(i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number
of
votes per one one-thousandth of a share to which holders of shares of Series
A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number
of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except
as
otherwise provided herein or by law, the holders of shares of Series A Preferred
Stock and the holders of Common Stock shall vote together as one class on
all
matters submitted to a vote of shareholders of the Corporation.
(C) (i) If
at any
time dividends on any Series A Preferred Stock shall be in arrears in an
amount
equal to four (4) quarterly dividends thereon (whether or not consecutive),
the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods on all shares
of Series A Preferred Stock then outstanding shall have been declared and
paid
or set apart for payment. During each default period, all holders of Preferred
Stock (including holders of the Series A Preferred Stock) with dividends
in
arrears in an amount equal to four (4) quarterly dividends thereon, voting
as a
class, irrespective of series, shall have the right to elect two (2)
Directors.
(ii) During
any default period, such voting right of the holders of Series A Preferred
Stock
may be exercised initially at a special meeting called pursuant to subparagraph
(iii) of this SECTION 3(C) or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders provided that neither such
voting
right nor the right of the holders of any other series of Preferred Stock,
if
any, to increase, in certain cases, the authorized number of Directors shall
be
exercised unless the holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of the holders of Common Stock shall not affect the exercise
by the
holders of Preferred Stock of such voting right. At any meeting at which
the
holders of Preferred Stock shall exercise such voting right initially during
an
existing default period, they shall have the right, voting as a class, to
elect
Directors to fill such vacancies, if any, in the Board of Directors as may
then
exist up to two (2) Directors or, if such right is exercised at an annual
meeting, to elect two (2) Directors. If the number which may be so elected
at
any special meeting does not amount to the required number, the holders of
the
Preferred Stock shall have the right to make such increase in the number
of
Directors as shall be necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the continuance
of
such period, the number of Directors shall not be increased or decreased
except
by vote of the holders of Preferred Stock as herein provided or pursuant
to the
rights of any equity securities ranking senior to or pari passu with the
Series
A Preferred Stock.
A-3
(iii) Notwithstanding
anything to the contrary contained in the Corporation's Certificate of
Incorporation or Bylaws, unless the holders of Preferred Stock shall, during
an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than ten percent (10%) of the total number
of
shares of Preferred Stock outstanding, irrespective of series, may request,
the
calling of a special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President or the Secretary
of
the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this subparagraph
(C)(iii) shall be given to each holder of record of Preferred Stock by mailing
a
copy of such notice to him at his last address as the same appears on the
books
of the Corporation. Such meeting shall be called for a time not earlier than
10
days and not later than 60 days after such order or request or in default
of the
calling of such meeting within 60 days after such order or request, such
meeting
may be called on similar notice by any shareholder or shareholders owning
in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this subparagraph
(C)(iii), no such special meeting shall be called during the period within
60
days immediately preceding the date fixed for the next annual meeting of
the
shareholders.
(iv)
In
any default period, the holders of Common Stock, and other classes of stock
of
the Corporation, if applicable, shall continue to be entitled to elect the
whole
number of Directors until the holders of Preferred Stock shall have exercised
their right to elect two (2) Directors voting as a class, after the exercise
of
which right (x) the Directors so elected by the holders of Preferred Stock
shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) the Common
Stock
and Preferred Stock, voting together as a class, shall be entitled to elect
the
remaining directors.
(v)
Immediately upon the expiration of a default period, (x) the right of the
holders of Preferred Stock as a class to elect directors shall cease, (y)
the
term of any directors elected by the holders of Preferred Stock as a class
shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in the Certificate of Incorporation or Bylaws irrespective of
any
increase made pursuant to the provisions of subparagraph (C)(ii) of this
SECTION
3 (such number being subject, however, to change thereafter in any manner
provided by law or in the Certificate of Incorporation or Bylaws). Any vacancies
in the Board of Directors effected by the provisions of CLAUSES (Y) and (Z)
in
the preceding sentence may be filled by a majority of the remaining Directors.
A-4
(D) Except
as
set forth herein, holders of Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent
they
are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
SECTION
4. Certain
Restrictions.
(A) Whenever
quarterly dividends or other dividends or distributions payable on the Series
A
Preferred Stock, as provided in SECTION 2 hereof, are in arrears, thereafter
and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been
paid
in full, the Corporation shall not:
(i) declare
or pay dividends on, make any other distributions on, or redeem or purchase
or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series
A
Preferred Stock;
(ii) declare
or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series A Preferred Stock, except dividends paid ratably
on
the Series A Preferred Stock and all such parity stock on which dividends
are
payable, or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii)
redeem
or
purchase or otherwise acquire for consideration shares of any stock ranking
on a
parity (either as to dividends or upon liquidation, dissolution or winding
up)
with the Series A Preferred Stock, provided that the Corporation may at any
time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either
as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv)
purchase
or otherwise acquire for consideration any shares of Series A Preferred Stock,
or any shares of stock ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by publication
(as
determined by the Board of Directors) to all holders of such shares upon
such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
A-5
(B)
The
Corporation shall not permit any subsidiary of the Corporation to purchase
or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under subsection (A) of is SECTION 4, purchase
or
otherwise acquire such shares at such time and in such manner.
SECTION
5. Reacquired
Shares.
Any
shares of Series A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued
as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors subject to the conditions and restrictions
on issuance set forth herein.
SECTION
6. Liquidation,
Dissolution or Winding-Up.
(A) Upon
any
liquidation (voluntary or otherwise), dissolution or winding-up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding-up) to the Series A Preferred Stock unless prior thereto, the holders
of
shares of Series A Preferred Stock shall have received $10 per share, plus
an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders
of shares of Series A Preferred Stock unless, prior thereto, the holders
of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the absolute
value
of the Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted
as set forth in subsection C below to reflect such events as stock splits,
stock
dividends and recapitalizations with respect to the Common Stock) (such number
in CLAUSE (II), the "Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Preferred Stock and Common
Stock,
respectively, holders of Series A Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number
to l
with respect to such Preferred Stock and Common Stock on a per share basis,
respectively.
(B) In
the
event, however, that there are not sufficient assets available to permit
payment
in full of the Series A Liquidation Preference and the liquidation preferences
of all other series of Preferred Stock, if any, which rank on a parity with
the
Series A Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then
such
remaining assets shall be distributed ratably to the holders of Common
Stock.
A-6
(C) In
the
event the Corporation shall at any time after the Rights Declaration Date
(i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding
Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is
the
number of shares of Common Stock outstanding immediately after such event
and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION
7. Consolidation,
Merger, Etc.
In
case
the Corporation shall enter into any consolidation, merger, combination or
other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such
case the shares of Series A Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
of
stock, securities, cash and/or any other property (payable in kind), as the
case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the
outstanding Common Stock into a smaller number of shares, then in each such
case
the amount set forth in the preceding sentence with respect to the exchange
or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares
of
Common Stock outstanding immediately after such event and the denominator
of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION
8. No Redemption.
The
shares of Series A Preferred Stock shall not be redeemable.
SECTION
9. Ranking.
The
Series A Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
A-7
SECTION
10. Amendment.
The
Certificate of Incorporation of the Corporation shall not be further amended
in
any manner which would materially alter or change the powers, preferences
or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Preferred Stock, voting separately as a
class.
SECTION
11. Fractional
Shares.
Series
A
Preferred Stock may be issued in fractions of a share which shall entitle
the
holder thereof, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have
the
benefit of all of the rights of holders of shares of Series A Preferred Stock.
| Dated: July 11, 1996 | FORGENT NETWORKS, INC (f.k.a. VTEL CORPORATION) | |
| |
|
|
| By: | /s/ F. H. (Dick) Moeller | |
|
Chief Executive Officer |
||
| |
|
|
| By: | /s/ Rodney S. Bond | |
|
Vice President-Finance |
||
A-8
EXHIBIT
B
[Form
of
Rights Certificate]
Certificate
No. R- _____
Rights
NOT
EXERCISABLE AFTER DECEMBER 31, 2015 OR EARLIER IF REDEEMED BY THE COMPANY.
THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(E)
OF SUCH AGREEMENT.]1
Rights
Certificate
Forgent
Networks, Inc.
This
certifies that ____________________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the
owner
thereof subject to the terms, provisions and conditions of the Rights Agreement,
dated as of December 19, 2005 (the "Rights Agreement"), between Forgent
Networks, Inc., a Delaware corporation (the "Company"), and American Stock
Transfer and Trust Company, as Rights Agent (the "Rights Agent"), to purchase
from the Company at any time prior to close of business on December 31, 2015
at
the office or offices of the Rights Agent, designated for such purposes or
its
successors as Rights Agent, one one-thousandth of a fully paid, non-assessable
share of Series A Preferred Stock (the "Preferred Stock") of the Company,
at a
purchase price of $13 per one one-thousandth of a share (the "Purchase Price"),
upon presentation and surrender of this Rights Certificate with the Form
of
Election to Purchase and related Certificate duly executed. The Purchase
Price
shall be paid in cash or by certified bank check or money order payable to
the
order of the Company. The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of December 15, 2005, based on the Preferred Stock
as
constituted at such date.
______________________
1
[The
portion of the legend in brackets shall be inserted only if
applicable]
B-1
Upon
the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
a
transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under
certain circumstances specified in the Rights Agreement, a transferee of
a
person who, after such transfer, became an Acquiring Person, or an Affiliate
or
Associate of an Acquiring Person, such Rights shall become null and void
and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Triggering Event.
As
provided in the Rights Agreement, the Purchase Price and the number and kind
of
shares of Preferred Stock or other securities which may be purchased upon
the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events.
This
Rights Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability
of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Company and
are
also available upon written request to the Company.
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the principal office or offices of the Rights Agent designated for such purposes
may be exchanged for another Rights Certificate or Rights Certificates of
like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-thousandths of a share of Preferred Stock as
the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall
be
exercised in part, the holder shall be entitled to receive upon surrender
hereof
another Rights Certificate or Rights Certificates for the number of whole
Rights
not exercised.
Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Company at its option at a redemption
price
of $.01 per Right in cash or in shares of Common Stock or in any other form
of
consideration deemed appropriate by the Board of Directors at any time prior
to
the earlier of the close of business on (i) the tenth day following the Stock
Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior
to
the Record Date, the close of business on the tenth day following the Record
Date), and (ii) the Final Expiration Date.
In
addition, the Company may, at any time after any Person becomes an Acquiring
Person, exchange all or a portion of the outstanding and exercisable Rights
for
shares of Common Stock at an exchange ratio of one share of Common Stock
per
Right, subject to adjustment to reflect stock splits, stock dividends or
similar
transactions. Immediately upon the action of the Board of Directors ordering
an
exchange of Rights, the Rights so exchanged will terminate and the only right
of
the holders of such Rights will be to receive the shares of Common Stock
in
exchange.
B-2
No
fractional shares of Preferred Stock will be issued upon the exercise of
any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may,
at the
election of the Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No
holder
of this Rights Certificate shall be entitled to vote or receive dividends
or be
deemed for any purpose the holder of shares of Preferred 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 for the election of directors
or
upon any matter submitted to shareholders at any meeting thereof or to give
or
withhold consent to any corporate action, or, to receive notice of meetings
or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose until
it
shall have been countersigned by the Rights Agent.
WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.
| ATTEST: | FORGENT NETWORKS, INC. | ||
| By: | |||
|
Secretary |
Title: |
|
|
|
|
|||
| Countersigned: | |||
|
|
|||
|
By:
Authorized Signature |
B-3
[Form
of
Reverse Side of Rights Certificate]
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such
holder
desires to transfer the Rights Certificate.)
FOR
VALUE
RECEIVED ____________________ hereby sells, assigns and transfers unto
_______________________________________________________________________________________ (Please
print name and address of transferee) this
Rights Certificate, together with all right, title and interest therein,
and
does hereby irrevocably constitute and appoint ___________________ Attorney,
to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
__________, 20____
| |
|
|
|
Signature |
||
Signature
Guaranteed:
B-4
Certificate
The
undersigned hereby certifies by checking the appropriate boxes that:
(1)
this
Rights Certificate [ ] is [ ] is not being sold, assigned
and
transferred by or on behalf of a Person who is or was an Acquiring Person
or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2)
after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ]
did not
acquire the Rights evidenced by this Rights Certificate from any Person who
is,
was or subsequently became an Acquiring Person or an Affiliate or Associate
of
an Acquiring Person.
Dated:
________, 20___ ___________________________________
Signature
Signature
Guaranteed:
NOTICE
The
signature to the foregoing Assignment and Certificate must correspond to
the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-5
FORM
OF ELECTION TO PURCHASE
(To
be
executed if holder desires to
exercise
Rights represented by the
Rights
Certificate.)
To
______________:
The
undersigned hereby irrevocably elects to exercise Rights represented by this
Rights Certificate to purchase the shares of Preferred Stock issuable upon
the
exercise of the Rights (or such other securities of the Company or of any
other
person which may be issuable upon the exercise of the Rights) and requests
that
certificates for such shares be issued in the name of and delivered to:
Please
insert social security
or
other
identifying number: ________________________
__________________________________________________________________________
(Please
print name and address)
__________________________________________________________________________
If
such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall
be
registered in the name of and delivered to:
Please
insert social security
or
other
identifying number: ________________________
__________________________________________________________________________
(Please
print name and address)
__________________________________________________________________________
Dated:
_________, 20____ _____________________________
Signature
Signature
Guaranteed:
B-6
Certificate
The
undersigned hereby certifies by checking the appropriate boxes that:
(1)
the
Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate
or
Associate of any such Acquiring Person (as such terms are defined pursuant
to
the Rights Agreement);
(2)
after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ]
did not
acquire the Rights evidenced by this Rights Certificate from any Person who
is,
was or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated:
_________, 20____ ___________________________________
Signature
Signature
Guaranteed:
NOTICE
The
signature to the foregoing Election to Purchase and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
B-7
EXHIBIT
C
SUMMARY
OF
FORGENT
NETWORKS, INC.
STOCKHOLDER
RIGHTS PLAN
Effective
as of December 31, 2005
In
connection with the expiration of the Rights Agreement between Forgent Networks,
Inc. f/k/a VTEL Corporation (the "Company") and First National Bank of Boston,
dated July 10, 1996 (the "Expiring Rights Agreement"), and the December 31,
2005
expiration of the associated rights issued thereunder, on December 15, 2005,
the
Board of Directors of the Company approved the execution of a new Rights
Agreement (the "New Rights Agreement") between the Company and American Stock
Transfer &
Trust
Company, as Rights Agent (the "Rights Agent").
To
implement the purpose of the new Rights Agreement, on December 15, 2005,
the
Board of Directors of the Company declared a dividend distribution of one
Right
for each outstanding share of common stock, par value $0.01 per share, of
the
Company (the "Common Stock"). The distribution is payable to the stockholders
of
record at the close of business on December 31, 2005, and is effective
simultaneous with the expiration of the rights granted under the Expiring
Rights
Agreement.
Each
newly issued Right will entitle the registered holder to purchase from the
Company one one-thousandth of a share of Series A Preferred Stock, $0.01
par
value (the "Preferred Stock"), subject to adjustment, at a purchase price
of
$13, subject to adjustment (the "Purchase Price"). The description and terms
of
the Rights are set forth in the New Rights Agreement, a copy of which is
attached hereto as Exhibit 1.
Initially,
the Rights will be attached to all Common Stock certificates representing
shares
then outstanding, and no separate Rights Certificates will be distributed.
The
Rights will separate from the Common Stock and a distribution date (the
"Distribution Date") will occur upon the earlier of (i) 10 days following
the date (the "Stock Acquisition Date") of a public announcement that a person
or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or
more
of the outstanding shares of Common Stock or (ii) 10 business days
following the commencement of a tender offer or exchange offer that would
result
in a person or group beneficially owning 15% or more of such outstanding
shares
of Common Stock. Until the Distribution Date, (i) the Rights will
be
evidenced by the Common Stock certificates (together with a copy of this
Summary
of Rights or bearing the notation referred to below) and will be transferred
with and only with such Common Stock certificates, (ii) Common Stock
certificates issued after December 31, 2005 will contain a notation
incorporating the New Rights Agreement by reference and (iii) the
surrender
for transfer of any certificate for Common Stock outstanding (with or without
a
copy of this Summary of Rights) will also constitute the transfer of the
Rights
associated with the Common Stock represented by such certificate.
C-1
The
Rights are not exercisable until the Distribution Date and will expire at
the
close of business on December 31, 2015, unless that date is extended
or the
Rights are earlier redeemed or exchanged by the Company as described
below.
As
soon
as practicable after the Distribution Date, Rights Certificates will be mailed
to holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone
will
represent the Rights.
Ten
business days after any person or group announces a tender offer for 15%
or more
of the Company's outstanding Common Stock, the Rights will become exercisable.
Thereafter, the Rights will trade separately from the Company's Common Stock
and
separate certificates representing the Rights will be issued, which will
entitle
the holder of a Right to purchase from the Company one one-thousandth of
a share
of Preferred Stock for the Purchase Price.
In
addition, if any person or group acquires 15% or more of the Common Stock,
each
Right not owned by the acquiror would become exercisable for the number of
shares of the Company's Common Stock that at the time have a market value
of two
times the Purchase Price of the Right. For example, at a Purchase Price of
$13
per Right, each Right not owned by an Acquiring Person (or by certain related
parties) following an event set forth in the preceding paragraph would entitle
its holder to purchase $26 worth of Common Stock (or other consideration,
as
noted above) for $13. Assuming that the Common Stock had a per share value
of $2
at such time, the holder of each valid Right would be entitled to purchase
13
shares of Common Stock for $13.
If,
after
any person or group acquires 15% or more of the Common Stock, the Company
is (i)
acquired in a merger or other business transaction in which the Company is
not
the surviving corporation or the capital stock of the Company is exchanged
for
the capital stock of the acquiring company, or (ii) involved in a sale of
at
least 50% of its assets, then the Rights, under certain circumstances, will
be
modified so as to entitle the holder to buy a number of the acquiring company's
common shares having a market value of two times the Purchase Price of each
Right.
The
Purchase Price payable, and the number of 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 or Preferred Stock,
(ii) if holders of the Common Stock or Preferred Stock are granted
certain
rights or warrants to subscribe for shares or convertible securities at less
than the current market price, or (iii) upon the distribution to holders
of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to
above).
With
certain exceptions, no adjustment in the Purchase Price will be required
until
cumulative adjustments amount to at least 1% of the Purchase Price. No
fractional Units will be issued and, in lieu thereof, an adjustment in cash
will
be made based on the market price of the Preferred Stock on the last trading
date prior to the date of exercise.
In
general, at any time until 10 days after the Stock Acquisition Date, the
Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
in
cash, shares of Common Stock or other consideration approved by the Board.
Immediately upon the action of the Board of Directors ordering redemption
of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.0l redemption price.
C-2
In
addition, the Company may, at any time after any person or group acquires
15% or
more
of the Common Stock, exchange all or a portion of the outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one
share
of Common Stock per Right, subject to adjustment to reflect stock splits,
stock
dividends or similar transactions. Immediately upon the action of the Board
of
Directors ordering an exchange of Rights, the Rights so exchanged will terminate
and the only right of the holders of such Rights will be to receive the shares
of Common Stock in exchange.
Until
a
Right is exercised, the holder thereof, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to vote
or
to receive dividends. While the distribution of the Rights will not be taxable
to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other
than those provisions relating to the rights and duties of the Rights Agent,
any
of the provisions of the New Rights Agreement may be amended by the Board
of
Directors of the Company prior to the Distribution Date. After the Distribution
Date, the provisions of the New Rights Agreement may be amended by the Board
in
order to cure any ambiguity to make changes which do not adversely affect
the
interests of holders of Rights (excluding the interest of any Acquiring Person),
or to shorten or lengthen any time period under the New Rights Agreement;
provided, however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not
redeemable.
The
Rights have certain anti-takeover effects. Exercise of the Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The existence
of
Rights, however, should not affect an offer at a price which is fair to all
stockholders and otherwise in the best interests of the Company and its
stockholders as determined by the Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board
of
Directors since the Board of Directors may, at its option, at any time until
ten
days following the Stock Acquisition Date (as such period may be extended
or
shortened by the Board of Directors) redeem all but not less than all of
the
then outstanding Rights at the $.01 redemption price.
This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the New Rights Agreement. A copy
of
the New Rights Agreement is available free of charge from the Company for
record
holders of the Common Stock.
C-3