Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment #4 to Form S-1 7 33K
2: EX-4.2 Form of Shareholder's Rights Agreement 52 241K
3: EX-5.1 Opinion of Maples and Calder 2 8K
4: EX-8.1 Opinion of Sonnenschein Nathe & Rosenthal 1 7K
5: EX-10.1 Garmin Ltd. 2000 Equity Incentive Plan 29 126K
EXHIBIT 4.2
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Form of
GARMIN LTD.
and
UMB Bank, N.A.,
Rights Agent
RIGHTS AGREEMENT
Dated as of
_______________, 2000
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GARMIN LTD. RIGHTS AGREEMENT
Table of Contents
[Enlarge/Download Table]
Section 1. Certain Definitions................................................................................ 1
Section 2. Appointment of a Rights Agent...................................................................... 4
Section 3. Certificates and Transfer of Rights................................................................ 4
Section 4. Form of Rights Certificates........................................................................ 7
Section 5. Countersignature and Registration.................................................................. 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates......................................................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................... 9
Section 8. Cancellation and Destruction of Rights Certificates................................................ 11
Section 9. Reservation and Availability of Capital Shares..................................................... 11
Section 10. Preferred Share Record Date........................................................................ 13
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights........................ 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................................... 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................... 21
Section 14. Fractional Rights and Fractional Shares............................................................ 23
Section 15. Rights of Action................................................................................... 24
Section 16. Agreement of Right Holders......................................................................... 24
Section 17. Rights Certificate Holder Not Deemed a Shareholder................................................. 25
Section 18. Concerning the Rights Agent........................................................................ 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................................... 26
Section 20. Duties of Rights Agent............................................................................. 27
Section 21. Change of Rights Agent............................................................................. 29
Section 22. Issuance of New Rights Certificates................................................................ 30
Section 23. Redemption and Termination......................................................................... 30
Section 24. Notice of Certain Events........................................................................... 31
Section 25. Notices............................................................................................ 32
Section 26. Supplements and Amendments......................................................................... 33
Section 27. Successors......................................................................................... 33
Section 28. Determination and Actions by the Board of Directors, etc........................................... 33
Section 29. Benefits of this Agreement......................................................................... 34
Section 30. Severability....................................................................................... 34
Section 31. Governing Law...................................................................................... 34
Section 32. Counterparts....................................................................................... 35
Section 33. Descriptive Headings............................................................................... 35
Exhibit A Form of Resolutions of the Board of Directors
Exhibit B Form of Rights Certificate
Form of Assignment
Certificate
Notice
Form of Election to Purchase
Certificate
Notice
Exhibit C Summary of Rights to Purchase Preferred Shares
i
RIGHTS AGREEMENT
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This Agreement, dated as of _______, 2000, between GARMIN LTD., a Cayman
Islands company (the "Company"), and UMB Bank, N.A., a national banking
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association organized and existing under the laws of the United States of
America, as rights agent (the "Rights Agent").
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W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend of one Right (as defined herein) for each outstanding common share
(as defined herein), of the Company at the close of business on _______________
(the "Record Date") and has authorized the issuance of one Right (as such number
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may hereinafter be adjusted pursuant to the provisions of Section 11 hereof) in
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respect of each Common Share of the Company issued between the Record Date and
the earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date (as such terms are hereinafter defined), each Right initially
representing the right to purchase, under certain circumstances, 1/1,000ths of a
Preferred Share (as defined herein), upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
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NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the Company and the Rights Agent 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, together with all
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Affiliates or Associates of such Person, shall be the Beneficial Owner of a
Substantial Block, whether or not such Person continues to be the Beneficial
Owner of a Substantial Block, but shall not include: (i) the Company; (ii) any
Subsidiary of the Company; (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person organized, appointed or established
by the Company or by any Subsidiary of the Company for or pursuant to the terms
of any such plan; (iv) Min H. Kao; (v) Gary L. Burrell; or (vi) a Person who,
together with all Affiliates and Associates of such Person, would become an
Acquiring Person solely as a result of a reduction of the number of Common
Shares of the Company outstanding, including repurchases of outstanding Common
Shares of the Company by the Company, which reduction increases the percentage
of outstanding Common Shares of the Company beneficially owned by such Person
until such Person, Affiliate or Associate shall thereafter become the Beneficial
Owner of any additional Common Shares.
(b) "Adjusted Number of Shares" shall have the meaning given the term in
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Section 11(a)(iii) of this Agreement.
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(c) "Adjusted Purchase Price" shall have the meaning given the term in
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Section 11(a)(iii) of this Agreement.
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(d) "Affiliate" and "Associate" shall have the respective meanings
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ascribed to such terms in Rule 12b-2 of the Exchange Act as in effect on the
date hereof.
(e) A Person shall be deemed the "Beneficial Owner" of and shall be
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deemed to "beneficially own" any securities that:
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(i) Such Person, or any of such Person's Affiliates or Associates,
beneficially owns, directly or indirectly (as determined pursuant to Rule
13d-3 of the Exchange Act);
(ii) Such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has: (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing), or
upon the exercise, conversion or exchange of rights, warrants or options,
or otherwise, (provided, however, that a Person shall not be deemed the
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"Beneficial Owner" of, or to beneficially own, securities tendered pursuant
to a tender or exchange offer made by such Person or any such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange and securities issuable upon the exercise of the
Rights at any time prior to the occurrence of a Triggering Event); or (B)
the right to vote or dispose of pursuant to any agreement, arrangement or
understanding (whether or not in writing) provided, however, that a Person
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shall not be deemed the Beneficial Owner or to beneficially own, any
security under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) Are beneficially owned, directly or indirectly, by any other
Person with which such former 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 clause (B) of subparagraph (ii) of
this paragraph (e)) or disposing of any securities of the Company;
provided, however, that nothing in this paragraph (e) shall cause a Person
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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.
(f) "Capital Share Equivalents" shall have the meaning given the term in
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Section 11(a)(iii) of this Agreement.
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(g) "Business Day" shall mean any day other than a Saturday, Sunday, or a
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day on which banking institutions in the States of New York or Missouri are
authorized or obligated by law or executive order to close.
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(h) "Close of Business" on any given date shall mean 5:00 p.m., New York,
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New York time, on such date, provided, however, if such date is not a Business
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Day it shall mean 5:00 p.m. on the next succeeding Business Day.
(i) "Common Share" when used with reference to the Company shall mean the
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Common Share, $0.01 par value, of the Company as adjusted from time to time.
"Common Share" when used with reference to any Person other than the Company
shall mean the capital shares with the greatest voting power of such Person or
the equity securities or other equity interest having power to control or direct
the management of such Person.
(j) "Current Market Price" of the Common Shares shall have the meaning
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given the term in Section 11(d)(i) of this Agreement.
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(k) "Current Market Price" of the Preferred Shares shall have the meaning
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given the term in Section 11(d)(ii) of this Agreement.
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(l) "Distribution Date" shall have the meaning given the term in Section
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3(a) of this Agreement.
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(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, or any successor thereto, and the rules and regulations promulgated
thereunder, all as the same shall be amended from time to time.
(n) "Expiration Date" shall have the meaning given the term in
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Section 7(a) of this Agreement.
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(o) "Final Expiration Date" shall have the meaning given the term in
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Section 7(a) of this Agreement.
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(p) "Permitted Offer" shall mean a tender offer or exchange offer that is
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for all outstanding Common Shares of the Company at a price and on terms
determined to be adequate prior to the purchase of shares under such tender
offer or exchange offer, by at least 70% of the members of the Board of
Directors of the Company, taking into account all factors that such directors
deem relevant including, without limitation, prices that could reasonably be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value and otherwise in the best interests of the Company and its
shareholders (other than the Person or any Affiliate or Associate thereof for
whose benefit the offer is being made).
(q) "Person" shall mean any individual, firm, company, corporation,
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limited liability company, partnership, joint venture, association, trust or
other entity.
(r) "Preferred Shares" shall mean the Series A Preferred Shares, par value
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$1.00 per share, of the Company having substantially the rights, powers and
preferences set forth in the Resolutions of the Board of Directors attached
hereto as Exhibit A, and, to the extent that there are not a sufficient number
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of Series A Preferred Shares authorized to permit the full exercise of the
Rights, any other series of Preferred Shares of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Preferred Shares.
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(s) "Principal Party" shall have the meaning given the term in Section
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13(b) of this Agreement.
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(t) "Proration Factor" shall have the meaning given the term in Section
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11(a)(iii) of this Agreement.
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(u) "Rights Certificates" shall have the meaning given the term in Section
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3 of this Agreement.
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(v) "Share Acquisition Date" shall mean the close of business on the tenth
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calendar day after the first date of public announcement (which, for purposes of
this definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(w) "Securities Act" shall mean the Securities Act of 1933, as amended, or
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any successor thereto, and the rules, regulations, and forms promulgated
thereunder, all as the same shall be amended from time to time.
(x) A "Subsidiary" of any Person shall mean any Person of whom a majority
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of the voting power of the voting equity securities or voting interests is owned
or, directly or indirectly, by such former Person, or any Person which is
otherwise controlled, directly or indirectly, by such former Person.
(y) "Substantial Block" shall mean a number of the Common Shares of the
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Company that equals or exceeds 15 percent of the number of the Common Shares of
the Company then outstanding.
(z) "Trading Days" shall have the meaning given the term in Section
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11(d)(i) of this Agreement.
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(aa) "Triggering Event" shall mean any event described in
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Section 11(a)(ii) or Section 13(a) of this Agreement.
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SECTION 2. Appointment of a Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3, hereof
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shall prior to the Distribution Date also be the holders of the Common Shares of
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. Certificates and Transfer of Rights.
(a) Common Shares Outstanding on the Record Date. Until the earlier of
(unless extended by the Board of Directors of the Company) (i) the Share
Acquisition Date or (ii) the close of business on the tenth calendar day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement of, or first public announcement of the intent of any Person (other
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than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any Person organized, appointed or established by the Company or
any Subsidiary of the Company for or pursuant to the terms of any such plan) to
commence (which intention to commence remains in effect for five business days
after such announcement) a tender or exchange offer if, upon consummation
thereof, such Person would be an Acquiring Person (including any such date that
is after the date of this Agreement and prior to the issuance of the Rights)
(the earlier of the dates in subsections (i) and (ii) hereof being herein
referred to as the "Distribution Date"), the Rights will be evidenced (subject
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to the provisions of paragraph (b) of this Section 3) by the certificates for
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Common Shares of the Company (which certificates of such Common Shares of the
Company shall be deemed also to be Rights Certificates), and not by separate
Rights Certificates, and the right to receive Rights Certificates will be
transferable only in connection with the transfer of such Common Shares
(including a transfer to the Company). With respect to certificates for the
Common Shares of the Company outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates for the
Common Shares of the Company with or without a Summary of Rights attached
thereto and the registered holders of the Common Shares of the Company shall
also be the registered holders of the associated Rights. Until the earlier of
the Distribution Date or the Expiration Date, the surrender or transfer
(including a transfer to the Company) of any of the certificates for the Common
Shares of the Company outstanding on the Record Date shall also constitute the
transfer of the Rights associated with the Common Shares of the Company
represented by such certificate. The Company will include with its next
mailing, by third-class, postage prepaid mail, of its quarterly report to
Shareholders, if any, a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C (the "Summary of Rights"). However, if such
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mailing has not occurred by the expiration of 60 days after the expiration of
the quarter in which this Agreement becomes effective, the Company will promptly
mail the Summary of Rights separately, by first-class, postage prepaid mail, to
each record holder of the Common Shares of the Company as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company and no such mailing shall be made with the Company's quarterly
report to Shareholders.
(b) Distribution of Separate Rights Certificates. 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 Shares of the
Company as of the close of business on the Distribution Date, at the address of
such holder of Common Shares shown on the records of the Company, a separate
Rights Certificate in substantially the form of Exhibit B attached hereto
evidencing one Right for each Common Share of the Company so held, subject to
adjustment as provided herein. In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11(p) hereof, at the
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time of distribution of the Rights Certificate, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a)
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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.
(c) Issuance of Additional Common Shares and Rights. Rights shall be
issued in respect of all Common Shares of the Company issued (whether originally
issued or later issued) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date.
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Certificates representing such Common Shares shall be deemed to be impressed on,
printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between Garmin Ltd. and UMB Bank,
N.A., as Rights Agent (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at
the principal executive offices of Garmin Ltd Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
redeemed, may expire or may be evidenced by separate certificates and will
no longer be evidenced by this certificate. Under certain circumstances,
Rights issued to, or which are or were beneficially owned by, Acquiring
Persons or their Affiliates or Associates (as such terms are defined in the
Rights Agreement) and any subsequent holder of such Rights may become null
and void. In addition, Rights held by Persons other than an Acquiring
Person may not be transferred to an Acquiring Person or certain other
Persons.
Until the earlier of the Distribution Date or the Expiration Date, the Rights
associated with the Common Shares of the Company represented by certificates
containing the foregoing legend shall be evidenced by such certificates alone,
and the surrender for transfer of any of such certificates shall also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate.
(d) Purchase of Common Shares by the Company. In the event that the
Company purchases or acquires any of its Common Shares after the Record Date but
prior to the Distribution Date, the Company shall not be entitled to exercise
any Rights associated with the Common Shares so purchased or acquired. Upon
reissuance of such Common Shares by the Company the Rights shall again attach to
such Common Shares as set forth in Section 3(c) of this Agreement.
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(e) Restriction on Transfers to Acquiring Persons. Notwithstanding
anything in this Agreement to the contrary, no Right shall at any time be
transferable or transferred, in one transaction or in a series of related
transactions (including a tender offer or exchange offer), directly or
indirectly (i) to any Person who is an Acquiring Person, (ii) to any Person in
connection with a transaction or series of related transactions in which such
Person becomes an Acquiring Person, (iii) to any Person who, as a result of such
transfer, would beneficially own 15 percent or more of the Rights, or (iv) to
any Affiliate or Associate of a Person referred to in any one or more of the
foregoing clauses (i), (ii), or (iii). Any purported or attempted transfer of a
Right on or after the Record Date in violation of the foregoing provisions
(regardless whether such purported or attempted transfer shall be recorded on
any transfer ledger) shall be null and void as of the date of the purported or
attempted transfer without any further action on the part of the Company or the
Rights Agent, and any Right that has been the subject of any such purported or
attempted transfer shall for purposes of this Agreement and the Right
Certificate be deemed to be held beneficially by the Person who attempted to
make such purported or attempted transfer and, thereafter, shall continue to be
exercisable by such Person or, in the case of a transfer not prohibited by this
Agreement, such Person's transferee, for a like number of 1/l,000ths of a
Preferred Share (or other securities, cash or other assets, as the case may be)
pursuant to this
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Agreement. The Company may require (or cause the Rights Agent or any transfer
agent of the Company to require) any Person who submits a Right Certificate for
transfer on the register of members or any other registry books or to exercise
the Rights represented thereby to establish to the satisfaction of the Company,
in its sole discretion, that such attempted transfer is not in violation of the
provisions of this Section 3(e). The Company and the Right s Agent shall use all
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reasonable efforts to insure the provisions of this Section 3(e) are complied
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with, but shall have no liability to any holder of a Right Certificate or any
other Person as a result of a failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees thereof.
SECTION 4. Form of Rights Certificates.
(a) Form of Certificate. The Rights Certificates (and the forms of
election to purchase shares and of assignment to be printed on the reverse
thereof) shall, subject to paragraph (a) of Section 3 of this Agreement, be
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substantially the same as Exhibit B hereto and may have such marks of
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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 Shares exchange on which the Rights may from time to
time be listed, or to conform to usages. Subject to the provisions of Section
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11 and Section 22 hereof, the Rights Certificates, whenever issued, shall be
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dated as of the Record Date, and on their face shall entitle the holders thereof
to purchase such number of 1/l,000ths of a Preferred Share as shall be set forth
therein at the price per 1/1,000ths of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase Price shall be
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subject to adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, any Rights
Certificate issued pursuant to Section 3 or Section 22 hereof that represent
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Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate thereof, (ii) a transferee of an Acquiring Person (or of any Associate
or Affiliate of such Acquiring Person) who becomes a transferee after the
Acquiring Person became such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate of such Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
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
that has a primary purpose or effect avoidance of Section 7(e) hereof, any
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Rights Certificate issued at any time to any nominee of such Acquiring Person,
Associate or Affiliate, and any Rights Certificate issued pursuant to Section 6
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or Section 11 upon transfer, exchange, replacement or adjustment of any other
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Rights Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
an Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented
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hereby may become null and void in the circumstances specified in Section
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7(e) of the Rights Agreement.
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The provisions of Section 7(e) of the Rights Agreement shall be operative
------------
whether or not the foregoing legend is contained on any Rights Certificate.
SECTION 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by
one of its authorized officers, either manually or by facsimile signature. The
Rights Certificates shall be countersigned by the Rights Agent, either manually
or by facsimile, 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, issued and delivered with the same force and effect as though the person
who signed such Rights Certificate 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 Rights Agreement any such person
was not such an officer. In case any authorized signatory of the Rights Agent
who shall have countersigned any of the Right Certificates shall cease to be
such signatory before delivery by the Company, such Rights Certificates,
nevertheless, may be issued and delivered by the Company with the same force and
effect as though the person who countersigned such Right Certificates had not
ceased to be such signatory; and any Right Certificates may be countersigned on
behalf of the Rights Agent by any person who, at the actual date of the
countersignature of such Right Certificate, shall be a proper signatory of the
Rights Agent to countersign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such a signatory.
(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 the 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 respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates, and such other
information as the Rights Agent deems appropriate in the circumstances.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Subject to the provisions of Section 4(b), Section 7(e) and Section 14
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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
Certificates may be transferred, split up or combined with or exchanged for any
other Rights Certificates, entitling the registered holder to purchase a like
number of 1/1,000ths of a Preferred Share (or following a Triggering Event,
Common Shares, other securities or other assets, as may be necessary) as the
Rights Certificate or Rights Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to
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purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose of the Rights
Agent. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to 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 or the
Rights Agent 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.
Upon receipt by the Rights Agent of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of a Rights Certificate, and in
case of loss, theft or destruction, of indemnity or security of the Company and
the Rights Agent reasonably satisfactory to the Rights Agent, 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 Rights Agent will make and deliver a new Rights
Certificate of like tenor for delivery to the registered owner in lieu of the
Rights Certificates 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
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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) and Section 23(a)
------------ ------------------ -------------
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 on
the reverse side thereof duly completed and executed, to the Rights Agent at the
principal office of the Rights Agent or offices designated by the Rights Agent
for such purposes, together with payment of the aggregate Purchase Price for the
total number of 1/1,000ths of a Preferred Share (or other securities or assets,
as may be necessary and authorized) as to which such surrendered Rights are
exercised, at or prior to the close of business on the earlier of: (i) ________,
2010 (the "Final Expiration Date"); (ii) the date on which the Rights are
---------------------
redeemed as provided in Section 23; or (iii) the consummation of a transaction
----------
contemplated by Section 13(d) hereof (such earlier date being herein referred to
-------------
as the "Expiration Date").
---------------
(b) The Purchase Price for each 1/1,000ths of a Preferred Share pursuant
to the exercise of a Right shall initially be $_________, shall be subject to
adjustment from time to time as provided in Section 11 and Section 13 hereof and
--------- ----------
shall be payable in accordance with paragraph (c) below.
9
(c) Upon receipt of a Rights Certificate representing exercisable Rights
with the form of election to purchase and the Certificate duly completed and
executed, payment of the Purchase Price for the number of 1/1,000ths of a
Preferred Share (or other securities or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax, the Rights Agent
shall thereupon, subject to Section 20(k), promptly:
-------------
(i) (A) requisition from any transfer agent of the Preferred Shares
(or make available, if the Rights Agent is serving in its separate capacity
as the transfer agent for such Preferred Shares) a certificate for the
total number of 1/1,000ths of a Preferred Share 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 Preferred Shares issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent a
depositary receipt representing such number of 1/1,000ths of a Preferred
Share as are to be purchased (in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer
agent with the depositary agent), and the Company hereby irrevocably
authorizes the depositary agent to comply with such request;
(ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 14;
----------
(iii) promptly after receipt of such certificate or depositary
receipt, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificates, registered in such name or
names as may be designated by such holder; and
(iv) when appropriate, after receipt promptly deliver such cash, if
any, to or upon the order of the registered holder of such Rights
Certificate.
The payment of the Purchase Price may be made: (i) in cash or by certified bank
check or bank draft payable to the order of the Company, (ii) by delivery of a
certificate or certificates (with appropriate Shares powers executed in blank
attached thereto) evidencing a number of Common Shares equal to the then
Purchase Price divided by the current market price (as determined pursuant to
Section 11(d) hereof) per Common Share on the Trading Date immediately preceding
-------------
the date of such exercise, or (iii) by a combination of (i) and (ii). In the
event that the Company is obligated to issue securities, distribute property or
pay cash pursuant to Section 11(a)(iii) hereof, the Company will make all
------------------
arrangements necessary so that cash, property or securities are available for
issuance, distribution or payment by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Rights Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
----------
(e) Notwithstanding anything in this Agreement to the contrary, if there
occurs the event set forth in Section 11(a)(ii), then any Rights that are or
-----------------
were beneficially owned by: (i) an
10
Acquiring Person or any Associate or Affiliate of such Acquiring Person; (ii)
any subsequent holder of such Rights; (iii) a transferee of an Acquiring Person
or of any Associate or Affiliate thereof who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which a majority of the Board has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e) shall become or be (as the case may be) null and void with respect
------------
to the rights provided under Section 11(a)(ii) without any further action, and
----------------
shall thereafter not provide any such holder with any rights whatsoever under
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure 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
thereof.
(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 or the Rights Agent shall reasonably request.
SECTION 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange, if surrendered to the Company or to any of
its agents, shall be delivered to the Rights Agent for cancellation or in
canceled form, or if surrendered to the Rights Agent, then 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 Rights 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 a certificate of destruction thereof to the
Company and shall destroy such canceled Rights Certificates in accordance with
applicable laws and regulations.
SECTION 9. Reservation and Availability of Capital Shares.
The Company covenants and agrees that it will:
(a) Cause to be reserved, through a statement of intention by the Board of
Directors that such securities will be issued in relevant circumstances, out of
its authorized and unissued Preferred Shares (and following the occurrence of a
Triggering Event, out of its authorized and unissued Common Shares, other
securities as provided herein or some combination thereof) the number of
Preferred Shares or other securities as provided herein or some combination of
such
11
securities that will be sufficient to permit the exercise in full of all
outstanding Rights whenever issued.
(b) If the Preferred Shares (and following the occurrence of a Triggering
Event, Common Shares and/or other securities) issuable upon the exercise of
Rights are listed on any national securities exchange, use its best efforts to
cause, from and after such time as the Rights become exercisable, all unissued
shares reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) Use its best efforts to: (i) file, as soon as practicable following
the first occurrence of the Distribution Date, a registration statement under
the Securities Act with respect to the securities purchasable upon exercise of
the Rights on an appropriate form; (ii) cause such registration statement to
become effective as soon as practicable after such filing; (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the date of the expiration
of the Rights; (iv) to otherwise comply with all requirements of the Securities
Act and the Exchange Act applicable to the exercise of the Rights and issuance
of the securities upon such exercise; and (v) take promptly such action as may
be appropriate under the blue sky or securities laws of the States such laws of
which would be applicable to the Rights and the exercise thereof in order for
the securities issuable upon exercise of the Rights to be offered, sold and
delivered in accordance with such laws. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualifications in such jurisdiction shall have
been obtained.
(d) Take all such action as may be necessary to ensure that all 1/1,000ths
of the Preferred Shares (and following the occurrence of a Triggering Event, the
other securities as permitted herein) 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 non-assessable.
(e) Pay when due and payable any and all state, federal and foreign
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for a number of
1/1,000ths of the Preferred Shares (or other securities, as the case may be)
upon the exercise of Rights all costs and expenses incurred in connection with
the obligations set forth in this Section 9. The Company shall not, however, be
---------
required: (i) to pay any transfer tax that may be payable in respect of any
transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of a number of certificates for whole or fractional
Preferred Shares (or other securities, as the case may be) in a name other than
that of the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise; or (ii) to issue or deliver any certificates for whole
or fractional Preferred Shares upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
(f) The Company agrees to provide to the Rights Agent, immediately
following the later to occur of an event described in Section 11(a)(i)(B) or
Section 13 hereof or the Distribution Date, an opinion of counsel reasonably
acceptable to the Rights Agent that the Common Shares
12
underlying the Rights have been or are being properly registered under the
Securities Act and all securities or "blue sky" laws of the various states, as
applicable, or in the alternative, the Rights are not subject to registration
under the Securities Act and/or any securities or "blue sky" laws of the various
states.
SECTION 10. Preferred Share Record Date.
Each person in whose name any certificate for any whole or fractional
Preferred Share (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 Preferred Shares (or other securities, as the case may be)
represented thereby, 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 any applicable transfer taxes) was made; provided,
--------
however, that if the date of such surrender and payment is a date upon which the
-------
Preferred Share (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 on, and such certificates shall be dated, the next succeeding
business day on which such transfer books for such securities are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights as a shareholder of the Company
with respect to shares for which the Rights may 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) In the event that:
(i) Changes in the Preferred Shares. The Company shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred
Shares payable in shares of the Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred Shares
into a smaller number of shares or (D) issue any shares of its capital
shares in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving company), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, then 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 Preferred Shares (or other securities, 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 the payment of the Purchase Price then in effect, the
aggregate number (whether whole or fractional) and kind of securities that
if such Right had been exercised immediately prior to such date and at a
time when the Preferred Share transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of
13
such dividend, subdivision, combination or reclassification. If an event
occurs that would require an adjustment under both this Section 11(a)(i)
----------------
and Section 11(a)(ii) hereof, the adjustment provided for in this Section
----------------- -------
11(a)(i) shall be in addition to, and shall be made prior to any adjustment
--------
required pursuant to Section 11(a)(ii).
-----------------
(ii) Determination of Preferred Shares. Any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any of its subsidiaries or any Person holding securities of the
Company organized, appointed or established by the Company or any of its
subsidiaries for or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall become an Acquiring
Person (except pursuant to a Permitted Offer), then proper provisions shall
be made so that each holder of a Right, except as provided in Section 7(e)
------------
hereof, shall, for a period of 60 days after the effective date of an
appropriate registration statement filed pursuant to Section 9 hereof, have
---------
a right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number of whole
or fractional Preferred Shares (or if the Board determines prior to the
Distribution Date, such number of Common Shares of the Company in lieu of
the Preferred Shares) as shall equal the result obtained by multiplying the
then current Purchase Price by the then number of 1/1,000ths of a Preferred
Share (or such Common Share) for which a Right is exercisable immediately
prior to the occurrence of such Section 11(a)(ii) event then dividing that
-----------------
product (which, following such first occurrence, shall thereafter be
referred to as the Purchase Price for each Right and for all other purposes
of this Agreement) by 50 percent of the current market price per one share
of the Preferred Shares (or Common Shares of the Company, as the case may
be) (determined pursuant to Section 11(d)) on the date of the first
-------------
occurrence of the event set forth in this subparagraph (ii) (such number of
-----------------
shares being referred to as the "Adjustment Shares").
-----------------
(iii) Insufficient Preferred Shares. There shall not be sufficient
unissued Preferred Shares (or Common Shares of the Company as provided for
in Section 11(a)(ii) hereof) to permit the exercise in full of all the
-----------------
outstanding Rights in accordance with the foregoing subparagraph (ii) and
the Rights become so exercisable, notwithstanding any other provision of
this Agreement, to the extent necessary and permitted by applicable law,
each Right shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement: (A) shares (whether whole or fractional) of Common Shares
of the Company that may permissibly be issued; (B) a number (whether whole
or fractional) of other equity securities of the Company (or in the
discretion of the Board of Directors of the Company, debt) including, but
not limited to, whole or fractional shares of preferred shares of the
Company other than the Preferred Shares (such alternative securities of the
Company being referred to as "Capital Share Equivalents"); or (C) some
-------------------------
combination of (A), (B) and the Preferred Shares, that, in the case of (A),
(B) or (C), the Board of Directors of the Company has determined to have
the same aggregate current market value as determined based upon advice of
a nationally recognized investment banking firm selected by a majority of
the Board and/or pursuant to Section 11(d)(i) and (ii) hereof, to the
-------------------------
extent applicable as the aggregate value of the Preferred Shares if there
were available for issuance sufficient shares of Preferred Shares;
provided, however, if there are unavailable sufficient Preferred Shares or
-------- -------
Capital Share Equivalents, then the Company shall, to the extent
14
permitted by applicable law, promptly take all such action as may be
necessary to authorize additional Preferred Shares or Capital Share
Equivalents for issuance upon exercise of the Rights, including the calling
of a meeting of shareholders; and provided, further, that if the Company is
-------- -------
unable to cause sufficient Preferred Shares or Capital Share Equivalents to
be available for issuance upon exercise in full of all of the outstanding
Rights, then each Right shall thereafter represent the right to receive the
Adjusted Number of Shares upon exercise of the Adjusted Purchase Price (as
such terms are hereinafter defined). As used herein, the term "Adjusted
--------
Number of Shares" shall be equal to that number of whole or fractional
----------------
Preferred Shares (or Capital Share Equivalents) equal to the product of (A)
the number of Adjustment Shares and (B) a fraction, the numerator of which
is the number of Preferred Shares (or Capital Share Equivalents) available
for issuance upon exercise of the Rights and the denominator of which is
the aggregate number of Adjustment Shares otherwise issuable upon exercise
in full of all Rights (assuming there were a sufficient number of Preferred
Shares (or Capital Share Equivalents as the case may be) available) (such
fraction being referred to as the "Proration Factor"). The "Adjusted
---------------- --------
Purchase Price" shall mean the product of the Purchase Price and the
--------------
Proration Factor. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Preferred Shares and
other Capital Share Equivalents upon exercise of the Rights among holders
of Rights.
(b) Preferred Share Rights or Warrants. In case the Company shall fix a
record date for the issuance of rights or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preferred Shares (or Securities
convertible into the Preferred Shares or similar preferred shares) at a price
per Preferred Share (or having a conversion price per Preferred Share, if a
security convertible into Preferred Shares) less than the current market price
per Preferred Share (as defined in Section 11(d) hereof) on such record date,
-------------
then the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction the numerator of which shall be the number of shares
of Preferred Shares (whether whole or fractional) outstanding on such record
date plus the number of Preferred Shares that the aggregate offering price of
the total number of Preferred Shares and/or similar preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares (whether whole or
fractional) outstanding on such record date plus the number of additional
Preferred Shares (whether whole or fractional) and/or similar preferred shares
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 in part or all in a form other than cash, then
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. Preferred Shares (whether whole or fractional)
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 that would then be in effect if such record date has not been
fixed.
15
(c) Distributions on the Preferred Shares. In case the Company shall fix a
record date for the making of a distribution to all holders of Preferred Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing company) of evidences of
indebtedness, assets (other than a regular periodic cash dividend at a rate not
in excess of 125 percent of the rate of the last cash dividend theretofore paid
out of the earnings or retained earnings of the Company or a dividend payable in
Preferred Shares (but including any dividend payable in shares other than
Preferred Shares)), securities or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), then the Purchase Price to be in
-------------
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction the
numerator of which shall be the current market price per Preferred Share (as
defined in Section 11(d) hereof) on such record date, less the fair market value
-------------
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the Holders of the Rights) of the
portion of the assets, evidences of indebtedness, securities, subscription
rights or warrants so to be distributed and applicable to one Preferred Share
and the denominator of which shall be such current market price per Preferred
Share (as determined pursuant to Section 11(d) hereof). 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 again be adjusted to
be the Purchase Price that would then be in effect if such record date had not
been fixed.
(d) Determination of Current Market Price. For the purpose of any
computation hereunder:
(i) The "current market price" per Common Share on any date shall be
--------------------
deemed to be for purposes other than Section 11 (a)(iii) hereof the average
-------------------
of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date and for purposes of Section 11(a)(iii) hereof, the
------------------
average of the daily closing prices per share of such Common Shares for the
10 consecutive Trading Days immediately prior to that date; provided,
--------
however, that in the event that the current market price per share of
-------
Common Shares is determined during the period following the announcement by
the issuer of such Common Shares of (A) a dividend or distribution on such
Common Shares payable in shares of such Common Shares or securities
convertible into shares of such Common Shares (other than the Rights), or
(B) any subdivision, combination or reclassification of such Common Shares,
and the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, shall not have
occurred prior to the commencement of the requisite 30 or 10 Trading Day
period, then, and in each such case, the current market price shall be
appropriately adjusted to reflect the current market price per Common Share
Equivalent. 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 principal
national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last sale price or, if not
so reported, the average of the high bid and low asked prices in the over-
the-counter market,
16
as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System (the "NASDAQ System") or such other system then
-------------
in use, or, if on any such date the Common Shares are not quoted by such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Shares
selected by the Board of Directors of the Company. If on any such date no
market maker is making a market in the Common Shares, the fair value of
such Common Shares on such date shall be as determined in good faith by a
majority of the Board (or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm
selected by such majority). The term "Trading Day" shall mean a day on
-----------
which the principal national securities exchange on which the Common Shares
are listed or admitted for trading is open for the transaction of business
or, if the Common Shares are not listed or admitted for trading on any
national securities exchange, a Business Day on which securities were
traded in the over-the-counter market. If the Common Shares are not
publicly held or not so listed or traded, "current market price" per share
--------------------
shall mean the fair value per share as determined in good faith by the
Board of Directors, or, if at the time of such determination there is an
Acquiring Person, by a nationally recognized investment banking firm, which
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes.
(ii) The "current market price" per Preferred Share shall be
--------------------
determined in the same manner as set forth above for the Common Shares in
clause (i) of this Section 11(d) (other than the last sentence thereof).
-------------
If the current market price per Preferred Share cannot be determined in the
manner provided above or if the Preferred Shares are 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 Shares shall be
--------------------
conclusively deemed to be an amount equal to 1,000 (as such number may be
appropriately adjusted for such events as Shares splits, Shares dividends
and recapitalization with respect to the Common Shares occurring after the
date of this Agreement) multiplied by the current market price per Common
Share. If neither the Common Shares nor the Preferred Shares is publicly
held or so listed or traded, "current market price" per Preferred Share
--------------------
shall be determined in the same manner as set forth in the last sentence of
Section 11(d)(i). For all purposes of this Agreement, the "current market
---------------- --------------
price" of 1/1,000ths of a Preferred Share shall be equal to the "current
----- -------
market price" of one Preferred Share divided by 1,000.
------------
(e) Limitation on Adjustment on Purchase Price. Notwithstanding anything
herein to the contrary, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1
percent in such price; provided, however, that any adjustments that by reason of
-------- -------
this Section 11(e) are not required to be made shall be carried forward and
-------------
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
----------
a share as the case may be. Notwithstanding the first sentence of this Section
-------
11(e), any adjustment required by this Section 11 shall be made no later than
----- ----------
the earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section 11(a), the
-------------
holder of any Right thereafter exercised shall become entitled to receive any
Capital Share Equivalents or other
17
shares of capital shares of the Company other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right and the
payment 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 Shares contained in Section 11(a) through (o),
-------------------------
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
----------------------------
the Preferred Shares shall apply on like terms to any such other shares.
(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 1/1,000ths of a
Preferred Share 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) hereof, upon each adjustment of the Purchase Price as a result of
-------------
the calculations made in Sections 11(b) and (c) hereof, 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 1/1,000ths of
a Preferred Share (calculated to the nearest ten-thousandth) obtained by (i)
multiplying (x) the number of 1/1,000ths 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 1/1,000ths of a Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding, after such adjustment of the number of
Rights, shall be exercisable for the number of 1/1,000ths of a Preferred Share
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth) obtained
by dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after the 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
date thereafter, but, if the Rights Certificates have been issued, shall be at
least 10 Business 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, the
----------
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
18
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of 1/1,000ths of a Preferred Share issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per 1/1,000ths of a share and the number of
1/l,000ths of a share that were expressed in the initial Rights Certificates
issued hereunder and if so, shall not affect in any way the adjustments or
changes required under this Agreement.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of 1/1,000ths
of a Preferred Share issuable upon exercise of the Rights, the Company shall
take any corporate action that may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and non-
assessable such number of 1/1,000ths of such Preferred Share 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 1/1,000ths of Preferred Shares and Capital Share Equivalents, if any,
issuable upon such exercise over and above the number of 1/1,000ths of Preferred
Shares and other capital shares 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 other securities
upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, 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 Preferred Shares, (ii) issuance wholly for cash of any shares of
Preferred Shares at less than the current market price, (iii) issuance wholly
for cash of Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, (iv) share dividends, or (v) issuance
of rights, options or warrants referred to hereinabove in this Section 11,
----------
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 26 hereof, take (nor will
---------- ----------
it permit any of its subsidiaries 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.
(o) The Company covenants and agrees that it shall not, at any time after
the Distribution Date (other than in a transaction or series of transactions
that comply with Section 11(n) hereof): (i) consolidate with; (ii) merge with or
-------------
into; or (iii) sell or transfer (or permit any of its subsidiaries to sell or
transfer), in one or more transactions, assets or earning power aggregating more
than 50 percent of the assets or earning power of the Company and its
19
subsidiaries (taken as a whole) to any other Person if at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants, other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company shall at any time after the Record Date and prior to the
Distribution Date: (i) declare a dividend on the outstanding Common Shares of
the Company payable in shares of Common Shares of the Company, (ii) subdivide
the outstanding Common Shares of the Company, or (iii) combine the outstanding
Common Shares of the Company into a smaller number of shares, then the number of
Rights associated with each Common Share of the Company 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 Common Share of the Company following any such event shall equal the result
obtained by multiplying the number of Rights associated with each Common Share
of the Company immediately prior to such event by a fraction, the numerator of
which shall be the total number of Common Shares of the Company outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares of the Company outstanding
immediately following the occurrence of such event.
(q) The exercise of Rights under Section 11(a)(ii) shall only result in
-----------------
the loss of rights under Section 11(a)(ii) to the extent so exercised and shall
-----------------
not otherwise affect the rights provided for under this Agreement, including the
rights provided for by Section 13.
----------
(r) Notwithstanding any other provision of this Agreement to the contrary,
if the Company determines that a registration statement filed pursuant to
Section 9(c) hereof is required to be amended or supplemented to continue to
------------
comply with the Securities Act, then the Company may suspend the exercisability
of the Rights and shall promptly after such determination take all necessary
steps to cause to be effective such amended or supplemented registration
statement. Immediately following such determination to amend or supplement such
registration statement, and immediately following the time such amended or
supplemented registration statement shall become effective, the Company shall
publicly announce the suspension of the exercisability of the Rights or the
termination of such suspension.
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and 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 Shares and the Common Shares 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
Common Shares) in accordance with Section 25 hereof. The Rights Agent shall be
----------
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of such adjustments unless
and until it shall have received such certificate.
20
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) Effect on Rights. In the event that, following the Share Acquisition
Date, directly or indirectly: (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof) and the Company shall not
-------------
be the surviving or continuing company of such consolidation or merger; (y) any
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o) hereof) shall consolidate with, or merge with or into, the
-------------
Company, and the Company shall be the continuing or surviving company of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding Common Shares of the Company shall be changed
into or exchanged for Shares or other securities of any other Person or cash or
any other property; or (z) the Company shall sell or otherwise transfer (or one
or more of its subsidiaries shall sell or otherwise transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50 percent of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to any other Person 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 be entitled to receive, upon the exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement,
such number of shares of validly authorized and issued, fully paid, non-
assessable and freely tradable Common Shares of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of call or
first refusal, or other adverse claims as shall be equal to the result obtained
by (A) multiplying the then current Purchase Price by the then number of
1/1,000ths of a Preferred Share for which a Right is then exercisable
immediately prior to the first occurrence of any of the events described in
subsections (x), (y) or (z) of this paragraph (a) of Section 13 (each a "Section
---------- -------
13 Event") (or, if an event described in Section 11(a)(ii) (each a "Section
-------- ----------------- -------
11(a)(ii) Event") has occurred prior to the first occurrence of a Section 13
---------------
Event, multiplying the number of such 1/1,000ths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event) by the Purchase Price in effect immediately prior to such first
occurrence, and (B) dividing that product (which following the first occurrence
of a Section 13 Event, shall be referred to as the "Purchase Price" for each
--------------
Right and for all purposes of the Agreement) by 50 percent of the current market
price per Common Share of such Principal Party (determined in the manner
described in Section 11(d)(i) hereof) on the date of consummation of such
----------------
Section 13 Event; (ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (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 apply to such Principal Party
----------
following the first occurrence of a Section 13 Event; and (iv) such Principal
Party shall take such steps (including, but not limited to, the authorization
and reservation of a sufficient number of its Common Shares) 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 Common Shares thereafter deliverable upon the exercise of
the Rights.
21
(b) Definition of Principal Party. The term "Principal Party" shall mean:
---------------
(i) in the case of any transaction described in subsection (x) or
(y) of paragraph (a) of this Section 13, the Person that is the issuer of
----------
any securities into which Common Shares of the Company are converted in
such merger or consolidation, and if no securities are so issued, the
Person that is the other party to the merger or consolidation; or
(ii) in the case of any transaction described in subsection (z) of
paragraph (a) of this Section 13, the Person that is the party receiving
----------
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (x) if the Common Shares of such
-------- -------
Person are not at such time and have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common Shares of which
is and has been so registered, "Principal Party" shall refer to such other
---------------
Person the Common Shares of which are so registered; (y) in case such Person is
a Subsidiary, directly or indirectly, of more than one Person, the Common Shares
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 Shares having the
greatest market value of shares held by the public, and (z) in case 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 (x) and (y) 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 sat 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) Limitation on Consummation of Mergers. The Company shall not
consummate any such consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of authorized Common Shares that have not
been issued or reserved for issuance to permit the exercise in full of all of
the Outstanding 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 paragraphs (a) and (b) of this Section 13 and further providing that, as soon
----------
as practicable after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will:
----------
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing, and (B) will use its best efforts to cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the date of
expiration of the Rights and will use its best efforts to comply with all
applicable State blue sky and other securities laws; and
22
(ii) 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 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
----------
consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
-------------
(d) Permitted Offers. Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
----------
subsections (x) and (y) of paragraph (a) of this Section 13 if: (i) such
----------
transaction is consummated with a Person or Persons who acquired Common Shares
pursuant to a Permitted Offer (or a wholly owned subsidiary of any such Person
or Persons); (ii) the price per Common Share of the Company offered in such
transaction is not less than the price per Common Share of the Company paid to
all holders of Common Shares of the Company whose shares were purchased pursuant
to such Permitted Offer; and (iii) the form of consideration being offered to
the remaining holders of Common Shares of the Company pursuant to such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of such transaction contemplated by this
paragraph (d), all Rights hereunder shall expire.
SECTION 14. Fractional Rights and Fractional Shares.
(a) Issuance of Fractional Rights. The Company shall not be required to
issue fractions of Rights, except prior to the Distribution Date in accordance
with Section 11(p) hereof, or to distribute Rights Certificates that evidence
-------------
fractional Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
-------------
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. 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 on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last sale price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the NASDAQ System 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 shall be as determined in good faith by the
Board, or, if at the time of such determination there is an Acquiring Person, by
a nationally recognized investment banking firm selected by such majority.
23
(b) Issuance of Certain Fractional Shares of Preferred Shares. The Company
shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of 1/1,000ths of a Preferred Share) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares (other than fractions that are integral multiples of 1/1,000ths of a
Preferred Share). In lieu of fractional shares that are not integral multiples
of 1/1,000ths of a Preferred Share, 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 1/1,000ths of a Preferred Share. For purposes of this Section 14(b),
-------------
the current market value of 1/1,000ths of a Preferred Share shall be 1/1,000ths
of the closing price of a Preferred Share (as determined pursuant to Section
-------
11(d)(ii)) 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 its Common Shares upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
such Common Shares. In lieu of fractional shares of such Common Shares, 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) Common Share of the Company. For
purposes of this Section 14(c), the current market value of one Common Share
-------------
shall be the closing price of one Common Share (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 Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise 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 Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), 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 will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
SECTION 16. Agreement of Right Holders.
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agents and with every other holder of a Right that:
24
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer and with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a), Section 7(e) and Section 7(f) hereof, the
------------ ------------ ------------
Company and the Rights Agent may deem and treat the Person in whose name the
Rights Certificate (or, prior to the Distribution Date, the associated Common
Share certificate) is registered on the registration books of the Company 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 Share 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
Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 24), or to receive
----------
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificates shall have been exercised in accordance
with the provisions hereof.
SECTION 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and
25
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the cost and expenses of
defending against any claim of liability in the premises and reasonable counsel
fees and expenses. The indemnification provided herein shall survive the
expiration of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
(c) 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 action.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation, succeeding to the
corporate trust, share transfer or other shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided, however, that
-------- -------
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
----------
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificate 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 in its name as
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
26
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 only 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 and no implied duties shall be read into this Agreement against the Rights
Agent:
(a) The Rights Agent may consult with the legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of 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 gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for, or by reason of, any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
----------
Section 13 hereof or be 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 Common Shares or Preferred Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
of the Common Shares or Preferred Shares will, when so issued, be validly
authorized and issued, fully paid and non-assessable.
27
(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 be reasonably required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, the Chief Financial Officer,
any Vice President, the Treasurer, any assistant Treasurer, the Secretary, or
any assistant Secretary of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company with respect to any matter about which the
Rights Agent is reasonably uncertain as to its responsibilities hereunder, may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any such officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided that 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 indicated an affirmative response
28
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 receiving written
instructions of the Company.
(l) The Rights Agent shall have no responsibility to the Company, holders
of Rights, any holders of Common Shares or any holders of Preferred Shares for
interest or earnings or any monies held by the Rights Agent pursuant to and in
compliance with this Agreement.
(m) The Rights Agent shall not be required to take notice or been deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination, and all notices shall be
effective if given in accordance with Section 25 hereof, and in the absence of
such notice the Rights Agent may conclusively assume that no such event or
condition exists.
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 and upon 30 days notice in writing mailed
to the Company and to each transfer agent of the Preferred Shares and the Common
Shares by registered or certified mail, and to the holders of the Rights
Certificates by first class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Shares and the Common Shares by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor 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 the registered holder of
any Rights Certificate or the resigning Rights Agent 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, existing and doing business under the laws of the
United States or of any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million; 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 and the
duties and obligations of the resigning Rights Agent shall cease and terminate;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Preferred Shares and the Common Shares, and mail a notice
thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice
29
provided for in this Section 21, however, or any defect therein, shall not
----------
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares of the
Company following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to such Common
Shares so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement granted or awarded prior to or as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
-------- -------
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificates
would be issued, 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 5:00 p.m., New York, New York time, on the earlier of (x) the Share
Acquisition Date (or if the Share Acquisition Date shall have occurred prior to
the Record Date, the close of business on the tenth day following the Record
Date) or (y) the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.01 per Right as such amount
may be appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), provided, however, that if,
---------------- -------- -------
following the occurrence of a Share Acquisition Date but prior to any event
described in Section 13(a), either (x) in connection with any event specified in
-------------
Section 13(a) in which all holders of Common Shares are treated alike and not
-------------
involving (other than as a holder of Common Shares being treated like all other
such holders) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person or any other person in which such Acquiring Person, Affiliate or such
Associate has any interest, or any other Person acting directly or indirectly on
behalf of or in association with any such Acquiring Person, Affiliate or
Associate, or (y) following the occurrence of an event set forth in, and the
expiration of any period during which the holders of Rights may exercise the
Rights under, Section 11(a)(ii) if each of the following shall have occurred and
-----------------
remain in effect: (i) such Section 11(a)(ii) Event shall be deemed inadvertent
as determined by the Board in its discretion taking into account all such
factors as the Board deems relevant; (ii) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of Common Shares in a
transaction, or series of
30
transactions, which did not result in the occurrence of a Triggering Event such
that such Person is thereafter a Beneficial Owner of 10 percent or less of the
outstanding Common Shares of the Company, (iii) there are no other Persons,
immediately following the occurrence of the event described in clause (ii)
hereof, who is Acquiring Persons, and (iv) the transfer or other disposition
described in clause (ii) hereof, above was other than pursuant to a transaction,
or series of transactions, which directly or indirectly involved the Company or
any of its Subsidiaries, then the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23.
----------
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, 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. Promptly after the action of the Board of Directors ordering the
redemption for the Rights, the Company shall file with the Rights Agent evidence
of such action by the Board of Directors and shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to each such holder at such 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 Shares of the Company. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23, and other than in connection with the
----------
purchase of Common Shares of the Company prior to the Distribution Date.
SECTION 24. Notice of Certain Events.
(a) In case the Company shall propose at any time following the
Distribution Date: (i) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend at a rate not in
excess of 125 percent of the rate of the last cash dividend theretofore paid);
(ii) to offer to the holders of Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of any class or any
other securities, rights or options; (iii) to effect any reclassification of
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares); (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction or transactions that comply with Section 11(o) hereof); (v) to
-------------
effect any sale or other transfer (or to permit one or more of its subsidiaries
to effect any sale or other transfer), in one or more transactions, of more than
50 percent of the assets or earning power of the Company and its subsidiaries
(taken as a whole) to, any other Person (other than a Subsidiary of the Company
in a transaction or transactions that comply with Section 11(o) hereof); or (vi)
-------------
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,
in accordance with Section 25, a notice of such proposed action, which shall
----------
specify the record date for, and the purposes of, such share dividend,
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Preferred Shares, if any such date is to be
31
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty days prior to the record date for
determining holders of Preferred Shares for purposes of such action, and in the
case of any such other action, at least twenty days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Shares, whichever shall be earlier.
(b) In case any of the events set forth in Section 11(a)(ii) of this
-----------------
Agreement shall occur, then, in any such case; (i) the Company shall, as soon as
practicable thereafter, give to each holder of a Rights Certificate, in
accordance with Section 25 and to the extent feasible, 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); and (ii) all references
-----------------
in the preceding paragraph to Preferred Shares shall be deemed to thereafter
refer to Common Shares and/or other securities, as the case may be.
SECTION 25. 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:
Garmin Ltd.
Attn: Co-Chief Executive Officer
Queensgate House
P.O. Box 30464SMB
113 South Church Street, George Town,
Grand Cayman, Cayman Islands
(345) 946-5203
With Copies to:
Garmin International, Inc.
Attn.: President
1200 East 151st Street
Olathe, Kansas 66062
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 upon
receipt if sent by registered or certified mail, postage prepaid, return receipt
requested addressed (until another address is filed in writing with the Company)
as follows:
UMB Bank, N.A., as Rights Agent
Attn.: Corporate Trust Department
P.O. Box 417015
Kansas City, Missouri 64141-7015
32
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the register
of members of the Company.
SECTION 26. Supplements and Amendments.
Prior to the Distribution Date and subject to the penultimate sentence of
this Section 26, 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 Rights Certificates. From and after the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
----------
the Rights Agent shall, if the Company so directs, supplement, amend, remove any
provision of this Agreement without approval of any holders of Rights in order:
(i) to cure any ambiguity; (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein;
(iii) to shorten or lengthen any time period hereunder (which lengthening or
shortening, following the first occurrence of an event set forth in clauses (i)
and (ii) of the first provision to Section 23(a) hereof, shall be effective only
-------------
if approved by at least 70 percent of the then members of the Board); 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
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of
a certificate from an appropriate officer of the Company and an opinion of
counsel reasonably acceptable to the Rights Agent that state that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
----------
Rights Agent shall execute such supplement or amendment unless the Rights Agent
shall have determined in good faith that such supplement or amendment would
adversely affect its interests under this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which changes the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of 1/1,000ths of Preferred Shares for which a Right is
exercisable. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares of the Company.
SECTION 27. 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 28. Determination and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares of the Company outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding Common Shares of
the Company of which any Person
33
is the Beneficial Owner, shall be made in accordance with the provisions of Rule
13d-3(d)(l)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for the purpose of clause (ii) below, all omissions
with respect to the foregoing which are done or made by the Board) in good
faith, shall (i) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights Certificates and all other parties, and (ii)
not subject to the Board to any liability to the holders of the Rights
Certificates.
SECTION 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give any Person other than
the Company, the Rights Agent and the registered holders of the Rights
Certificates any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the Rights Certificates.
SECTION 30. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
-------- -------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right or redemption set forth in Section 23 hereof shall be reinstated and
----------
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors.
SECTION 31. Governing Law.
This Agreement, each Rights Certificate and each Right issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State, except for Sections 18, 19, 20 and 21 hereof and relating to
--------------------------
the rights, duties and obligations of the Rights Agent, which shall be governed
by the laws of the State of Missouri without reference to its choice of law
rules.
34
SECTION 32. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 33. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly
executed and attested all as of the day and year first above written.
GARMIN LTD.
Attest:
By:__________________________________ By:__________________________________
Name: Andrew R. Etkind Name: Min H. Kao
Title: General Counsel and Secretary Title: Co-Chief Executive Officer
UMB BANK, N.A., AS RIGHTS AGENT
Attest:
By:__________________________________ By:__________________________________
Name:_____________________________ Name:_____________________________
Title:____________________________ Title:____________________________
35
Exhibit A
FORM OF
RESOLUTIONS
OF
GARMIN LTD.
SERIES A PREFERRED SHARES
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Company in accordance with the provisions of the Memorandum
of Association and Articles of Association, a series of Series A Preferred
Shares of the Company be, and it hereby is created, and the designation and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of such series, and the qualifications,
limitations or restrictions thereof (in addition to the provisions set forth in
the Memorandum of Association and Articles of Association, which are applicable
to the Preferred Shares) are as follows:
1. Designation and Amount. The shares of such series shall be designated
----------------------
as "Series A Preferred Shares" and the number of shares initially constituting
-------------------------
such series shall be 100,000.
2. Dividends and Distributions.
---------------------------
(A) Subject to any prior and superior rights of the holders of any
series of Preferred Shares ranking prior and superior to the shares of Series A
Preferred Shares with respect to dividends, the holders of shares of Series A
Preferred Shares shall be entitled prior to the payment of any dividends on
shares ranking junior to the Series A Preferred Shares 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 Shares, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in Common Shares, par value $0.01 per share, of the Company (the "Common
------
Shares") or a subdivision of the outstanding Common Shares (by reclassification
------
or otherwise), declared on the Common Shares 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 Shares. In the event the Company shall at any time
after _____________, 2000 (the "Rights Declaration Date") (i) declare any
-----------------------
dividend on Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Preferred Shares were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the
numerator of which is the number of Common Shares that were outstanding
immediately after such event and the denominator of which is the number of
Common Shares outstanding immediately prior to such event. Such adjustment shall
be made successively whenever such a dividend or change in the Common Shares is
consummated.
(B) The Company shall declare a dividend or distribution on the
Series A Preferred Shares as provided in paragraph (A) above immediately after
it declares a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares); provided, that in the event no dividend or
--------
distribution shall have been declared on the Common Shares during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the Series A Preferred
Shares shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series A Preferred Shares,
unless the date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Shares 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 Shares in
an amount less than the total amount of such dividends at the time accrued ant
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
Shares 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.
3. Voting Rights. The holders of shares of Series A Preferred Shares
-------------
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each 1/1,000th share of Series A Preferred Shares shall entitle the holder
thereof to one vote on all matters voted on at a meeting of the shareholders of
the Company. In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in Common
Shares, or (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of Series A
Preferred Shares 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
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event. Such adjustment shall be made successively whenever such a dividend
or change in the Common Shares is consummated.
2
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Shares and the holders of Common Shares shall vote
together as one class on all matters voted on at a meeting of shareholders of
the Company.
(C) Except as set forth herein, holders of Series A Preferred Shares
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 Shares as
set forth herein) for taking any corporate action.
4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Shares as provided in Section 2
---------
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Shares
outstanding shall have been paid in full, the Company shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any capital shares
of the Company ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Shares;
(ii) declare or pay dividends on or make any other distributions on
any capital shares of the Company ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Shares,
except dividends paid ratably on the Series A Preferred Shares and all such
parity shares 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 capital shares of the Company ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Shares; provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such parity shares in exchange for shares of any
capital shares of the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Shares; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Shares or any shares ranking on a parity with the Series A
Preferred Shares, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any capital shares of the Company unless
the Company could, under paragraph (A) of this Section 4, purchase or otherwise
---------
acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Shares purchased
-----------------
or otherwise acquired by the Company in any manner whatsoever shall be retired
and cancelled
3
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued Preferred Shares and may be reissued
as part of a new series of Preferred Shares to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, no distribution shall be made on any
capital shares of the Company that rank junior (whether as to dividends or upon
liquidation, dissolution or winding up) to Series A Preferred unless prior
thereto the holders of Series A Preferred Shares shall have received an amount
equal to 1,000 times the aggregate amount to be distributed per share to holders
of the common shares.
(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 shares, if any,
which rank on a parity with the Series A Preferred Shares, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, then in each such
case the amount that the holders of the Series A Preferred Shares were entitled
to receive upon liquidation, dissolution or winding up of the Company
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of Common Shares that were
outstanding immediately after such event and the denominator of which is the
number of Common Shares outstanding immediately prior to such event. Such
adjustment shall be made successively whenever such a dividend or change in the
Common Shares is consummated.
7. Merger, Consolidation, etc. In case the Company shall enter into any
--------------------------
merger, consolidation, combination or other transaction in which the Common
Shares are exchanged for or changed into other shares or securities, cash and/or
any other property, then in any such case each share of Series A Preferred
Shares 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 shares, securities, cash and/or other
property (payable in kind), as the case may be, into which or for which each
share of Common Shares is changed or exchanged. In the event the Company shall
at any time after the Rights Declaration Date (i) declare any dividend on Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares,
or (iii) combine the outstanding Common Shares 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 Shares shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
8. No Redemption. The Series A Preferred Shares shall not be redeemable.
-------------
4
9. Ranking. The Series A Preferred Shares shall rank on a parity with
-------
all other series of the Company's Preferred Shares as to the payment of
dividends and other distribution of assets, unless the terms of any such other
series shall provide otherwise.
10. Amendment. The powers, preferences, rights, qualifications,
---------
limitations and restrictions of the Series A Preferred Shares may not be
materially altered or changed 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 Shares, voting separately as a class.
11. Fractional Shares. Series A Preferred Shares may be issued in
-----------------
fractions of a share, which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Shares.
AND BE IT FURTHER RESOLVED , that any documents heretofore executed or
lawful actions heretofore taken by any of the officers of the Company in
connection with the transactions herein described are hereby ratified, confirmed
and approved in all respects.
5
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. A- [___________] Rights
NOT EXERCISABLE AFTER [_____________] OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $[__________________] PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
PRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE
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 THE
RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
------------------
This certifies that [________________________________________], or
registered assigns is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of [________], 2000
(the "Rights Agreement") between Garmin Ltd., a Cayman Islands corporation (the
----------------
"Company"), and UMB Bank, N.A., a national banking association organized and
-------
existing under the laws of the United States of America, as rights agent (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 P.M.
------------
(New York, New York time) on [_______________] at the principal office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, 1/1,000ths of a fully paid nonassessable share of the Series A
Preferred Shares (the "Preferred Shares"), of the Company, at a purchase price
----------------
of $[_________] per 1/1,000ths 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 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
1/1,000ths share set forth above, are the number and Purchase Price as of
[_______________], 2000, based on the Preferred Shares of the Company as
constituted at such date.
Upon the occurrence of a transaction listed in Section 11(a)(ii) (a
"Section 11(a)(ii) Event"), if the Rights evidenced by this Rights Certificate
-----------------------
are beneficially owned by (i) an
_______________________
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
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 Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Shares or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitation of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices the Rights Agent designated for such purpose,
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 1/1,000ths of a share of Preferred Shares 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 options at a redemption
price of $0.01 per Right.
No fractional shares of Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of 1/1,000ths of a share of Preferred Shares), 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 Preferred Shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, to receive notice of meetings or
other action affecting shareholders
2
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Right evidenced by this
Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of this [______] day of [________________], 2000.
[SEAL] GARMIN LTD.
By:______________________________________
Title: Co-Chief Executive Officer
ATTEST:
___________________________
Title: Secretary
Countersigned:
[RIGHTS AGENT]
By:_____________________________
Authorized Signature
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 Certificates.)
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:___________________________
__________________________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate (TM) is (TM) 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, the
undersigned (TM) did (TM) 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:_________________________
_______________________________________
Signature
Signature Guaranteed:
4
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.
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
Shares 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 remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Dated:_______________________, _____
____________________________________
Signature
Signature Guaranteed:
6
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate (TM) are (TM) 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, the
undersigned (TM) did (TM) 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:_______________, 2000
__________________________________________
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.
7
EXHIBIT C
DETAILED SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED SHARES
On ____________, 2000, the Board of Directors of Garmin Ltd. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of the Company's Common Shares, $0.01 par value per share (the "Common
Shares") of the Company to the shareholders of record on __________, 2000 (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company 1/1,000ths of a share of Series A Preferred Shares (the "Preferred
Shares") or in some circumstances, Common Shares, other securities, cash or
other assets as summarized below at a price of $_________ per share (the
"Purchase Price"), (both shares and price are subject to adjustment as described
below). The complete terms and conditions of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and UMB Bank,
N.A., as rights agent, dated as of ____________, 2000, as may be amended from
time to time. Capitalized terms not defined herein are defined in the Rights
Agreement.
Each share outstanding on the Record Date will receive one Right.
Until the Distribution Date (or the earlier redemption or expiration of the
Rights), Common Shares issued (whether newly issued or later issued) will have
the Rights automatically attached.
In the event that a Person or group of affiliated or associated
persons (an "Acquiring Person") becomes the beneficial owner of or announces a
tender or exchange offer for 15 percent or more of the outstanding Common Shares
of the Company, proper provision shall be made so that each holder of a Right,
other than of Rights that are or were beneficially owned by the Acquiring Person
(which will thereafter be null and void), will thereafter have the right to
receive upon exercise that number of shares of the Preferred Shares (or in
certain circumstances, Common Shares or assets or other securities of the
Company) having a market value of two times the exercise price of the Right. In
the event that the Company were acquired in a merger or other business
combination transaction (other than pursuant to a Permitted Offer) or more than
50 percent of the Company's (together with its subsidiaries) assets or earning
power were sold, proper provision shall be made so that each holder of a Right,
other than of Rights that are or were beneficially owned by an Acquiring Person
(which will thereafter be null and void) shall thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of the highest priority voting securities of the
acquiring company (or certain of its affiliates) that at the time of such
transaction would have a market value of two times the exercise price of the
Right. If the Rights are exercised to acquire the Preferred Shares, then the
Rights will not be exercisable to acquire the securities of any Acquiring
Person.
Until ten calendar days following the earlier to occur of (unless
extended by the Board of Directors and subject to the earlier redemption or
expiration of the Rights): (i) the date of a public announcement that an
Acquiring Person acquired, or obtained the right to acquire, beneficial
ownership of 15 percent or more of the outstanding shares of the Common Shares
of the Company, or (ii) the commencement or announcement of an intention to make
a tender offer or exchange offer that would result in an Acquiring Person
beneficially owning 15 percent or more of such outstanding Common Shares of the
Company (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of
the Company's Common Shares certificates outstanding as of the Record Date, by
such Common Shares certificate. The certificates for Common Shares issued after
the Record Date, but prior to the Distribution Date will have a notation
referencing the Rights Agreement. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the
Company's Common Shares, and until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender for transfer of any of the Company's
Common Shares certificates outstanding as of the Record Date, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Company's Common
Shares as of the close of business on the Distribution Date and such separate
Rights Certificates alone will evidence the Rights.
Permitted Offer is defined in the Rights Agreement as a tender offer
that is for all outstanding Common Shares of the Company at a price and on terms
determined to be adequate prior to the purchase of shares under such tender or
exchange offer, by at least 70% of the members of the Board of Directors of the
Company, taking into account all factors that such directors deem relevant
including, without limitation, prices that could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value and otherwise in the best interests of the Company and its shareholders
(other than the Person or any Affiliate or Associate thereof for whose benefit
the offer is being made).
The Purchase Price payable, and the number of shares of Preferred
Shares (or Common Shares, other securities, cash or other assets, as the case
may be) issuable upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a shares dividend on, or a
subdivision, combination or reclassification of the Preferred Shares, (ii) upon
the grant to holders of the Preferred Shares of certain rights or warrants to
subscribe for shares of the Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or retained
earnings or dividends payable in the Preferred Shares) 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 require an adjustment of at least 1
percent in such Purchase Price. No fractional shares will be issued (other than
fractional shares which are integral multiples of 1/1,000ths of a share of
Preferred Shares) and, in lieu thereof, an adjustment in cash will be made based
on the market price of the Preferred Shares on the last Trading Date prior to
the date of exercise.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on _________, 2010, unless earlier redeemed by the Company as
described below.
At any time prior to 5:00 p.m. New York, New York time on the tenth
calendar day after the first date after the public announcement that an
Acquiring Person has acquired beneficial ownership of 15 percent or more of the
outstanding shares of the Common Shares of the Company (the "Share Acquisition
Date"), the Company may redeem the Rights in whole, but not in part, at a price
of $0.01 per Right (the "Redemption Price"). Following the Share Acquisition
2
Date, but prior to an event listed in Section 13(a) of the Rights Agreement
(i.e. a merger, consolidation or sale of more than 50 percent of the assets or
earnings power of the Company and its subsidiaries), the Company may redeem the
Rights in connection with any event specified in Section 13(a) in which all
shareholders are treated alike and which does not include the Acquiring Person
or its Affiliates or Associates. In addition, the Company's right of redemption
may be reinstated following an inadvertent trigger of the Rights (as determined
by the Board) if an Acquiring Person reduces its beneficial ownership to 10
percent or less of the outstanding Common Shares of the Company in a transaction
or series of transactions not involving the Company. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights,
the Company shall make announcement thereof, and upon such election, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
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 of the Company, shareholders may, depending on the
circumstances, recognize taxable income in the event that the Rights become
exercisable for the Preferred Shares (or other securities, as the case may be)
of the Company.
Prior to the Distribution Date the Company may amend or supplement any
provision of the Rights Agreement without the consent of the holders of the
Rights. Following the Distribution Date, the Company may amend the provisions
of the Rights Agreement in order to cure any ambiguity, to correct any defect or
inconsistency, to make changes deemed necessary or desirable so long as such
changes do not adversely affect the interests of the holders of the Rights
(excluding the interests of any Acquiring Person and its affiliates and
associates). In either case, however, the Company may not amend or supplement
the Rights Agreement to change or supplement the Redemption Price, Final
Expiration Date, the Purchase Price or the number of 1/1,000ths of a share of
Preferred Shares for which a Right is exercisable.
The Rights may have the effect of impeding a change in control of the
Company without the prior consent of the Company's Board of Directors, and the
Rights could cause substantial dilution to a person that attempts to acquire the
Company without conditioning the offer on redemption of the Rights by the
Company's Board of Directors or on the acquisition by such person of a
substantial number of Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form S-1 dated
_________, 2000. A copy of the Rights Agreement is available free of charge
from the Company by written request to Garmin Ltd., c/o Garmin International,
Inc., 1200 E. 151st Street, Olathe, Kansas 66062. This summary description of
the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference. In the event of a conflict between this summary and the Rights
Agreement, the Rights Agreement will prevail.
3
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
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| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 12/1/00 | | | | | | | None on these Dates |
| List all Filings |
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