Document:

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

FOR

 

TIMOTHY J. PARROTT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is  entered into as of the 12th day of

October, 2000 by and between ON STAGE ENTERTAINMENT, INC., a Nevada corporation

(“On Stage” or the “Company”), and TIMOTHY J. PARROTT, an individual

(“Executive”).

 

WHEREAS, the Company desires to

employ the Executive and the Executive desires to be employed by the Company,

on the terms and conditions set forth herein.

 

NOW, THEREFORE,

in consideration of the mutual covenants and agreements set forth herein and

for other good and valuable consideration, the receipt and sufficiency of which

are hereby acknowledged, the Company and Executive hereby agree as follows:

 

1.             EMPLOYMENT

 

On the terms and conditions

set forth in this Agreement, the Company agrees to employ the Executive and the

Executive agrees to be employed by the Company for the term set forth in

Section 2 hereof and in the position and with the duties set forth in Section 3

hereof.

 

2.             TERM

 

The employment of the

Executive by the Company as provided in Section 1 hereof shall commence on the

effective date of this Agreement and end three (3) years thereafter, provided,

that the term of this Agreement shall be extended automatically for additional

one (1) year periods on the first anniversary date of this Agreement and each

subsequent anniversary date, unless and until each party provides written

notice to the other party in accordance with Section 17 hereof not less than

ninety (90) days prior to such anniversary date that such party is terminating

this Agreement, which termination shall be effective as of the end of such

initial term or extended term, as the case may be (the “Expiration Date”), or

until sooner terminated as hereinafter set forth.

 

3.             POSITION AND DUTIES

 

The Executive shall serve as

the Chief Executive Officer of the Company and a member of the Company’s Board

of Directors (the “Board”), with such duties and responsibilities as the Board

may from time to time determine and assign to the Executive.  The Executive shall devote the Executive’s

best efforts and full business time to the performance of the Executive’s

duties and the advancement of the business and affairs of the Company.  In addition, Executive agrees that he will

not engage in any

 

 

business, civic or other activities, that

would materially interfere with the performance of his duties hereunder.

 

The Executive shall be

permitted to serve as a Director or Trustee of other organizations, subject to

the sole discretion of the Board, on a case-by-case basis.  Approval will not be granted if such service

involves a competitor of the Company or materially interferes with the

effective performance of the Executive’s duties under the Agreement.  In connection with the Executive’s

employment by the Company, the Executive shall be based at the principal

executive offices of the Company or such other places as the Company and the

Executive mutually agree, except for required travel on Company business.

 

4.             DEFINITIONS

 

For purposes of this Agreement,

the following terms shall have the meanings set forth in this Section 4:

 

(a)           “Annual Bonus” shall mean a cash payment available

annually (or as otherwise provided for in this document) to Executive in

addition to Base salary, payment of which is contingent upon the performance of

the Company and the Executive during 

each Calendar Year as determined in accordance with section 5(b) of this

Agreement.

 

(b)           “Annual Bonus Plan” shall mean the annual cash

bonus plan approved by the Board as amended from time to time. Participants in

the Annual Bonus Plan shall be eligible to receive annual cash payments based

on Board assessment of performance which may be totally discretionary, or based

partly or totally on specific objectives established by the Board for the

Company and Executive for the Fiscal Year.

 

(c)           “Base Salary” shall mean the annual base salary

rate in effect for Executive from time to time during the Term of this

Agreement.

 

(d)           “Calendar” shall mean the one year period ending

December 31 of each year.

 

(e)           “Cause” 

Shall mean Executive’s:

 

(i)                       Conviction for

any felony involving moral turpitude;

(ii)                    Personal dishonesty,

misconduct, breach of fiduciary duty involving personal profit, or intentional

failure to perform stated duties;

(iii)                 Refusal to provide

appropriate information or to otherwise participate and cooperate in connection

with the obtaining by the Company of all licenses, permits, and approvals

necessary to the conduct of it’s business; or

 

 

2

 

 

(iv)     Inability to obtain any license, permit, or

other authorization required to be obtained by such person as a condition to

the conduct by the Company of entertainment related activities.

 

(f)            “Disability” 

shall be deemed to have occurred if Executive makes application for or

is otherwise eligible for disability benefits under any Company-sponsored

long-term disability program covering Executive, and Executive qualifies for

such benefits.  In the absence of a

Company-sponsored long-term disability program covering Executive, Executive

shall be presumed to be totally and permanently disabled if so determined by

the Company’s Board following the Board’s review of a medical opinion

satisfactory to the Board certifying that Executive will be permanently unable

to perform his normal duties as Chairman of the Board and Chief Executive

Officer as a result of a physical or mental condition.

 

(g)           “Good Reason” 

shall mean Executive’s Voluntary Termination of Service from the Company

within ninety (90) days following the occurrence of one or more of the

following events, unless such event is approved in writing by Executive in

advance of it’s occurrence:

 

(i)                                     Any reduction

in the Executive’s total compensation opportunity consisting of three pay

components:  Base Salary,  Target Annual Bonus and Target Annualized

value of long-term incentive awards, including stock options, unless the

reduction in the total compensation opportunity is applied equally to all

officers of the Company.  The target

annualized value of long-term incentives will be determined based on the

Executive’s average long-term incentive award value for the prior three Fiscal

Years, calculated according to the Black Scholes option pricing model as

required for proxy statement disclosure;

(ii)                                  A material

reduction in Executive’s title or responsibilities; or

(iii)                               Relocation of

Executive’s primary place of work to a location more than fifty (50) miles from

Executive’s primary residence as of the date of this Agreement.

 

(h)           “Long Term Incentive Plan”  shall mean The Company’s Amended and

Restated Incentive Stock Option Plan or any other form of equity (real or

phantom) or other long-term incentive plan introduced by the Company.

 

(i)            “Service”  shall mean Executive’s full-time or

substantially full-time employment with the Company, or any affiliated

organization, including any leave of absence approved by the Board.

 

(j)            “Stock Option Plan”  shall mean the Company’s Amended and Restated Incentive Stock

Option Plan.

 

3

 

(k)           “Retirement” 

shall mean the termination of employment upon Executive’s attainment of

age 65 with the sole approval of the Board.

 

(l)            “Termination of Service”  shall mean Executive’s termination of Service for any reason

whatsoever, including death.

 

5.             COMPENSTATION.

 

(a)           Base Salary. 

The Company shall pay to the Executive an annual base salary (the “Base

Salary”) in accordance with the following:

 

	

  (i)

  	

  ONE DOLLAR ($1.00) for the

  period of the date of this Agreement through December 31, 2000;

  
	

  (ii)

  	

  ONE HUNDRED TWENTY

  THOUSAND DOLLARS ($120,000.00) for the period of January 1, 2001 through

  December 31, 2001; and

  
	

  (iii)

  	

  An annual salary TO BE

  DETERMINED by the compensation committee of the Board for the period of

  January 1, 2002 through December 31, 2002.

  

 

After December 31, 2001, the

Base Salary shall be reviewed no less frequently than annually and may be

increased at the discretion of the Board based on prevailing market conditions,

performance of the Executive and other considerations.  If the Executive’s Base Salary is increased,

the increased amount shall be the Base salary for the remainder of the

employment term hereunder, except that the Company may reduce the Executive’s

Base Salary at any time as part of a general salary reduction applied to all

officers of the Company.

 

(b)           Annual Bonus. 

The Executive shall be eligible to participate each Calendar Year in an

Annual Bonus Plan approved by the Board. 

The actual amount of Annual Bonus earned by Executive for Year 2000 and subsequent

years shall be determined by the Board in accordance with the Annual Bonus Plan

approved by the Board.  Any Annual Bonus

earned by the Executive shall be paid in Cash within one-hundred twenty (120)

days following the completion of the Company’s Fiscal Year or as otherwise

specified in the Annual Bonus Plan.

 

(c)           Stock Options. 

Executive shall be issued an option to purchase 750,000 shares of the

Company’s Common Stock, which will be granted under the Company’s Stock Option

Plan (the “Options”).  The Options shall

be valid for a period of five (5) years from the date of grant, shall have a

strike price of $0.50 per share and shall be exercisable as follows: (1)

250,000 of the Options shall be exercisable on January 1, 2001; (2) 250,000 of

the Options shall be exercisable on January 1, 2002; and (3) the remaining

250,000 shall be exercisable on January 1, 2003. Subject to Section 422 of the

Internal Revenue Code of 1986, as amended (the “Code”), Executive shall specify

what portion of the Options granted to Executive shall be treated as incentive

stock options and what portion shall be treated as non-qualified stock options.

 

4

 

(d)           Long-Term Incentives.  The Executive shall participate in any Long-Term Incentive Plan

that may be designed specifically for the Executive or provided to the officers

and other executives of the Company during the Term of this Agreement.

 

(e)           Medical and Dental Health Plans.  The Company shall provide Executive and his

immediate family with medical and dental health insurance of the type and in

such amounts as is available from time to time to all other executive officers

of the Company.  Nothing contained in

this Agreement shall prevent the Company from changing insurance carriers or

from affecting modifications in insurance coverage for the Executive.

 

(f)            Life and Disability Insurance.  The Company shall purchase life and

disability insurance for Executive of the type and in such amounts as is

available from time to time to all other executives of the Company.

 

(g)           Cellular Telephone.  The Company will provide Executive with a cellular telephone, a

cellular car telephone and a pager and will pay for or reimburse Executive for

all fair and reasonable expenses incurred by Executive for the use of said

items in the performance of his services hereunder.

 

(h)           Home Office Expenses.  The Company will pay for the installation and line charges for a

two-line telephone and a fax machine with it own line in Executive’s home to

the extent used in the performance of his services hereunder.  The Company will pay for or reimburse to

Executive, whichever the case may be, all reasonable costs associated with

keeping an office at his home, including, but not limited to: a desk, a two-way

telephone, a facsimile machine, a computer, computer software, a copy machine

and all office supplies reasonable related to maintaining an office.

 

(i)            Vacation Holidays.  The Executive shall be entitled to all public holidays observed

by the Company and vacation days in accordance with the applicable vacation

policies (three weeks vacation) for officers of the Company, which shall be

taken at a reasonable time or times.  In

the event Executive is unable to utilize his allotted vacation time, Executive

shall have the right to request that the Company pay him his salary in lieu of

any such unutilized vacation days at the expiration of any given employment

year.

 

6.             EXPENSES

 

The Company shall reimburse

the Executive for all reasonable expenses incurred by the Executive (in

accordance with the policies and procedures in effect for officers of the

Company) in connection with the Executive’s services under this Agreement.  The Executive shall account to the Company

for such expenses in accordance with policies and procedures established by the

Company.

 

5

 

7.                                      CONFIDENTIAL INFORMATION

 

During the period in which this Agreement

remains in force and while Executive is entitled to receive any benefits under

this Agreement, Executive shall not, without prior written consent of the Board

or pursuant to and consistent with the order of any court, legislative body or

regulatory agency (a) engage directly or indirectly (including, by way of

example only, as principal, partner, venturer, employee, or agent), nor have

any direct or indirect interest, in any business which competes with the

Company in any material way, or (b) disclose to any third party, either

directly or indirectly, any non-public information regarding the Company’s

business, customers, financial conditions, strategies, or operations the

disclosure of which could possibly harm the Company in any material way.  Clause (a) above shall not apply to any

investment by Executive in the stock of a publicly traded corporation, provided

such investment constitutes less than five percent (5%) of the corporation’s

cumulative voting shares.  In the event

that Executive violates clauses (a) or (b) above, Executive’s rights to any

benefits under this Agreement shall immediately terminate.

 

8.             VESTING OF STOCK OPTIONS UPON A CHANGE OF CONTROL

 

Upon the effective date of a Change of

Control, all stock options previously granted to the Executive under the

Company’s Long-Term Incentive Plan (excluding any stock options granted under

the Company’s Stock Option Plan) shall become fully vested and exercisable by

the Executive.

 

For purpose of this Section

8, “Change of Control” shall mean the occurrence of any of the following

events.

 

(a)           When any “person” (as such term is used in Sections 13 (d)

and 14 (d) of the Securities Exchange Act of 1934, as amended) other than the

Company is or becomes the “beneficial owner” (as defined in Rule 13-d-3 under

said Act), Directly or indirectly, of securities of the Company representing

50% or more of the total voting power represented by the Company’s then

outstanding voting securities; or

 

(b)           The approval by the stockholders of the Company of a

merger or consolidation of the Company with any other corporation, other than a

merger or consolidation which would result in the voting securities of the

Company outstanding immediately prior thereto continuing to represent (either

by remaining outstanding or by being converted into voting securities of the

surviving entity) at least fifty percent (50%) of the total voting power

represented by the voting securities of the Company or such surviving security

outstanding immediately after such merger or consolidation; or the stockholders

of the Company approve a plan of complete liquidation of the Company or an agreement

for the sale or disposition by the Company of all or substantially all the

Company’s assets.

 

6

 

9.             EXECUTIVE’S RIGHTS UPON TERMINATION OF SERVICE

 

(a)           For Reason of Voluntary Resignation Constituting Good

Reason or Termination by the Company Without Cause.  In the event of Executive’s Termination of

Service for reason of (i) voluntary resignation by Executive constituting Good

Reason; or (ii) Executive’s Termination of Service by the Company without

cause, Executive (or if Executive dies while benefits remain due under this

Agreement; Executive’s beneficiaries as designated in accordance with the

provisions of Section 12 herein) shall be entitled to receive the following

upon such Termination Service:

 

(i)                                     Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary and the pro-rata portion of any Annual Bonus owed to Executive (if

necessary, the Company may pay such Annual Bonus when all bonuses for that

calendar year are calculated and paid under the Company’s Annual Bonus Plan)

through the date of the Executive’s Termination of Service;

(ii)                                  Base Salary,

for a period equal to the amount of time remaining under the Term of this

Agreement following such Termination, payable in equal biweekly Installments;

(iii)                               The average of

the actual Annual Bonus payments for the three Calendar Years completed prior

to such Termination, for a period equal to the amount of time remaining under

the Term of this Agreement following such Termination, payable in accordance

with the typical payout schedule of Annual Bonuses earned by the Executive for

the prior three Calendar year.

(iv)                              Continued

participation in fringe benefits and perquisites for balance of the term as

described in Section 5 (d) herein, as available to Executive immediately prior

to Executive’s Termination of Service. 

If continued participation in one or more of these fringe benefits is

not possible due to legal or other constraints, the Company shall provide

Executive with sufficient funds on a monthly basis to enable Executive to

secure fringe benefits, on an after-tax basis, substantially similar to those

which Executive was entitled to immediately prior to Executive’s Termination of

Service;

(v)                                 Immediate

vesting of any stock options or other rights previously provided to Executive

under the Company’s Long-Term Incentive Plan, excluding any stock options

granted under the Company’s Amended & Restated Incentive Stock Option

Plan and any cash-based long-term incentives; and

(vi)                              Payment of any

life insurance, Disability, or other benefits provided to Executive by the

Company in accordance with the terms and conditions of such benefits and this

Agreement.

 

7

 

(b)           For Reason of Retirement.  In the event of Executive’s Termination of Service for reason of

Retirement, Executive (or if Executive dies while benefits remain due under

this Agreement, Executive’s beneficiaries as designated in accordance with the

provisions of Section 12 herein) shall be entitled to receive the following

upon such Termination of Service:

 

(i)                                     Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary;

(ii)                                  Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan, provided such options or other rights have vested in accordance

with any agreement between the Company and Executive covering such options or

other rights; and

(iii)                               Payment of any

retirement benefits provided to Executive by the Company in accordance with the

terms and conditions of such benefits and this Agreement.

 

(c)           For Reason of Disability.  In the event of Executive’s Termination of Service for reason of

Disability, Executive (or if Executive while benefits remain due under this

Agreement, Executive’s beneficiaries as designated in accordance with the

provisions of Section 12 herein) shall be entitled to receive the following

upon such Termination of Service:

 

(i)                                     Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary;

(ii)                                  Continued

participation in fringe benefits and perquisites for twenty-four (24) months as

described in Section 5(d) herein, as available to Executive immediately prior

to Executive’s Termination of Service. 

If continued participation in one or more of these fringe benefits is

not possible due to legal or other constraints the Company shall provide

Executive with sufficient funds on a monthly basis to enable Executive to

secure fringe benefits, on an after-tax basis, substantially similar to those

which Executive was entitled to immediately prior to Executive’s Termination of

Service;

(iii)                               Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan, provided such options or other rights have vested in accordance

with any agreement between the Company and Executive covering such options or

other rights; and

(iv)                              Payment of any

life insurance, Disability, or other benefits provided to Executive by the

Company in accordance with the terms and conditions of such benefits and this

Agreement.

 

8

 

(d)           For Reason of Death.  In the event of Executive’s Termination for Service for Reason of

Death, Executive’s beneficiaries  as

designated in accordance with the provisions of Section 12, herein shall be entitled

to receive the following upon such Termination of Service:

 

(i)                                      Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary;

(ii)                                   Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan provided such options or other rights have vested in accordance

with any agreement between the Company and Executive covering such options or

other rights; and

(iii)                                Payment of any

life insurance benefits provided to Executive by the Company in accordance with

the terms and conditions of such benefits and this Agreement.

 

(e)           For Reason of Voluntary Resignation Not Constituting

Good Reason.  In the event of

Executive’s Termination of Service for reason of voluntary resignation by

Executive not constituting Good Reason, Executive (or if Executive dies while

benefits remain due under this Agreement, Executive’s beneficiaries as

designated in accordance with the provisions of Section 12 herein) shall be

entitled to receive the following upon such Termination of Service:

 

(i)                                     Payment

immediately upon Executives termination of Service of any previously unpaid

Base Salary;

(ii)                                  Performance of

Company obligations with respect to Executives exercise of any stock options or

other rights previously granted to Executive under the Company’s Long-Term

Incentive Plan, provided such options or other rights have vested in accordance

with any agreement between the Company and the Executive covering such options

or other rights; and

(iii)                               Payment of any

life insurance benefits provided to Executive by the Company in accordance with

the terms and conditions of such benefits and this Agreement.

 

(f)            For Reason of Cause.  In the event of Executive’s Termination of Service for Reason of

Cause, the Company’s obligation to Executive shall be limited to:

 

(i)                                     Payment

immediately upon Executive’s Termination of Service of any previously unpaid

Base Salary;

(ii)                                  Performance of

Company obligations with respect to Executive’s exercise of any stock options

or other rights have vested in accordance with agreement between the Company

and Executive covering such options or other rights; and

 

9

 

(iii)                               Payment of any

life insurance benefits provided to Executive by the Company in accordance with

the terms   and conditions of such

benefits and this Agent.

 

10.                               MITIGATION

 

Executive shall not be

required to mitigate the amount of any benefit provided for in this Agreement

by actively seeking alternative employment during the period in which such

Benefits are paid.

 

11.          LIMITATION

OF BENEFITS UNDER THIS AGREEMENT

 

(a)           In the event that the payment of any benefit due to

Executive under this Agreement (including any early vesting of stock options or

other rights under the Company’s Long-Term Incentive Plan): (i) constitutes a

“parachute payment” within the meaning of Section 280G of the Code of 1986; and

(ii) but for this Section would be subject to the excise tax imposed by Section

4999 of the Code, then the cumulative benefits due under the Agreement shall be

payable either as:

 

(i)                                     the full

payment, or

(ii)                                  such lesser amount which

would result in no portion of the payment being subject to excise tax under

Section 4999 of the Code, whichever of the foregoing amounts, taking into

account the applicable Federal, State, and local employment taxes, income taxes

and the excise tax imposed by Section 4999 of the Internal Revenue Code,

results in the receipt by the Executive, on an after tax basis, of the greatest

amount of the payment, notwithstanding that all or some portion of the payment

may be taxable under Section 4999 of the Code.

 

All determinations required to be made under

this Section 11 shall be made in writing by the Company’s independent public

accountants (the “Accounting Firm”). 

The Company shall cause the Accounting Firm to provide detailed

supporting calculations of it’s determinations to the Company and Executive.  Notice must be given to the Accounting Firm

within fifteen (15) business days after an event entitling Executive to a

payment under  this Agreement.  All fees and expenses of the Accounting Firm

shall be borne solely by the Company. 

The Accounting Firm’s determinations must be made with substantial

authority (within the meaning of Section 6662 of the Code).

 

(b)           In the event that it is 

determined by the Board, upon receipt of a written opinion of the

Company’s independent public accountants, that the enforcement of Section 8

hereof would preclude accounting for any proposed business combination of the

Company as a pooling of interests, and the Board otherwise desires to approve a

proposed business transaction which requires as a condition to the closing of

such transactions that it be accounted for as a pooling of interests, Section 8

of this Agreement shall be null and void, but only if the absence of

enforcement of such sections hereof

 

10

 

would preserve the pooling treatment.  For purposes of this Section 11, the Board’s

determination shall require the unanimous approval of the disinterested members

of the Board.

 

12.          DESIGNATION

OF BENEFICIARIES

 

Executive shall have the

right at any time to designate any person(s) or trust(s) as beneficiaries to

whom any benefits payable under this Agreement shall be made in the event of

Executive’s death prior to the distribution of all benefits due Executive under

this Agreement.  Each beneficiary

designation shall be effective only when filed in writing with the Company

during Executive’s lifetime.  If

Executive designates more than one beneficiary, distributions of cash payments

shall be made in equal proportions to each beneficiary unless otherwise provided

for in Executive’s beneficiary designation.

 

The filing of a new

beneficiary designation shall cancel all designations previously filed.  Any finalized marriage or divorce (other

than common law marriage) of Executive subsequent to the date of filing a

beneficiary designation shall revoke such designation unless (a) in the case of

divorce, the previous spouse was not designated as beneficiary, and (b) in the

case of marriage, Executive’s new spouse had previously been designated as

beneficiary.

 

If Executive fails to

designate a beneficiary as provided for above, or if the beneficiary

designation is revoked by marriage, divorce, or otherwise without execution of

a new designation, or if the beneficiary designated by Executive dies prior to

distribution of the benefits due the Executive under this Agreement, the

Company shall direct the distribution of any benefits due under this Agreement

to Executive’s estate.

 

13.          SUCCESSORS

 

Except as provided for in

Section 12 above, the rights and duties of a party hereunder shall not be

assignable by that party; provided, however, that this Agreement shall be

binding upon and shall inure to the benefit of any successor of this Company,

and any such successor shall be deemed substituted for the Company under the

terms of this Agreement.  The term

successor as used herein shall include any person, firm, corporation, or other

business entity which at any time, by merger, purchase or otherwise, acquires

substantially all of the assets or business of the Company.

 

14.                               ENTIRE AGREEMENT

 

With

respect to matters specified herein, this Agreement contains the entire

agreement between the parties and supercedes all prior oral and written

agreements, understandings, and commitments between the parties, including the

provisions of any stock option agreement(s) between the Executive and the

Company providing for the acceleration of vesting of vesting of Executive’s

stock option(s) upon  Executive’s

Termination of Service.  No amendments

to this Agreement may be made except through a written document signed by both

parties.

 

11

 

15.          VALIDITY

 

In the event that any

provision of this Agreement is held to be invalid, void or unenforceable, the

same shall not affect, in any respect whatsoever, the validity of any other

provision of the Agreement.

 

16.          PARAGRAPHS AND OTHER HEADINGS

 

Paragraphs or other headings

contained in this Agreement are for reference purposes only and shall not

affect in any way the meaning or interpretation of this Agreement.

 

17.          NOTICE

 

Any notice or demand

required or permitted to be given under this Agreement shall be made in writing

and shall be deemed effective upon the personal delivery thereof if delivered

or, if mailed, 48 hours after having been deposited in the United States mail,

postage prepaid, and addressed in the case of the Company to the attention of

the Board of Directors at the Company’s then principal place of business,

presently 4625 West Nevso Drive, Suite # 9, Las Vegas, Nevada 89103, and in the

case of Executive, presently            

                                      . Either party may change the

address to which such notices are to be addressed by giving the other party

notice in the manner herein set forth.

 

18.          RIGHT OF EMPLOYMENT

 

Nothing stated or implied by

this Agreement shall prevent the Company from terminating the Service of

Executive at any time, nor prevent Executive from voluntarily terminating

Service at any time.

 

19.          ARBITRATION OF DISPUTES

 

Except as expressly provided

below, in the event of a dispute arising over the interpretation or enforcement

of any of the provisions of this Agreement, or any other controversy or claim

arising out of or relating to the Agreement, the Company and Executive agree to

submit such dispute to binding arbitration in accordance with the Commercial

Arbitration Rules of the American Arbitration Association to the fullest extent

permitted by law.  Each party expressly

waives it’s entitlement, if any, to have any such controversy heard before a

court or jury.  Either party may, within

90 days of the occurrence of the event giving rise to the dispute, initiate

arbitration by notifying the other in writing. 

Failure to initiate arbitration within such 90 day period, or such

extended period as may be mutually agreed in writing within such 90 day period,

shall constitute a waiver of any and all such claims, and they shall be forever

barred.  Both parties shall attempt to

agree upon a mutually acceptable arbitrator. 

If the Company and Executive are unable to agree upon one arbitrator,

then an arbitrator shall be selected in accordance with the then-current rules

of the American Arbitration Association. 

The arbitrator’s

 

12

 

decision shall be final and binding on both

parties.  The Company and Executive

agree that the arbitration shall occur in Las Vegas, Nevada. The fees and

expenses of the arbitrator for any arbitration under this Agreement shall be

paid by the Company.  The fees and

expenses of counsel and experts retained by each party, the Company and the

Executive, shall be paid by the party retaining the services.  The arbitrator shall have no authority to

award punitive or exemplary damages against any party.  Notwithstanding the foregoing, no disputes

arising under or in connection with any agreement concerning proprietary

information shall be subject to arbitration, and either party may pursue other

legal and equitable remedies in connection therewith.  As used in this Section 19, the term “Executive” shall also mean,

in the event of Executive’s death, his designated beneficiaries, his personal

representative, or the executor or administrator of his estate.

 

20.          WITHHOLDING

TAXES

 

To the extent required by

law, the Company shall withhold from any payments due the Executive due under

this Agreement any applicable federal, state or local taxes and such other

deductions as are prescribed by law or Company policy.

 

21.          APPLICABLE

LAW

 

To the full extent

controllable by stipulation of the parties, this Agreement shall be interpreted

and enforced under Nevada law.

 

22.          GOVERNING LAW

 

This Agreement shall be

governed in all respects by the internal laws of the State of Nevada.

 

23.          SUCCESSORS AND ASSIGNS

 

Except as otherwise provided

herein, the provisions hereof shall inure to the benefit of and be binding

upon, the successors, assigns, heirs, executors and administrators of the

parties hereto.

 

24.          AMENDMENT

 

Neither this Agreement nor

any term hereof may be amended, waived, discharged or terminated other than by

written instrument signed by the party against whom enforcement of such

amendment, waiver, discharge or termination is sought.

 

25.          COUNTERPARTS

 

This Agreement may be

executed in any number of counterparts, each of which shall be enforceable

against the parties actually executing such counterparts, and all of which

together shall constitute one instrument.

 

13

 

IN WITNESS WHEREOF,  the Company has caused this Agreement to be executed by it’s duly

authorized Representative(s) and Executive has affixed his signature as of the

date first written above.

 

 

	

  EXECUTIVE

  	

   

  	

  ON STAGE ENTERTAINMENT,

  INC,.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  /s/ Timothy J. Parrott

  	

   

  	

  By:

  	

    /s/ John W. Stuart

  	

   

  
	

   

  	

   

  	

  Name:

  	

    Chairman

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  	

   

  
								

 

14Exhibit 4.01

 

RACOTEK, INC.

 

AND

 

NORWEST BANK MINNESOTA,

N.A.

 

RIGHTS AGENT

 

 

RIGHTS AGREEMENT

 

DATED AS OF SEPTEMBER 12,

1994

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

	

  Section 1.

  	

   

  	

  Certain Definitions

  
	

   

  	

   

  	

   

  
	

  Section 2.

  	

   

  	

  Appointment of

  Rights Agent

  
	

   

  	

   

  	

   

  
	

  Section 3.

  	

   

  	

  Issue of Right

  Certificates

  
	

   

  	

   

  	

   

  
	

  Section 4.

  	

   

  	

  Form of Right

  Certificates

  
	

   

  	

   

  	

   

  
	

  Section 5.

  	

   

  	

  Countersignature

  and Registration

  
	

   

  	

   

  	

   

  
	

  Section 6.

  	

   

  	

  Transfer, Split Up, Combination and

  Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right

  Certificates

  
	

   

  	

   

  	

   

  
	

  Section 7.

  	

   

  	

  Exercise of Rights;

  Purchase Price; Expiration Date of Rights

  
	

   

  	

   

  	

   

  
	

  Section 8.

  	

   

  	

  Cancellation and Destruction of

  Right Certificates

  
	

   

  	

   

  	

   

  
	

  Section 9.

  	

   

  	

  Status and

  Availability of Preferred Shares

  
	

   

  	

   

  	

   

  
	

  Section 10.

  	

   

  	

  Preferred

  Shares Record Date

  
	

   

  	

   

  	

   

  
	

  Section 11.

  	

   

  	

  Adjustment of

  Purchase Price, Number of Shares or Number of Rights

  
	

   

  	

   

  	

   

  
	

  Section

  12.

  	

   

  	

  Certificate

  of Adjusted Purchase Price or Number of Shares

  
	

   

  	

   

  	

   

  
	

  Section 13.

  	

   

  	

  Consolidation, Merger, Sale

  or Transfer of Assets or Earning Power

  
	

   

  	

   

  	

   

  
	

  Section

  14.

  	

   

  	

  Fractional

  Rights and Fractional Shares

  
	

   

  	

   

  	

   

  
	

  Section 15.

  	

   

  	

  Rights of Action

  
	

   

  	

   

  	

   

  
	

  Section 16.

  	

   

  	

  Agreement of

  Right Holders

  
	

   

  	

   

  	

   

  
	

  Section

  17.

  	

   

  	

  Right

  Certificate Holder Not Deemed a Stockholder

  
	

   

  	

   

  	

   

  
	

  Section 18.

  	

   

  	

  Concerning the

  Rights Agent

  

 

 

i

 

	

  Section

  19.

  	

   

  	

  Merger

  or Consolidation or Change of Name of Rights Agent

  
	

   

  	

   

  	

   

  
	

  Section 20.

  	

   

  	

  Duties of Rights

  Agent

  
	

   

  	

   

  	

   

  
	

  Section 21.

  	

   

  	

  Change of Rights

  Agent

  
	

   

  	

   

  	

   

  
	

  Section

  22.

  	

   

  	

  Issuance

  of New Right Certificates

  
	

   

  	

   

  	

   

  
	

  Section 23.

  	

   

  	

  Redemption

  
	

   

  	

   

  	

   

  
	

  Section 24.

  	

   

  	

  Exchange

  
	

   

  	

   

  	

   

  
	

  Section 25.

  	

   

  	

  Notice of Certain

  Events

  
	

   

  	

   

  	

   

  
	

  Section 26.

  	

   

  	

  Notices

  
	

   

  	

   

  	

   

  
	

  Section 27.

  	

   

  	

  Supplements and

  Amendments

  
	

   

  	

   

  	

   

  
	

  Section 28.

  	

   

  	

  Successors

  
	

   

  	

   

  	

   

  
	

  Section 29.

  	

   

  	

  Benefits of this

  Agreement

  
	

   

  	

   

  	

   

  
	

  Section 30.

  	

   

  	

  Severability

  
	

   

  	

   

  	

   

  
	

  Section 31.

  	

   

  	

  Governing Law

  
	

   

  	

   

  	

   

  
	

  Section 32.

  	

   

  	

  Counterparts

  
	

   

  	

   

  	

   

  
	

  Section 33.

  	

   

  	

  Descriptive Headings

  
	

   

  	

   

  	

   

  
	

  Section 34.

  	

   

  	

  Entire Agreement

  
	

   

  	

   

  	

   

  
	

  Signatures

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Exhibit

  A -

  	

   

  	

  Form

  of Certificate of Designations of Series A Junior Participating Preferred

  Stock

  
	

   

  	

   

  	

   

  
	

  Exhibit B -

  	

   

  	

  Form of Right

  Certificate

  
	

   

  	

   

  	

   

  
	

  Exhibit

  C -

  	

   

  	

  Summary

  of Rights to Purchase Preferred Shares

  

 

 

ii

 

RIGHTS AGREEMENT

 

                Agreement, dated as of September

12, 1994, between Racotek, Inc., a Delaware corporation (the “Company”),

and Norwest Bank Minnesota, N.A. (the “Rights Agent”).

 

                The Board of Directors of the

Company has authorized and declared a dividend of one preferred share purchase

right (a “Right”) for each Common Share (as hereinafter defined) of the

Company outstanding at the Close of Business (as hereinafter defined) on

September 28, 1994 (the “Record Date”), each Right representing the

right to purchase one one-hundredth of a Preferred Share (as hereinafter

defined), upon the terms and subject to the conditions herein set forth, and

has further authorized and directed the issuance of one Right with respect to

each Common Share that shall become outstanding between the Record Date and the

earliest of the Distribution Date, the Redemption Date and the Final Expiration

Date (as such terms are hereinafter defined).

 

                Accordingly, in consideration of

the premises and the mutual agreements herein set forth, the parties hereto

hereby agree as follows:

 

                Section 1. Certain Definitions.

For purposes of this Agreement, the following terms have the meanings

indicated:

 

                                (a)           “Acquiring Person” shall mean

any Person who or which, together with all Affiliates and Associates of such

Person, shall be the Beneficial Owner of 20% or more of the Common Shares of

the Company then outstanding, but shall not include (i) the Company, (ii) any

Subsidiary of the Company, (iii) any employee benefit plan of the Company or

any Subsidiary of the Company or (iv) any entity holding Common Shares for or

pursuant to the terms of any such plan. Notwithstanding the foregoing, no

Person shall become an “Acquiring Person” as the result of an acquisition of

Common Shares by the Company which, by reducing the number of shares

outstanding, increases the proportionate number of shares beneficially owned by

such Person and such Person’s Affiliates and Associates to 20% or more of the

Common Shares of the Company then outstanding; provided, however,

that if a Person, together with such Person’s Affiliates and Associates, shall

become the Beneficial Owner of 20% or more of the Common Shares of the Company

then outstanding by reason of share purchases by the Company and shall, after

such share purchases by the Company, such Person, together with its Affiliates

and Associates, become the Beneficial Owner of any additional Common Shares of

the Company, then such Person shall be deemed to be an “Acquiring Person.”

 

                                (b)           “Affiliate” and “Associate”

shall have the following meanings:

 

                                                (i)            An “Affiliate” of, or a

Person “affiliated” with, a specified Person, is a Person that directly,

or indirectly through one or more intermediaries, controls, or is controlled

by, or is under common control with, the Person specified. For this purpose, “control”

(including the terms “controlling,” “controlled by” and “under

common control with”) means the possession, direct or indirect, of the

power to direct or cause the direction of the management and

 

 

 

1

 

 

policies

of a Person, whether through the ownership of voting securities, by contract or

otherwise;

 

                                                (ii)           The term “Associate” used to

indicate a relationship with any Person shall mean (A) any corporation or

organization (other than the Company or a majority-owned subsidiary of the

Company) of which such Person is an officer or partner or is, directly or

indirectly, the Beneficial Owner of 10% or more of any class of equity

securities, (B) any trust or other estate in which such Person has a

substantial beneficial interest or as to which such Person serves as trustee or

in a similar fiduciary capacity, and (C) any relative or spouse of such Person,

or any relative of such spouse, who has the same home as such Person or who is

a director or officer of the Company or any of its parents or Subsidiaries.

 

                                (c)           A Person shall be deemed the “Beneficial

Owner” of and shall be deemed to “beneficially own” any securities:

 

                                                (i)            which such Person owns, directly or

indirectly;

 

                                                (ii)            which such Person has (A) the right

to acquire (whether such right is exercisable immediately or only after the

passage of time) pursuant to any agreement, arrangement or understanding (other

than customary agreements with and between underwriters and selling group

members with respect to a bona fide public offering of securities), written or

otherwise, or upon the exercise of conversion rights, exchange rights, rights

(other than the Rights), warrants or options, or otherwise; provided, however,

that a Person shall not be deemed to be the Beneficial Owner of, or to

beneficially own, securities tendered pursuant to a tender or exchange offer

made by or on behalf of such Person until such tendered securities are accepted

for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement

or understanding; provided, however, that a Person shall not be

deemed the Beneficial Owner of, or to beneficially own, any security if the

agreement, arrangement or understanding to vote such security (1) arises solely

from a revocable proxy or consent given to such Person in response to a public

proxy or consent solicitation made pursuant to, and in accordance with, the

applicable rules and regulations promulgated under the Exchange Act and (2) is

not also then reportable on Schedule 13D under the Exchange Act (or any

comparable or successor report); or

 

                                                (iii)          which are beneficially owned, directly

or indirectly, by any other Person with which such Person has any agreement,

arrangement or understanding (other than customary agreements with and between

underwriters and selling group members with respect to a bona fide public

offering of securities), written or otherwise, for the purpose of acquiring,

holding, voting (except to the extent contemplated by the proviso to Section

l(c)(ii)(B)) or disposing of any securities of the Company.

 

                                                Notwithstanding

anything in this definition of Beneficial Ownership to the contrary, the phrase

“then outstanding,” when used with reference to a Person’s Beneficial

Ownership of securities of the Company, shall mean the number of such

securities then issued and outstanding together with the number of such

securities not then actually issued and outstanding which such Person would be

deemed to own beneficially hereunder.

 

 

2

 

                                (d)           “Business Day” shall mean any

day other than a Saturday, a Sunday, or a day on which banking institutions in

the State of Minnesota are authorized or obligated by law or executive order to

close.

 

                                (e)           “Close of Business” on any

given date shall mean 5:00 p.m., Pacific Time, on such date; provided, however,

that if such date is not a Business Day it shall mean 5:00 p.m., Pacific Time.

on the next succeeding Business Day.

 

                                (f)            “Common Shares” when used

with reference to the Company shall mean the shares of common stock, par value

$0.01 per share, of the Company. “Common Shares” when used with reference to

any Person other than the Company shall mean the capital stock (or equity

interest) with the greatest voting power of such other Person or, if such other

Person is a Subsidiary of another Person, the Person or Persons which

ultimately control such first-mentioned Person.

 

                                (g)           “Distribution Date” shall have

the meaning set forth in Section 3 hereof.

 

                                (h)           “Exchange Act” shall mean the

Securities Exchange Act of 1934, as amended.

 

                                (i)            “Final Expiration Date” shall

have the meaning set forth in Section 7 hereof.

 

                                (j)            “Person” shall mean any

individual, firm, corporation, partnership, limited partnership, business

trust, unincorporated association or other entity, and shall include any

successor (by merger or otherwise) of such entity.

 

                                (k)           “Purchase Price” shall have

the meaning set forth in Section 7(b) hereof.

 

                                (l)            “Preferred Shares” shall mean

shares of Series A Junior Participating Preferred Stock, par value $0.01 per

share, of the Company having the rights and preferences set forth in the

Certificate of Designations attached to this Agreement as Exhibit A.

 

                                (m)          “Redemption Date” shall have

the meaning set forth in Section 7 hereof.

 

                                (n)           “Shares Acquisition Date”

shall mean the earlier of the date of (i) the public announcement by the

Company or an Acquiring Person that an Acquiring Person has become such or (ii)

the public disclosure of facts by the Company or an Acquiring Person indicating

that an Acquiring Person has become such.

 

                                (o)           “Subsidiary” of any Person

shall mean any Person of which a majority of the voting power of the voting

equity securities or equity interest is owned, directly or indirectly, by such

Person.

 

 

 

3

 

                                (p)           A “Successor” shall mean the

estate or legal representative of a deceased individual, the beneficiary of a

deceased individual’s estate, a trust created by a deceased individual as

grantor, or the beneficiary of a trust created by a deceased individual as

grantor.

 

                Section 2.  Appointment of Rights Agent. The Company hereby

appoints the Rights Agent to act as agent for the Company and the holders of

the Rights (who, in accordance with Section 3 hereof, shall prior to the

Distribution Date also be the holders of the Common Shares) in accordance with

the terms and conditions hereof, and the Rights Agent hereby accepts such

appointment. The Company may from time to time appoint such co-Rights Agents as

it may deem necessary or desirable.

 

                Section 3.  Issue of Right Certificates.

 

                                (a)           Until the earlier of (i) the tenth

day after the Shares Acquisition Date or (ii) the tenth Business 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 first public

announcement of the intention of any Person (other than the Company, any

Subsidiary of the Company, any employee benefit plan of the Company or of any

Subsidiary of the Company, or any entity holding Common Shares for or pursuant

to the terms of any such plan) to commence a tender or exchange offer the

consummation of which would result in any such Person, together with such

Person’s Affiliates and Associates, becoming the Beneficial Owner of Common

Shares aggregating 20% or more of the then outstanding Common Shares (including

any such date which is after the date of this Agreement and prior to the

issuance of the Rights; the earlier of such dates being herein referred to as

the “Distribution Date”); (x) the Rights will be evidenced (subject to

the provisions of Section 3(b) hereof) by the certificates for Common Shares

registered in the names of the holders thereof (which certificates shall also

be deemed to be Right Certificates) and not by separate Right Certificates, and

(y) the right to receive Right Certificates will be transferable only in

connection with the transfer of Common Shares. As soon as practicable after the

Distribution Date, the Company will prepare and execute, the Rights Agent will

countersign, and the Company will send or cause to be sent (and the Rights

Agent will, if requested. send) by first-class, insured, postage-prepaid mail,

to each record holder of Common Shares as of the Close of Business on the

Distribution Date, at the address of such holder shown on the records of the

Company, a Right Certificate, in substantially the form of Exhibit B

hereto (a “Right Certificate”), evidencing one Right for each Common

Share so held. As of the Distribution Date, the Rights will be evidenced solely

by such Right Certificates.

 

                                (b)           On the Record Date, or as soon as

practicable thereafter, the Company will send a copy of a Summary of Rights to

Purchase Preferred Shares, in substantially the form of Exhibit C hereto

(the “Summary of Rights”), by first-class, postage-prepaid-mail, to each

record holder of Common Shares as of the Close of Business on the Record Date,

at the address of such holder shown on the records of the Company. With respect

to certificates for Common Shares outstanding as of the Record Date, until the

Distribution Date, the Rights will be evidenced by such certificates registered

in the names of the holders thereof together with a copy of the Summary of

Rights attached thereto. Until the Distribution Date (or the earlier of the

Redemption Date or the Final Expiration Date), the surrender for transfer of

any certificate for

 

 

 

4

 

Common

Shares outstanding on the Record Date, with or without a copy of the Summary of

Rights attached thereto, shall also constitute the transfer of the Rights

associated with the Common Shares represented thereby.

 

                                (c)           Certificates for Common Shares which

become outstanding (including, without limitation, reacquired Common Shares

referred to in the last sentence of this paragraph (c) ) after the Record Date

but prior to the earliest of the Distribution Date, the Redemption Date or the

Final Expiration Date shall have impressed on, printed on, written on or otherwise

affixed to them the following legend:

 

This

certificate also evidences and entitles the holder hereof to certain rights

(the “Rights”) as set forth in a Rights Agreement between Racotek, Inc. and

Norwest Bank Minnesota, N.A., dated as of September 12, 1994, as such may

subsequently be amended (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 Racotek, Inc. Under certain circumstances, as

set forth in the Rights Agreement, such Rights will be evidenced by separate

certificates and will no longer be evidenced by this certificate. Racotek, Inc.

will mail to the holder of this certificate a copy of the Rights Agreement

without charge after receipt of a written request therefor. As described in

Section 11(a)(ii) of the Rights Agreement, Rights beneficially owned by any

Person who becomes an Acquiring Person (as defined in the Rights Agreement) and

certain other Persons shall become null and void.

 

With

respect to such certificates containing the foregoing legend, until the

Distribution Date, the Rights associated with the Common Shares represented by

such certificates shall be evidenced by such certificates alone, and the

surrender for transfer of any such certificate shall also constitute the

transfer of the Rights associated with the Common Shares represented thereby.

In the event that the Company purchases or acquires any Common Shares after the

Record Date but prior to the Distribution Date, any Rights associated with such

Common Shares shall be deemed cancelled and retired so that the Company shall

not be entitled to exercise any Rights associated with the Common Shares which

are no longer outstanding.

 

                Section 4. Form of Right

Certificates. The Right Certificates (and the forms of election to

purchase Preferred Shares and of assignment to be printed on the reverse

thereof) shall be substantially the same as Exhibit B hereto and may have such

marks of identification or designation and such legends, summaries or

endorsements printed thereon as the Company may deem appropriate and as are not

inconsistent with the provisions of this Agreement, or as may be required to

comply with any applicable law or with any rule or regulation made pursuant

thereto or with any rule or regulation of any stock exchange on which the

Rights may from time to time be listed, or to conform to usage. Subject to the

other provisions of this Agreement, the Right Certificates shall entitle the

holders thereof to purchase such number of one one-hundredth of a Preferred

Share as shall be set forth therein at the Purchase Price, but the number of

such one one-hundredths of a Preferred Share and the Purchase Price shall be

subject to adjustment as provided herein.

 

 

 

5

 

                Section 5. Countersignature and

Registration. The Right Certificates shall be executed on behalf of the

Company by its Chairman of the Board, its Chief Executive Officer, its

President, any of its Vice Presidents, or its Treasurer, either manually or by

facsimile signature, shall have affixed thereto the Company’s seal or a

facsimile thereof, and shall be attested by the Secretary or any Assistant

Secretary of the Company, either manually or by facsimile signature. The Right

Certificates shall be manually countersigned by the Rights Agent (unless

applicable exchange rules and law permit facsimile signature, in which case the

Rights Agent signature may be by facsimile) and shall not be valid for any

purpose unless countersigned. In case any officer of the Company who shall have

signed any of the Right Certificates shall cease to be such officer of the

Company before countersignature by the Rights Agent and issuance and delivery

by the Company, such Right Certificates, nevertheless, may be countersigned by

the Rights Agent and issued and delivered by the Company with the same force

and effect as though the person who signed such Right Certificates had not

ceased to be such officer of the Company; and any Right Certificate may be

signed on behalf of the Company by any person who, at the actual date of the

execution of such Right Certificate, shall be a proper officer of the Company

to sign such Right Certificate, although at the date of the execution of this

Rights Agreement any such person was not such an officer.

 

                Following the Distribution Date,

the Rights Agent will keep or cause to be kept, at its principal office, books

for registration and transfer of the Right Certificates issued hereunder. Such

books shall show the names and addresses of the respective holders of the Right

Certificates, the number of Rights evidenced on its face by each of the Right

Certificates and the date of each of the Right Certificates.

 

                Section 6. Transfer, Split Up,

Combination and Exchange of Right Certificates: Mutilated, Destroyed, Lost or

Stolen Right Certificates. Subject to the provisions of Section 14 hereof,

at any time after the Close of Business on the Distribution Date, and at or

prior to the Close of Business on the earlier of the Redemption Date or the

Final Expiration Date, any Right Certificate or Right Certificates (other than

Right Certificates representing Rights that have become void pursuant to

Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24

hereof) may be transferred, split up, combined or exchanged for another Right

Certificate or Right Certificates, entitling the registered holder to purchase

a like number of one one-hundredths of a Preferred Share as the Right

Certificate or Right Certificates surrendered then entitled such holder to

purchase. Any registered holder desiring to transfer, split up, combine or

exchange any Right Certificate or Right Certificates shall make such request in

writing delivered to the Rights Agent, and shall surrender the Right

Certificate or Right Certificates to be transferred, split up, combined or

exchanged at the principal office of the Rights Agent. Thereupon the Rights

Agent shall countersign and deliver to the person entitled thereto a Right

Certificate or Right Certificates, as the case may be, as so requested. The

Company may require payment of a sum sufficient for any tax or governmental

charge that may be imposed in connection with any transfer, split up,

combination or exchange of Right Certificates.

 

                Upon receipt by the Company and

the Rights Agent of evidence reasonably satisfactory to them of the loss,

theft, destruction or mutilation of a Right Certificate, and, in case of loss,

theft

 

 

 

6

 

or

destruction, of indemnity or security reasonably satisfactory to them, and, at

the Company’s request, reimbursement to the Company and the Rights Agent of all

reasonable expenses incidental thereto, and upon surrender to the Rights Agent

and cancellation of the Right Certificate if mutilated, the Company will make

and deliver a new Right Certificate of like tenor to the Rights Agent for

delivery to the registered holder in lieu of the Right Certificate so lost,

stolen, destroyed or mutilated.

 

                Section 7. 

Exercise of Rights; Purchase Price; Expiration Date of

Rights

 

                                (a)           The registered holder of any Right

Certificate may exercise the Rights evidenced thereby (except as otherwise

provided herein) in whole or in part at any time after the Distribution Date

upon surrender of the Right Certificate, with the form of election to purchase

on the reverse side thereof duly executed, to the Rights Agent at the principal

office of the Rights Agent, together with payment of the Purchase Price for

each one one-hundredth of a Preferred Share as to which the Rights are

exercised, at or prior to the earliest of (i) the Close of Business on

September 12, 2004 (the “Final Expiration Date”), (ii) the time at which

the Rights are redeemed as provided in Section 23 hereof (the “Redemption

Date”), or (iii) the time at which such Rights are exchanged as provided in

Section 24 hereof.

 

                                (b)           The Purchase Price for each one

one-hundredth of a Preferred Share pursuant to the exercise of a Right shall

initially be $25.00 (the “Purchase Price”), shall be subject to

adjustment from time to time as provided in Sections 11 and 13 hereof and shall

be payable in lawful money of the United States of America in accordance with

paragraph (c) below.

 

                                (c)           Upon receipt of a Right Certificate

representing exercisable Rights, with the form of election to purchase and

certificate duly executed, accompanied by payment of the Purchase Price for the

shares to be purchased and an amount equal to any applicable transfer tax

required to be paid by the holder of such Right Certificate in accordance with

Section 9 hereof by certified check, cashier’s check or money order payable to

the order of the Company, the Rights Agent shall thereupon promptly (i) (A)

requisition from any transfer agent of the Preferred Shares certificates for

the number of one-one hundredths of a Preferred Share to be purchased and the

Company hereby irrevocably authorizes its transfer agent to comply with all

such requests, or (B) requisition from any depositary agent for the Preferred

Shares depositary receipts representing such number of one one-hundredths 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 directs the

depositary agent to comply with such request, (ii) when appropriate,

requisition from the Company the amount of cash to be paid in lieu of issuance

of fractional Preferred Shares in accordance with Section 14 hereof, (iii) after

receipt of such certificates or depositary receipts, cause the same to be

delivered to or upon the order of the registered holder of such Right

Certificate, registered in such name or names as may be designated by such

holder and (iv) when appropriate, after receipt, deliver such cash to or upon

the order of the registered holder of such Right Certificate.

 

 

 

7

 

                                (d)           In case the registered holder of any

Right Certificate shall exercise less than all the Rights evidenced thereby, a

new Right Certificate evidencing Rights equivalent to the Rights remaining

unexercised shall be issued by the Rights Agent to the registered holder of

such Right Certificate or to such holder’s duly authorized assigns, subject to

the provisions of Section l4 hereof.

 

                                (e)           The Company covenants and agrees that

it will cause to be reserved and kept available, out of its authorized and

unissued Preferred Shares or any Preferred Shares held in its treasury, the

number of Preferred Shares that will be sufficient to permit the exercise in

full of all outstanding Rights in accordance with this Section 7.

 

                                (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 following

the form of election to purchase set forth on the reverse side of the Right

Certificate surrendered for such exercise and (ii) provided such additional

evidence of the identity of the Beneficial Owner (or former Beneficial Owner)

or Affiliates or Associates thereof as the Company shall reasonably request.

 

                Section 8. Cancellation and

Destruction of Right Certificates. All Right Certificates surrendered for

the purpose of exercise, transfer, split up, combination or exchange shall, if

surrendered to the Company or to any of its agents, be delivered to the Rights

Agent for cancellation or in cancelled form, or, if surrendered to the Rights

Agent, shall be cancelled by it, and no Right Certificates shall be issued in

lieu thereof except as expressly permitted by any of the provisions of this Rights

Agreement. The Company shall deliver to the Rights Agent for cancellation and

retirement, and the Rights Agent shall so cancel and retire, any other Right

Certificate purchased or acquired by the Company otherwise than upon the

exercise thereof. The Rights Agent shall deliver all cancelled Right

Certificates to the Company.

 

                Section 9. Status and Availability

of Preferred Shares. The Company covenants and agrees that it will take all

such action as may be necessary to ensure that all Preferred Shares delivered

upon exercise of Rights shall, at the time of delivery of the certificates for

such Preferred Shares (subject to payment of the Purchase Price), be duly and

validly authorized and issued and fully paid and non-assessable shares.

 

                The Company further covenants

and agrees that it will pay when due and payable any and all federal and state

transfer taxes and charges which may be payable in respect of the issuance or

delivery of the Right Certificates or of any Preferred Shares upon the exercise

of Rights. The Company shall not, however, be required to pay any transfer tax

which may be payable in respect of any transfer or delivery of Right

Certificates to a person other than, or the issuance or delivery of

certificates or depositary receipts for the Preferred Shares in a name other

than that of, the registered holder of the Right Certificate evidencing Rights

surrendered for exercise or to issue or to deliver any certificates or

depositary receipts for 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

 

 

 

8

 

Right

Certificate at the time of surrender) or until it has been established to the

Company’s reasonable satisfaction that no such tax is due.

 

                Section 10. Preferred Shares

Record Date. Each person in whose name any certificate for Preferred

Shares is issued upon the exercise of Rights shall for all purposes be deemed

to have become the holder of record of the Preferred Shares represented thereby

on, and such certificate shall be dated, the date upon which the Right

Certificate evidencing such Rights was duly surrendered and payment of the

Purchase Price (and any applicable transfer taxes) was made. Prior to the exercise

of the Rights evidenced thereby, the holder of a Right Certificate shall not be

entitled to any rights of a holder of Preferred Shares for which the Rights

shall be exercisable, including, without limitation, the right to vote, to

receive dividends or other distributions or to exercise any preemptive rights,

and shall not be entitled to receive any notice of any proceedings of the

Company, except as provided herein.

 

                Section 11. Adjustment of

Purchase Price, Number of Shares or Number of Rights. The

Purchase Price, the number of Preferred Shares covered by each Right and the

number of Rights outstanding are subject to adjustment from time to time as

provided in this Section 11.

 

                                (a)           (i)            In

the event the Company shall at any time after the date of this Agreement (A)

declare a dividend on the Preferred Shares payable in Preferred Shares, (B)

subdivide the outstanding Preferred Shares, (C) combine the outstanding

Preferred Shares into a smaller number of Preferred Shares or (D) issue any

shares of its capital stock in a reclassification of the Preferred Shares

(including any such reclassification in connection with a consolidation or

merger in which the Company is the continuing or surviving corporation), except

as otherwise provided in this Section 11(a), the Purchase Price in effect at

the time of the record date for such dividend or of the effective date of such

subdivision, combination or reclassification, and the number and kind of shares

of capital stock issuable on such date, shall be proportionately adjusted so

that the holder of any Right exercised after such time shall be entitled to

receive the aggregate number and kind of shares of capital stock which, if such

Right had been exercised immediately prior to such date, such holder would have

owned upon such exercise and been entitled to receive by virtue of such

dividend, subdivision, combination or reclassification; provided, however,

that in no event shall the consideration to be paid upon the exercise of one

Right be less than the aggregate par value of the shares of capital stock of

the Company issuable upon exercise of one Right.

 

                                                (ii)           Subject to the following paragraph of

this subparagraph (ii) and to Sections 23 and 24 of this Agreement, in the

event that any Person shall become an Acquiring Person, each holder of a Right

shall thereafter have a right to receive, upon exercise thereof at a price

equal to the then current Purchase Price multiplied by the number of one

one-hundredths of a Preferred Share for which a Right is then exercisable, in

accordance with the terms of this Agreement and in lieu of Preferred Shares,

such number of Common Shares of the Company as shall equal the result obtained

by (x) multiplying the then current Purchase Price by the number of one

one-hundredths of a Preferred Share for which a Right is then exercisable and

dividing that product by (y) 50% of the then current per share market price of

the Company’s Common

 

 

 

9

 

Shares

(determined pursuant to Section 11(d) hereof) on the date such Person became an

Acquiring Person.

 

                                                                From

and after the occurrence of any Person becoming an Acquiring Person, any Rights

that are or were acquired or beneficially owned by such Acquiring Person (or

any Associate or Affiliate of such Acquiring Person) shall be void and any

holder of such Rights shall thereafter have no right to exercise such Rights

under any provision of this Agreement. No Right Certificate shall be issued

pursuant to Section 3 that represents Rights beneficially owned by an Acquiring

Person whose Rights would be void pursuant to the preceding sentence or any

Associate or Affiliate thereof; no Right Certificate shall be issued at any

time upon the transfer of any Rights to an Acquiring Person whose Rights would be

void pursuant to the preceding sentence or any Associate or Affiliate thereof

or to any nominee of such Acquiring Person, Associate or Affiliate; and any

Right Certificate delivered to the Rights Agent for transfer to an Acquiring

Person whose Rights would be void pursuant to the preceding sentence or any

Associate or Affiliate thereof shall be cancelled. This paragraph shall apply

not only to an initial Acquiring Person, and its Affiliates and Associates, but

also to subsequent Acquiring Persons, and their Affiliates and Associates.

 

                                                (iii)          In the event that the number of Common

Shares which are authorized by the Company’s certificate of incorporation and

not outstanding or subscribed for, or reserved or otherwise committed for

issuance for purposes other than upon exercise of the Rights, is not sufficient

to permit the holder of each Right to purchase the number of Common Shares to

which such holder would be entitled upon the exercise in full of the Rights in

accordance with the foregoing subparagraph (ii) of paragraph (a) of this

Section 11, the Company shall: (A) determine the excess of (1) the value of the

Common Shares issuable upon the exercise of a Right (calculated as provided in

the last sentence of this subparagraph (iii)) pursuant to Section 11(a)(ii)

hereof (the “Current Value”) over (2) the Purchase Price (such excess,

the “Spread”), and (B) with respect to each Right, make adequate

provision to substitute for such Common Shares, upon payment of the applicable

Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common

Shares or other equity securities of the Company (including, without

limitation, shares, or units of shares, of preferred stock which the Board of

Directors of the Company has determined to have the same value as shares of

common stock (such equity securities, “common stock equivalents”)), (4)

debt securities of the Company, (5) other assets, or (6) any combination of the

foregoing, having an aggregate value equal to the Current Value, where such

aggregate value has been determined by the Board of Directors of the Company in

good faith; provided, however, if the Company shall not have made

adequate provision to deliver value pursuant to clause (B) above within thirty

(30) days following the later of (x) the first occurrence of an event

triggering the rights to purchase Common Shares described in Section 11(a)(ii)

and (y) the date on which the Company’s right of redemption pursuant to Section

23(a) expires (the later of (x) and (y) being referred to herein as the “Section

11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver,

upon the surrender for exercise of a Right without requiring payment of the

Purchase Price, shares of common stock (to the extent available) and then, if

necessary, cash, which shares and cash have an aggregate value equal to the

Spread. If the Board of Directors of the Company shall determine in good faith

that it is likely that sufficient additional shares of common stock could be

authorized for issuance upon

 

 

 

10

 

exercise

in full of the Rights, the thirty (30) day period set forth above may be

extended to the extent necessary, but not more than ninety (90) days after the

Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder

approval for the authorization of such additional shares (such period, as it

may be extended, the “Substitution Period”). To the extent that the

Company determines that some action need be taken pursuant to the first and/or

second sentences of this Section 11(a)(iii), the Company (x) shall provide,

subject to Section 7(f) hereof, that such action shall apply uniformly to all

outstanding Rights, and (y) may suspend the exercisability of the Rights until

the expiration of the Substitution Period in order to seek any authorization of

additional shares and/or to decide the appropriate form of distribution to be

made pursuant to such first sentence and to determine the value thereof. In the

event of any such suspension, the Company shall make a public announcement, and

shall deliver to the Rights Agent a statement, stating that the exercisability

of the Rights has been temporarily suspended. At such time as the suspension is

no longer in effect, the Company shall make another public announcement, and

deliver to the Rights Agent a statement, so stating. For purposes of this

Section 11(a)(iii), the value of the Common Shares shall be the current per

share market price (as determined pursuant to Section 11(d)(i) hereof) of the

Common Shares on the Section 11(a)(ii) Trigger Date and the value of any

“common stock equivalent” shall be deemed to have the same value as the Common

Shares on such date.

 

                                (b)           In case the Company shall fix a

record date for the issuance of rights, options or warrants to all holders of

Preferred Shares entitling them to subscribe for or purchase Preferred Shares

(or shares having the same rights, privileges and preferences as the Preferred

Shares (“equivalent preferred shares”)) or securities convertible into

Preferred Shares or equivalent preferred shares at a price per Preferred Share

or equivalent preferred share (or having a conversion price per share, if a

security convertible into Preferred Shares or equivalent preferred shares) less

than the then current per share market price of the Preferred Shares (as

defined in Section 11(d)) on such record date, the Purchase Price to be in

effect after such record date shall be determined by multiplying the Purchase

Price in effect immediately prior to such record date by a fraction, the

numerator of which shall be the number of Preferred Shares outstanding on such

record date plus the number of Preferred Shares which the aggregate offering

price of the total number of Preferred Shares and/or equivalent 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

outstanding on such record date plus the number of additional Preferred Shares

and/or equivalent preferred shares to be offered for subscription or purchase

(or into which the convertible securities so to be offered are initially

convertible); provided, however, that in no event shall the

consideration to be paid upon the exercise of one Right be less than the

aggregate par value of the shares of capital stock of the Company issuable upon

exercise of one Right. In case such subscription price may be paid in a

consideration part or all of which shall be in a form other than cash, the

value of such consideration shall be as determined in good faith by the Board

of Directors of the Company, whose determination shall be described in a

statement filed with the Rights Agent. Preferred Shares owned by or held for

the account of the Company shall not be deemed outstanding for the purpose of

any such computation. Such adjustment shall be made successively whenever such

a record date is fixed; and in the event that

 

 

 

11

 

such

rights, options or warrants are not so issued, the Purchase Price shall be

adjusted to be the Purchase Price which would then be in effect if such record

date had not been fixed.

 

                                (c)           In case the Company shall fix a

record date for the making of a distribution to all holders of the Preferred

Shares (including any such distribution made in connection with a consolidation

or merger in which the Company is the continuing or surviving corporation) of

evidences of indebtedness or assets (other than a regular quarterly cash

dividend or a dividend payable in Preferred Shares) or subscription rights or

warrants (excluding those referred to in Section 11(b) hereof), the Purchase

Price to be in effect after such record date shall be determined by multiplying

the Purchase Price in effect immediately prior to such record date by a

fraction, the numerator of which shall be the then current per share market

price of the Preferred Shares on such record date, less the fair market value

(as determined in good faith by the Board of Directors of the Company, whose

determination shall be described in a statement filed with the Rights Agent) of

the portion of the assets or evidences of indebtedness so to be distributed or

of such subscription rights or warrants applicable to one Preferred Share and

the denominator of which shall be such current per share market price of the

Preferred Shares; provided, however, that in no event shall the

consideration to be paid upon the exercise of one Right be less than the aggregate

par value of the shares of capital stock of the Company to be issued upon

exercise of one Right. Such adjustments shall be made successively whenever

such a record date is fixed; and in the event that such distribution is not so

made, the Purchase Price shall again be adjusted to be the Purchase Price which

would then be in effect if such record date had not been fixed.

 

                                (d)           (i)            For

the purpose of any computation hereunder, the “current per share market

price” of any security (a “Security” for the purpose of this Section

11(d)(i)) on any date shall be deemed to be the average of the daily closing

prices per share of such Security for the 30 consecutive Trading Days (as such

term is hereinafter defined) immediately prior to such date; provided, however,

that in the event that the current per share market price of the Security is

determined during a period following the announcement by the issuer of such

Security of (A) a dividend or distribution on such Security payable in shares

of such Security or securities convertible into such shares, or (B) any

subdivision, combination or reclassification of such Security and prior to the

expiration of 30 Trading Days after the ex-dividend date for such dividend or

distribution, or the record date for such subdivision, combination or

reclassification, then, and in each such case, the current per share market

price shall be appropriately adjusted to reflect the current market price per

share equivalent of such Security. The closing price for each day shall be the

last sale price, regular way, or, in case no such sale takes place on such day,

the average of the closing bid and asked prices, regular way, in either case as

reported in the principal consolidated transaction reporting system with

respect to securities listed or admitted to trading on the New York Stock

Exchange or, if the Security is not listed or admitted to trading on the New

York Stock Exchange, as reported in the principal consolidated transaction

reporting system with respect to securities listed on the principal national

securities exchange on which the Security is listed or admitted to trading or,

if the Security is not listed or admitted to trading on any national securities

exchange, the last quoted price, or, if not so quoted, the average of the high

bid and low asked prices in the over-the-counter market, as reported by the

National Association of Securities Dealers, Inc. Automated Quotations System (“Nasdaq”)

or such other

 

 

 

12

system

then in use, or, if on any such date the Security is not quoted by any such

organization, the average of the closing bid and asked prices as furnished by a

professional market maker making a market in the Security selected by the Board

of Directors of the Company. The term “Trading Day” shall mean a day on

which the principal national securities exchange on which the Security is

listed or admitted to trading is open for the transaction of business or, if

the Security is not listed or admitted to trading on any national securities

exchange, a Business Day.

 

                                                (ii)           For the purpose of any computation

hereunder, the “current per share market price” of the Preferred Shares shall

be determined in accordance with the method set forth in Section 1l(d)(i). If

the Preferred Shares are not publicly traded, the “current per share market

price” of the Preferred Shares shall be conclusively deemed to be the current

per share market price of the Common Shares as determined pursuant to Section

1l(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or

similar transaction occurring after the date hereof), multiplied by one

hundred. If neither the Common Shares nor the Preferred Shares are publicly

held or so listed or traded, “current per share market price” shall mean the

fair value per share as determined in good faith by the Board of Directors of

the Company, whose determination shall be described in a statement filed with

the Rights Agent.

 

                                (e)           No adjustment in the Purchase Price

shall be required unless such adjustment would require an increase or decrease

of at least 1% in the Purchase Price; provided, however, that any

adjustments which by reason of this Section 11(e) are not required to be made

shall be carried forward and taken into account in any subsequent adjustment.

All calculations under this Section 11 shall be made to the nearest cent or to

the nearest one one-millionth of a Preferred Share or one one-thousandth of any

other share or security 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 three years from the date of the transaction which requires such

adjustment.

 

                                (f)            If as a result of an adjustment made

pursuant to Section 11(a) hereof, the holder of any Right thereafter exercised

shall become entitled to receive any shares of capital stock of the Company

other than Preferred Shares, the number of such other shares so receivable upon

exercise of any Right shall thereafter 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 (c), inclusive, and the provisions of Sections 7, 9, 10 and 13 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

one one-hundredths 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), upon each adjustment of

the Purchase Price as a result of the calculations made in Sections 11(b) and

(c), each Right outstanding immediately prior to the making of such

 

 

 

 

13

 

adjustment

shall thereafter evidence the right to purchase, at the adjusted Purchase

Price, that number of one one-hundredths of a Preferred Share (calculated to

the nearest one one-millionth of a Preferred Share) obtained by (i) multiplying

(x) the number of one one-hundredths 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 substitution for any adjustment in the number of one one-hundredths 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 one one-hundredths 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 one one-thousandth) obtained by dividing the

Purchase Price in effect immediately prior to adjustment of the Purchase Price

by the Purchase Price in effect immediately after adjustment of the Purchase

Price. The Company shall make a public announcement of its election to adjust

the number of Rights, indicating the record date for the adjustment, and, if

known at the time, the amount of the adjustment to be made. This record date

may be the date on which the Purchase Price is adjusted or any day thereafter,

but, if the Right Certificates have been distributed, shall be at least 10 days

later than the date of the public announcement. If Right Certificates have been

distributed, 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 Right Certificates on such record date

Right Certificates evidencing, subject to Section 14 hereof, the additional

Rights to which such holders shall be entitled as a result of such adjustment,

or, at the option of the Company, shall cause to be distributed to such holders

of record in substitution and replacement for the Right Certificates held by

such holders prior to the date of adjustment, and upon surrender thereof, if

required by the Company, new Right Certificates evidencing all the Rights to

which such holders shall be entitled after such adjustment. Right Certificates

to be so distributed shall be issued, executed and countersigned in the manner

provided for herein and shall be registered in the names of the holders of

record of Right Certificates on the record date specified in the public

announcement.

 

                                (j)            Irrespective of any adjustment or

change in the Purchase Price or the number of one one-hundredths of a Preferred

Share issuable upon the exercise of the Rights, the Right Certificates

theretofore and thereafter issued may continue to express the Purchase Price

and the number of one one-hundredths of a Preferred Share which were expressed

in the initial Right Certificates issued hereunder.

 

                                (k)           Before taking any action that would

cause an adjustment reducing the Purchase Price below one one-hundredth of the

then par value of the Preferred Shares issuable upon exercise of the Rights,

the Company shall take any corporate action which may, in the opinion of its

counsel, be necessary in order that the Company may validly and legally issue

fully paid and non-assessable Preferred Shares at such adjusted Purchase Price.

 

 

 

14

 

                                (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 issuing to the holder of any Right exercised after

such record date of the Preferred Shares and other capital stock or securities

of the Company, if any, issuable upon such exercise over and above the

Preferred Shares and other capital stock or securities of the Company, if any,

issuable upon such exercise on the basis of the Purchase Price in effect prior

to such adjustment; provided, however, that the Company shall

deliver to such holder a due bill or other appropriate instrument evidencing

such holder’s right to receive such additional shares upon the occurrence of

the event requiring such adjustment.

 

                                (m)          Anything in this Section 11 to the

contrary notwithstanding, the Company shall be entitled to make such reductions

in the Purchase Price, in addition to those adjustments expressly required by

this Section 11, as and to the extent that it in its sole discretion shall

determine to be advisable in order that any (i) consolidation or subdivision of

the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares or

securities which by their terms are convertible into or exchangeable for

Preferred Shares, (iii) dividends on Preferred Shares payable in Preferred

Shares or (iv) issuance of any rights, options or warrants referred to

hereinabove in Section 11 (b), hereafter made by the Company to holders of its

Preferred Shares shall not be taxable to such stockholders.

 

                                (n)           In the event that at any time after

the date of this Agreement and prior to the Distribution Date, the Company

shall (i) declare or pay any dividend on the Common Shares payable in Common

Shares or (ii) effect a subdivision, combination or consolidation of the Common

Shares (by reclassification or otherwise other than by payment of dividends in

Common Shares) into a greater or lesser number of Common Shares, then in any

such case (i) the number of one one-hundredths of a Preferred Share purchasable

after such event upon proper exercise of each Right shall be determined by

multiplying the number of one one-hundredths of a Preferred Share so

purchasable immediately prior to such event by a fraction, the numerator of

which is the number of Common Shares outstanding immediately before such event

and the denominator of which is the number of Common Shares outstanding

immediately after such event, and (ii) each Common Share outstanding

immediately after such event shall have issued with respect to it that number

of Rights which each Common Share outstanding immediately prior to such event

had issued with respect to it. The adjustments provided for in this Section

11(n) shall be made successively whenever such a dividend is declared or paid

or such a subdivision, combination or consolidation is effected.

 

                                (o)           The Company covenants and agrees

that, after the Distribution Date, it will not, except as permitted by Sections

23, 24 and 27, take (or permit any Subsidiary to take) any action if the

purpose of such action is to, or if at the time such action is taken it is

reasonably foreseeable that such action will, diminish substantially or

eliminate the benefits intended to be afforded by the Rights.

 

                Section 12. Certificate of

Adjusted Purchase Price or Number of Shares. Whenever an

adjustment is made as provided in Sections 11 and 13 hereof, the Company shall

promptly (a) prepare a certificate setting forth such adjustment, and a brief

statement of the facts accounting

 

 

 

15

 

for such

adjustment, (b) file with the Rights Agent and with each transfer agent for the

Common Shares or the Preferred Shares a copy of such certificate and (c) mail a

brief summary thereof to each holder of a Right Certificate in accordance with

Section 25 hereof.

 

                Section 13. Consolidation, Merger

or Sale or Transfer of Assets or Earning Power. In the event that, after

the Distribution Date, directly or indirectly, (a) the Company shall

consolidate with, or merge with and into, an Acquiring Person, or an affiliate

or associate of an Acquiring Person, (b) an Acquiring Person, or an affiliate

or associate of an Acquiring Person, shall consolidate with the Company, or

merge with and into the Company and the Company shall be the continuing or

surviving corporation of such merger and, in connection with such merger, all

or part of the Common Shares shall be changed into or exchanged for stock or

other securities of any other Person (or the Company) or cash or any other

property, or (c) the Company shall sell or otherwise transfer (or one or more

of its Subsidiaries shall sell or otherwise transfer), in one or more

transactions, assets or earning power aggregating 50% or more of the assets or

earning power of the Company and its Subsidiaries (taken as a whole) to an

Acquiring Person, or an affiliate or associate of an Acquiring Person, then,

and in each such case, proper provision shall be made so that (i) each holder

of a Right (except as otherwise provided herein) shall thereafter have the

right to receive, upon the exercise thereof at a price equal to the then

current Purchase Price multiplied by the number of one one-hundredths of a

Preferred Share for which a Right is then exercisable, in accordance with the

terms of this Agreement and in lieu of Preferred Shares, such number of Common

Shares of the Person in the transaction (including the Company as successor

thereto or as the surviving corporation) who is issuing the consideration with

the greatest fair market value to the Company and its stockholders in connection

with such transaction (the “Principal Issuer”) as shall equal the result

obtained by (A) multiplying the then current Purchase Price by the number of

one one-hundredths of a Preferred Share for which a Right is then exercisable

and dividing that product by (B) 50% of the then current per share market price

of the Common Shares of the Principal Issuer (determined pursuant to Section

11(d) hereof) on the date of consummation of such consolidation, merger, sale

or transfer; (ii) the Principal Issuer shall thereafter be liable for, and

shall assume, by virtue of such consolidation, merger, sale or transfer, all

the obligations and duties of the Company pursuant to this Agreement; (iii) the

term “Company” shall thereafter be deemed to refer to the Principal Issuer; and

(iv) the Principal Issuer shall take such steps (including, but not limited to,

the reservation of a sufficient number of its Common Shares in accordance with

Section 9 hereof) in connection with such consummation as may be necessary to assure

that the provisions hereof shall thereafter be applicable, as nearly as

reasonably may be, in relation to the Common Shares thereafter deliverable upon

the exercise of the Rights. The Company covenants and agrees that it shall not

consummate any such consolidation, merger, sale or transfer unless prior

thereto the Company and the Principal Issuer shall have executed and delivered

to the Rights Agent a supplemental agreement so providing. The Company shall

not enter into any transaction of the kind referred to in this Section 13 if at

the time of such transaction there are any rights, warrants, instruments or

securities outstanding or any agreements or arrangements which, as a result of

the consummation of such transaction, would eliminate or substantially diminish

the benefits intended to be afforded by the Rights. The provisions of this

Section 13 shall similarly apply to successive mergers or consolidations or

sales or other transfers.

 

 

 

16

 

                Section 14. Fractional Rights and

Fractional Shares.

 

                                (a)           The Company shall not be required to

issue fractions of Rights or to distribute Right Certificates which evidence

fractional Rights. In lieu of such fractional Rights, there shall be paid to

the registered holders of the Right Certificates with regard to which such

fractional Rights would otherwise be issuable, an amount in cash equal to the

same fraction of the current market value of a whole Right. For the purposes of

this Section l4(a), the current market value of a whole Right shall be the

closing price of the Rights for the Trading Day immediately prior to the date

on which such fractional Rights would have been otherwise issuable. The closing

price for any day shall be the last sale price, regular way, or, in case no

such sale takes place on such day, the average of the closing bid and asked

prices, regular way, in either case as reported in the principal consolidated

transaction reporting system with respect to securities listed or admitted to

trading on the New York Stock Exchange or, if the Rights are not listed or

admitted to trading on the New York Stock Exchange, as reported in the

principal consolidated transaction reporting system with respect to securities

listed on the principal national securities exchange on which the Rights are

listed or admitted to trading or, if the Rights are not listed or admitted to

trading on any national securities exchange, the last quoted price or, if not

so quoted, the average of the high bid and low asked prices in the

over-the-counter market, as reported by Nasdaq or such other system then in use

or, if on any such date the Rights are not quoted by any such organization, the

average of the closing bid and asked prices as furnished by a professional

market maker making a market in the Rights selected by the Board of Directors

of the Company. If on any such date no such market maker is making a market in

the Rights, the fair value of the Rights on such date as determined in good

faith by the Board of Directors of the Company shall be used.

 

                                (b)           The Company shall not be required to

issue fractions of Preferred Shares (other than fractions which are integral

multiples of one one-hundredth of a Preferred Share) upon exercise of the

Rights or to distribute certificates which evidence fractional Preferred Shares

(other than fractions which are integral multiples of one one-hundredth of a

Preferred Share). Fractions of Preferred Shares in integral multiples of one

one-hundredth of a Preferred Share may, at the election of the Company, be

evidenced by depositary receipts, pursuant to an appropriate agreement between

the Company and a depositary selected by it; provided, that such

agreement shall provide that the holders of such depositary receipts shall have

all the rights, privileges and preferences to which they are entitled as

beneficial owners of the Preferred Shares represented by such depositary

receipts. In lieu of fractional Preferred Shares that are not integral

multiples of one one-hundredth of a Preferred Share, the Company shall pay to

the registered holders of Right Certificates at the time such Rights are

exercised as herein provided an amount in cash equal to the same fractions of

the current market value of one Preferred Share. For the purposes of this

Section l4(b), the current market value of a Preferred Share shall be the

closing price of a Preferred Share (as determined pursuant to the second

sentence of Section 1l(d)(i) hereof) for the Trading Day immediately prior to

the date of such exercise.

 

                                (c)           The holder of a Right by the

acceptance of the Right expressly waives any right to receive fractional Rights

or fractional shares upon exercise of a Right (except as provided above).

 

 

17

 

                Section 15. Rights of Action. All

rights of action in respect of this Agreement, excepting the rights of action

given to the Rights Agent under Section 18 hereof, are vested in the respective

registered holders of the Right Certificates (and, prior to the Distribution

Date, the registered holders of the Common Shares); and any registered holder

of any Right Certificate (or, prior to the Distribution Date, of the Common

Shares) may, without the consent of the Rights Agent or of the holder of any

other Right Certificate ( or, prior to the Distribution Date, of the Common

Shares), in such holder’s own behalf and for such holder’s own benefit,

enforce, and may institute and maintain any suit, action or proceeding against

the Company to enforce, or otherwise act in respect of, such holder’s right to

exercise the Rights evidenced by such Right Certificate in the manner provided

in such Right Certificate and in this Agreement. Without limiting the foregoing

or any remedies available to the holders of Rights, it is specifically

acknowledged that the holders of Rights would not have an adequate remedy at

law for any breach of this Agreement and will be entitled to specific

performance of the obligations under, and injunctive relief against actual or

threatened violations of the obligations of any Person subject to, this

Agreement.

 

                Section 16.  Agreement of Right Holders. Every holder of a Right,

by accepting the same, consents and agrees with the Company and the Rights

Agent and with every other holder of a Right that:

 

                                (a)           prior to the Distribution Date, the

Rights will be transferable only in connection with the transfer of the Common

Shares;

 

                                (b)           after the Distribution Date, the

Right Certificates are transferable only on the registry books maintained by

the Rights Agent if surrendered at the principal office of the Rights Agent,

duly endorsed or accompanied by a proper instrument of transfer; and

 

                                (c)           the Company and the Rights Agent may

deem and treat the person in whose name the Right Certificate (or, prior to the

Distribution Date, the associated Common Shares certificate) is registered as

the absolute owner thereof and of the Rights evidenced thereby (notwithstanding

any notations of ownership or writing on the Right Certificates or the

associated Common Shares certificate made by anyone other than the Company or

the Rights Agent) for all purposes whatsoever, and neither the Company nor the

Rights Agent shall be affected by any notice to the contrary.

 

                Section 17. Right Certificate

Holder Not Deemed a Stockholder. No holder, as such, of any Right

Certificate shall be entitled to vote, receive dividends or be deemed for any

purpose the holder of the Preferred Shares or any other securities of the

Company which may at any time be issuable on the exercise of the Rights

represented thereby nor shall anything contained herein or in any Right

Certificate be construed to confer upon the holder of any Right Certificate, as

such, any of the rights of a stockholder of the Company or any right to vote

for the election of directors or upon any matter submitted to stockholders at

any meeting thereof, or to give or withhold consent to any corporate action, or

to receive notice of meetings or other actions affecting stockholders (except

as provided in Section 25 hereof), or to receive dividends or subscription

 

 

 

18

 

rights,

or otherwise, until the Right or Rights evidenced by such Right Certificate

shall have been exercised in accordance with the provisions hereof.

 

                Section 18. Concerning the Rights

Agent.

 

                                (a)           The Company agrees to pay to the

Rights Agent reasonable compensation for all services rendered by it hereunder

and, from time to time, on demand of the Rights Agent, its reasonable expenses

and counsel fees and other disbursements incurred in the administration and

execution of this Agreement and the exercise and performance of its duties

hereunder. The Company also agrees to indemnify the Rights Agent for, and to

hold it harmless against, any loss, liability or expense, incurred without 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.

 

                                (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.

 

                Section 19. Merger or

Consolidation or Change of Name of Rights Agent. Any corporation into

which the Rights Agent or any successor Rights Agent may be merged or with

which it may be consolidated. or any corporation resulting from any merger or

consolidation to which the Rights Agent or any successor Rights Agent shall be

a party, or any corporation succeeding to the stock transfer or corporate trust

business of the Rights Agent or any successor Rights Agent, shall be the

successor to the Rights Agent under this Agreement without the execution or

filing of any paper or any further act on the part of any of the parties

hereto, provided 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 Right Certificates shall have been countersigned but

not delivered, any such successor Rights Agent may adopt the countersignature

of the predecessor Rights Agent and deliver such Right Certificates so

countersigned; and in case at that time any of the Right Certificates shall not

have been countersigned, any successor Rights Agent may countersign such Right

Certificates either in the name of the predecessor Rights Agent or in the name

of the successor Rights Agent; and in all such cases such Right Certificates

shall have the full force provided in the Right Certificates and in this

Agreement.

 

                In case at any time the name of

the Rights Agent shall be changed and at such time any of the Right

Certificates shall have been countersigned but not delivered, the Rights Agent

may adopt the countersignature under its prior name and deliver Right

Certificates so countersigned; and in case at that time any of the Right

Certificates shall not have been countersigned. the Rights Agent may

countersign such Right Certificates either in its prior name or in its changed

 

 

 

19

 

name; and

in all such cases such Right Certificates shall have the full force provided in

the Right Certificates and in this Agreement.

 

                Section 20. Duties of Rights Agent.

The Rights Agent undertakes the duties and obligations imposed by this

Agreement upon the following terms and conditions, by all of which the Company

and the holders of Right Certificates, by their acceptance thereof, shall be

bound:

 

                                (a)           The Rights Agent may consult with

legal counsel (who may be legal counsel for the Company), and the opinion of

such counsel shall be full and complete authorization and protection to the

Rights Agent as to any action taken or omitted by it in good faith and in

accordance with such opinion.

 

                                (b)           Whenever in the performance of its

duties under this Agreement the Rights Agent shall deem it necessary or

desirable that any fact or matter be proved or established by the Company prior

to taking or suffering any action hereunder, such fact or matter (unless other

evidence in respect thereof be herein specifically prescribed) may be deemed to

be conclusively proved and established by a certificate signed by any one of

the Chairman of the Board, the Chief Executive Officer, the President, any Vice

President, the General Counsel, the Treasurer or the Secretary of the Company

and delivered to the Rights Agent; and such certificate shall be full

authorization to the Rights Agent for any action taken or suffered in good

faith by it under the provisions of this Agreement in reliance upon such

certificate.

 

                                (c)           The Rights Agent shall be liable

hereunder to the Company and any other Person only for its own negligence, bad

faith or willful misconduct.

 

                                (d)           The Company agrees that it will

perform, execute, acknowledge and deliver or cause to be performed, executed,

acknowledged and delivered all such further and other acts, instruments and

assurances as may reasonably be required by the Rights Agent for the carrying

out or performing by the Rights Agent of the provisions of this Agreement.

 

                                (e)           The Rights Agent is hereby authorized

and directed to accept instructions with respect to the performance of its

duties hereunder from anyone of the Chairman of the Board, the Chief Executive

Officer, the President, any Vice President, the General Counsel, the Secretary

or the Treasurer of the Company, and to apply to such officers for advice or

instructions in connection with its duties, and it shall not be liable for any

action taken or suffered by it in good faith in accordance with instructions of

any such officer or for any delay in acting while waiting for those

instructions. Any application by the Rights Agent for written instructions from

the Company may, at the option of the Rights Agent, set forth in writing any

action proposed to be taken or omitted by the Rights Agent with respect to its

duties or obligations under this Rights Agreement and the date on and/or after

which such action shall be taken or omitted and the Rights Agent shall not be

liable for any action taken or omitted in accordance with a proposal included

in any such application on or after the date specified therein (which date

shall not be less than three Business Days after the date any such officer

actually receives such application, unless any such officer shall have

consented in writing to an earlier

 

 

 

20

 

date)

unless, prior to taking or omitting any such action, the Rights Agent has

received written instructions in response to such application specifying the

action to be taken or omitted.

 

                                (f)            The Rights Agent and any

stockholder, 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.

 

                                (g)           The Rights Agent may execute and

exercise any of the rights or powers hereby vested in it or perform any duty

hereunder either itself or by or through its attorneys or agents, and the

Rights Agent shall not be answerable or accountable for any act, default,

neglect or misconduct of any such attorneys or agents or for any loss to the

Company resulting from any such act, default, neglect or misconduct, provided

reasonable care was exercised in the selection and continued employment

thereof.

 

                Section 21. Change of Rights Agent.

The Rights Agent or any successor Rights Agent may resign and be discharged

from its duties under this Agreement upon 30 days’ notice in writing mailed to

the Company and to each transfer agent of the Common Shares or Preferred Shares

by registered or certified mail, and to the holders of the Right Certificates

by first-class mail. The Company may remove the Rights Agent or any successor Rights

Agent 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 Common

Shares or Preferred Shares by registered or certified mail, and to the holders

of the Right Certificates by first-class mail. If the Rights Agent shall resign

or be removed or shall otherwise become incapable of acting, the Company shall

appoint a successor to the Rights Agent. If the Company shall fail to make such

appointment within a period of 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 Right Certificate

(who shall, with such notice, submit such holder’s Right Certificate for

inspection by the Company), then the registered holder of any Right Certificate

may apply to any court of competent jurisdiction for the appointment of a new

Rights Agent. Any successor Rights Agent, whether appointed by the Company or by

such a court, shall be (i) a corporation organized and doing business under the

laws of the United States or any state of the United States and 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 dollars or (ii) a

subsidiary of a corporation described in clause (i) of this sentence. After

appointment, the successor Rights Agent shall be vested with the same powers,

rights, duties and responsibilities as if it had been originally named as

Rights Agent without further act or deed; but the predecessor Rights Agent shall

deliver and transfer to the successor Rights Agent any property at the time

held by it hereunder, and execute and deliver any further assurance,

conveyance, act or deed necessary for the purpose. Not later than the effective

date of any such appointment the Company shall file notice thereof in writing

with the predecessor Rights Agent and each transfer agent of the Common Shares

or Preferred Shares, and mail a

 

 

 

21

 

notice

thereof in writing to the registered holders of the Right Certificates. Failure

to give any notice provided for in this Section 21, however, or any defect

therein, shall not affect the legality or validity of the resignation or

removal of the Rights Agent or the appointment of the successor Rights Agent,

as the case may be.

 

                Section 22. Issuance of New Right

Certificates. Notwithstanding any of the provisions of this Agreement

or of the Rights to the contrary the Company may, at its option, issue new

Right Certificates evidencing Rights in such form as may be approved by its

Board of Directors to reflect any adjustment or change in the Purchase Price

and the number or kind or class of shares or other securities or property

purchasable under the Right Certificates made in accordance with the provisions

of this Agreement.

 

                Section 23. Redemption.

 

                                (a)           The Board of Directors of the Company

may, at its option, at any time prior to the earlier of (i) the Close of

Business on the tenth day following the Shares Acquisition Date and (ii) the Final

Expiration Date, redeem all but not less than all the then outstanding Rights

at a redemption price of $0.005 per Right, appropriately adjusted to reflect

any stock split, stock dividend or similar transaction occurring after the date

hereof (such redemption price being hereinafter referred to as the “Redemption

Price”). Notwithstanding the foregoing, if, and so long as, following the

Shares Acquisition Date a majority of the members of the Board of Directors are

persons who were members of the Board immediately prior to the Shares

Acquisition Date, then the Board may extend the period to redeem the Rights; provided,

however, that after the period for redemption of the Rights has expired,

the Board of Directors may not extend the period for redemption of the Rights

or otherwise provide for their redemption. The redemption of the Rights by the

Board of Directors may be made effective at such time, on such basis and

subject to such conditions as the Board of Directors in its sole discretion may

establish.

 

                                (b)           Immediately upon the action of the

Board of Directors of the Company ordering the redemption of the Rights

pursuant to paragraph (a) of this Section 23, and without any further action

and without any notice, the right to exercise the Rights will terminate and the

only right thereafter of the holders of Rights shall be to receive the

Redemption Price. The Company shall promptly give public notice of any such

redemption; provided, however, that the failure to give, or any

defect in, any such notice shall not affect the validity of such redemption.

Within 10 days after such action of the Board of Directors ordering the

redemption of the Rights pursuant to paragraph (a), the Company shall mail a

notice of redemption to all the holders of the then outstanding Rights at their

last addresses as they appear upon the registry books of the Rights Agent or,

prior to the Distribution Date, on the registry books of the transfer agent for

the Common Shares. Any notice which is mailed in the manner herein provided shall

be deemed given, whether or not the holder receives the notice. If the payment

of the Redemption Price is not included in such notice, each such notice shall

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

 

 

 

22

specifically

set forth in this Section 23 or in Section 24 hereof, and other than in

connection wth the purchase of Commn shares prior to the Distribution Date.

 

                                (c)           Notwithstanding anything contained in

this Agreement to the contrary, the Rights shall not be exercisable for the

Common Shares pursuant to Section 11(a)(ii) until such time as the Company’s

right of redemption hereunder has terminated.

 

                Section 24. Exchange.

 

                                (a)           The Board of Directors of the Company

may, at its option, at any time after any Person becomes an Acquiring Person,

exchange all or part of the then outstanding and exercisable Rights (which

shall not include Rights that have become void pursuant to the provisions of

Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common

Share per Right, appropriately adjusted to reflect any stock split, stock

dividend or similar transaction occuring after the date hereof (such exchange

ratio being hereinafter referred to as the “Exchange Ratio”).

Notwithstanding the foregoing, the Board of Directors shall not be empowered to

effect such exchange at any time after any Person (other than the Company, any

Subsidiary of the Company, any employee benefit plan of the Company or any such

Subsidiary, or any entity holding Common Shares for or pursuant to the terms of

any such plan), together with all Affiliates and Associates of such Person,

becomes the Beneficial Owner of a majority of the Common Shares then

outstanding.

 

                                (b)           Immediately upon the action of the

Board of Directors of the Company ordering the exchange of any Rights pursuant

Section 24(a) hereof and without any further action and without any notice, the

right to exercise such Rights shall terminate and the only rigtht thereafter of

a holder of such Rights shall be to receive that number of Common Shares equal

to the number of such Rights held by such holder  multiplied by the Exchange Ratio. The Company shall promptly give

public notice of any such exchange; provided, however, that the

failure to give, or any defect in, such notice shall not affect the validity of

such exchange. The Company promptly shall mail a notice of any such exchange to

all of the holders of such Rights at their last addresses as they appear upon

the registry books of the Rights Agent. Any notice which is mailed in the

manner herein provided shall be deemed given, whether or not the holder

receives the notice. Each such notice of exchange will state the method by

which the exchange of the Common Shares for Rights will be effected and, in the

event of any partial exchange, the number of Rights which will be exchanged.

Any partial exchange shall be effected pro rata based on the number of Rights

(other than Rights which have become void pursuant to the provisions of Section

11(a)(ii) hereof) held by each holder of Rights.

 

                                (c)           In any exchange pursuant to this Section

24, the Company, at its option, may substitute Preferred Shares (or common

stock equivalents, as such term is defined in Section 11(a)(ii) hereof) for

Common Shares exchangeable for Rights, at the initial rate of one one-hundredth

of a Preferred Share (or common stock equivalents) for each Common Share, as

appropriately adjusted to reflect adjustments in the voting rights of the

Preferred Shares pursuant to the terms thereof, so that the fraction of a

Preferred Share delivered in lieu of each Common Share shall have the same

voting rights as one Common Share.

 

 

23

 

                                (d)           In the event that there shall not be

sufficient Common Shares, Preferred Shares or common stock equivalents

authorized by the Company’s certificate of incorporation and not outstanding or

subscribed for, or reserved or otherwise committed for issuance for purposes

other than upon exercise of Rights, to permit any exchange of Rights as

contemplated in accordance with this Section 24, the Company shall take all

such action as may be necessary to authorize additional Common Shares,

Preferred Shares or common stock equivalents for issuance upon exchange of the

Rights.

 

                                (e)           The Company shall not be required to

issue fractions of Common Shares or to distribute certificates which evidence

fractional Common Shares. In lieu of such fractional Common Shares, the Company

shall pay to the registered holders of the Right Certificates with regard to

which such fractional Common Shares would otherwise be issuable an amount in

cash equal to the same fraction of the current per share market value of a

whole Common Share. For the purposes of this paragraph (e), the current per

share market value of a whole Common Share shall be the closing price of a

Common Share (as determined pursuant to the second sentence of Section 11(d)(i)

hereof) for the Trading Day immediately prior to the date of exchange pursuant

to this Section 24.

 

                Section 25. Notice of Certain Events.

 

                                (a)           In case the Company shall propose (i)

to pay any dividend payable in stock of any class to the holders of its

Preferred Shares or to make  any other

distribution to the holders of its Preferred Shares (other than a regular

quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares

rights or warrants to subscribe for or to purchase any additional Preferred

Shares or shares of stock of any class or any other securities, rights or

options, (iii) to effect any reclassification of its Preferred Shares (other

than a reclassification involving only the subdivision of outstanding Preferred

Shares), (iv) to effect any consolidation or merger into or with, or to effect

any sale or other transfer (or permit one or more of its Subsidiaries to effect

any sale or other transfer), in one or more transactions, of 50% or more of the

assets or earning power of the Company and its Subsidiaries (taken as a whole)

to, any other Person, (v) to effect the liquidation, dissolution or winding up

of the Company, or (vi) to declare or pay any dividend on the Common Shares

payable in Common Shares or to effect a subdivision, combination or

consolidation of the Common Shares (by reclassification or otherwise than by

payment of dividends in Common Shares), then, in each such case, the Company

shall give to each holder of a Right Certificate, in accordance with Section 26

hereof, a notice of such proposed action, which shall specify the record date

for the purposes of such stock dividend, or 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 Common Shares and/or Preferred

Shares, if any such date is to be fixed, and such notice shall be so given in

the case of any action covered by clause (i) or (ii) above at least 10 days

prior to the record date of determining holders of the Preferred Shares for

purposes of such action, and in the case of any such other action, at least 10

days prior to the date of the taking of such proposed action or the date of

participation therein by the holders of the Common Shares and/or Preferred

Shares, whichever shall be earlier.

 

 

24

 

                                (b)           In case any event set forth in

Section 11(a)(ii) hereof shall occur, then the Company shall as soon as

practicable thereafter give to each holder of a Right Certificate, in

accordance with Section 26 hereof, a notice of the occurence of such event,

which notice shall describe such event and the consequences of such event to

holders of Rights under Section 11(a)(ii) hereof.

 

                Section 26. Notices. Notices or demands

authorized by this Agreement to be given or made by the Rights Agent or by the

holder of any Right 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:

 

Racotek,

Inc.

7401

Metro Blvd., Suite 500

Minneapolis,

MN 55439

Attention:

Corporate Secretary

 

Subject

to the provisions of Section 21 hereof, any notice or demand authorized by this

Agreement to be given or made by the Company or by the holder of any Right

Certificate to or on the Rights Agent shall be sufficiently given or made if

sent by first-class mail, postage prepaid, addressed (until another address is

filed in writing with the Company) as follows:

 

Norwest

Bank Minnesota, N.A.

161

North Concord Exchange

South

St. Paul, MN 55075-0738

Attention:

Stock Transfer Department

 

Notices

or demands authorized by this Agreement to be given or made by the Company or

the Rights Agent to the holder of any Right Certificate shall be sufficiently

given or made if sent by first-class mail, postage prepaid, addressed to such

holder at the address of such holder as shown on the registry books of the

Company.

 

                Section 27. Supplements and

Amendments. The Company may from time to time, and the Rights Agent

shall, if the Company directs, supplement or amend this Agreement without the

approval of any holders of Right Certificates in order to cure any ambiguity,

to correct or supplement any provision contained herein which may be defective

or inconsistent with any other provisions herein, or to make any other

provisions or changes with respect to the Rights which the Company may deem

necessary or desirable, including, without limitation, to modify or amend the

definition of Acquiring Person set forth in Section 1(a) hereof, to change the

Purchase Price set forth in Section 7(b), or to extend (to the extent permitted

by the second sentence of Section 23 hereof) or shorten the period for

redemption of the Rights: provided, however, that after the

period for redemption of the Rights has expired, no supplement or amendment may

extend the period for redemption of the Rights, or otherwise provide for their

redemption; and provided further that from and after the time that the

Rights are no longer redeemable, this Agreement shall not be amended in any

manner which would adversely affect the interests of the

 

 

 

25

holders

of Rights (other than an Acquiring Person and its Affiliates and Associates).

Any such supplement or amendment will be evidenced by a writing signed by the

Company and the Rights Agent.

 

                Section 28. Successors. All the

covenants and provisions of this Agreement by or for the benefit of the Company

or the Rights Agent shall bind and inure to the benefit of their respective

successors and assigns hereunder.

 

                Section 29. Benefits or this

Agreement. Nothing in this Agreement shall be construed to give to any

person or corporation other than the Company , the Rights Agent and the

registered holders of the Right Certificates (and, prior to the Distribution

Date, the Common Shares) any legal or equitable right, remedy or claim under

this Agreement; but this Agreement shall be for the sole and exclusive benefit

of the Company, the Rights Agent and the registered holders of the Right

Certificates (and, prior to the Distribution Date, the Common Shares).

 

                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,

then such term, provision, covenant or restriction shall be enforced to the

maximum extent permissible, and the remainder of the terms, provisions,

covenants and restrictions of this Agreement shall remain in full force and

effect and shall in no way be affected, impaired or invalidated.

 

                Section 31. Governing Law. This

Agreement and each Right Certificate issued hereunder shall be deemed to be a

contract made under the laws of the State of Delaware and for all purposes

shall be governed by and construed in accordance with the laws of such State applicable

to contracts to be made and performed entirely within such State.

 

                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 thereof.

 

                Section 34. Entire Agreement. This

Agreeement contains the entire agreement between the parties with respect to

the subject matter hereof.

 

 

 

26

 

                IN WITNESS WHEREOF, the parties hereto have caused

this Agreement to be duly executed and attested, all as of the day and year

first above written.

 

 

 

	

   

  	

   

  	

   

  	

  Company:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  RACOTEK, INC.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Attest:

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

  Vice President of Finance and 

  
	

   

  	

   

  	

   

  	

   

  	

  Administration, Chief Financial Officer and Secretary

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Rights Agent:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  NORWEST BANK MINNESOTA, N.A.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Attest:

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  	

  Title

  	

   

  
												

 

 

27

 

Exhibit A

FORM

 

of

 

CERTIFICATE OF DESIGNATIONS

 

of

 

SERIES A JUNIOR PARTICIPATING PREFERRED

STOCK

 

of

 

 

RACOTEK, INC.

 

(Pursuant to Section 151 of the

 

Delaware General Corporation Law)

 

 

                Racotek, Inc., a corporation

organized and existing under the General Corporation Law of the State of

Delaware (hereinafter called the “Corporation”), hereby certifies that the

following resolution was adopted by the Board of Directors of the Corporation

as required by Section 151 of the General Corporation Law at a meeting duly

called and held on September 7, 1994:

 

                RESOLVED, that pursuant to the

authority granted to and vested in the Board of Directors of this Corporation

(hereinafter called the “Board of Directors” or the “Board”) in accordance with

the provisions of the Certificate of Incorporation of the Corporation, the

Board of Directors hereby creates a series of Preferred Stock, par value $0.01

per share ( the “Preferred Stock”), of the Corporation and hereby states the

designation and number of shares, and fixes the relative rights, preferences,

and limitations thereof as follows:

 

                Series A Junior Participating

Preferred Stock:

 

                Section 1. Designation and

Amount. The shares of such series shall be designated as “Series A Junior

Participating Preferred Stock” (the “Series A Preferred Stock”) and the number

of shares constituting the Series A Preferred Stock shall be 350,000. Such

number of shares may be increased or decreased by resolution of the Board of

Directors; provided, that no decrease shall reduce the number of shares

of Series A Preferred Stock to a number less than the number of shares then

outstanding plus the number of shares reserved for issuance upon the exercise

of outstanding options, rights or warrants or upon the conversion of any

outstanding securities issued by the Corporation convertible into Series A

Preferred Stock.

 

 

 

 

                Section 2. Dividends and

Distributions.

 

                                   (A)       Subject to the rights of the holders of

any shares of any series of Preferred Stock (or any other stock) ranking prior

and superior to the Series A Preferred Stock with respect to dividends, the

holders of shares of Series A Preferred Stock shall be entitled to receive,

when, as and if declared by the Board of Directors out of funds legally

available for the purpose, quarterly dividends payable in cash on the first day

of March, June, September and December in each year (each such date being

referred to herein as a “Quarterly Dividend Payment Date”), commencing on the

first Quarterly Dividend Payment Date after the first issuance of a share or

fraction of a share of Series A Preferred Stock, in an amount (if any) per

share (rounded to the nearest cent), subject to the provision for adjustment

hereinafter set forth, equal to 100 times the aggregate per share amount of all

cash dividends, and 100 times the aggregate per share amount (payable in kind)

of all non-cash dividends or other distributions, other than a dividend payable

in shares of Common Stock, par value $0.01 per share (the “Common Stock”), of

the Company or a subdivision of the outstanding shares of Common Stock (by

reclassification or otherwise), declared on the Common Stock since the

immediately preceding Quarterly Dividend Payment Date or, with respect to the

first Quarterly Dividend Payment Date, since the first issuance of any share or

fraction of a share of Series A Preferred Stock. In the event the Corporation

shall at any time declare or pay any dividend on the Common Stock payable in

shares of Common Stock, or effect a subdivision or combination or consolidation

of the outstanding shares of Common Stock (by reclassification or otherwise

than by payment of a dividend in shares of Common Stock) into a greater or

lesser number of shares of Common Stock, then in each such case the amount to

which holders of shares of Series A Preferred Stock were entitled immediately

prior to such event under the preceding sentence shall be adjusted by

multiplying such amount by a fraction, the numerator of which is the number of

shares of Common Stock outstanding immediately after such event and the

denominator of which is the number of shares of Common Stock that were

outstanding immediately prior to such event.

 

                                (B)           The Corporation shall declare a

dividend or distribution on the Series A Preferred Stock as provided in

paragraph (A) of this Section immediately after it declares a dividend or

distribution on the Common Stock (other than a dividend payable in shares of

Common Stock).

 

                                (C)           Dividends due pursuant to paragraph

(A) of this Section shall begin to accrue and be cumulative on outstanding

shares of Series A Preferred Stock from the Quarterly Dividend Payment Date

next preceding the date of issue of such shares, unless the date of issue of

such shares is prior to the record date for the first Quarterly Dividend

Payment Date, in which case dividends on such shares shall begin to accrue from

the date of issue of such shares, or unless the date of issue is a Quarterly

Dividend Payment Date or is a date after the record date for the determination

of holders of shares of Series A Preferred Stock entitled to receive a

quarterly dividend and before such Quarterly Dividend Payment Date, in either

of which events such dividends shall begin to accrue and be cumulative from

such Quarterly Dividend Payment Date. 

Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series A

Preferred Stock in an amount less than the total amount of such dividends at

the time accrued and payable on such shares shall be allocated pro rata on a

share-by-share basis among all such shares at the time outstanding. The Board

of Directors may fix a record date for the determination of holders of shares

of Series A Preferred Stock entitled to receive payment of a dividend or

 

 

 

2

 

distribution

declared thereon, which record date shall be not more than 60 days prior to the

date fixed for the payment thereof.

 

                Section 3. Voting Rights.

The holders of shares of Series A Preferred Stock shall have the following

voting rights:

 

                              (A)            Subject to the provision for

adjustment hereinafter set forth, each share of Series A Preferred Stock shall

entitle the holder thereof to 100 votes on all matters submitted to a vote of

the stockholders of the Corporation. In the event the Corporation shall at any

time declare or pay any dividend on the Common Stock payable in shares of

Common Stock, or effect a subdivision or combination or consolidation of the

outstanding shares of Common Stock (by reclassification or otherwise than by

payment of a dividend in shares of Common Stock) into a greater or lesser

number of shares of Common Stock, then in each such case the number of votes

per share to which holders of shares of Series A Preferred Stock were entitled

immediately prior to such event shall be adjusted by multiplying such number by

a fraction, the numerator of which is the number of shares of Common Stock

outstanding immediately after such event and the denominator of which is the

number of shares of Common Stock that were outstanding immediately prior to

such event.

 

                              (B)            Except as otherwise provided herein,

in any other Certificate of Designations creating a series of Preferred Stock

or any similar stock, or by law, the holders of shares of Series A Preferred

Stock and the holders of shares of Common Stock and any other capital stock of

the Corporation having general voting rights shall vote together as one class

on all matters submitted to a vote of stockholders of the Corporation.

 

                              (C)            Except as set forth herein, or as

otherwise provided by law, holders of Series A Preferred Stock shall have no special

voting rights and their consent shall not be required (except to the extent

they are entitled to vote with holders of Common Stock as set forth herein) for

taking any corporate action.

 

                Section 4. Certain

Restrictions.

 

                              (A)            Whenever quarterly dividends or

other dividends or distributions payable on the Series A Preferred Stock as

provided in Section 2 are in arrears, thereafter and until all accrued and

unpaid dividends and distributions, whether or not declared, on shares of

Series A Preferred Stock outstanding shall have been paid in full, the

Corporation shall not:

 

                                                (i)            declare or pay dividends, or make

any other distributions, on any shares of stock ranking junior (either as to

dividends or upon liquidation, dissolution or winding up) to the Series A

Preferred Stock;

 

                                                (ii)           declare or pay dividends, or make any

other distributions, on any shares of stock ranking on a parity (either as to

dividends or upon liquidation, dissolution or winding up) with the Series A

Preferred Stock, except dividends paid ratably on the Series A Preferred Stock

and all such parity stock on which dividends are payable or in arrears in

proportion to the total amounts to which the holders of all such shares are

then entitled; or

 

 

 

3

 

                                                (iii)          redeem or purchase or otherwise

acquire for consideration shares of any stock ranking junior (either as to

dividends or upon liquidation, dissolution or winding up) to the Series A

Preferred Stock, provided that the Corporation may at any time redeem, purchase

or otherwise acquire shares of any such junior stock in exchange for shares of

any stock of the Corporation ranking junior (as to dividends and upon

dissolution, liquidation or winding up) to the Series A Preferred Stock.

 

                              (B)            The Corporation shall not permit any

subsidiary of the Corporation to purchase or otherwise acquire for

consideration any shares of stock of the Corporation unless the Corporation

could, under paragraph (A) of this Section 4, purchase or otherwise acquire

such shares at such time and in such manner.

 

                Section 5.Reacquired Shares.

Any shares of Series A Preferred Stock purchased or otherwise acquired by the

Corporation in any manner whatsoever shall be retired and cancelled promptly

after the acquisition thereof. All such shares shall upon their cancellation

become authorized but unissued shares of Preferred Stock and may be reissued as

part of a new series of Preferred Stock subject to the conditions and

restrictions on issuance set forth herein, in the Certificate of Incorporation,

or in any other Certificate of Designations creating a series of Preferred

Stock or any similar stock or as otherwise required by law.

 

                Section 6. Liquidation,

Dissolution or Winding Up

 

                              (A)            Upon any liquidation, dissolution or

winding up of the Corporation, the holders of shares of Series A Preferred

Stock shall be entitled to receive, prior and in preference to any distribution

of any assets of the Corporation to the holders of Common Stock, the amount of

$1.00 per share for each share of Series A Preferred Stock then held by them.

Thereafter, the holders of shares of Series A Preferred Stock shall be entitled

to receive an aggregate amount per share, subject to the provision for

adjustment hereinafter set forth, equal to 100 times the aggregate amount to be

distributed per share to holders of shares of Common Stock plus an amount equal

to any accrued and unpaid dividends. In the event the Corporation shall at any

time declare or pay any dividend on the Common Stock payable in shares of

Common Stock, or effect a subdivision or combination or consolidation of the

outstanding shares of Common Stock (by reclassification or otherwise than by

payment of a dividend in shares of Common Stock) into a greater or lesser

number of shares of Common Stock, then in each such case the aggregate amount

to which holders of shares of Series A Preferred Stock were entitled

immediately prior to such event under the preceding sentence shall be adjusted

by multiplying such amount by a fraction the numerator of which is the number

of shares of Common Stock outstanding immediately after such event and the

denominator of which is the number of shares of Common Stock that were

outstanding immediately prior to such event.

 

                              (B)            If the assets of the Corporation

legally available for distribution to the holders of shares of Series A

Preferred Stock upon liquidation, dissolution or winding up of the Corporation

are insufficient to pay the full preferential amount set forth in the first

sentence of paragraph (A) above, then the entire assets of the Corporation

legally available for distribution to the holders of Series A Preferred Stock

shall be distributed among such holders in proportion to the shares of Series A

Preferred Stock then held by them.

 

 

4

 

                              (C)            The foregoing rights upon

liquidation, dissolution or winding up provided to the holders of Series A

Preferred Stock shall be subject to the rights of the holders of any other

series of Preferred Stock (or any other stock) ranking prior and superior to

the Series A Preferred Stock upon liquidation, dissolution or winding up.

 

                Section 7. Consolidation,

Merger, etc. In case the Corporation shall enter into any consolidation,

merger, combination or other transaction in which the shares of Common Stock

are exchanged for or changed into other stock or securities, cash and/or other

property, then in any such case each share of Series A Preferred Stock shall at

the same time be similarly exchanged or changed into an amount per share,

subject to the provision for adjustment hereinafter set forth, equal to 100

times the aggregate amount of stock, securities, cash and/or any other property

(payable in kind), as the case may be, into which or for which each share of

Common Stock is changed or exchanged. In the event the Corporation shall at any

time declare or pay any dividend on the Common Stock payable in shares of

Common Stock, or effect a subdivision or combination or consolidation of the

outstanding shares of Common Stock (by reclassification or otherwise than by

payment of a dividend in shares of Common Stock) into a greater or lesser

number of shares of Common Stock, then in each such case the amount set forth

in the preceding sentence with respect to the exchange or change of shares of

Series A Preferred Stock shall be adjusted by multiplying such amount by a

fraction, the numerator of which is the number of shares of Common Stock

outstanding immediately after such event and the denominator of which is the

number of shares of Common Stock that were outstanding immediately prior to

such event.

 

                Section 8. No Redemption.

The shares of Series A Preferred Stock shall not be redeemable.

 

                IN WITNESS WHEREOF, this

Certificate of Designations is executed on behalf of the Corporation by its

President and attested by its Secretary this        day of September, 1994.

 

 

	

   

  	

  Company:

  	

   

  
	

   

  	

   

  
	

   

  	

  RACOTEK, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

  President and Chief Executive Officer

  
				

 

	

  Attest:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Vice President of Finance and Administration, Chief Financial

  Officer and Secretary

  	

   

  

 

 

 

5

 

Exhibit B

FORM OF RIGHT CERTIFICATE

 

	

  Certificate No. R-

  	

   

  	

  Rights

  

 

NOT

EXERCISABLE AFTER SEPTEMBER 12, 2004 OR EARLIER IF REDEMPTION OR EXCHANGE

OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.005 PER RIGHT AND TO

EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

 

RIGHT CERTIFICATE

 

RACOTEK, INC.

 

                This certifies that                         or registered

assigns, is the registered owner of the number of Rights set forth above, each

of which entitles the owner thereof, subject to the terms, provisions and conditions

of the Rights Agreement, dated as of September 12, 1994 (the “Rights

Agreement”), between Racotek, Inc., a Delaware corporation (the “Company”), and

Norwest Bank Minnesota, N.A. (the “Rights Agent”), to purchase from the Company

at any time after the Distribution Date (as such term is defined in the Rights

Agreement) and prior to 5:00 p.m., Pacific Time, on September 12, 2004 at the

principal office of the Rights Agent, or at the office of its successor as

Rights Agent, one one-hundredth of a fully paid non-assessable share of Series

A Junior Participating Preferred Stock, par value $0.01 per share (the

“Preferred Shares”), of the Company, at a purchase price of $25.00 per one

one-hundredth of a Preferred Share (the “Purchase Price”), upon presentation

and surrender of this Right Certificate with the Certification and the Form of

Election to Purchase duly executed. The number of Rights evidenced by this

Right Certificate (and the number of one one-hundredths of a Preferred Share

which may be purchased upon exercise hereof) set forth above, and the Purchase

Price set forth above, are the number and Purchase Price as of September 28,

1994, based on the Preferred Shares as constituted at such date. As provided in

the Rights Agreement, the Purchase Price and the number of one one-hundredths

of a Preferred Share which may be purchased upon the exercise of the Rights

evidenced by this Right Certificate are subject to modification and adjustment

upon the happening of certain events.

 

                This Right Certificate is

subject to all of the terms, provisions and conditions of the Rights Agreement,

which terms, provisions and conditions are hereby incorporated herein by

reference and made a part hereof 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 Right Certificates. Copies of the Rights Agreement are

on file at the principal executive offices of the Company and the

above-mentioned offices of the Rights Agent.

 

                This Right Certificate, with or

without other Right Certificates, upon surrender at the principal office of the

Rights Agent, may be exchanged for another Right Certificate or Right

Certificates of like tenor and date evidencing Rights entitling the holder to

purchase alike aggregate number of Preferred Shares as the Rights evidenced by

the Right Certificate or Right Certificates surrendered shall have entitled

such holder to purchase. If this Right Certificate shall

 

 

 

 

 

be

exercised in part, the holder shall be entitled to receive upon surrender

hereof another Right Certificate or Right Certificates for the number of whole

Rights not exercised.

 

                Subject to the provisions of the

Rights Agreement, the Rights evidenced by this Certificate (i) may be redeemed

by the Company at a redemption price of $0.005 per Right or (ii) may be

exchanged in whole or in part for Preferred Shares or shares of the Company’s

Common Stock, par value $0.01 per share.

 

                No fractional Preferred Shares

will be issued upon the exercise of any Right or Rights evidenced hereby (other

than fractions which are integral multiples of one one-hundredth of a Preferred

Share, which may, at the election of the Company, be evidenced by depository

receipts), but in lieu thereof a cash payment will be made, as provided in the

Rights Agreement.

 

                No holder of this Right

Certificate shall be entitled to vote or receive dividends or be deemed for any

purpose the holder of the Preferred Shares or of any other securities of the

Company which may at any time be issuable on the exercise hereof, nor shall

anything contained in the Rights Agreement or herein be construed to confer

upon the holder hereof, as such, any of the rights of a stockholder of the

Company or any right to vote for the election of directors or upon any matter

submitted to stockholders at any meeting thereof, or to give or withhold

consent to any corporate action, or to receive notice of meetings or other

actions affecting stockholders (except as provided in the Rights Agreement), or

to receive dividends or subscription rights, or otherwise, until the Right or

Rights evidenced by this Right Certificate shall have been exercised as

provided in the Rights Agreement.

 

                This Right Certificate shall not

be valid or obligatory for any purpose until it shall have been countersigned

by the Rights Agent.

 

                WITNESS the facsimile signature

of the proper officers of the Company and its corporate seal. Dated as of:

 

 

	

  ATTEST:

  	

   

  	

   

  	

  Company:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  RACOTEK, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
							

 

Countersigned:

 

Rights

Agent:

 

NORWEST BANK MINNESOTA, N.A.

 

	

  By:

  	

   

  
	

   

  	

  Authorized Signature

  

 

 

 

2

 

Form of Reverse Side of Right Certificate

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder

if such holder desires to transfer the Right Certificate)

 

                FOR VALUE RECEIVED

________________________________________ hereby sells, assigns and transfers

unto ______________________________________________________________________

(Please print name and address of transferee) this Right Certificate, together

with all right, title and interest therein, and does hereby irrevocably

constitute and appoint ________________________________________ Attorney, to

transfer the within Right Certificate on the books of the within-named Company,

with full power of substitution.

 

 

	

  Dated:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Signature

  

 

 

Signature(s)

Guaranteed:

 

                SIGNATURE(S) SHOULD BE

GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS

AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED

SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

 

                The undersigned hereby certifies

that the Rights evidenced by this Right Certificate are not beneficially owned

by an Acquiring Person or an Affiliate or Associate thereof (as defined in the

Rights Agreement).

 

	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Signature

  

 

 

 

3

 

 

                The undersigned hereby certifies

that the Rights evidenced by this Right Certificate are not beneficially owned

by an Acquiring Person or an Affiliate or Associate thereof (as defined in the

Rights Agreement).

 

	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Signature

  

 

 

NOTICE

 

                The signature in the foregoing

Forms of Assignment and Election must conform to the name as written upon the

face of this Right Certificate in every particular, without alteration or any

change whatsoever.

 

                In the event the certification

set forth above in the Form of Assignment or the Form of Election to Purchase,

as the case may be, is not completed, the Company and the Rights Agent will

deem the beneficial owner of the Rights evidenced by this Right Certificate to

be an Acquiring Person or an Affiliate or Associate thereof (as defined in the

Rights Agreement) and such Assignment or Election to Purchase will not be

honored.

 

 

 

4

 

FORM OF ELECTION TO

PURCHASE

 

(To be executed if holder desires to

exercise the Right Certificate )

 

 

To                             :

 

                The undersigned hereby

irrevocably elects to exercise                

Rights represented by this Right Certificate to purchase the Preferred

Shares issuable upon the exercise of such Rights and requests that certificates

for such Preferred Shares be issued in the name of:

 

 

	

  Please insert social security 

  or other identifying number

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  (Please print name and address)

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  

 

 

If such

number of Rights shall not be all the Rights evidenced by this Right

Certificate, a new Right Certificate for the balance remaining of such Rights

shall be registered in the name of and delivered to:

 

 

	

  Please insert social security or 

  other identifying number

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  (Please print name and address)

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  

 

 

	

  Dated:

  	

   

  	

  , 1994

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Signature

  

 

Signature(s)

Guaranteed:

 

                SIGNATURE(S) SHOULD BE

GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS

AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED

SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

 

 

5

 

Exhibit C

SUMMARY OF RIGHTS

TO PURCHASE PREFERRED SHARES

 

                On September 7, 1994, the Board

of Directors of Racotek, Inc. (the "Company”) declared a dividend of one

preferred share purchase right (a “Right”) for each outstanding share of common

stock, par value $0.01 per share (the “Common Shares”), of the Company. The

dividend is payable to stockholders of record on September 28, 1994 (the

“Record Date”). In addition, one Right shall be issued with each Common Share

that becomes outstanding between the Record Date and the earliest of the

Distribution Date, the Redemption Date and the Final Expiration Date (as such

terms are hereinafter defined). Each Right entitles the registered holder to

purchase from the Company one one-hundredth of a share of Series A Junior

Participating Preferred Stock, par value $0.01 per share (the “Preferred

Shares”), of the Company, at a price of $25.00 per one one-hundredth of a

Preferred Share (the “Purchase Price”), subject to adjustment. The description

and terms of the Rights are set forth in a Rights Agreement (the “Rights

Agreement”) between the Company and Norwest Bank Minnesota, N.A., as Rights

Agent (the “Rights Agent”).

 

                Until the earlier to occur of (i)

10 days following a public announcement or disclosure that a person or group of

affiliated or associated persons (an “Acquiring Person”), has acquired

beneficial ownership of 20% or more of the outstanding Common Shares (the date

of such announcement or disclosure being the “Shares Acquisition Date”) or (ii)

10 business days (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) following the announcement of an intention to make a tender offer or

exchange offer the consummation of which would result in the beneficial

ownership by a person or group of 20% or more of such outstanding Common Shares

(the earlier of such dates being called the “Distribution Date”), the Rights will

be evidenced by Common Share certificates with a copy of this Summary of Rights

attached thereto.

 

                The Rights Agreement provides

that, until the Distribution Date, the Rights will be transferred with and only

with the Common Shares. Until the Distribution Date (or earlier redemption or

expiration of the Rights), new Common Share certificates issued after the

Record Date, upon transfer or new issuance of Common Shares, will contain a

notation incorporating the Rights Agreement by reference. Until the Distribution

Date (or earlier redemption or expiration of the Rights), the surrender for

transfer of any certificates for Common Shares, even without such notation or a

copy of this Summary of Rights being attached thereto, will also constitute the

transfer of the Rights associated with the Common Shares represented by such

certificate. As soon as practicable following the Distribution Date, separate

certificates evidencing the Rights (“Right Certificates”) will be mailed to

holders of record of the Common Shares as of the Close of Business on the

Distribution Date and such separate Right Certificates alone will evidence the

Rights.

 

 

 

 

 

                The Rights are not exercisable

until the Distribution Date. The Rights will expire on September 12, 2004 (the

“Final Expiration Date”), unless the Final Expiration Date is extended or

unless the Rights are earlier redeemed or exchanged by the Company, in each

case, as described below.

 

                The Purchase Price payable, and

the number of Preferred Shares or other securities or property issuable, upon

exercise of the Rights are subject to adjustment from time to time to prevent

dilution (i) in the event of a stock dividend on, or a subdivision, combination

or reclassification of, the Preferred Shares, (ii) upon the grant to holders of

the Preferred Shares of certain rights or warrants to subscribe for or purchase

Preferred Shares at a price, or securities convertible into Preferred Shares

with a conversion price, less than the then 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 paid out of earnings or retained earnings or dividends payable in

Preferred Shares) or of subscription rights or warrants (other than those

referred to above).

 

                The number of outstanding Rights

and the number of one one-hundredths of a Preferred Share issuable upon

exercise of each Right are also subject to adjustment in the event of a stock

dividend on the Common Shares payable in Common Shares or subdivisions,

consolidations or combinations of the Common Shares occurring, in any such

case, prior to the Distribution Date.

 

                Preferred Shares purchasable

upon exercise of the Rights will not be redeemable. Each Preferred Share will

be entitled to a quarterly dividend payment of 100 times the dividend declared

per Common Share. In the event of liquidation, each Preferred Share will be

entitled to a $1.00 preference, and thereafter the holders of the Preferred

Shares will be entitled to an aggregate payment of 100 times the aggregate

payment made per Common Share. Each Preferred Share will have 100 votes, voting

together with the Common Shares. Finally, in the event of any merger,

consolidation or other transaction in which Common Shares are exchanged, each

Preferred Share will be entitled to receive 100 times the amount received per

Common Share. These rights are protected by customary antidilution provisions.

 

                Because of the nature of the

Preferred Shares’ dividend, liquidation and voting rights, the value of the one

one-hundredth interest in a Preferred Share purchasable upon exercise of each

Right should approximate the value of one Common Share.

 

                In the event that any person

becomes an Acquiring Person, proper provision will be made so that each holder

of a Right, other than Rights beneficially owned by the Acquiring Person (which

will thereafter be void), will thereafter have the right to receive upon

exercise that number of Common Shares having a market value of two times the

exercise price of the Right. If the Company does not have authorized but

unissued Common Shares sufficient to satisfy such obligation to issue Common

Shares, the Company is obligated to deliver upon payment of the exercise price

of a Right an amount of cash or other securities equivalent in value to the

Common Shares issuable upon exercise of a Right.

 

 

 

2

 

                In the event that, after the

Distribution Date, the Company is acquired in a merger or other business

combination transaction by an Acquiring Person, or 50% or more of its

consolidated assets or earning power are sold to an Acquiring Person, each

holder of a Right, other than Rights beneficially owned by an Acquiring Person,

will thereafter have the right to receive, upon the exercise thereof at the

then current exercise price of the Right, that number of shares of common stock

of the acquiring company which at the time of such transaction will have a

market value of two times the exercise price of the Right.

 

                At any time after any person becomes

an Acquiring Person and prior to the acquisition by such person or group of 50%

or more of the outstanding Common Shares, the Board of Directors of the Company

may exchange the Rights (other than Rights owned by such person or group which

have become void), in whole or in part, at an exchange ratio of one Common

Share, or one one-hundredth of a Preferred Share (or of a share of a class or

series of the Company’s preferred stock having equivalent rights, preferences

and privileges), per Right (subject to adjustment).

 

                With certain exceptions, no

adjustment in the Purchase Price will be required until cumulative adjustments

require an adjustment of at least 1% in such Purchase Price. No fractional

Preferred Shares will be issued (other than fractions which are integral

multiples of one one-hundredth of a Preferred Share, which may, at the election

of the Company, be evidenced by depository receipts) and in lieu thereof, an

adjustment in cash will be made based on the market price of the Preferred

Shares on the last trading day prior to the date of exercise.

 

                At any time prior to the earlier

of (i) the Close of Business on the tenth day following the Shares Acquisition

Date and (ii) the expiration date of the Rights, the Board of Directors of the

Company may redeem the Rights in whole, but not in part, at a price of $0.005

per Right (the “Redemption Price”). The redemption of the Rights may be made

effective at such time, on such basis and with such conditions as the Board of

Directors in its sole discretion may establish. Notwithstanding the foregoing,

if, and so long as, following the Shares Acquisition Date a majority of the

members of the Board of Directors are persons who were members of the Board

immediately prior to the Shares Acquisition Date, then the Board may extend the

period to redeem the Rights, except that after the period for redemption of the

Rights has expired, the Board may not amend the Agreement to extend the period

for redemption of the Rights. Immediately upon any redemption of the Rights,

the right to exercise the Rights will terminate and the only right of the

holders of Rights will be to receive the Redemption Price. Additionally, the

Rights shall not be exercisable for Common Shares upon a person becoming an

Acquiring Person, until the Company’s right to redeem the Rights has

terminated.

 

                The terms of the Rights may be

amended by the Board of Directors of the Company without the consent of the

holders of the Rights, except that from and after such time as the period for

redemption of the Rights has expired, no such amendment may adversely affect

the interests of the holders of the Rights (other than an Acquiring Person).

 

                Until a Right is exercised, the

holder thereof, as such, will have no rights as a stockholder of the Company,

including, without limitation, the right to vote or to receive dividends.

 

 

 

3

 

                A copy of the Rights Agreement

has been filed with the Securities and Exchange Commission as an Exhibit to a

Registration Statement on Form 8-A dated September            , 1994. A copy of the Rights Agreement is available

free of charge from the Company. 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.

 

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]