4.1
Exhibit 4.1
RIGHTS AGREEMENT
Dated as of April 26,
2013
FORWARD INDUSTRIES, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,
as Rights Agent
Table of Contents
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Page
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Section 1........... Certain
Definitions
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1 |
Section 2........... Appointment of Rights
Agent
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9 |
Section 3........... Issuance of Rights
Certificates
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9 |
Section 4........... Form of Rights
Certificates
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11 |
Section 5........... Countersignature and Registration
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12 |
Section 6........... Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates
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13 |
Section 7........... Exercise of Rights; Exercise Price;
Expiration Date of Rights
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14 |
Section 8........... Cancellation and Destruction of Rights
Certificates
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17 |
Section 9........... Reservation and Availability of Preferred
Shares
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17 |
Section 10......... Record Date for Securities Issued
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18 |
Section 11......... Adjustment of Exercise Price, Number and
Kind of Shares or Number of Rights
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19 |
Section 12......... Certificate of Adjusted Exercise Price or
Number of Shares
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26 |
Section 13......... Consolidation, Merger or Sale or Transfer
of Assets, Cash Flow or Earning Power.
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26 |
Section 14......... Fractional Rights and Fractional Shares
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29 |
Section 15......... Rights of Action
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30 |
Section 16......... Agreement of Rights Holders
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30 |
Section 17......... Holders of Rights Certificate Not Deemed
to be Shareholders
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31 |
Section 18......... Concerning the Rights Agent
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31 |
Section 19......... Merger, Consolidation or Change of Name of
Rights Agent
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32 |
Section 20......... Duties of Rights Agent
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33 |
Section 21......... Change of Rights Agent
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36 |
Section 22......... Issuance of New Rights Certificates
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37 |
Section 23......... Redemption
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37 |
Section 24......... Exchange
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38 |
Section 25......... Notice of Certain Events
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41 |
Section 26......... Notices
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41 |
Section 27......... Supplements and Amendments
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42 |
Section 28......... Successors
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43 |
Section 29......... Determinations and Actions by the Board
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43 |
Section 30......... Benefits of this Agreement
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43 |
Section 31......... Severability
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44 |
Section 32......... Governing Law
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44 |
Section 33......... Counterparts
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44 |
i
2057153-1
Table of Contents
(continued)
Page
EXHIBITS
Exhibit A Form of Certificate of Amendment of the
Certificate of Incorporation
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Series A
Participating Preferred Stock
ii
RIGHTS AGREEMENT
This RIGHTS AGREEMENT (this “Agreement”), dated as
of April 26, 2013, is by and between Forward Industries, Inc., a New York
corporation (the “Company”), and American Stock Transfer & Trust
Company, LLC, a New York limited liability trust company, as rights agent (the “Rights
Agent”). All capitalized terms that are used in this Agreement shall have
the respective meanings given thereto in Section 1.
RECITALS
WHEREAS, on April 26, 2013 (the “Rights Dividend
Declaration Date”), the Board of Directors of the Company (the “Board”)
adopted this Agreement and authorized and declared a dividend of one preferred
share purchase right (each, a “Right,” and collectively, the “Rights”)
for each Common Share outstanding as of the Close of Business on May 6, 2013 (the
“Record Date”), each Right initially representing the right to purchase
one one-thousandth of a Preferred Share (as such number may be adjusted
pursuant to the provisions of this Agreement) and having the rights, preferences
and privileges set forth in the form of Certificate of Amendment to the
Certificate of Incorporation attached hereto as Exhibit A, upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the Board further authorized and directed the
issuance of one Right (as such number may be adjusted pursuant to the
provisions of this Agreement) with respect to each Common Share that becomes
outstanding (whether as an original issuance or from the Company’s treasury)
between the Record Date and the earlier of the (a) Distribution Date and (b)
Expiration Date, and in certain circumstances after the Distribution Date.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
(a) “Acquiring Person” means any Person who or
that, together with all Affiliates and Associates of such Person, is the
Beneficial Owner of 20% or more of the Common Shares then outstanding, but
shall not include any Exempt Person. Notwithstanding anything in this
definition of “Acquiring Person” to the contrary:
(i) no Person will be deemed to be an “Acquiring Person”
as the result of an acquisition of Common Shares by an Exempt Person that, by
reducing the number of Common Shares then outstanding, increases the
proportionate number of Common Shares that are Beneficially Owned by such
Person to 20% or more of the Common Shares then outstanding; provided,
however, that if a Person becomes the Beneficial Owner of 20% or more of
the Common Shares then outstanding solely as the result of a reduction in the
number of Common Shares then outstanding due to an acquisition of Common Shares
by an Exempt Person and, after such acquisition by such Exempt Person, becomes
the Beneficial Owner of one or more additional Common Shares (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person will be deemed
to be an Acquiring Person unless, upon becoming the Beneficial Owner of such
additional Common Shares, such Person does not Beneficially Own 20% or more of
the Common Shares then outstanding;
(ii) if the Board determines that a Person who would
otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a) has become such inadvertently (including
because (A) such Person was unaware that it Beneficially Owned a percentage of
the Common Shares that would otherwise cause such Person to be an Acquiring
Person or (B) such Person was aware of the extent of the Common Shares that it
Beneficially Owned but had no actual knowledge of the consequences of such
Beneficial Ownership pursuant to this Agreement) and without any intention of
changing or influencing control of the Company, and if such Person divested or
divests (including by entering into an agreement with the Company, which agreement
is satisfactory to the Board in its sole discretion, to divest and subsequently
divests in accordance with the terms of such agreement, without exercising or
retaining any power, including voting power, with respect to such Common
Shares) as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an “Acquiring Person,” then such Person will not
be deemed to be or to have become an “Acquiring Person” at any time for any
purposes of this Agreement.
(iii) if, as of the date hereof or prior to the first
public announcement of the adoption of this Agreement, any Person is or becomes
the Beneficial Owner of 20% or more of the Common Shares then outstanding, such
Person shall not be deemed to be or to become an “Acquiring Person” unless and
until such time as such Person shall, after the first public announcement of
the adoption of this Agreement, become the Beneficial Owner of additional
Common Shares (other than pursuant to a dividend or distribution paid or made
by the Company on the outstanding Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), unless upon becoming the
Beneficial Owner of such additional Common Shares, such Person is not then the
Beneficial Owner of 20% or more of the Common Shares then outstanding; and
2
(iv) no Person shall become an “Acquiring Person” solely
as a result of any unilateral grant of any security by the Company, or through
the exercise of any options, warrants, rights or similar interests (including
restricted stock) granted by the Company to its directors, officers and
employees; provided, however, that if a Person, who or which together
with all Affiliates and Associates, shall become the Beneficial Owner of 20% or
more of the Common Shares then outstanding by reason of a unilateral grant of a
security by the Company, or through the exercise of any options, warrants,
rights or similar interests (including restricted stock) granted by the Company
to its directors, officers and employees, such Person shall nevertheless be
deemed to be an “Acquiring Person” if, subject to Section 1(a)(ii), such
Person, together with all Affiliates and Associates, thereafter becomes the
Beneficial Owner of any additional Common Shares (unless upon becoming the
Beneficial Owner of additional Common Shares, such Person, together with all
Affiliates and Associates, does not beneficially own 20% or more of the Common Shares
then outstanding), except as a result of (y) a dividend or distribution
paid or made by the Company on the outstanding Common Shares or a split or
subdivision of the outstanding Common Shares; or (z) the unilateral grant
of a security by the Company, or through the exercise of any options, warrants,
rights or similar interest (including restricted stock) granted by the Company
to its directors, officers and employees.
For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of the
outstanding Common Shares of which any Person is the Beneficial Owner, will
include the number of Common Shares not outstanding at the time of such
calculation that such Person is otherwise deemed to Beneficially Own for
purposes of this Agreement, but the number of Common Shares not outstanding
that such Person, together with all Affiliates and Associates of such Person,
is otherwise deemed to Beneficially Own for purposes of this Agreement will not
be deemed to be outstanding for the purpose of computing the percentage of
outstanding Common Shares owned by any other Person.
(b) “Adjustment Shares” has the meaning set forth
in Section 11(a)(ii).
(c) “Affiliate” and “Associate” have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations promulgated under the Exchange Act, as in effect on the Rights
Dividend Declaration Date.
(d) “Agreement” has the meaning set forth in the
preamble hereto.
(e) A Person will be deemed the “Beneficial Owner”
of, and will be deemed to “Beneficially Own,” any securities:
3
(i) that such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, owns or has the legal, equitable or
contractual right or obligation to acquire (whether directly or indirectly and
whether exercisable immediately or only after the passage of time, compliance
with regulatory requirements, satisfaction of one or more conditions (whether
or not within the control of such Person) or otherwise) (A) pursuant to any
agreement, arrangement or understanding whether or not in writing (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities); (B) upon the
exercise of any conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; (C) pursuant to the power to revoke
a trust, discretionary account or similar arrangement; (D) pursuant to the
power to terminate a repurchase or similar so-called “stock borrowing”
agreement, arrangement or understanding; or (E) pursuant to the automatic
termination of a trust, discretionary account or similar arrangement; provided,
however, that a Person will not be deemed pursuant to this Section 1(e)(i)
to be the Beneficial Owner of, or to Beneficially Own, securities (1) tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; (2) issuable upon the exercise of Rights
at any time prior to the occurrence of a Triggering Event; (3) issuable upon
the exercise of Rights from and after the occurrence of a Triggering Event if
such Rights were acquired by such Person or any of such Person’s Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 (the “Original Rights”) or pursuant to Section 11(h) in
connection with an adjustment made with respect to any Original Rights; or (4)
that a Person or any of such Person’s Affiliates or Associates may be deemed to
have the right to acquire pursuant to any merger or other acquisition agreement
between the Company and such Person (or one or more of its Affiliates or
Associates), or any tender, voting or support agreement entered into by such
Person (or one or more of its Affiliates or Associates) in connection
therewith, if such agreement has been approved by the Board prior to there
being an Acquiring Person;
(ii) that such Person or any of such Person’s Affiliates
or Associates, directly or indirectly, has the right to vote (including the
power to vote or to direct the voting of) or dispose (or direct the
disposition) of or has “beneficial ownership” of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations promulgated under the
Exchange Act, as in effect on the Rights Dividend Declaration Date), including
pursuant to any agreement, arrangement or understanding whether or not in
writing; provided, however, that a Person will not be deemed the
Beneficial Owner of, or to Beneficially Own, any security pursuant to this
Section 1(e)(ii) as a result of an agreement, arrangement or understanding
whether or not in writing to vote such security if such agreement, arrangement
or understanding (A) 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 provisions of the General Rules and
Regulations promulgated under the Exchange Act; and (B) is not also then
reportable by such Person on Schedule 13D pursuant to the Exchange Act (or any
comparable or successor report);
(iii) that are Beneficially Owned, directly or indirectly,
by any other Person (or any of such Person’s Affiliates or Associates) with
which such first Person (or any of such first Person’s Affiliates or
Associates) has any agreement, arrangement or understanding whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy to the extent contemplated by the proviso to Section 1(e)(ii)) or
disposing of any securities of the Company; provided, however, that no
person who is an officer, director or employee of an Exempt Person will be
deemed, solely by reason of such person’s status or authority as such, to be a
Beneficial Owner of, to have Beneficial Ownership of or to Beneficially Own any
securities of the Company that are Beneficially Owned (including in a fiduciary
capacity) by an Exempt Person or by any other such officer, director or
employee of an Exempt Person; or
4
(iv) that are the subject of a derivative transaction
entered into by such Person or any of such Person’s Affiliates or Associates,
including, for these purposes, any derivative security acquired by such Person
or any of such Person’s Affiliates or Associates that gives such Person or any
of such Person’s Affiliates or Associates the economic equivalent of ownership
of an amount of securities due to the fact that the value of the derivative
security is explicitly determined by reference to the price or value of such
securities, or that provides such Person or any of such Person’s Affiliates or
Associates an opportunity, directly or indirectly, to profit or to share in any
profit derived from any change in the value of such securities, in any case
without regard to whether (A) such derivative security conveys any voting
rights in such securities to such Person or any of such Person’s Affiliates or
Associates; (B) the derivative security is required to be, or capable of being,
settled through delivery of such securities; or (C) such Person or any of such
Person’s Affiliates or Associates may have entered into other transactions that
hedge the economic effect of such derivative security. In determining the
number of Common Shares that are Beneficially Owned by virtue of the operation
of this Section 1(e)(iv), the subject Person will be deemed to Beneficially Own
(without duplication) the notional or other number of Common Shares that,
pursuant to the documentation evidencing the derivative security, may be
acquired upon the exercise or settlement of the applicable security or as the
basis upon which the value or settlement amount of such security, or the
opportunity of the holder of such derivative security to profit or share in any
profit, is to be calculated, in whole or in part, and in any case (or if no
such number of Common Shares is specified in such documentation or otherwise)
as determined by the Board in good faith to be the number of Common Shares to
which the derivative security relates.
(f) “Board” has the meaning set forth in the
recitals at the beginning of this Agreement.
(g) “Book Entry Shares” has the meaning set forth
in Section 3(a).
(h) “Business Day” means any day other than a
Saturday, Sunday or any day on which the Federal Reserve Bank of New York is
closed.
(i) “Close of Business” on any given date means
5:00 p.m., New York City time, on such date; provided, however, that if such
date is not a Business Day, it means 5:00 p.m., New York City time, on the next
succeeding Business Day.
(j) “Common Shares” means, unless otherwise
specified, the shares of common stock, par value $0.01 per share, of the
Company. When used with reference to any Person other than the Company, Common
Shares means the capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person or, if such Person is a Subsidiary of another
Person, of the Person that ultimately controls such first-mentioned Person.
(k) “Common Share Equivalents” has the meaning set
forth in Section 11(a)(iii).
(l) “Company” has the meaning set forth in the
preamble hereto, subject to the terms of Section 13(a).
5
(m) “Current Per Share Market Price” of any
security (a “Security” for purposes of this definition), for all
computations other than those made pursuant to Section 11(a)(iii), means the
average of the daily closing prices per share of such Security for the 30 consecutive
Trading Days immediately prior to but not including such date, and for purposes
of computations made pursuant to Section 11(a)(iii), the Current Per Share
Market Price of any Security on any date will be deemed to be the average of
the daily closing prices per share of such Security for the 10 consecutive
Trading Days immediately following but not including such date; provided,
however, that in the event that the Current Per Share Market Price of the
Security is determined during any period following the announcement by the
issuer of such Security of (i) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares
(other than the Rights), or (ii) any subdivision, combination, consolidation,
reverse stock split or reclassification of such Security, and the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination, consolidation, reverse stock split or
reclassification, has not occurred prior to the commencement of the requisite
30 Trading Day or 10 Trading Day period as set forth above, then, and in each
such case, the Current Per Share Market Price will be appropriately adjusted to
take into account ex-dividend trading. The closing price for each day will be
the last sale price, regular way, reported at or prior to 4:00 p.m., New York
City time, or, if no such sale takes place on such day, the average of the bid
and asked prices, regular way, reported as of 4:00 p.m. New York City time, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on NASDAQ or,
if the Security is not listed or admitted to trading on NASDAQ, 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
reported at or prior to 4:00 p.m., New York City time, or, if on such date the
Security is not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported as of 4:00 p.m., New York City time,
by NASDAQ or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board. If on any such date no market maker is
making a market in the Security, the fair value of such shares on such date as
determined in good faith by the Board will be used, which determination will be
described in a statement filed with the Rights Agent and will be conclusive and
binding on the Rights Agent and the holders of the Rights. If the Current Per
Share Market Price of the Preferred Shares cannot be determined in the manner
provided above or if the Preferred Shares are not publicly held or not listed
or traded in a manner described above, then the Current Per Share Market Price
of the Preferred Shares will be conclusively deemed to be (x) the Current Per
Share Market Price of the Common Shares as determined pursuant to this Section
1(m) multiplied by (y) 1,000 (as such number may be appropriately adjusted to
reflect any subdivision, combination, consolidation, reverse stock split or
reclassification of Common Shares occurring after the Rights Dividend
Declaration Date). If the Security (other than the Preferred Shares) is not
publicly held or not so listed or traded, or if on any such date the Security
is not so quoted and no such market maker is making a market in the Security,
then the Current Per Share Market Price means the fair value per share as
determined in good faith by the Board, after consultation with a nationally
recognized investment banking firm, whose determination will be described in a
statement filed with the Rights Agent and will be conclusive and binding on the
Rights Agent and the holders of the Rights.
(n) “Current Exchange Value” means the product of
the Current Per Share Market Price of Common Shares on the date of the
occurrence of an Exchange Determination (or the next Business Day, if such date
is not a Business Day) multiplied by the number of Common Shares for which the
Right would otherwise be exchangeable (without regard to whether there were
sufficient Common Shares available therefor).
(o) “Current Value” means the value of the
Adjustment Shares issuable upon the exercise of a Right.
6
(p) “Distribution Date” means the earlier of (i)
the Close of Business on the 10th Business Day (or such later date as may be
determined by action of the Board, which action must be taken prior to the
Distribution Date that otherwise would have occurred) after the Shares
Acquisition Date (or, if the 10th Business Day after the Shares Acquisition
Date occurs before the Record Date, then the Record Date); or (ii) the Close of
Business on the 10th Business Day (or such later date as may be determined by
the Board) after the date that a tender or exchange offer by any Person (other
than an Exempt Person) is first published, sent or given within the meaning of
Rule 14d-2(a) of the General Rules and Regulations promulgated under the
Exchange Act if, assuming the successful consummation thereof, such Person
would be an Acquiring Person; provided, however, that if any tender or
exchange offer referred to in clause (ii) of this Section 1(p) is cancelled,
terminated or otherwise withdrawn prior to the Distribution Date without the
purchase or exchange of any Common Shares pursuant thereto, then such offer
will be deemed, for purposes of this paragraph, never to have been made.
(q) “Equivalent Shares” means any class or series
of capital stock of the Company having the same rights, privileges and
preferences as the Preferred Shares.
(r) “Exchange Act” means the Securities Exchange
Act of 1934, as amended.
(s) “Exchange Determination” has the meaning set
forth in Section 24(a).
(t) “Exchange Ratio” has the meaning set forth in
Section 24(a).
(u) “Exempt Person” means (i) the Company or any
Subsidiary of the Company or (ii) any employee benefit plan of the Company or
of any Subsidiary of the Company or any entity or trustee holding (or acting in
a fiduciary capacity in respect of) shares of capital stock of the Company for
or pursuant to the terms of any such plan, or for the purpose of funding other
employee benefits for employees of the Company or any Subsidiary of the
Company.
(v) “Exercise Price” has the meaning set forth in
Section 4(a).
(w) “Expiration Date” means the earliest to occur
of (i) the Close of Business on the Final Expiration Date; (ii) the Redemption
Date; or (iii) the time at which the Board orders the exchange of the Rights as
provided in Section 24.
(x) “Final Expiration Date” means April 26, 2016.
(y) “NASDAQ” means The NASDAQ Stock Market LLC.
(z) “Original Rights” has the meaning set forth in
Section 1(e)(i).
(aa) “Person” means any individual, firm,
corporation, partnership, limited liability company, joint venture, business
trust, trust, association, syndicate, group (as such term is used in Rule 13d-5
of the General Rules and Regulations promulgated under the Exchange Act, as in
effect on the Rights Dividend Declaration Date) or other entity, and, in each
case, will include any successor (by merger or otherwise) of any such Person.
(bb) “Post-Event Transferee” has the meaning set
forth in Section 7(e).
(cc) “Pre-Event Transferee” has the meaning set
forth in Section 7(e).
7
(dd) “Preferred Shares” means shares of Series A
Participating Preferred Stock, par value $0.01 per share, of the Company and,
to the extent that there are not a sufficient number of shares of Preferred
Shares authorized to permit the full exercise of the Rights, any other series
of preferred stock of the Company designated for such purpose containing terms
substantially similar to the terms of the Preferred Shares.
(ee) “Principal Party” has the meaning set forth in
Section 13(b).
(ff) “Record Date” has the meaning set forth in the
recitals at the beginning of this Agreement.
(gg) “Redemption Date” has the meaning set forth in
Section 23(a).
(hh) “Redemption Price” has the meaning set forth
in Section 23(a).
(ii) “Right” or “Rights” has the meaning set
forth in the recitals at the beginning of this Agreement.
(jj) “Rights Agent” has the meaning set forth in the
preamble hereto.
(kk) “Rights Certificate” means a certificate
substantially in the form attached hereto as Exhibit B.
(ll) “Rights Dividend Declaration Date” has the
meaning set forth in the recitals at the beginning of this Agreement.
(mm) “Section 11(a)(ii) Event” means any event
described in Section 11(a)(ii).
(nn) “Section 11(a)(ii) Trigger Date” has the
meaning set forth in Section 11(a)(iii).
(oo) “Section 13 Event” means any event described
in clause (i), (ii) or (iii) of Section 13(a).
(pp) “Securities Act” means the Securities Act of
1933, as amended.
(qq) “Security” has the meaning set forth in
Section 1(m).
(rr) “Shares Acquisition Date” means the first date
of public announcement (which, for purposes of this definition, includes the
filing or amending of a report pursuant to Section 13(d) of the Exchange Act or
pursuant to a comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that discloses information
that reveals the existence of an Acquiring Person.
(ss) “Spread” means the excess of (i) the Current
Value over (ii) the Exercise Price.
(tt) “Subsequent Transferee” has the meaning set
forth in Section 7(e).
8
(uu) “Subsidiary” of any Person means any firm,
corporation, partnership, limited liability company, joint venture, business
trust, trust, association, syndicate or other entity (whether or not
incorporated) of which an amount of voting securities sufficient to elect a
majority of the directors or Persons having similar authority, or a majority of
the equity or ownership interests, is Beneficially Owned, directly or
indirectly, by such Person, or any firm, corporation, partnership, limited
liability company, joint venture, business trust, trust, association, syndicate
or other entity (whether or not incorporated) otherwise controlled by such
Person.
(vv) “Substitution Period” has the meaning set
forth in Section 11(a)(iii).
(ww) “Summary of Rights” means a summary of this
Agreement substantially in the form attached hereto as Exhibit C.
(xx) “Trading Day” means a day on which the
principal national securities exchange on which a referenced security is listed
or admitted to trading is open for the transaction of business or, if a
referenced security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(yy) “Triggering Event” means any Section 11(a)(ii)
Event or Section 13 Event.
(zz) “Trust” has the meaning set forth in Section
24(b)(ii).
(aaa) “Trust Agreement” has the meaning set forth
in Section 24(b)(ii).
9
(a) Rights Evidenced by Certificates for Common Shares
and Book Entry Shares. Until the Distribution Date, (i) the Rights (unless
earlier expired, redeemed or terminated) will be evidenced (subject to the
provisions of Section 3(b) and Section 3(c)) by the certificates for Common
Shares registered in the names of the holders thereof or, in the case of
uncertificated Common Shares registered in book entry form (“Book Entry
Shares”), by notation in book entry accounts reflecting the ownership of
such Common Shares (which certificates and Book Entry Shares, as applicable,
will also be deemed to be Rights Certificates) and not by separate Rights Certificates;
and (ii) the Rights (and the right to receive Rights Certificates) will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). 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 mailing, in accordance with Section 26 or by such
means as may be selected by the Company) to each record holder of Common Shares
as of the Close of Business on the Distribution Date (other than any Acquiring
Person or any of its Affiliates or Associates), at the address of such holder
shown on the transfer books of the Company or the transfer agent for the Common
Shares, one or more Rights Certificates evidencing one Right for each Common
Share so held, subject to adjustment as provided herein. Receipt of a Rights
Certificate by any Person will not preclude a later determination that all or
part of the Rights represented thereby are null and void pursuant to Section
7(e). To the extent that a Section 11(a)(ii) Event has also occurred, the
Company may implement such procedures as it deems appropriate in its sole
discretion to minimize the possibility that Rights are received by any Person
whose Rights are null and void pursuant to Section 7(e). In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
Section 11, then at the time of distribution of the Rights Certificates, the
Company will make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a)) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights (in accordance with Section 14(a)). As of and after the Distribution
Date, the Rights will be evidenced solely by the Rights Certificates and may be
transferred by the transfer of the Rights Certificates as permitted hereby,
separately and apart from any transfer of Common Shares, and the holders of
such Rights Certificates as shown on the transfer books of the Company or the
transfer agent for the Rights (which may be the Rights Agent) will be the
record holders thereof. The Company will promptly notify the Rights Agent in
writing upon the occurrence of the Distribution Date. Until such notice is
provided to the Rights Agent, it may presume conclusively that the Distribution
Date has not occurred.
(b) Summary of Rights; Outstanding Common Shares. The
Company will make available, or cause to be made available, promptly after the
Record Date, a copy of the Summary of Rights to any holder of Rights who may so
request from time to time prior to the Expiration Date. With respect to
certificates for Common Shares and Book Entry Shares, as applicable,
outstanding as of the Record Date or issued subsequent to the Record Date,
until the earlier of the Distribution Date or the Expiration Date, the Rights
will be evidenced by such certificates or Book Entry Shares, and the registered
holders of the Common Shares will also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the surrender for transfer of any Common Shares in respect of
which Rights have been issued (with or without a copy of the Summary of Rights)
will also constitute the transfer of the Rights associated with such Common
Shares. Notwithstanding anything to the contrary in this Agreement, upon the
effectiveness of a redemption pursuant to Section 23 or an exchange pursuant to
Section 24, the Company will not thereafter issue any additional Rights and,
for the avoidance of doubt, no Rights will be attached to or will be issued
with any Common Shares (including any Common Shares issued pursuant to an
exchange) at any time thereafter.
(c) Legend. Rights will be issued in respect of
all Common Shares that are issued (whether as an original issuance or from the
Company’s treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such Common Shares will
also be deemed to be certificates for Rights, and will bear the following
legend if such certificates are issued after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date:
10
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT, DATED AS OF
APRIL 26, 2013, BETWEEN FORWARD INDUSTRIES, INC. (THE “COMPANY”) AND AMERICAN
STOCK TRANSFER & TRUST COMPANY, LLC, AS RIGHTS AGENT, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME (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 THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS (AS DEFINED IN THE RIGHTS
AGREEMENT) MAY BE REDEEMED, MAY BECOME EXERCISABLE FOR SECURITIES OR ASSETS OF
THE COMPANY OR SECURITIES OF ANOTHER ENTITY, MAY BE EXCHANGED FOR SHARES OF COMMON
STOCK OR OTHER SECURITIES OR ASSETS OF THE COMPANY, MAY EXPIRE OR MAY BE
EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF
THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
THAT ARE OWNED BY, TRANSFERRED TO OR HAVE BEEN OWNED BY AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY OF ITS AFFILIATES (AS DEFINED IN THE
RIGHTS AGREEMENT) OR ASSOCIATES (AS DEFINED IN THE RIGHTS AGREEMENT) WILL BE
NULL AND VOID AND WILL NO LONGER BE TRANSFERRABLE.
With respect to any Book Entry Shares, a legend in
substantially similar form will be included in a notice to the record holder of
such shares in accordance with applicable law. With respect to such
certificates for Common Shares or Book Entry Shares, as applicable, containing
the foregoing legend, until the earlier of the Distribution Date or the
Expiration Date, (i) the Rights associated with the Common Shares represented
by such certificates or Book Entry Shares will be evidenced solely by such
certificates or Book Entry Shares, (ii) the registered holders of the Common
Shares will also be the registered holders of the associated Rights and (iii)
the surrender for transfer of any such certificates or Book Entry Shares (with
or without a copy of the Summary or Rights) will also constitute the transfer
of the Rights associated with the Common Shares represented thereby.
Notwithstanding this Section 3(c), the omission of the legend required hereby,
the inclusion of a legend that makes reference to a rights agreement other than
this Agreement or the failure to provide notice thereof will not affect the
enforceability of any part of this Agreement or the rights of any holder of
Rights.
(d) Acquisitions of Rights by the Company. In the
event that the Company purchases or acquires any Common Shares after the Record
Date but prior to the earlier of the Distribution Date or the Expiration Date,
any Rights associated with such Common Shares will be deemed cancelled and
retired so that the Company will not be entitled to exercise any Rights
associated with the Common Shares that are no longer outstanding.
11
(a) Rights Certificates. The Rights Certificates
(and the form of election to purchase and form of assignment, including the
certifications therein, to be printed on the reverse thereof) will be
substantially in the form of Exhibit B hereto, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect
the rights, duties, responsibilities and liabilities of the Rights Agent) and
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, with any applicable rule or regulation of any applicable
stock exchange or trading system or the Financial Industry Regulatory
Authority, or to conform to usage. Subject to the provisions of Section 11 and
Section 22, the Rights Certificates, whenever distributed, will be dated as of
the Record Date (or in the case of Rights issued with respect to Common Shares
issued by the Company after the Record Date, as of the date of issuance of such
Common Shares) and on their face will entitle the holders thereof to purchase
such number of one one-thousandths of a Preferred Share as will be set forth
therein at the price set forth therein (such exercise price per one
one-thousandth of a Preferred Share, the “Exercise Price”), but the
number and type of securities purchasable upon the exercise of each Right and
the Exercise Price will be subject to adjustment as provided herein.
(b) Certain Legends. Any Rights Certificate issued
pursuant to Section 3(a), Section 11(h) or Section 22 that represents Rights
that are Beneficially Owned by an Acquiring Person, an Affiliate or Associate
of an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a
Subsequent Transferee or (v) any nominee of any of the foregoing, and any
Rights Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, will contain (to the extent feasible) the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.
(c) Uncertificated Rights. Notwithstanding
anything to the contrary in this Agreement, the Company and the Rights Agent
may amend this Agreement to provide for uncertificated Rights in addition to or
in place of Rights evidenced by Rights Certificates.
12
(a) Countersignature. The Rights Certificates will
be executed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Financial Officer or any of its
Vice Presidents, which execution will be attested to by the Secretary or an
Assistant Secretary of the Company, in each case either manually or by
facsimile signature, and will have affixed thereto the Company’s seal (if any)
or a facsimile thereof. The Rights Certificates will be countersigned, either
manually or by facsimile signature, by an authorized signatory of the Rights
Agent, but it will not be necessary for the same signatory to countersign all
of the Rights Certificates. No Rights Certificate will be valid for any
purpose unless countersigned by the Rights Agent. If any director or officer
of the Company who has signed or attested to any of the Rights Certificates
ceases to be such director or officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the Company, such Rights
Certificates nevertheless may be countersigned by the Rights Agent and issued
and delivered by the Company with the same force and effect as though the
person who signed or attested to such Rights Certificates on behalf of the
Company had not ceased to be a director or officer of the Company. Any Rights
Certificate may be signed or attested to on behalf of the Company by any person
who, as of the actual date of the execution of such Rights Certificate, is a
proper director or officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such person was not
such a director or officer.
(b) Transfer Books. Following the Distribution
Date, the Rights Agent will keep or cause to be kept, at its office designated
for such purposes, books for registration and transfer of the Rights
Certificates issued hereunder. Such books will show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, the certificate
number of each of the Rights Certificates and the date of each of the Rights
Certificates. The Rights Agent will not register, or permit to be registered,
any transfer or exchange of any Rights Certificates (or the underlying Rights)
that have become null and void pursuant to Section 7(e), have been redeemed
pursuant to Section 23 or have been exchanged pursuant to Section 24.
13
(a) Transfer, Split Up, Combination and Exchange of
Rights Certificates. Subject to the provisions of Section 4(b), Section
7(e), Section 14 and Section 24, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate (other than any Rights Certificate representing
Rights that have become null and void pursuant to Section 7(e) or that have
been exchanged pursuant to Section 24) may be transferred, split up, combined
or exchanged for another Rights Certificate entitling the registered holder to
purchase a like number of one one-thousandths of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) as the Rights Certificate surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate will
make such request in writing delivered to the Rights Agent, and will surrender
the Rights Certificate to be transferred, split up, combined or exchanged at
the office of the Rights Agent designated for such purpose. Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company will be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
has properly completed and duly executed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and has provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof, in each case as the Company
or the Rights Agent reasonably requests. Thereupon, subject to Section 4(b),
Section 7(e), Section 14 and Section 24, the Rights Agent will countersign (by
manual or facsimile signature) and deliver to the Person entitled thereto a
Rights Certificate as so requested. The Company or the Rights Agent may
require payment from the holder of a Rights Certificate of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of any Rights Certificate. If and
to the extent that the Company does require payment of any such tax or charge,
the Company will provide the Rights Agent prompt written notice thereof and the
Rights Agent will not deliver any Right Certificate unless and until the Rights
Agent is satisfied that all such payments have been made, and the Rights Agent
will forward any such sum collected by it to the Company or to such Person as
the Company specifies by written notice. The Rights Agent will not have any duty
or obligation to take any action pursuant to any Section of this Agreement
related to the issuance or delivery of Rights Certificates unless and until it
is satisfied that all such taxes or charges have been paid.
(b) Mutilated, Destroyed, Lost or Stolen Rights
Certificates. Subject to the provisions of Section 7(e), Section 11(a)(ii)
and Section 24, at any time after the Distribution Date and prior to the
Expiration Date, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate and such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent may request, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated. Every new Rights Certificate issued pursuant to
this Section 6(b) in lieu of any lost, stolen, destroyed or mutilated Rights
Certificate will evidence an original additional contractual obligation of the
Company, whether or not the lost, stolen, destroyed or mutilated Rights
Certificate will be at any time enforceable by anyone, and, subject to Section
7(e) will be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
(a) Exercise of Rights. Subject to Section 7(e),
Section 23(b) and Section 24(a), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part on any Business Day at or after the
Distribution Date and prior to the Close of Business on the Expiration Date by
surrender of the Rights Certificate, with the form of election to purchase and
certificate on the reverse side thereof properly completed and duly executed,
to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Exercise Price for each one
one-thousandth of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as to which the Rights
are exercised.
(b) Price. The Exercise Price for each one
one-thousandth of a Preferred Share issuable pursuant to the exercise of a
Right is initially $4.00 and is subject to adjustment from time to time as
provided in Section 11 or Section 13, and is payable in accordance with Section
7(c).
14
(c) Payment. Except as otherwise provided in this
Agreement, upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and certification properly
completed and duly executed, accompanied by payment of the aggregate Exercise
Price for the total number of one one-thousandths of a Preferred Share (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) to be purchased and an amount equal to any applicable transfer tax
or governmental charge required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e), the Rights Agent will, subject to
Section 7(f) and Section 20(k), thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent for the Preferred Shares) a certificate for the total
number of one one-thousandths of a Preferred Share (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) to be
purchased (or, in the case of uncertificated shares or other securities,
requisition from the transfer agent a notice setting forth such number of
shares or other securities to be purchased for which registration will be made
on the transfer books of the Company), and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company has elected to deposit the total number of one one-thousandths of a
Preferred Share (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from such depositary agent
depositary receipts representing interests in such number of one
one-thousandths of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as are to be purchased
(in which case certificates for the Preferred Shares (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
represented by such receipts will be deposited by the transfer agent with such
depositary agent) and the Company hereby irrevocably directs such depositary
agent to comply with such request; (ii) when appropriate, requisition from the
Company the amount of cash, if any, to be paid in lieu of the issuance of
fractional shares in accordance with Section 14; (iii) after receipt of such
certificates, notices, or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder; and (iv)
when appropriate, after receipt thereof, deliver such cash to or upon the order
of the registered holder of such Rights Certificate. The payment of the
Exercise Price (as such amount may be reduced (including to zero) pursuant to
Section 11(a)(iii)), and an amount equal to any applicable transfer tax or
governmental charge required to be paid by the holder of such Rights
Certificate in accordance with Section 9(e), may be made by certified bank
check, money order, cashier’s check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue securities of the
Company other than Preferred Shares, pay cash or distribute other property
pursuant to Section 11(a), then the Company will make all arrangements necessary
so that such other securities, cash or other property are available for
distribution by the Rights Agent, if and when appropriate. Notwithstanding
anything to the contrary in this Agreement, the Company reserves the right to
require that prior to the occurrence of a Triggering Event, upon any exercise
of Rights, a number of Rights be exercised so that only whole Preferred Shares
would be issued.
(d) Partial Exercise. If the registered holder of
any Rights Certificate exercises less than all the Rights evidenced thereby,
then a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised will be issued by the Rights Agent and delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name as may be designated by such holder, subject to the provisions of
Section 14.
15
(e) Prohibited Issuances. Notwithstanding anything
to the contrary in this Agreement, from and after the first occurrence of a
Triggering Event, any Rights that are or were acquired or Beneficially Owned by
(i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or an Affiliate or Associate of an
Acquiring Person) who becomes a transferee after the Acquiring Person becomes
such (a “Post-Event Transferee”), (iii) a transferee of an Acquiring
Person (or an Affiliate or Associate of an Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding whether or not in writing
regarding the transferred Rights or (B) a transfer that the Board has
determined is part of a plan, arrangement or understanding that has as a
primary purpose or effect the avoidance of this Section 7(e) (a “Pre-Event
Transferee”), (iv) any subsequent transferee receiving transferred Rights
from a Post-Event Transferee or a Pre-Event Transferee, either directly or
through one or more intermediate transferees (a “Subsequent Transferee”),
or (v) any nominee of any of the foregoing will, in each case, become null and
void without any further action, and no holder (whether or not such holder is
an Acquiring Person or an Affiliate or Associate of an Acquiring Person) of
such Rights will have any rights whatsoever (including the right to exercise)
with respect to such Rights or any Rights Certificates that formerly evidenced
such Rights, whether pursuant to any provision of this Agreement or otherwise.
From and after the first occurrence of a Triggering Event, no Rights
Certificate will be issued pursuant to this Agreement (including to an
Acquiring Person, an Affiliate or Associate of an Acquiring Person, a
Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any
nominee of any of the foregoing) that represents one or more Rights that are or
have become void pursuant to this Section 7(e) or with respect to any Common
Shares otherwise deemed to be Beneficially Owned by any of the foregoing, and
any Rights Certificate delivered to the Rights Agent that represents Rights that
are or have become null and void pursuant to this Section 7(e) will be
cancelled. The Company will use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but neither
the Company nor the Rights Agent will have any liability to any holder of
Rights Certificates or to any other Person as a result of the Company’s failure
to make any determinations with respect to an Acquiring Person, an Affiliate or
Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event
Transferee, a Subsequent Transferee or any nominee of any of the foregoing. The
Company will provide the Rights Agent with written notice of the identity of
any such Acquiring Person, Affiliate or Associate of an Acquiring Person, Post-Event
Transferee, Pre-Event Transferee, Subsequent Transferee or any nominee of any
of the foregoing, and the Rights Agent may rely on such notice in carrying out
its duties pursuant to this Agreement and will be deemed not to have any
knowledge of the identity of any such Person unless and until it has received
such notice.
16
(f) Information Concerning Ownership. Notwithstanding
anything to the contrary in this Agreement, neither the Rights Agent nor the
Company is obligated to undertake any action with respect to a registered
holder of Rights upon the occurrence of any purported exercise or transfer of
Rights as set forth in this Section 7 unless such registered holder, in
addition to having complied with the requirements of Section 7(a), has (i)
properly completed and duly executed the certificate contained in the form of
election to purchase or form of assignment, as applicable, set forth on the
reverse side of the Rights Certificate surrendered for such exercise or
assignment; and (ii) provided such additional evidence (including the identity
of the Beneficial Owner (or former Beneficial Owner) thereof and of the Rights
evidenced thereby, and the Affiliates or Associates of such Beneficial Owner or
former Beneficial Owner) as the Company or the Rights Agent may reasonably
request. If such registered holder does not comply with the foregoing
requirements, then the Company will be entitled to conclusively deem such
Rights to be Beneficially Owned by an Acquiring Person (or an Affiliate or
Associate of an Acquiring Person, a Post-Event Transferee, a Pre-Event
Transferee, a Subsequent Transferee or any nominee of any of the foregoing, as
applicable) and, accordingly, such Rights will be null and void and not
exercisable or transferable.
(a) Reservation. The Company covenants and agrees
that it will use all reasonable efforts to cause to be reserved and kept
available out of its authorized and unissued Preferred Shares not reserved for
another purpose (and, following the occurrence of a Triggering Event, out of its
authorized and unissued Common Shares or other securities, or out of its
authorized and issued shares held in treasury), the number of Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) Listing. So long as the Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange, then the Company must use all
reasonable efforts to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely that the
Rights will be exercised), all shares reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.
17
(c) Registration. The Company must use all
reasonable efforts to (i) file, as soon as practicable following the earliest
date after the first occurrence of a Section 11(a)(ii) Event in which the
consideration to be delivered by the Company upon exercise of the Rights is
described in Section 11(a)(ii) or Section 11(a)(iii), or as soon as is required
by law following the Distribution Date, as the case may be, a registration
statement pursuant to the Securities Act with respect to the securities
purchasable upon exercise of the Rights on an appropriate form; (ii) cause such
registration statement to become effective as soon as practicable after such
filing; and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company may temporarily suspend,
from time to time for a period not to exceed 120 days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective or in order to prepare and file any supplement or
amendment to such registration statement that the Board determines to be
necessary pursuant to applicable law. Upon any such suspension, the Company
will issue a public announcement stating, and notify the Rights Agent in
writing, that the exercisability of the Rights has been temporarily suspended,
as well as issue a public announcement, and notify the Rights Agent in writing,
at such time as the suspension is no longer in effect. In addition, if the
Company determines that a registration statement is required following the Distribution
Date, then the Company may temporarily suspend the exercisability of the Rights
until such time as such registration statement has been declared effective. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or “blue sky” laws of the various states in
connection with the exercisability of the Rights, as well as any other
applicable law, rule or regulation. Notwithstanding anything to the contrary
in this Agreement, the Rights will not be exercisable in any jurisdiction
unless the requisite qualification in such jurisdiction has been obtained (and
the exercise thereof is permitted pursuant to applicable law), or an exemption
therefrom is available, and until a registration statement in respect thereof
has been declared and remains effective.
(d) Valid Issuance. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares or other securities of the Company) delivered upon exercise of Rights
will, at the time of delivery of the certificates for such securities (or
registration on the transfer books of the Company or the transfer agent for
such securities) (subject to payment of the Exercise Price, if any), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) Taxes and Charges. The Company further
covenants and agrees that it will pay when due and payable any and all transfer
taxes and governmental charges that may be payable in respect of the original
issuance or delivery of Rights Certificates (or any Preferred Share, Common
Share or other security of the Company, as the case may be) upon the exercise
or exchange of Rights. Notwithstanding the foregoing, the Company is not
required to (i) pay any transfer tax or governmental charge that may be payable
in respect of any transfer or delivery of Rights Certificates (or certificates
or depositary receipts for Preferred Shares, Common Shares or other securities
of the Company, as the case may be) in a name other than, or the issuance or
delivery of certificates or depositary receipts for Preferred Shares, Common
Shares or other securities of the Company, as the case may be, in a name other
than, that of the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or exchange; or (ii) issue or deliver any certificates
or depositary receipts for Preferred Shares, Common Shares or other securities
of the Company, as the case may be, upon the exercise or exchange of any Rights
until any such transfer tax or charge has been paid (any such transfer tax or
charge being payable by the registered holder of such Rights Certificate at the
time of surrender or exchange) or it has been established to the Company’s
satisfaction that no such tax or charge is due. The foregoing also apply to any
transfer taxes and governmental charges that may be payable in respect of any
uncertificated Rights Certificates, shares or other securities.
18
Section 10. Record Date for Securities Issued. Each
Person in whose name any certificate for a number of one one-thousandths of a
Preferred Share (or any other security of the Company, including Common Shares)
is issued (or registration on the transfer books of the Company or the
applicable transfer agent is effected) upon the exercise or exchange of Rights
will for all purposes be deemed to have become the holder of record of such
fractional Preferred Share (or other security of the Company) represented
thereby on, and such certificate will be dated (or registration on the transfer
books of the Company or the applicable transfer agent effected), the date on
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the applicable Exercise Price, if any, together with any applicable
transfer tax or governmental charge required to be paid by the holder of such
Rights Certificate in accordance with Section 9(e), was made; provided,
however, that if the date of such surrender and payment is a date upon which
the transfer books of the Company (or the applicable transfer agent) are
closed, then such Person will be deemed to have become the record holder of
such fractional Preferred Shares (or other securities of the Company) on, and
such certificate will be dated (or registration on the transfer books of the
Company or the applicable transfer agent effected), the next succeeding
Business Day on which the transfer books of the Company (or the applicable
transfer agent) are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate is not entitled to any rights of a
holder of Preferred Shares (or any other security of the Company) for which the
Rights are exercisable, including the right to vote, to receive dividends or
other distributions, or to exercise any preemptive rights, and is not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
(a) Certain Events.
19
(i) Certain Adjustments to Preferred Shares. Notwithstanding
anything to the contrary in this Agreement, in the event that the Company at
any time after the Rights Dividend Declaration Date (A) declares a dividend on
the Preferred Shares payable in Preferred Shares, (B) subdivides or splits the
outstanding Preferred Shares, (C) combines or consolidates the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of
Preferred Shares or (D) issues any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification
in connection with a share exchange, consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event,
except as otherwise provided in this Section 11(a)(i) and Section 7(e), (1) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, split, combination, consolidation or
reclassification, and the number and kind of Preferred Shares or capital stock
of the Company, as the case may be, issuable on such date, will be
proportionately adjusted so that the holder of any Right exercised after such
time will be entitled to receive, upon payment of the Exercise Price then in
effect, the aggregate number and kind of Preferred Shares or securities of the
Company, as the case may be, that, if such Right had been exercised immediately
prior to such date (and at a time when the Preferred Shares transfer books of
the Company were open), such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, split,
combination, consolidation or reclassification; provided, however, that
in no event will 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 the exercise of one Right. If an event occurs that would require
an adjustment pursuant to both this Section 11(a)(i) and Section 11(a)(ii),
then the adjustment provided for in this Section 11(a)(i) will be in addition
to, and will be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Exercise of Rights Following Certain Events. Subject
to Section 23 and Section 24, in the event that any Person, at any time after
the Rights Dividend Declaration Date, becomes an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a transaction set
forth in Section 13(a), then promptly following the occurrence of such event
each holder of a Right, except as provided below and in Section 7(e), will
thereafter have the right to receive for each Right, upon exercise thereof in
accordance with the terms of this Agreement and payment of the Exercise Price
in effect immediately prior to the occurrence of such event, in lieu of a
number of one one-thousandths of a Preferred Share, such number of Common Shares
as equals the quotient obtained by dividing (A) the product obtained by
multiplying (1) the Exercise Price in effect immediately prior to the first
occurrence of such event by (2) the number of one one-thousandths of a
Preferred Share for which a Right was exercisable (or would have been
exercisable if the Distribution Date had occurred) immediately prior to the
first occurrence of such event by (B) 50% of the Current Per Share Market Price
for Common Shares on the date of such first occurrence of such event (such
number of shares, the “Adjustment Shares”); provided, however,
that the Exercise Price and the number of Common Shares so receivable upon the
exercise of a Right will be subject to further adjustment as appropriate in
accordance with Section 11(e). In the event that a Section 11(a)(ii) Event has
occurred and the Rights are outstanding, then, subject to Section 27, the
Company may not take any action that would eliminate or diminish the benefits
intended to be afforded by the Rights. The Company will promptly notify the
Rights Agent in writing when this Section 11(a)(ii) applies.
20
(iii) Insufficient Common Shares. In the event that the
number of Common Shares that are authorized by the Company’s Amended and
Restated Certificate of Incorporation, as amended, but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), or if any necessary regulatory or shareholder approval for
such issuance has not been obtained by the Company, then, in the event that the
Rights become exercisable, the Company will (A) determine the Spread and (B)
with respect to each Right (subject to Section 7(e)), make adequate provision
to substitute for the Adjustment Shares issuable pursuant thereto, upon the
exercise of a Right and the payment of the applicable Exercise Price, (1) cash,
(2) a reduction in the Exercise Price, (3) Preferred Shares, (4) other equity
securities of the Company (including shares or units of shares of any series of
preferred stock that, by virtue of having dividend, voting and liquidation
rights substantially comparable to those of the Common Shares, the Board has
deemed in good faith to have substantially the same value or economic rights as
the Common Shares (such shares or units of shares of preferred stock, “Common
Share Equivalents”)), (5) debt securities of the Company, (6) other assets
or (7) any combination of the foregoing, in each case having an aggregate value
equal to the Current Value (less the amount of any reduction in the Exercise
Price), where such aggregate value has been determined by the Board based upon
the advice of a nationally recognized investment banking firm selected by the
Board, which determination will be described in a written statement filed with
the Rights Agent and will be binding on the Rights Agent and the holders of the
Rights; provided, however, that if the Company has not made adequate
provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company’s right of redemption pursuant to Section
23(a) expires (the later of (x) or (y), the “Section 11(a)(ii) Trigger Date”),
then the Company will be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Exercise Price, Common Shares
(to the extent available and except to the extent that the Company has not
obtained any necessary shareholder or regulatory approval for such issuance)
and such number or fractions of Preferred Shares and then, if necessary, cash,
which shares or cash have an aggregate value equal to the Spread. If the Board
determines in good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the Rights or
that any necessary shareholder or regulatory approval for such issuance could
be obtained, the 30 day period set forth above may be extended and re-extended
to the extent necessary (with prompt written notice of any such extension
provided to the Rights Agent) from time to time, but not more than 120 days
after the Section 11(a)(ii) Trigger Date, so that the Company may seek shareholder
approval for the authorization of such additional Common Shares or take such
action necessary to obtain such regulatory approval (such period, as it may be
extended, the “Substitution Period”). To the extent that the Company
determines that some action need be taken pursuant to the first or second
sentences of this Section 11(a)(iii), the Company (a) will provide, subject to
Section 7(e), that such action applies uniformly to all outstanding Rights and
(b) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such shareholder approval, to take any
action necessary to obtain such regulatory approval 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 will issue a public announcement (and promptly provide written notice
to the Rights Agent) stating that the exercisability of the Rights has been
temporarily suspended, as well as issue a public announcement (and promptly
provide written notice to the Rights Agent) at such time as the suspension is
no longer in effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares will be the Current Per Share Market Price of the Common Shares
on the Section 11(a)(ii) Trigger Date and the value of any Common Share
Equivalent will be deemed to have the same value as the Common Shares on such
date. The Board may, but will not be required to, establish procedures to
allocate the right to receive Common Shares upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
21
(b) Dilutive Rights Offering. If the Company, at
any time after the Rights Dividend Declaration Date, fixes a record date for
the issuance of rights, options or warrants to all holders of Preferred Shares
entitling such holders (for a period expiring within 45 days after such record
date) to subscribe for or purchase Preferred Shares or Equivalent Shares, or
securities convertible into Preferred Shares or Equivalent Shares, at a price
per share (or having a conversion or exercise price per share, if a security
that is convertible into or exercisable for Preferred Shares or Equivalent
Shares) less than the Current Per Share Market Price of the Preferred Shares on
such record date, then, in each such case, the Exercise Price to be in effect
after such record date will be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of Preferred Shares or
Equivalent Shares, as the case may be, that the aggregate offering price of the
total number of Preferred Shares or Equivalent Shares, as the case may be, to
be offered or issued (or the aggregate initial conversion price of the
convertible securities to be offered or issued) would purchase at such Current
Per Share Market Price, and the denominator of which shall be the number of
Preferred Shares and Equivalent Shares (if any) outstanding on such record
date, plus the number of additional Preferred Shares or Equivalent Shares, as
the case may be, to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event will 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 the exercise of one Right. If such
subscription price may be paid in a consideration part or all of which is in a
form other than cash, then the value of such consideration will be as
determined in good faith by the Board, whose determination will be described in
a statement filed with the Rights Agent and will be binding on the Rights Agent
and the holders of the Rights. Preferred Shares and Equivalent Shares owned by
or held for the account of the Company will not be deemed outstanding for the
purpose of any such computation. Such adjustment will be made successively
whenever such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, then the Exercise Price will be adjusted
to be the Exercise Price that would then be in effect if such record date had
not been fixed.
(c) Distributions. If the Company, at any time
after the Rights Dividend Declaration Date, fixes a record date for the making
of a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a share exchange, consolidation or merger
in which the Company is the continuing or surviving corporation) of cash (other
than a periodic cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Shares, but
including any dividend payable in stock other than Preferred Shares), evidences
of indebtedness, subscription rights, options or warrants (excluding those
referred to in Section 11(b)), then, in each such case, the Exercise Price to
be in effect after such record date will be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which will be the Current Per Share Market Price of a
Preferred Share on such record date, less the fair market value per Preferred
Share (as determined in good faith by the Board, whose determination will be
described in a statement filed with the Rights Agent and will be conclusive and
binding on the Rights Agent and the holders of the Rights) of the portion of
the cash, assets or evidences of indebtedness to be so distributed or of such
subscription rights, options or warrants applicable to one Preferred Share, and
the denominator of which shall be such Current Per Share Market Price of a
Preferred Share on such record date; provided, however, that in no event
will 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 the exercise of one Right. Such adjustment will be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made, then the Exercise Price will be adjusted to be the Exercise
Price that would have been in effect if such record date had not been fixed.
22
(d) Insignificant Changes. Notwithstanding
anything to the contrary in this Agreement, no adjustment in the Exercise Price
is required unless such adjustment would require an increase or decrease of at
least 1% of the Exercise Price; provided, however, that any adjustments
that by reason of this Section 11(d) are not required to be made will be
carried forward and taken into account in any subsequent adjustment. All
calculations pursuant to this Section 11 must be made to the nearest cent or to
the nearest ten-millionth of a Preferred Share or ten-thousandth of any other
share or security, as the case may be. Notwithstanding the first sentence of
this Section 11(d), any adjustment required by this Section 11 must be made no
later than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the Expiration Date.
(e) Shares Other Than Preferred Shares. If as a
result of an adjustment made pursuant to Section 11(a) or Section 13(a), the
holder of any Right thereafter exercised will become entitled to receive any
shares of capital stock other than Preferred Shares, then thereafter the number
of such other shares so receivable upon exercise of any Right and, if required,
the Exercise Price thereof, will 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), Section 11(b),
Section 11(c), Section 11(d), Section 11(g), Section 11(h), Section 11(i),
Section 11(j), Section 11(k) and Section 11(l), and the provisions of Section
7, Section 9, Section 10 and Section 13 with respect to the Preferred Shares
will apply on like terms to any such other shares.
(f) Rights Issued Subsequent to Adjustment. All
Rights originally issued by the Company subsequent to any adjustment made to
the Exercise Price hereunder will evidence the right to purchase, at the
adjusted Exercise Price, the number of one one-thousandths of a Preferred Share
(and other shares of other capital stock or other securities, assets or cash of
the Company, if any) purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(g) Effect of Adjustments on Existing Rights. Unless
the Company has exercised its election as provided in Section 11(h), upon each
adjustment of the Exercise Price as a result of the calculations made in
Section 11(b) and Section 11(c), each Right outstanding immediately prior to the
making of such adjustment will thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of Preferred Shares (calculated to the
nearest ten-millionth of a Preferred Share) obtained by (i) multiplying (A) the
number of one one-thousandths of a Preferred Share covered by a Right
immediately prior to this adjustment by (B) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price, and (ii) dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
23
(h) Adjustment in Number of Rights. The Company
may elect on or after the date of any adjustment of the Exercise Price to
adjust the number of Rights, in substitution for any adjustment in the number
of one one-thousandths of a Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights will be exercisable for the number of one one-thousandths 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 will
become that number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company will make a public
announcement (and promptly provide written notice to the Rights Agent) of its election
to adjust the number of Rights, indicating the record date for the adjustment
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Exercise Price is adjusted or any day
thereafter, but, if any Rights Certificates have been issued, will be at least
10 days later than the date of the public announcement. If any Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(h), the Company will, as promptly as practicable,
distribute or cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14, the additional Rights to which such holders will be entitled as a
result of such adjustment, or, at the option of the Company, will distribute or
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders will be
entitled after such adjustment. Rights Certificates to be so distributed will
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Exercise Price) and will
be registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(i) Rights Certificates Unchanged. Irrespective of
any adjustment or change in the Exercise Price or the number of one
one-thousandths of a Preferred Share issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Exercise Price per one one-thousandth of a Preferred Share and the
number of one one-thousandths of a Preferred Share that were expressed in the
initial Rights Certificates issued hereunder.
(j) Par Value Limitations. Before taking any
action that would cause an adjustment reducing the Exercise Price below the par
or stated value, if any, of the number of one one-thousandths of a Preferred
Share issuable upon exercise of the Rights, the Company will take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may duly and validly issue as fully paid and nonassessable shares such
number of one one-thousandths of a Preferred Share at such adjusted Exercise
Price.
(k) Deferred Issuance. In any case in which this
Section 11 requires that an adjustment in the Exercise Price be made effective
as of a record date for a specified event, the Company may elect to defer (with
prompt written notice to the Rights Agent) until the occurrence of such event
the issuance to the holder of any Right exercised after such record date of the
number of one one-thousandths of a Preferred Share and other capital stock or
securities, assets or cash of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a Preferred Share and other
capital stock or securities, assets or cash of the Company, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Company must deliver to such
holder a due bill or other appropriate instrument evidencing such holder’s
right to receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
24
(l) Reduction in Exercise Price. Notwithstanding
anything to the contrary in this Section 11, the Company is entitled to make
such reductions in the Exercise Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it, in its
sole discretion, determines to be advisable in order that any (i) consolidation
or subdivision of the Preferred Shares or Common Shares, (ii) issuance wholly
for cash of any Preferred Shares or Common Shares at less than the applicable
Current Per Share Market Price, (iii) issuance wholly for cash of Preferred
Shares or Common Shares or securities that by their terms are convertible into
or exchangeable for Preferred Shares or Common Shares, (iv) stock dividend or
(v) issuance of rights, options or warrants referred to in this Section 11
hereafter made by the Company to holders of Preferred Shares or Common Shares
is not be taxable to such shareholders.
(m) No Diminishment of Benefit of Rights. The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23, Section 24 or Section 27, take (or permit to
be taken) any action if at the time that such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
25
(n) Certain Adjustments to Common Shares. Notwithstanding
anything to the contrary in this Agreement, in the event that the Company, at
any time after the Rights Dividend Declaration Date and prior to the
Distribution Date, (i) declares or pays a dividend on the Common Shares payable
in Common Shares, (ii) subdivides or splits the outstanding Common Shares
(other than by the payment of dividends payable in Common Shares), (iii)
combines or consolidates the outstanding Common Shares (by reverse stock split
or otherwise) into a lesser number of Common Shares or (iv) issues any shares
of its capital stock in a reclassification of the Common Shares (including any
such reclassification in connection with a share exchange, consolidation or
merger in which the Company is the continuing or surviving corporation), then,
in each such event, except as otherwise provided in this Section 11 or Section
7(e): (A) each Common Share (or shares of capital stock issued in such
reclassification of the Common Shares) outstanding immediately following such
time will have associated with it the number of Rights as were associated with
one Common Share immediately prior to the occurrence of such event; (B) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, split, combination, consolidation or
reclassification will be adjusted so that the Exercise Price thereafter equals
the result obtained by multiplying the Exercise Price in effect immediately prior
to such time by a fraction, the numerator of which shall be the total number of
Common Shares outstanding immediately prior to such event and the denominator
of which shall be the total number of Common Shares outstanding immediately
after such event; provided, however, that in no event will 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
the exercise of such Right; and (C) the number of one one-thousandths of a
Preferred Share (or shares of such other capital stock) issuable upon the
exercise of each Right outstanding after such event equals the number of one
one-thousandths of a Preferred Share (or shares of such other capital stock) as
were issuable with respect to one Right immediately prior to such event. Each
Common Share that becomes outstanding after an adjustment has been made
pursuant to this Section 11(n) will have issued with it that number of Rights,
exercisable at the Exercise Price and for the number of one one-thousandths of
a Preferred Share (or shares of such other capital stock), as one Common Share
has associated with it immediately following the adjustment made pursuant to
this Section 11(n). If an event occurs that would require an adjustment
pursuant to both this Section 11(n) and Section 11(a)(ii), then the adjustment
provided for in this Section 11(n) will be in addition to, and will be made
prior to, any adjustment required pursuant to Section 11(a)(ii). The
adjustments provided for in this Section 11(n) will be made successively
whenever such a dividend is declared or paid or such a subdivision, split,
combination, consolidation or reclassification is effected.
(o) Adjustment of Rights Associated with Certain
Distributions. Other than in connection with a transaction contemplated by
Section 11(n), in the event that the Company, at any time after the Rights
Dividend Declaration Date and prior to the Distribution Date, issues or
distributes any securities or assets in respect of Common Shares (other than
(A) a distribution or dividend of its capital stock and (B) pursuant to any
non-extraordinary periodic cash dividend), then the Company will make such
adjustments, if any, in the Exercise Price or the number of Rights or securities
or other property purchasable upon exercise of Rights as the Board, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of the Rights generally, and
the Company and the Rights Agent will amend this Agreement as necessary to
provide for such adjustments.
26
(a) Certain Transactions. In the event that,
following a Shares Acquisition Date, directly or indirectly, (i) the Company
consolidates with, or merges with and into, any other Person (other than a
wholly owned Subsidiary of the Company in a transaction that complies with
Section 11(m)) and the Company is not be the continuing or surviving
corporation of such consolidation or merger, (ii) any Person (other than a
wholly owned Subsidiary of the Company in a transaction that complies with
Section 11(m)) consolidates with, or merges with and into, the Company, and the
Company is the continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all or part of the
Common Shares are changed into or exchanged for stock or other securities of
any other Person or the Company, or cash or any other property, or (iii) the
Company sells, exchanges, mortgages or otherwise transfers (or one or more of
its Subsidiaries sells, exchanges, mortgages or otherwise transfers), in one
transaction or a series of related transactions, assets, cash flow or earning
power aggregating to 50% or more of the assets, cash flow or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or one or more of its wholly owned Subsidiaries
in one or more transactions, each of which individually (and together) complies
with Section 11(m)), then, concurrent with and in each such case, proper
provision must be made so that (A) each holder of a Right (except as provided
in Section 7(e)) thereafter has the right to receive, upon the exercise thereof
at a price per Right equal to the Exercise Price multiplied by the number of
one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the occurrence of such Section 13 Event in accordance with
the terms of this Agreement, and in lieu of Preferred Shares, such number of
duly and validly authorized and issued and fully paid and nonassessable and
freely tradable Common Shares of the Principal Party, free of any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (1) multiplying the then current Exercise Price
by the number of one one-thousandths of a Preferred Share for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of
a Section 13 Event, multiplying the number of such one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Exercise Price in effect
immediately prior to such first occurrence of a Section 11(a)(ii) Event), and
(2) dividing that product (which, following the first occurrence of a Section
13 Event, will be referred to as the “Exercise Price” for each Right and for
all purposes of this Agreement) by 50% of the Current Per Share Market Price of
the Common Shares of such Principal Party on the date of consummation of such
Section 13 Event; provided, however, that the price per Right so payable
and the number of Common Shares of such Principal Party so receivable upon
exercise of a Right will be subject to further adjustment as appropriate in
accordance with Section 11(e) to reflect any events covered thereby occurring
in respect of the Common Shares of such Principal Party after the occurrence of
such Section 13 Event; (B) such Principal Party will thereafter be liable for,
and must assume, by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (C) the term “Company” will
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 will apply only to such Principal
Party following the first occurrence of a Section 13 Event; (D) such Principal
Party must take such steps (including the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such transaction
as may be necessary to ensure that the provisions hereof will thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; (E) the provisions of
Section 11(a)(ii) will be of no effect following the first occurrence of any
Section 13 Event; and (F) upon the subsequent occurrence of any consolidation,
merger, sale, exchange, mortgage, transfer or other extraordinary transaction
in respect of such Principal Party, each holder of a Right will thereupon be
entitled to receive, upon exercise of a Right and payment of the Exercise Price
as provided in this Section 13(a), such cash, shares, rights, warrants and
other property that such holder would have been entitled to receive had such
holder, at the time of such transaction, owned the Common Shares of the
Principal Party receivable upon the exercise of a Right pursuant to this
Section 13(a), and such Principal Party must take such steps (including
reservation of a sufficient number of shares of its capital stock) as may be necessary
to permit the subsequent exercise of the Rights in accordance with the terms
hereof for such cash, shares, rights, warrants and other property. For purposes
hereof, the “earning power” of the Company and its Subsidiaries will be
determined in good faith by the Board on the basis of the operating income of
each business operated by the Company and its Subsidiaries during the three
fiscal years preceding the date of such determination (or, in the case of any
business not operated by the Company or any of its Subsidiaries during the
three fiscal years preceding such date, during the period that such business
was operated by the Company or any of its Subsidiaries).
(b) Principal Party. For purposes of this
Agreement, the term “Principal Party” means (i) in the case of any
transaction described in clause (i) or (ii) of Section 13(a) (A) the Person
that is the issuer of the securities into which the Common Shares are converted
in the consolidation or merger, or, if there is more than one such issuer, the
issuer whose Common Shares have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (1) the Person that is the
other party to the consolidation or merger, if such Person survives the
consolidation or merger, or, if there is more than one such Person, the Person
whose Common Shares have the greatest aggregate market value of shares
outstanding, (2) if the Person that is the other party to the merger does not
survive such consolidation or merger, the Person that does survive such
consolidation or merger (including the Company if it survives) or (3) the
Person resulting from the consolidation or merger; and (ii) in the case of any
transaction described in clause (iii) of Section 13(a), the Person that is the
party receiving the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions, or, if more than one
Person that is a party to such transaction or transactions receives the same
portion of the assets or earning power so transferred and each such portion
would, were it not for the other equal portions, constitute the greatest
portion of the assets or earning power so transferred, or if the Person
receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons is the issuer of Common Shares having the
greatest aggregate market value of shares outstanding; provided, however,
that in the case of each of clause (i) and (ii) of this Section 13(b), if the
Common Shares of such Person are not at such time, or have not been
continuously over the preceding 12-month period, registered pursuant to Section
12 of the Exchange Act, then if such Person is (x) a direct or indirect
Subsidiary of another Person whose Common Shares are and have been so
registered, the term “Principal Party” will refer to such other Person,
(y) a direct or indirect Subsidiary of more than one Person whose Common Shares
are and have been so registered, the term “Principal Party” will refer
to whichever of such Persons is the issuer of Common Shares having the greatest
aggregate market value of shares outstanding, or (z) if such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules set forth
in clauses (x) and (y) above will apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case must bear the obligations set forth in this Section 13 in the
same ratio as its interest in such Person bears to the total of such interests.
27
(c) Certain Arrangements. The Company will not
consummate or permit to occur any Section 13 Event unless (A) the Principal
Party has a sufficient number of authorized, unissued and unreserved Common
Shares to permit the exercise in full of the Rights in accordance with this
Section 13 and (B) prior thereto the Company and the Principal Party have executed
and delivered to the Rights Agent a supplemental agreement confirming that (1)
the requirements of this Section 13 will be promptly performed in accordance
with their terms, (2) the Principal Party will, upon consummation of such
Section 13 Event, assume this Agreement in accordance with Section 13(a) and
Section 13(b), (3) such Section 13 Event will not result in a default by the
Principal Party pursuant to this Agreement (as it has been assumed by the
Principal Party) and (4) the Principal Party, as soon as practicable after the
date of such Section 13 Event and at its own expense, will:
(i) prepare and file a registration statement pursuant to
the Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and use its best efforts to
cause such registration statement to (x) become effective as soon as
practicable after such filing and (y) remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the Expiration
Date, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on a national securities exchange and to list (and continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and its Affiliates that comply in
all respects with the requirements for registration on Form 10 (or any
successor form) promulgated under the Exchange Act; and
(iv) take all other action as may be necessary to allow
the Principal Party to issue the securities purchasable upon exercise of the
Rights.
(d) Prohibited Transactions.
(i) Notwithstanding anything to the contrary in this
Agreement, if the Principal Party has a provision in any of its authorized
securities or in its organizational documents that would have the effect of (i)
causing the Principal Party to issue (other than to holders of Rights pursuant
to Section 13), in connection with, or as a consequence of, the consummation of
a Section 13 Event, Common Shares or common stock equivalents of the Principal
Party at less than the then Current Per Share Market Price thereof or
securities exercisable for, or convertible into, Common Shares or common stock
equivalents of the Principal Party at less than such Current Per Share Market
Price, or (ii) providing for any special payment, tax, charge or similar
provision in connection with the issuance of the Common Shares of the Principal
Party pursuant to the provisions of this Section 13, then the Company hereby agrees
with each holder of Rights that it will not consummate any such Section 13
Event unless prior thereto the Company and such Principal Party have executed
and delivered to the Rights Agent a supplemental agreement providing that such
provision has been cancelled, waived, amended or rescinded, or that such
authorized securities will be redeemed, so that such provision will have no
effect in connection with, or as a consequence of, the consummation of such
Section 13 Event.
28
(ii) Notwithstanding anything to the contrary in this
Agreement, the Company hereby agrees with each holder of Rights that it will
not consummate or permit to occur any Section 13 Event if (A) at the time or
immediately after such Section 13 Event there are any rights, warrants,
instruments or securities outstanding, or any agreements or arrangements, that,
as a result of the consummation of such Section 13 Event, would eliminate or
diminish in any material respect the benefits intended to be afforded by the
Rights; (B) all rights of first refusal or preemptive rights in respect of the
issuance of Common Shares or common stock equivalents of the Principal Party
upon exercise of outstanding Rights have not been irrevocably waived or
rendered inapplicable; (C) prior to, simultaneously with or immediately after
such Section 13 Event, the shareholders of the Person who constitutes, or would
constitute, the Principal Party have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates; or (D)
the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
(e) Continued Applicability. The provisions of
this Section 13 will similarly apply to successive mergers, consolidations,
sales, exchanges, mortgages, transfers or other extraordinary transactions. In
the event that a Section 13 Event occurs at any time after the occurrence of a
Section 11(a)(ii) Event, then the Rights that have not theretofore been
exercised will thereafter become exercisable in the manner described in Section
13(a) (without taking into account any prior adjustment required by Section
11(a)(ii)).
(a) Cash in Lieu of Fractional Rights. The Company
will not be required to issue fractions of Rights (except prior to the
Distribution Date as provided in Section 11(n)) or to distribute Rights
Certificates that evidence fractional Rights. In lieu of such fractional
Rights, the Company will pay to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the Current Per Share
Market Price of a whole Right, calculated as of the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable.
(b) Cash in Lieu of Fractional Preferred Shares. The
Company will not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-thousandth of a Preferred
Share) upon exercise or exchange of the Rights or to distribute certificates
that evidence fractional Preferred Shares (other than fractions that are
integral multiples of one one-thousandth of a Preferred Share). Interests in
fractions of Preferred Shares in integral multiples of one one-thousandth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a depositary
selected by the Company; provided, however, that such agreement must
provide that the holders of such depositary receipts have all of the rights,
privileges and preferences to which they are entitled as Beneficial Owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company may pay to the registered
holders of Rights Certificates at the time that such Rights are exercised or
exchanged as provided herein an amount in cash equal to the same fraction of
the current market value of one one-thousandth of a Preferred Share. For
purposes of this Section 14(b), the current market value of one one-thousandth
of a Preferred Share will be one one-thousandth of the Current Per Share Market
Price of a Preferred Share, calculated as of the Trading Day immediately prior
to the date of such exercise or exchange.
29
(c) Cash in Lieu of Fractional Common Shares. The
Company is not required to issue fractions of Common Shares or to distribute
certificates that evidence fractional Common Shares upon the exercise or
exchange of Rights. In lieu of such fractional Common Shares, the Company may
pay to the registered holders of Rights Certificates at the time such Rights
are exercised or exchanged as provided herein an amount in cash equal to the
same fraction of the current market value of a Common Share. For purposes of
this Section 14(c), the current market value of a Common Share will be the
Current Per Share Market Price of a Common Share, calculated as of the Trading
Day immediately prior to the date of such exercise or exchange.
(d) Waiver of Fractional Rights. Except as
permitted by this Section 14, the holder of a Right, by the acceptance of such
Right, expressly waives such holder’s right to receive any fractional Rights or
any fractional shares of any security upon the exercise or exchange of a Right.
(e) Procedure for Payment. Whenever a payment for
fractional Rights, Preferred Shares or Common Shares is to be made by the
Rights Agent pursuant to this Agreement, the Company will (i) promptly prepare
and deliver to the Rights Agent a certificate setting forth in reasonable
detail the facts related to such payment and the prices or formulas utilized in
calculating such payments; and (ii) provide sufficient monies to the Rights
Agent to make such payments. The Rights Agent will be fully protected in
relying upon such certificate and will have no duty with respect thereto, and
will not be deemed to have knowledge of any payment for fractional Rights,
Preferred Shares or Common Shares pursuant to this Agreement unless and until
the Rights Agent has received such certificate and sufficient monies.
(a) prior to the Distribution Date, the Rights will not be
evidenced by a Rights Certificate and will be transferable only in connection
with the transfer of the Common Shares;
30
(b) after the Distribution Date, the Rights Certificates
are transferable only on the transfer books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully completed;
(c) subject to Section 6(a) and Section 7(f), the Company
and the Rights Agent may deem and treat the Person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated certificate for
Common Shares or Book Entry Shares, as applicable) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
certificate for Common Shares or Book Entry Shares, as applicable, made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent (subject to Section 7(e)) will be
affected by any notice to the contrary;
(d) notwithstanding anything to the contrary in this
Agreement, neither the Company nor the Rights Agent will have any liability to
any holder of a Right (or a beneficial interest in a Right) or other Person as
a result of the inability of the Company or the Rights Agent to perform any of
their respective obligations pursuant to this Agreement by reason of any
preliminary or permanent injunction or other order, judgment, decree or ruling
(whether interlocutory or final) issued by a court of competent jurisdiction or
by a governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company will use
all reasonable efforts to have any such injunction, order, judgment, decree or
ruling lifted or otherwise overturned as promptly as practicable;
(e) Rights that are Beneficially Owned by certain Persons
will, under the circumstances set forth in Section 7(e), become null and void;
and
(f) this Agreement may be supplemented or amended from
time to time in accordance with Section 27.
31
Section 18. Concerning the Rights
Agent.
(a) Compensation; Reimbursement; Indemnification. 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, the reasonable and documented out-of-pocket expenses and counsel
fees and other disbursements incurred by the Rights Agent in connection with
the preparation, negotiation, delivery, execution, amendment and administration
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, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense (including the reasonable and documented fees of
its outside counsel) incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent (which gross negligence, bad faith
or willful misconduct must be determined by a final, non-appealable judgment of
a court of competent jurisdiction) for any action taken, suffered or omitted to
be taken by the Rights Agent in connection with the acceptance, administration,
exercise and performance of its duties pursuant to this Agreement, including
the costs and expenses of defending against any claim of liability and
appealing any claim of liability arising therefrom, directly or indirectly. The
provisions of this Section 18 and Section 20 will survive the termination of
this Agreement, the exercise, exchange or expiration of the Rights and the
resignation, replacement or removal of the Rights Agent.
(b) Reliance by the Rights Agent. The Rights Agent
is authorized to rely conclusively on, and will be protected and incur no
liability for, or in respect of any action taken, suffered or omitted to be
taken by it in connection with its acceptance and administration of this
Agreement, and the exercise and performance of its duties pursuant to this
Agreement, in reliance upon any (i) Rights Certificate, (ii) certificate (or
registration on the transfer books of the Company, including, in the case of
uncertificated shares, by notation in book entry accounts reflecting ownership)
for Preferred Shares, Common Shares or other securities of the Company issuable
upon exercise of Rights or (iii) instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document reasonably believed by it to
be genuine and to be duly executed and, where necessary, verified or
acknowledged, by the proper Person, or otherwise upon the advice of counsel as
set forth in Section 20. The Rights Agent will not be required to take notice,
or be deemed to have any knowledge, of any fact, event or determination of
which it was supposed to receive notice hereunder (including any dates or
events defined in this Agreement or the designation of any Person as an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and the
Rights Agent will be fully protected and will incur no liability for failing to
take action in connection therewith, unless and until it has received such
notice in writing.
32
(a) Merger or Consolidation of Rights Agent. Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may effect a share exchange or be consolidated, or any Person
resulting from any merger, share exchange or consolidation to which the Rights
Agent or any successor Rights Agent is a party, or any Person succeeding to the
corporate trust, stock transfer or shareholder services business of the Rights
Agent or any successor Rights Agent, will be the successor to the Rights Agent
pursuant to this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto so long as such Person is
eligible for appointment as a successor Rights Agent pursuant to the provisions
of Section 21. The purchase of all or substantially all of the Rights Agent’s
assets employed in the performance of this Agreement, or transfer or rights
agent services generally, will be deemed to be a merger, share exchange or
consolidation for purposes of this Section 19. If at the time that such
successor Rights Agent succeeds to the agency created by this Agreement any of
the Rights Certificates have been countersigned but not delivered, then any
such successor Rights Agent may adopt the countersignature of any predecessor
Rights Agent and deliver such Rights Certificates so countersigned, and if at
that time any of the Rights Certificates have not been countersigned, then any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent. In all such cases, such Rights Certificates will have the full force and
effect provided in the Rights Certificates and in this Agreement.
(b) Change of Name of Rights Agent. If at any time
the name of the Rights Agent is changed and at such time any of the Rights
Certificates have been countersigned but not delivered, then the Rights Agent
may adopt the countersignature under its prior name and deliver such Rights
Certificates so countersigned, and if at any time any of the Rights
Certificates have not have been countersigned, then the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name. In all such cases, such Rights Certificates will have the full force and
effect provided in the Rights Certificates and in this Agreement.
(a) Before the Rights Agent acts or refrains from acting,
the Rights Agent may consult with legal counsel that it selects (who may be
legal counsel for the Company or an employee of the Rights Agent), and the
advice or opinion of such counsel will be full and complete authorization and
protection to the Rights Agent, and the Rights Agent will incur no liability
for or in respect of, any action taken, suffered or omitted to be taken by it
in accordance with such advice or opinion.
(b) Whenever in the performance of its duties pursuant to
this Agreement the Rights Agent deems it necessary or desirable that any fact
or matter (including the identity of any Acquiring Person and the determination
of the Current Per Share Market Price of any security) be proved or established
by the Company prior to taking, suffering or omitting to take any action
hereunder, such fact or matter (unless other evidence in respect thereof is
specifically prescribed herein) 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, the Chief Financial Officer, the
Secretary or any Vice President or Assistant Secretary of the Company and
delivered to the Rights Agent, and such certificate will be full and complete
authorization and protection to the Rights Agent, and the Rights Agent will
incur no liability for or in respect of any action taken, suffered or omitted
to be taken by it pursuant to the provisions of this Agreement in reliance upon
such certificate.
33
(c) The Rights Agent will be liable hereunder to the
Company and any other Person only for its and its directors’, officers’,
employees’, Affiliates’, agents’, advisors’ and representatives’ own gross
negligence, bad faith or willful misconduct (which gross negligence, bad faith
or willful misconduct must be determined by a final, non-appealable judgment of
a court of competent jurisdiction). In no event will the Rights Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including lost profits), even if the Rights Agent has been advised of the
possibility of such loss or damage.
(d) The Rights Agent will not be liable hereunder for or
by reason of any of the statements of fact or recitals contained in this
Agreement, the Rights Certificates or any certificate (or registration on the
transfer books of the Company, including, in the case of uncertificated shares,
by notation in book entry accounts reflecting ownership) for Preferred Shares,
Common Shares or other securities of the Company issuable upon exercise of
Rights, or be required to verify the same (except, in each case, its
countersignature thereof, if applicable), and all such statements and recitals
are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not (i) have any liability for
or be under any responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the validity or execution
of any Rights Certificate (except its countersignature thereof) or any
certificate (or registration on the transfer books of the Company, including,
in the case of uncertificated shares, by notation in book entry accounts
reflecting ownership) for Preferred Shares, Common Shares or other securities
of the Company issuable upon exercise of Rights (except, in each case, its
countersignature thereof, if applicable); (ii) be responsible for any change in
the exercisability or exchangeability of Rights (including certain Rights
becoming null and void pursuant to Section 7(e)), except with respect to the
exercise of Rights evidenced by Rights Certificates after notice of such change
has been provided by the Company; (iii) be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or any Rights
Certificate; (iv) be responsible for (A) any adjustment or change required
pursuant to Section 3, Section 11, Section 13, Section 23 or Section 24, (B)
the manner, method or amount of any such adjustment or change or (C)
ascertaining the existence of facts that would require any such adjustment or
change (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of a certificate furnished
pursuant to Section 12 describing such adjustment or change); (v) be
responsible for any determination by the Board of the Current Per Share Market
Price of any security pursuant to this Agreement; or (vi) by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any securities to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any such securities will, when issued, be
duly and validly authorized and issued and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of its duties pursuant to this Agreement.
34
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, the Secretary or any Vice President or
Assistant Secretary of the Company, and it is authorized to apply to any such
director or officer for advice or instructions in connection with its duties
pursuant to this Agreement. Such advice and instructions will be full and
complete authorization and protection to the Rights Agent, and the Rights Agent
will not be liable for or in respect of any action taken, suffered or omitted
to be taken by it in accordance with the written advice or instructions of any
such director or officer or for any delay in acting while waiting for those
instructions. The Rights Agent will be fully and completely authorized and
protected in relying on the latest-dated instructions received from any such
director or officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken, suffered or omitted to be taken by
the Rights Agent pursuant to this Agreement and the date on or after which such
action will be taken, suffered or omitted to be taken. The Rights Agent will
not be liable for any action taken or suffered by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on or
after the date specified in such application (which date must not be less than
10 Business Days after, but not including, the date on which any such director
or officer of the Company actually receives such application, unless any such
director or officer has consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent has received, in response to such application, written
instructions with respect to the proposed action or omission specifying a
different action to be taken, suffered or omitted to be taken.
(h) The Rights Agent and any member, shareholder,
director, officer, employee or Affiliate of the Rights Agent (in each case,
other than an Acquiring Person) may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent pursuant to this Agreement. Nothing herein will preclude the
Rights Agent or any such member, shareholder, director, officer, employee or
Affiliate from acting in any other capacity for the Company or for any other
Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself (including through its directors, officers and employees) or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company, to the holders of Rights or
to any other Person resulting from any such act, omission, default, neglect or
misconduct in the absence of gross negligence, bad faith or willful misconduct
in the selection and continued employment thereof (which gross negligence, bad
faith or willful misconduct must be determined by a final, non-appealable
judgment of a court of competent jurisdiction).
35
(j) No provision of this Agreement requires the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder (other than costs
and expenses incurred by the Rights Agent in providing services to the Company
in the ordinary course of its business as the Rights Agent) or in the exercise
of its rights if it reasonably believes, after consultation with counsel, that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate contained in the
form of election to purchase or form of assignment, as the case may be, has
either (i) not been properly completed or (ii) indicates an affirmative
response to clause (1) or clause (2) thereof, then the Rights Agent will not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
(l) From time to time after the Distribution Date, upon
the written request of the Company, the Rights Agent will promptly deliver to
the Company a list, as of the most recent practicable date (or as of such
earlier date as may be specified by the Company), of the record holders of
Rights and Rights Certificates.
36
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be discharged from its
duties pursuant to this Agreement upon 30 days’ written notice to the Company
(or such lesser notice as is acceptable to the Company) and to each transfer
agent of the Preferred Shares and the Common Shares (in the event that the
Rights Agent or one of its Affiliates is not also such transfer agent),
delivered to the Company in accordance with Section 26. In the event that any
transfer agency relationship in effect between the Company and the Rights Agent
or any of its Affiliates terminates, the Rights Agent will be deemed to have
automatically resigned and be discharged from its duties under this Agreement
on the effective date of such termination, and the Company will be responsible
for sending any required notices. The Company may remove the Rights Agent or
any successor Rights Agent, with or without cause, upon 30 days’ notice in
writing to the Rights Agent or any successor Rights Agent, as the case may be,
and to each transfer agent of the Preferred Shares and the Common Shares (in
the event that the Rights Agent or one of its Affiliates is not also such
transfer agent), delivered to the Rights Agent in accordance with Section 26.
If the Rights Agent resigns or is removed or otherwise becomes incapable of
acting, then the resigning, removed or incapacitated Rights Agent must, upon
the Company’s request, remit to the Company or to any successor Rights Agent,
all books, records, funds, certificates or other documents or instruments of
any kind then in its possession that were acquired by such resigning, removed
or incapacitated Rights Agent in connection with its services as the Rights
Agent in accordance with its record retention policy. Following such removal,
resignation or incapacity, the Company will appoint a successor to the Rights
Agent. If the Company fails to make such appointment within a period of 30 days
after giving written 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 registered holder of a Rights Certificate (who must,
together with such notice, submit such registered holder’s Rights Certificate
for inspection by the Company), then any registered holder may apply, at the
Company’s expense, to a court of competent jurisdiction for the appointment of
a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such court, must be either (a) a Person organized, in good
standing and doing business pursuant to the laws of the United States or any
state of the United States that is authorized pursuant to such laws to exercise
corporate trust, stock transfer or shareholder services, is subject to
supervision or examination by federal or state authorities and has at the time
of its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate or direct or indirect wholly owned Subsidiary
of such Person. After appointment, the successor Rights Agent will be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, and the
predecessor Rights Agent must 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 such purpose. Not
later than the effective date of any such appointment, the Company will file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Shares and the Common Shares (in the event that the
Rights Agent or one of its Affiliates is not also such transfer agent), and
deliver such notice to the holders of Rights Certificates in accordance with
Section 26. Notwithstanding anything to the contrary in this Agreement, failure
to give any notice provided for in this Section 21, or any defect therein, will
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.
Upon appointment, any successor Rights Agent will, unless the context requires
otherwise, be deemed to be the Rights Agent for all purposes of this Agreement.
37
(a) Right to Redeem. The Board may, at its option,
at any time prior to the earlier of (i) the Distribution Date or (ii) the Close
of Business on the Final Expiration Date, redeem all but not less than all of
the then outstanding Rights at a redemption price of $0.001 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend, recapitalization or similar transaction occurring after the Rights
Dividend Declaration Date (such redemption price, the “Redemption Price”).
Notwithstanding anything to the contrary in this Agreement, the Rights will not
be exercisable after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company’s right of redemption pursuant to this Section 23 has
expired. The Company may, at its option, pay the Redemption Price in Common
Shares (based on the Current Per Share Market Price of Common Shares at the
time of redemption), cash or any other form of consideration deemed appropriate
by the Board, in its sole discretion, to be at least equivalent to the
Redemption Price. Such redemption of the Rights by the Board may be made
effective at such time, on such basis and with such conditions as the Board in
its sole discretion may establish. The date on which the Board elects to make
the redemption effective is referred to as the “Redemption Date.”
(b) General Redemption Procedures. Immediately
upon the action of the Board ordering the redemption of the Rights (or at such
later time as the Board may establish for the effectiveness of such
redemption), evidence of which will have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
will be to receive the Redemption Price for each Right so held. The Company
will promptly give public notice of any such redemption (with prompt written
notice thereof also provided to the Rights Agent). Promptly after the action of
the Board ordering the redemption of the Rights, the Company will give, or
cause to be given, notice of such redemption to the holders of Rights
Certificates in accordance with Section 26; provided, however, that any notice
that is so provided will be deemed given, whether or not the holder receives
the notice. Each such notice of redemption must state the method by which the
payment of the Redemption Price is to be made. The failure to given, or any
defect in, any notice required by this Section 23 will not affect the legality
or validity of the action taken by the Board or of the redemption.
(c) Discharge of Obligations. Notwithstanding
anything to the contrary in this Agreement, in the event of a redemption
pursuant to Section 23(a), the Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release or making
a publicly-available filing with the Securities and Exchange Commission
announcing the manner of redemption of the Rights and (ii) mailing payment of
the Redemption Price to the holders of Rights at the addresses of such holders
as shown on the transfer books of the Rights Agent or, prior to the
Distribution Date, on the transfer books of the Company or the transfer agent
for the Common Shares, and upon such action, all outstanding Right Certificates
will be void without any further action by the Company.
(d) Prohibited Purchases. Notwithstanding anything
to the contrary in this Agreement, 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 as specifically set forth in this Section
23 or in Section 24, or other than in connection with the purchase or
repurchase of Common Shares prior to the Distribution Date.
38
(a) Exchange of Common Shares for Rights. The
Board 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 will not include Rights that have become null and void pursuant to the
provisions of Section 7(e)) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split,
stock dividend, recapitalization or similar transaction occurring after the
Rights Dividend Declaration Date (such exchange ratio, the “Exchange Ratio,”
and such determination by the Board to effect such exchange, an “Exchange
Determination”). Notwithstanding the foregoing, the Board is not empowered
to effect an Exchange Determination at any time after any Person (other than
any Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding. Notwithstanding the foregoing, from and after the occurrence of a
Section 13 Event, any Rights that theretofore have not been exchanged pursuant
to this Section 24(a) will thereafter be exercisable only in accordance with
Section 13 and may not be exchanged (or eligible for exchange) pursuant to this
Section 24(a).
(b) Exchange Procedures.
39
(i) Immediately following an Exchange Determination and
without any further action or notice, the right to exercise such Rights will
terminate and the only right thereafter of a holder of such Rights is 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 will promptly give
public notice of any such exchange (with prompt written notice thereof also
provided to the Rights Agent), and thereafter will promptly give, or cause to
be given, notice of such exchange to the holders of the then outstanding Rights
(other than Rights that have become null and void pursuant to the provisions of
Section 7(e)) by mailing such notice, in accordance with Section 26; provided,
however, that any notice that is so provided will be deemed given, whether
or not the holder receives the notice. Each such notice of exchange must state
the method by which the exchange of Common Shares for Rights is to be effected
(including the actions that must be taken by the holders of Rights to receive
Common Shares in exchange for Rights) and, in the event of any partial
exchange, the number of Rights that are to be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than Rights that
have become null and void pursuant to the provisions of Section 7(e)) held by
each holder of Rights. Following an Exchange Determination, the Company may
implement such procedures as it deems appropriate, in its sole discretion, to
minimize the possibility that any Common Shares (or other consideration)
issuable pursuant to this Section 24 are received by Persons whose Rights are
null and void pursuant to Section 7(e). Prior to effecting any exchange, the
Company may require, or cause the trustee of the Trust to require, as a
condition thereof, that any registered holder of Rights provide such evidence
(including the identity of the Beneficial Owner (or former Beneficial Owner)
thereof and the Affiliates or Associates of such Beneficial Owner or former
Beneficial Owner) as the Company may reasonably request in order to determine
if such Rights are null and void pursuant to Section 7(e). If such registered
holder does not comply with the foregoing requirements, then the Company will
be entitled to conclusively deem such Rights to be Beneficially Owned by an
Acquiring Person (or an Affiliate or Associate of an Acquiring Person, a
Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any
nominee of any of the foregoing) and, accordingly, such Rights will be null and
void and not exchangeable in connection herewith. Any Common Shares (or other
securities) issued at the direction of the Board in connection with an Exchange
Determination will be duly and validly authorized and issued and fully paid and
nonassessable, and the Company will be deemed to have received as consideration
for such issuance a benefit having a value that is at least equal to the
aggregate par value of the Common Shares (or other securities) so issued. The
failure to give, or any defect in, any notice required by this Section 24 will
not affect the legality or validity of the action taken by the Board or of such
exchange.
(ii) The exchange of the Rights pursuant to Section 24(a)
may be made effective at such time, on such basis and with such conditions as
the Board, in its sole discretion, may establish. Without limiting the
foregoing, prior to effecting an exchange pursuant to Section 24(a), the Board
may direct the Company to enter into a trust agreement in such form and with
such terms as the Board approves (the “Trust Agreement”). If the Board
so directs, then the Company must enter into the Trust Agreement and must issue
to the trust created by such agreement (the “Trust”) all of the Common
Shares (or other consideration) issuable pursuant to the exchange (or any
portion thereof that has not theretofore been issued in connection with the
exchange). From and after the time at which such Common Shares (or other
consideration) are issued to the Trust, all shareholders then entitled to
receive Common Shares (or other consideration) pursuant to the exchange will be
entitled to receive such shares or consideration (and any dividends or
distributions made thereon after the date on which such shares or consideration
are deposited into the Trust) only from the Trust and solely upon compliance
with the relevant terms and provisions of the Trust Agreement.
(c) Insufficient Shares. In the event that there
are not sufficient Common Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
Section 24(a), then the Company will either take such action as may be
necessary to authorize additional Common Shares for issuance upon exchange of
the Rights or alternatively, at the option of the Board, with respect to each
Right (i) pay cash in an amount equal to the Current Exchange Value in lieu of
issuing Common Shares in exchange therefor; (ii) issue debt or equity
securities (or a combination thereof) having a value equal to the Current
Exchange Value in lieu of issuing Common Shares in exchange for each such Right,
where the value of such securities will be determined by the Board based upon
the advice of a nationally recognized investment banking firm selected by the
Board, which determination will be described in a written statement filed with
the Rights Agent and will be binding on the Rights Agent and the holders of
Rights; or (iii) deliver any combination of cash, property, Common Shares,
Preferred Shares, Equivalent Shares or other securities having a value equal to
the Current Exchange Value in exchange for each Right. To the extent that the
Company determines that some action need be taken pursuant to this Section
24(c), then the Board may temporarily suspend the exercisability of the Rights
for a period of up to 120 days following the date on which the Exchange
Determination has occurred in order to seek any authorization of additional
Common Shares or to decide the appropriate form of distribution to be made
pursuant to the above provision and to determine the value thereof. Upon any
such suspension, the Company will issue a public announcement stating, and
notify the Rights Agent in writing, that the exercisability of the Rights has
been temporarily suspended, as well as issue a public announcement, and notify
the Rights Agent in writing, at such time as the suspension is no longer in
effect.
40
(d) Cash in Lieu of Fractional Common Shares. In
connection with an Exchange Determination, the Company will not be required to
issue fractions of Common Shares or to distribute certificates that evidence
fractional Common Shares. In lieu of such fractional Common Shares, the Company
may pay to the registered holders of Rights Certificates with regard to which
such fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the Current Per Share Market Price of a Common
Share, calculated as of the Trading Day immediately prior to the date of the
Exchange Determination.
(a) Certain Distributions. If the Company
proposes, at any time after the Distribution Date, to (i) declare or pay any
dividend payable in stock of any class to the holders of Preferred Shares or to
make any other distribution to the holders of Preferred Shares (other than a
regular quarterly or periodic cash dividend out of earnings or retained earnings
of the Company), (ii) offer to the holders of 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)
effect any reclassification of the Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) effect any share exchange, consolidation or merger into or with
any other Person (other than a wholly owned Subsidiary of the Company in a
transaction that complies with Section 11(m)), (v) effect any sale or other
transfer (or permit one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related transactions, of more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person, (vi) effect the
liquidation, dissolution or winding up of the Company, (vii) declare or pay any
dividend on the Common Shares payable in Common Shares or (viii) 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 will give written notice of such proposed
action to the Rights Agent and the holders of Rights Certificates in accordance
with Section 26, which notice must specify the record date for the purposes of
such stock dividend, distribution of rights or warrants, or the date on which
such subdivision, combination, reclassification, share exchange, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is to take place
and the date of participation therein by the holders of Preferred Shares or
Common Shares, if any such date is to be fixed, and such notice must be so
given in the case of any action covered by clause (i) or (ii) above at least 10
Business Days prior to but not including the record date for determining
holders of Preferred Shares for purposes of such action, and in the case of any
such other action, at least 10 Business Days prior to but not including the
date of the taking of such proposed action or the date of participation therein
by the holders of Preferred Shares or Common Shares, whichever is earlier.
(b) Certain Events. If any Triggering Event has
occurred, then (i) the Company will as soon as practicable thereafter give, or
cause to be given, to each holder of Rights Certificates a notice in accordance
with Section 26 of the occurrence of such Triggering Event, which notice must
specify the event and the consequences of the event to holders of Rights
pursuant to Section 11(a)(ii) or Section 13, and (ii) all references in this
Section 25 to Preferred Shares will thereafter be deemed to be references to
Common Shares or, if appropriate, other securities.
41
Forward Industries, Inc.
477 Rosemary Avenue, Suite 217-219
West Palm Beach, FL 33410
Attention: Robert Garrett Jr.
with a copy (which will not constitute notice) to:
Olshan Frome Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, NY 10022
Attention: Adam W. Finerman
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent will be
sufficiently given or made if in writing and sent by a recognized national
overnight delivery service or first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company by the Rights
Agent) as follows:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Attention: General Counsel
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holders of Rights or
Rights Certificates (or, if prior to the Distribution Date, to the holders of
Common Shares) will be sufficiently given or made if in writing and sent by a
recognized national overnight delivery service or first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
transfer books of the Rights Agent or the Company or the transfer agent for the
Common Shares. Any notice that is sent or mailed in the manner herein provided
will be deemed given whether or not the holder receives the notice.
Notwithstanding anything to the contrary in this Agreement, prior to the
Distribution Date, the issuance of a press release or the making of a
publicly-available filing by the Company with the Securities and Exchange
Commission will constitute sufficient notice by the Rights Agent or the Company
to the holders of securities of the Company, including the Rights, for all
purposes of this Agreement and no other notice need be given.
42
Section 27. Supplements and Amendments. Prior to
the occurrence of a Distribution Date, the Company may in its sole discretion
supplement or amend this Agreement in any respect without the approval of any
holders of Rights Certificates, Preferred Shares or Common Shares, and the
Rights Agent must, if the Company so directs, execute such supplement or
amendment. From and after the occurrence of a Distribution Date, the Company
and the Rights Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order to (i) cure
any ambiguity, (ii) correct or supplement any provision contained herein that
may be defective or inconsistent with any other provisions herein or otherwise
defective, including any change in order to satisfy any applicable law, rule or
regulation, (iii) shorten or lengthen any time period hereunder or (iv) change
or supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that does not adversely affect the interests of the
holders of Rights (other than an Acquiring Person, an Affiliate or Associate of
an Acquiring Person, a Post-Event Transferee, a Pre-Event Transferee, a
Subsequent Transferee or any nominee of any of the foregoing), including
extending the Final Expiration Date; provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, a time period relating to when the Rights may be redeemed at a time
when the Rights are not then redeemable; provided further, however, that the
right of the Board to extend the Distribution Date does not require any
amendment or supplement hereunder. Upon the delivery of a certificate from an
appropriate officer of the Company that states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
must execute such supplement or amendment, and the Rights Agent acknowledges
and agrees that time is of the essence in executing such supplement or
amendment. Notwithstanding the foregoing, the Rights Agent will not be required
to execute any such supplement or amendment that adversely affects its rights,
duties, or obligations pursuant to this Agreement. Prior to the Distribution
Date, the interests of the holders of Rights and Rights Certificates will be
deemed to be coincident with the interests of the holders of Common Shares.
43
Section 30. Benefits of this Agreement. Nothing in
this Agreement may be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of Rights Certificates (and, prior
to the Distribution Date, the registered holders of Common Shares) any legal or
equitable right, remedy or claim pursuant to this Agreement. This Agreement is
for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of Rights Certificates (and, prior to the Distribution Date,
the registered holders of Common Shares).
Section 34. Descriptive
Headings; Interpretation.
(a) Descriptive Headings. The table of contents
and descriptive headings of the several Sections of this Agreement are inserted
for convenience only and will not control or affect the meaning or construction
of any of the provisions hereof.
(b) Interpretation.
(i) Unless otherwise indicated, all references herein to
Sections or Exhibits will be deemed to refer to Sections or Exhibits of or to
this Agreement, as applicable. Any capitalized terms used in any Exhibit but
not otherwise defined therein have the meaning set forth in this Agreement. All
Exhibits attached hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if fully set forth herein.
44
(ii) Unless otherwise indicated, the words “include,”
“includes” and “including,” when used herein, are deemed in each case to be
followed by the words “without limitation.”
(iii) The words “hereof,” “herein, “herewith” and words of
similar import will, unless otherwise stated, be constructed to refer to this
Agreement as whole and not to any particular provision of this Agreement.
(iv) The word “or” is used in the inclusive sense of
“and/or.” The terms “or,” “any” and “either” are not exclusive.
(v) Whenever the context may require, any pronouns used in
this Agreement include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns include the plural and vice versa.
(vi) Where a word or phrase is defined, each of its other
grammatical forms has a corresponding meaning.
(vii) References to “$” are to the lawful currency
of the United States of America.
[Signature page follows.]
45
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
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FORWARD INDUSTRIES, INC.
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By:
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Name:
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Robert Garrett Jr.
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Title:
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Chief Executive Officer
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AMERICAN STOCK TRANSFER
& TRUST COMPANY, LLC
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By:
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Name:
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Michael A. Nespoli
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Title:
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Senior Vice President
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[Signature Page to Rights Agreement]
EXHIBIT A
FORM OF
CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
of
FORWARD INDUSTRIES, INC.
(Under Section 805 of the Business Corporation
Law)
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned hereby certifies:
1. The
name of the Corporation is “Forward Industries, Inc.” (the “Corporation”).
The name under which the Corporation was originally form is Progress Heat
Sealing Co., Inc.
2. The
original Certificate of Incorporation of the Corporation was filed with the
Department of State on March 6, 1961.
3. The
Corporation is authorized to issue a total of 44,000,000 shares, consisting of 40,000,000
shares of common stock, par value $0.01 per share (“Common Stock”) and 4,000,000
shares of preferred stock, par value $0.01 per share (“Preferred Stock”).
An amendment of the Corporation’s Certificate of Incorporation effected by this
Certificate of Amendment to add the designations, rights and preferences of Series
A Participating Preferred Stock, par value $0.01 per share (the “Series A Participating
Preferred Stock”) is hereby made.
To effect the foregoing, a new
Article FOURTH of the Corporation’s Certificate of Incorporation, relating to
the Series A Participating Preferred Stock, is hereby added, and all subsequent
Articles of the Corporation’s Certificate of Incorporation are renumbered
accordingly. Article FOURTH shall read in its entirety as follows.
FOURTH: The Corporation’s Board
of Directors (the “Board”) has designated 100,000 shares of Preferred Stock
as Series A Participating Preferred Stock, which shall have the following
designations, rights and preferences:
A-1
Section 1. Designation and Amount.
The shares of such series shall be designated as “Series A Participating
Preferred Stock.” The Series A Participating Preferred Stock shall have a
par value of $0.01 per share, and the number of shares constituting such series
shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board; provided, however, that no decrease shall
reduce the number of shares of Series A Participating 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 exercise of any options, rights or warrants issuable
upon conversion of any outstanding securities issued by the Corporation
convertible into Series A Participating Preferred Stock.
Section 2. Proportional Adjustment.
In the event that the Corporation shall at any time after the issuance of any
share or shares of Series A Participating Preferred Stock (the “Rights
Declaration Date”) (a) declare any dividend on the common stock of the
Corporation, par value $0.01 per share (the “Common Stock”), payable in
shares of Common Stock, (b) subdivide the outstanding Common Stock or (c)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Corporation shall simultaneously effect a proportional
adjustment to the number of outstanding shares of Series A Participating
Preferred Stock by an amount 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 3. Dividends and
Distributions.
(a) Subject to Section 2 and to the
prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A
Participating Preferred Stock with respect to dividends, the holders of shares
of Series A Participating Preferred Stock shall be entitled to receive, when,
as and if declared by the Board out of funds legally available for the purpose,
quarterly dividends payable in cash on the last day of March, June, September
and December in each year (each such date being referred to herein as a “Quarterly
Dividend Payment Date”), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (i) $1.00 and (ii) subject to Section 2, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Participating Preferred Stock.
(b) The Corporation shall declare a
dividend or distribution on the Series A Participating Preferred Stock as
provided in paragraph (a) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in shares of
Common Stock); provided, however, that, in the event that no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
A-2
(c) Dividends shall begin to accrue and
be cumulative on outstanding shares of Series A Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of issue of
such shares of Series A Participating Preferred Stock, unless the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue 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
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board may fix a record date for the determination of holders of shares of
Series A Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 60 days prior to the date fixed for the payment thereof.
Section 4. Voting Rights. The
holders of shares of Series A Participating Preferred Stock shall have the
following voting rights:
(a) Subject to the provision for
adjustment hereinafter set forth, each share of Series A Participating
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation. In the event that
the Corporation shall at any time after the Rights Declaration Date (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the number of votes per
share to which holders of shares of Series A Participating 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 Designation creating a series of Preferred Stock or
any similar stock, the Certificate of Incorporation of the Corporation (the “Certificate
of Incorporation”) or the Amended and Restated Bylaws of the Corporation
(the “Bylaws”), or by law, the holders of shares of Series A
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of shareholders
of the Corporation.
(c) Except as set forth herein or as required
by law, the holders of Series A Participating Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent that they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
A-3
(d) (i) If at any time dividends on any
Series A Participating Preferred Stock shall be in arrears in an amount equal
to six quarterly dividends thereon, then the occurrence of such contingency
shall mark the beginning of a period (herein called a “default period”) that
shall extend until such time as all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend
period on all shares of Series A Participating Preferred Stock then outstanding
shall have been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of Series A
Participating Preferred Stock) with dividends in arrears in an amount equal to
six quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two directors.
(ii) During any default period, such
voting right of the holders of Series A Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to subparagraph (iii)
of this Section 4(d) or at any annual meeting of shareholders, and thereafter
at annual meetings of shareholders; provided, however, that such voting
shall not be exercised unless the holders of at least one-third in number of
shares of Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right. At any meeting
at which the holders of Preferred Stock shall exercise such voting right
initially during an existing default period, they shall have the right, voting
as a class, to elect directors to fill such vacancies, if any, in the Board as
may then exist up to two directors or, if such right is exercised at an annual
meeting of shareholders, to elect two directors. If the number that may be so
elected at any special meeting does not amount to the required number, the
holders of Preferred Stock shall have the right to make such increase in the
number of directors as shall be necessary to permit the election by them of the
required number. After the holders of Preferred Stock shall have exercised
their right to elect directors in any default period and during the continuance
of such period, the number of directors shall not be increased or decreased
except by vote of the holders of Preferred Stock as herein provided or pursuant
to the rights of any equity securities ranking senior to or pari passu with the
Series A Participating Preferred Stock.
(iii) Unless the holders of Preferred
Stock shall, during an existing default period, have previously exercised their
right to elect directors, the Corporation shall, by action of the Chairman of
the Board, the Chief Executive Officer, the President or the Board in
accordance with the Certificate of Incorporation, promptly call a special
meeting of the holders of Preferred Stock for such purpose. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are entitled
to vote pursuant to this paragraph (d)(iii) shall be given to each holder of
record of Preferred Stock by mailing a copy of such notice to such holder at
such holder’s last address as the same appears on the books of the Corporation.
Notwithstanding the provisions of this paragraph (d)(iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the shareholders.
A-4
(iv) In any default period, the holders
of Common Stock and other classes of stock of the Corporation, if applicable,
shall continue to be entitled to elect the whole number of directors until the
holders of Preferred Stock shall have exercised their right to elect two
directors voting as a class, after the exercise of which right (A) the
directors so elected by the holders of Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the default period, and (B) any vacancy in the Board may (except
as provided in subparagraph (ii) of this Section 4(d)) be filled by vote of a
majority of the remaining directors theretofore elected by the holders of the
class of stock that elected the director whose office shall have become vacant.
References in this Section 4(d) to directors elected by the holders of a
particular class of stock shall include directors elected by such directors to
fill vacancies as provided in clause (B) of the foregoing sentence.
(v) Immediately upon the expiration of a
default period, (A) the right of the holders of Preferred Stock as a class to
elect directors shall cease, (B) the term of any directors elected by the
holders of Preferred Stock as a class shall terminate and (C) the number of
directors shall be such number as may be provided for in the Certificate of
Incorporation or the Bylaws irrespective of any increase made pursuant to the
provisions of subparagraph (ii) of this Section 4(d) (such number being
subject, however, to change thereafter in any manner provided by law or in the Certificate
of Incorporation or Bylaws). Any vacancies in the Board effected by the
provisions of clauses (B) and (C) in the preceding sentence may be filled by a
majority of the remaining directors.
Section 5. Certain
Restrictions.
(a) The Corporation shall not declare
any dividend on, make any distribution on, or redeem or purchase or otherwise
acquire for consideration any shares of Common Stock after the first issuance
of a share or fraction of a share of Series A Participating Preferred Stock
unless concurrently therewith it shall declare a dividend on the Series A
Participating Preferred Stock as required by Section 3 hereof.
(b) Whenever quarterly dividends or
other dividends or distributions payable on the Series A Participating
Preferred Stock as provided in Section 3 hereof are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Participating Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make
any other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating Preferred
Stock;
(ii) declare or pay dividends, 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
Participating Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock; provided, however, that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
Series A Participating Preferred Stock; or
A-5
(iv) redeem or purchase or otherwise
acquire for consideration any shares of Series A Participating Preferred Stock,
or any shares of stock ranking on a parity with the Series A Participating
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board) to all holders of such shares upon
such terms as the Board, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(c) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the Corporation
could, pursuant to paragraph (a) of this Section 5, purchase or otherwise
acquire such shares at such time and in such manner.
Section 6. Reacquired Shares. Any
shares of Series A Participating Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and 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 to be created by
resolution or resolutions of the Board, subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation
or in any Certificate of Amendment thereto creating a series of Preferred Stock
or any similar stock or as otherwise required by law.
Section 7. Liquidation,
Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no distribution shall
be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Participating Preferred Stock unless, prior thereto, the holders of shares of
Series A Participating Preferred Stock shall have received an amount equal to
$1,000 per share of Series A Participating Preferred Stock, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the “Series A Liquidation Preference”).
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the “Common
Adjustment”) equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted to reflect
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the “Adjustment Number”).
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series A
Participating Preferred Stock and Common Stock, respectively, holders of Series
A Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to one with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
A-6
(b) In the event, however, that there
are not sufficient assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, that rank on a parity with the Series A Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(c) In the event that the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
the Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Corporation shall
simultaneously effect a proportional adjustment to the Adjustment Number in
effect immediately prior to such event by an amount 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. Consolidation, Merger, etc.
In the event that the Corporation shall enter into any consolidation, merger,
combination, conversion, share exchange or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock,
securities, cash and/or any other property (payable in kind), then in any such
case the shares of Series A Participating Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject to
Section 2) equal to 1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged.
Section 9. No Redemption. The
shares of Series A Participating Preferred Stock shall not be redeemable.
Section 10. Ranking. The Series
A Participating Preferred Stock shall rank junior to all other series of the
Preferred Stock as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
Section 11. Amendment. At any
time when any shares of Series A Participating Preferred Stock are outstanding,
the Certificate of Incorporation shall not be amended in any manner that would
materially alter or change the powers, preferences or special rights of the
Series A Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of Series A Participating Preferred Stock, voting separately as a class.
Section 12. Fractional Shares. Series
A Participating Preferred Stock may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Participating
Preferred Stock.
4. The
foregoing Amendment to the Certificate of Incorporation of the Corporation was
authorized by a resolution of the Board at a meeting thereof duly held on April
26, 2013, in accordance with the authority vested in the Board by Article THIRD
of the Certificate of Incorporation.
[Signature
Page Follows]
A-7
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment of the Certificate of Incorporation to be executed by
a duly authorized officer as of the 26th day of April, 2013.
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FORWARD INDUSTRIES, INC.
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By:
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Name:
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Robert Garrett Jr.
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Title:
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Chief Executive Officer
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A-8
EXHIBIT B
FORM OF
RIGHTS CERTIFICATE
Certificate No. R-______
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________ Rights
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NOT EXERCISABLE AFTER APRIL 26, 2016 OR SUCH EARLIER
DATE AS THE RIGHTS ARE REDEEMED, EXCHANGED OR TERMINATED. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY (AS DEFINED BELOW), AT
$0.001 PER RIGHT, AND EXCHANGE, IN EACH CASE PURSUANT TO THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT (AS DEFINED BELOW). UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON. ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.][1]
RIGHTS CERTIFICATE
FORWARD INDUSTRIES, INC.
[1]
The portion of the legend in brackets is to be inserted only if applicable and
will replace the preceding sentence.
B-1
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 April 26, 2013 (the “Rights
Agreement”), between Forward Industries, Inc., a New York corporation (the “Company”),
and American Stock Transfer & Trust Company, LLC, a New York limited
liability trust company (the “Rights Agent,” which term shall include
any successor Rights Agent pursuant to the Rights Agreement), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to the Expiration Date (as such term is defined
in the Rights Agreement) at the office of the Rights Agent designated for such
purpose, or at the office of its successor as Rights Agent, one one-thousandth
of a fully paid and nonassessable share of Series A Participating Preferred
Stock, par value $0.01 per share (the “Preferred Shares”), of the
Company, at an exercise price of $4.00 per one one-thousandth of a Preferred
Share (the “Exercise Price”), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of a Preferred Share that
may be purchased upon exercise hereof) set forth above, and the Exercise Price
per share set forth above, are the number and Exercise Price as of April 26,
2013 based on the Preferred Shares as constituted at such date. As provided in
the Rights Agreement, the Exercise Price and the number and kind of Preferred
Shares or other securities that may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the occurrence of certain events. The Company reserves the
right to require prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights be exercised so that
only whole Preferred Shares will be issued. Capitalized terms used in this
Rights Certificate without definition shall have the meanings ascribed to them
in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the
Rights evidenced by this Rights Certificate are beneficially owned by an
Acquiring Person, an Affiliate or Associate of an Acquiring Person, a
Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any
nominee of any of the foregoing, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office of the Rights
Agent and are available without cost upon written request.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Rights Certificate may be redeemed by the Company, at
its option, at a redemption price of $0.001 per Right at any time prior to the
earlier of (i) the Distribution Date or (ii) the Close of Business on the Final
Expiration Date. In addition, under certain circumstances after any Person
becomes an Acquiring Person, the Rights may be exchanged, in whole or in part,
for Common Shares, or cash other securities of the Company having essentially
the same value or economic rights as such shares. Immediately upon the action
of the Board authorizing any such exchange, and without any further action or
any notice, the Rights (other than Rights that are not subject to such
exchange) will terminate and the Rights will only enable holders to receive the
Common Shares (or cash or other securities or assets of the Company) issuable upon
such exchange.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like number of one one-thousandths of a Preferred Share as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate is
exercised in part, then the holder will be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
B-2
No fractions of Preferred Shares (other than fractions
that are integral multiples of one one-thousandth of a Preferred Share, which
may, at the election of the Company, be evidenced by depositary receipts) will
be issued upon the exercise of any Right or Rights evidenced hereby. In lieu
thereof, a cash payment will be made as provided in the Rights Agreement. The
Company, at its election, may require that a number of Rights be exercised so
that only whole Preferred Shares would be issued.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of the number of one one-thousandths of a Preferred Share or any other
securities of the Company that may at any time be issuable on the exercise or
exchange hereof, nor shall anything contained in herein or in the Rights
Agreement be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as specifically
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised or exchange in accordance with the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of , 20____.
ATTEST:
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FORWARD INDUSTRIES, INC.
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY, LLC, as Rights Agent
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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B-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________ hereby sells, assigns
and transfers unto
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(Please print name and address of transferee)
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this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint ____________________________
as attorney-in-fact to transfer the within Rights Certificate on the books of Forward
Industries, Inc., with full power of substitution.
Dated: _____________
Signature Medallion Guaranteed:
Signatures must be guaranteed by an “Eligible Guarantor
Institution” (with membership in an approved signature guarantee medallion
program at a level acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended. All guarantees must be by a
financial institution (such as a bank or broker) that is a participant in the
Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion
Signature Program (MSP) or the Stock Exchanges Medallion Program (SEMP) and
must not be dated. Guarantees by a notary public are not acceptable.
B-4
CERTIFICATE
The undersigned hereby certifies, for the benefit of the
Company and all holders of Rights and Common Shares, by checking the
appropriate boxes that:
(1) the Right(s) evidenced by this Rights
Certificate are not Beneficially Owned and
¨ are
¨ are not
being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person, an
Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a
Pre-Event Transferee, a Subsequent Transferee or any nominee of any of the
foregoing; and
(2) after due inquiry and to the best knowledge
of the undersigned, it
¨ did
¨ did not
acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person, an Affiliate or Associate of an Acquiring Person, a
Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any
nominee of any of the foregoing.
Dated: _____________
Signature Medallion Guaranteed:
Signatures must be guaranteed by an “Eligible Guarantor
Institution” (with membership in an approved signature guarantee medallion
program at a level acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended. All guarantees must be by a
financial institution (such as a bank or broker) that is a participant in the
Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion
Signature Program (MSP) or the Stock Exchanges Medallion Program (SEMP) and
must not be dated. Guarantees by a notary public are not acceptable.
B-5
[Form of Reverse Side of Rights Certificate—continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the Rights Certificate.)
To: Forward Industries, Inc.
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the number of one
one-thousandths of a Preferred Share (or such other securities of the Company
or of any other Person that may be issuable upon the exercise of the Rights)
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of and delivered to:
Please insert social security
or other identifying number
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(Please print name and address of transferee)
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If such number of Rights shall not be all of the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the balance
remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
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(Please print name and address of transferee)
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Dated: _____________
Signature Medallion Guaranteed:
Signatures must be guaranteed by an “Eligible Guarantor
Institution” (with membership in an approved signature guarantee medallion
program at a level acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended. All guarantees must be by a
financial institution (such as a bank or broker) that is a participant in the
Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion
Signature Program (MSP) or the Stock Exchanges Medallion Program (SEMP) and
must not be dated. Guarantees by a notary public are not acceptable.
B-6
CERTIFICATE
The undersigned hereby certifies, for the benefit of the
Company and all holders of Rights and Common Shares, by checking the
appropriate boxes that:
(1) the Right(s) evidenced by this Rights
Certificate are not Beneficially Owned and
¨ are
¨ are not
being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person, an
Affiliate or Associate of an Acquiring Person, a Post-Event Transferee, a
Pre-Event Transferee, a Subsequent Transferee or any nominee of any of the
foregoing; and
(2) after due inquiry and to the best knowledge
of the undersigned, it
¨
did
¨
did not
acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person, an Affiliate or Associate of an Acquiring Person, a
Post-Event Transferee, a Pre-Event Transferee, a Subsequent Transferee or any
nominee of any of the foregoing.
Dated: _____________
Signature Medallion Guaranteed:
Signatures must be guaranteed by an “Eligible Guarantor
Institution” (with membership in an approved signature guarantee medallion
program at a level acceptable to the Rights Agent) pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended. All guarantees must be by a
financial institution (such as a bank or broker) that is a participant in the
Securities Transfer Agents Medallion Program (STAMP), the NASDAQ Medallion
Signature Program (MSP) or the Stock Exchanges Medallion Program (SEMP) and
must not be dated. Guarantees by a notary public are not acceptable.
B-7
[Form of Reverse Side of Rights Certificate—continued]
NOTICE
The signature in the foregoing Forms of Assignment and
Election to Purchase, as the case may be, must conform to the name as written
upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
IN THE EVENT THAT THE CERTIFICATIONS SET FORTH IN THE
FOREGOING FORMS OF ASSIGNMENT AND ELECTION TO PURCHASE, AS THE CASE MAY BE, ARE
NOT COMPLETED, THEN THE COMPANY AND THE RIGHTS AGENT WILL DEEM THE BENEFICIAL
OWNER OF THE RIGHTS EVIDENCED BY THIS RIGHT CERTIFICATE TO BE AN ACQUIRING
PERSON, AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON, A POST-EVENT
TRANSFEREE, A PRE-EVENT TRANSFEREE, A SUBSEQUENT TRANSFEREE OR ANY NOMINEE OF
ANY OF THE FOREGOING, AS THE CASE MAY BE, AND SUCH ASSIGNMENT OR ELECTION TO
PURCHASE WILL NOT BE HONORED AND THE RIGHTS EVIDENCED BY THIS RIGHTS
CERTIFICATE WILL BE DEEMED TO BE NULL AND VOID.
B-8
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PARTICIPATING PREFERRED STOCK
On April 26, 2013, the Board of Directors (the “Board”)
of Forward Industries, Inc. (the “Company”) authorized and declared a
dividend distribution of one right (a “Right”) for each outstanding
share of the common stock, par value $0.01 per share (the “Common Shares”),
of the Company to shareholders of record at the close of business on May 6, 2013
(the “Record Date”). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of the Series A
Participating Preferred Stock, par value $0.01 per share (the “Preferred
Shares”), of the Company at an exercise price of $4.00 per one
one-thousandth of a Preferred Share, subject to adjustment (the “Exercise
Price”). The complete terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”), dated as of April 26, 2013, between
the Company and American Stock Transfer & Trust Company, LLC, as rights
agent.
The Board adopted the Rights Agreement to protect shareholders
from coercive or otherwise unfair takeover tactics. In general terms, it works
by imposing a significant penalty upon any person or group that acquires 20% or
more of the Common Shares without the approval of the Board. As a result, the
overall effect of the Rights Agreement and the issuance of the Rights may be to
render more difficult or discourage a merger, tender or exchange offer or other
business combination involving the Company that is not approved by the Board.
However, neither the Rights Agreement nor the Rights should interfere with any
merger, tender or exchange offer or other business combination approved by the
Board.
For those interested in the specific terms of the Rights
Agreement, the following is a summary description. Please note, however, that
this description is only a summary and is not complete, and should be read
together with the entire Rights Agreement, which has been filed with the
Securities and Exchange Commission as an exhibit to a Registration Statement on
Form 8-A or a Current Report on Form 8-K to be filed promptly by the Company. A
copy of the Rights Agreement is available free of charge from the Company.
C-1
Distribution and
Transfer of Rights;
Rights Certificates:
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The Board has declared a
dividend of one Right for each outstanding Common Share. Prior to the
Distribution Date referred to below:
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the Rights will be evidenced
by and trade with the certificates for the Common Shares (or, with respect to
any uncertificated Common Shares registered in book entry form, by notation
in book entry), together with a copy of this Summary of Rights, and no
separate rights certificates will be distributed;
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new Common Shares
certificates issued after the Record Date will contain a legend incorporating
the Rights Agreement by reference (for uncertificated Common Shares
registered in book entry form, this legend will be contained in a notation in
book entry); and
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the surrender for transfer of
any certificates for Common Shares (or the surrender for transfer of any
uncertificated Common Shares registered in book entry form) will also
constitute the transfer of the Rights associated with such Common Shares.
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Rights will accompany any new
Common Shares that are issued after the Record Date.
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Distribution Date:
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Subject to certain exceptions
specified in the Rights Agreement, the Rights will separate from the Common
Shares and become exercisable following (i) the 10th business day (or such
later date as may be determined by the Board) after the public announcement
that an Acquiring Person has acquired beneficial ownership of 20% or more of
the Common Shares or (ii) the 10th business day (or such later date as may be
determined by the Board) after a person or group announces a tender or
exchange offer that would result in ownership by a person or group of 20% or
more of the Common Shares. For purposes of the Rights Agreement, beneficial
ownership is defined to include the ownership of derivative securities.
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The date on which the Rights
separate from the Common Shares and become exercisable is referred to as the
“Distribution Date.”
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After the Distribution Date,
the Company will mail Rights certificates to the Company’s shareholders as of
the close of business on the Distribution Date and the Rights will become
transferable apart from the Common Shares. Thereafter, such Rights
certificates alone will represent the Rights.
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Preferred Shares Purchasable Upon Exercise of Rights:
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After the Distribution Date,
each Right will entitle the holder to purchase, for $4.00 (the “Exercise
Price”), one one-thousandth of a Preferred Share having economic and other
terms similar to that of one Common Share. This portion of a Preferred Share
is intended to give the shareholder approximately the same dividend, voting
and liquidation rights as would one Common Share, and should approximate the
value of one Common Share.
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More specifically, each one
one-thousandth of a Preferred Share, if issued, will:
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not be redeemable;
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entitle holders to quarterly
dividend payments of $0.001 per share, or an amount equal to the dividend
paid on one Common Share, whichever is greater;
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entitle holders upon liquidation either to receive $1 per share or an amount
equal to the payment made on one Common Share, whichever is greater; |
C-2
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have the same voting power as
one Common Share; and
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entitle holders to a per
share payment equal to the payment made on one Common Share if the Common
Shares are exchanged via merger, consolidation or a similar transaction.
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Flip-In Trigger:
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If a person or group of
affiliated or associated persons (an “Acquiring Person”) obtains
beneficial ownership of 20% or more of the Common Shares, then each Right
will entitle the holder thereof to purchase, for the Exercise Price, a number
of Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a then-current market value of twice the
Exercise Price. However, the Rights are not exercisable following the
occurrence of the foregoing event until such time as the Rights are no longer
redeemable by the Company, as further described below.
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Following the occurrence of
an event set forth in preceding paragraph, all Rights that are or, under
certain circumstances specified in the Rights Agreement, were beneficially
owned by an Acquiring Person or certain of its transferees will be null and
void.
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Flip-Over Trigger:
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If, after an Acquiring Person
obtains 20% or more of the Common Shares, (i) the Company merges into another
entity, (ii) an acquiring entity merges into the Company or (iii) the Company
sells or transfers more than 50% of its assets, cash flow or earning power,
then each Right (except for Rights that have previously been voided as set
forth above) will entitle the holder thereof to purchase, for the Exercise
Price, a number of shares of common stock of the person engaging in the
transaction having a then-current market value of twice the Exercise Price.
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C-3
Redemption of the Rights:
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The Rights will be redeemable at the Company’s option for $0.001 per Right
(payable in cash, Common Shares or other consideration deemed appropriate by
the Board) at any time on or prior to the 10th business day (or such later
date as may be determined by the Board) after the public announcement that
an Acquiring Person has acquired beneficial ownership of 20% or more of the
Common Shares. Immediately upon the action of the Board ordering redemption,
the Rights will terminate and the only right of the holders of the Rights
will be to receive the $0.001 redemption price. The redemption price will be
adjusted if the Company undertakes a stock dividend or a stock split.
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Exchange Provision:
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At any time after the date on which an Acquiring Person beneficially owns
20% or more of the Common Shares and prior to the acquisition by the
Acquiring Person of 50% of the Common Shares, the Board may exchange the
Rights (except for Rights that have previously been voided as set forth
above), in whole or in part, for Common Shares at an exchange ratio of one
Common Share per Right (subject to adjustment). In certain circumstances,
the Company may elect to exchange the Rights for cash or other securities of
the Company having a value approximately equal to one Common Share.
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Expiration of the Rights:
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The Rights expire on the earliest of (i) 5:00 p.m., New York City time, on
April 26, 2016 (unless such date is extended) or (ii) the redemption or
exchange of the Rights as described above.
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Amendment of Terms of Rights Agreement and Rights:
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The terms of the Rights and the Rights Agreement may be amended in any
respect without the consent of the holders of the Rights on or prior to the
Distribution Date. Thereafter, the terms of the Rights and the Rights
Agreement may be amended without the consent of the holders of Rights in
order to cure any ambiguities, to shorten or lengthen any time period
pursuant to the Rights Agreement or to make changes that do not adversely
affect the interests of holders of the Rights.
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Voting Rights; Other Shareholder Rights:
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The Rights will not have any voting rights. Until a Right is exercised, the
holder thereof, as such, will have no separate rights as shareholder of the
Company.
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Anti-Dilution Provisions:
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The Board may adjust the Exercise Price, the number of Preferred Shares
issuable and the number of outstanding Rights to prevent dilution that may
occur from a stock dividend, a stock split or a reclassification of the
Preferred Shares or Common Shares.
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With certain exceptions, no adjustments to the Exercise Price will be made
until the cumulative adjustments amount to at least 1% of the Exercise
Price. No fractional Preferred Shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the current market price of the
Preferred Shares.
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Taxes:
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The distribution of Rights should not be taxable for federal income tax
purposes. However, following an event that renders the Rights exercisable or
upon redemption of the Rights, shareholders may recognize taxable income.
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C-4