Exhibit 4.1
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The Sportsman's Guide, Inc.
and
Norwest Bank Minnesota, N.A.
Rights Agent
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Rights Agreement
Dated as of May 11, 1999
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Table of Contents
Section
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . .
Section 3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . . . .
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . .
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . .
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . .
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . .
Section 9. Reservation and Availability of Capital Stock . . . . . . . . . . . .
Section 10. Common Stock Record Date. . . . . . . . . . . . . . . . . . . . . . .
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . .
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . .
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . .
Section 17. Rights Certificate Holder Not Deemed a Shareholder. . . . . . . . . .
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . .
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . .
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . .
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . .
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . .
Section 23. Redemption and Termination. . . . . . . . . . . . . . . . . . . . . .
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . .
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . .
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 29. Determination and Actions by the Board of Directors, etc. . . . . . .
Section 30. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . .
Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . .
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of May 11, 1999 (this "Agreement"), is
by and between The Sportsman's Guide, Inc., a Minnesota corporation (the
"Company"), and Norwest Bank Minnesota, N.A., a national banking association
(the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on May 11, 1999 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared, a dividend
distribution of one Right (as hereinafter defined) for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the Close of
Business on May 21, 1999 (the "Record Date"), each Right initially
representing the right to purchase one share of Common Stock of the Company,
upon the terms and subject to the conditions hereinafter set forth (the
"Rights"), and has further authorized the issuance of one Right for each
share of Common Stock issued between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter
defined) or, in certain circumstances provided in Section 22, after the
Distribution Date.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, but
shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any
Person organized, appointed or established by the Company for or pursuant to
the terms of any such plan. Notwithstanding the foregoing,
(i) no Person who or which, at the Close of Business on the
date hereof, shall be the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding shall be deemed an "Acquiring Person";
provided, however, that, subject to clause (ii) and clause (iii) below,
if a Person is, at the Close of Business on the date hereof, the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding and shall thereafter become the Beneficial Owner of
additional shares of Common Stock at any time that the Person is or
thereby becomes the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding (other than shares acquired solely as a
result of corporate action of the Company not caused, directly or
indirectly, by such Person), then such Person shall be deemed to be an
"Acquiring Person"; and
(ii) no Person shall become an "Acquiring Person" as the result
of an acquisition of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the
shares of Common Stock then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding by reason of share purchases by the Company
and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional shares of Common Stock at any time
that the person is or thereby becomes the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding (not as a result of any
action or transaction contemplated in this clause (ii) or in clause (iii)
below), then such Person shall be deemed to be an "Acquiring Person"; and
(iii) no Person shall become an "Acquiring Person" solely as a
result of an action or transaction or series of related actions or
transactions approved by the Board of Directors of the Company before
such Person would otherwise have become an "Acquiring Person"; provided,
however, that if any Person which, but for the foregoing provisions of
this clause (iii), would have become an "Acquiring Person" shall
thereafter acquire additional shares of Common Stock (not as a result of
any action or transaction contemplated in clause (ii) or in this clause
(iii)), then such person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith 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, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person" (as defined pursuant to the foregoing
provisions of this paragraph (a)), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act);
(ii) which such Person or any of such Person's Affiliates or
Associates (A) has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (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 as described in
clause (B) of subparagraph (ii) of this paragraph (d)) or disposing of
any securities of the Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Minnesota are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Minnesota time, on such date; provided, however, that if such date is not a
Business Day, it shall mean 5:00 P.M., Minnesota time, on the next succeeding
Business Day.
(g) "Common Stock" shall mean the common stock, $.01 par value, of
the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(h) "Person" shall mean any individual, firm, limited liability
company, corporation, partnership or other entity and shall include any
successor (by merger or otherwise) of such entity.
(i) "Section 11(a)(ii) Event" shall mean the event described in
Section 11(a)(ii).
(j) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a).
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(k) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become
such.
(1) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities
sufficient to elect at least a majority of the directors of such corporation
is beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(m) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
In addition, for purposes of this Agreement, the following terms have
the meanings indicated in specified sections of this Agreement: (i)
"Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii);
(ii) "common share equivalents" shall have the meaning set forth in Section
11(a)(iii); (iii) "current market price" shall have the meanings set forth in
Section 11(d); (iv) "Current Value" shall have the meaning set forth in
Section 11(a)(iii); (v) "Distribution Date" shall have the meaning set forth
in Section 3(a); (vi) "equivalent common shares" shall have the meaning set
forth in Section 11(b); (vii) "Nasdaq" shall have the meaning set forth in
Section 11(d); (viii) "Principal Party" shall have the meaning set forth in
Section 13(b); (ix) "Purchase Price" shall have the meaning set forth in
Sections 4(a), 11(a)(ii) and 13; (x) "Redemption Price" shall have the
meaning set forth in Section 23(a); (xi) "Rights Certificates" shall have the
meaning set forth in Section 3(a); (xii) "Section 11(a)(ii) Trigger Date"
shall have the meaning set forth in Section 11(a)(iii); (xiii) "Spread" shall
have the meaning set forth in Section 11(a)(iii); (xiv) "Substitution Period"
shall have the meaning set forth in Section 11(a)(iii); (xv) "Summary of
Rights" shall have the meaning set forth in Section 3(b); and (xvi) "Trading
Day" shall have the meaning set forth in Section 11(d).
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3, shall, prior to the
Distribution Date, also be the holders of the Common Stock) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES. (a) Until the earlier of
(i) the Close of Business on the tenth day after the Stock Acquisition Date
(or, if the tenth day after the Stock Acquisition Date occurs before the
Record Date, the Close of Business on the Record Date), or (ii) the Close of
Business on the tenth Business Day (or such later date as may be determined
by action of the Board of Directors of the Company prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement of, or
first public announcement of the intent to commence, a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
or any Person organized, appointed or established by the
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Company for or pursuant to the terms of any such plan) if, upon consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates and (y) the
Rights will be transferable only in connection with the transfer of the
underlying Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, postage prepaid mail, to each record holder of the Common Stock
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more Rights certificates,
in substantially the form of Exhibit A hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Common Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Record Date, at the address
of such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the earlier of the Distribution
Date or the Expiration Date (as such term is defined in Section 7(a)), the
surrender for transfer of any certificate representing shares of Common Stock
in respect of which Rights have been issued, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or
the Expiration Date or, in certain circumstances provided in Section 22,
after the Distribution Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between The
Sportsman's Guide, Inc. (the "Company") and Norwest Bank Minnesota, N.A.
(the "Rights Agent") dated as of May 11, 1999 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights
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Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates. In the event the Company purchases or acquires any shares of
its Common Stock after the Record Date but prior to the Distribution Date,
any Rights associated with such shares shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any rights associated
with shares of Common Stock which are no longer outstanding.
Section 4. FORM OF RIGHTS CERTIFICATES. (a) The Rights Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in Exhibit
A hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and Section 22,
the Rights Certificates, whenever distributed, shall be dated as of the
Distribution Date and on their face shall entitle the holders thereof to
purchase such number of shares of Common Stock as shall be set forth therein
at the price per share of Common Stock set forth therein (the "Purchase
Price"), but the amount of Common Stock or other type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights beneficially owned by any Person known to
be: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person with
whom such Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e), 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, shall contain (to
the extent feasible) the following legend:
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The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman,
President or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Rights Certificates
shall be countersigned manually or by facsimile signature by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the certificate number and
the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14, at
any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate
or Certificates (other than Rights Certificates representing Rights that have
become 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 or Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to
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take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on
the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 and Section 24, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificates if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section
23(a)) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for
such purpose, together with payment of the Purchase Price with respect to the
total number of shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earliest of (i) the Close of Business on May
11, 2009 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 or (iii) the time at which such Rights are
exchanged pursuant to Section 24 (the earliest of (i), (ii) and (iii) being
herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of Common Stock pursuant to
the exercise of a Right shall initially be $50, and shall be subject to
adjustment from time to time as provided in Sections 11 and 13(a) and shall
be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the shares of Common Stock (or
other securities, cash or other assets, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer tax (as
determined by the Rights Agent) required to be paid by the holder of the Rights
Certificate in accordance with Section 9, the Rights Agent shall, subject to
Section 20(k), thereupon promptly (i) (A) requisition from any transfer agent of
the shares of Common Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the
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total number of shares of Common Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
or (B) if the Company shall have elected to deposit the total number of
shares of the Common Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of shares of Common Stock as are to be
purchased (in which case certificates for the shares of Common Stock
represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash,
if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii)) shall be made in cash or by certified
bank check or bank draft payable to the order of the Company. In the event
that the Company is obligated to issue other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a), the Company
will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if
and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any Affiliate or Associate thereof) to holders of equity
interests in such Acquiring Person (or any Affiliate or Associate thereof) or
to any Person with whom the Acquiring Person (or any Affiliate or Associate
thereof) has any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its determinations, or
failure to make any determinations, with respect to an Acquiring Person or
any of its Affiliates, Associates or transferees hereunder.
9
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any
of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof, except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificates
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates to
the Company, or shall, after any Securities and Exchange Commission required
retention period, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued other securities) or any authorized and issued shares of Common
Stock held in its treasury, the number of shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities) that, as
provided in this Agreement, including Section 11(a)(iii), will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock (and, following the
occurrence of a Triggering Event, other securities) issuable and deliverable
upon the exercise of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii), a registration statement under the Act with respect to
the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the date of the expiration of
the Rights. The Company
10
will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
In addition, if the Company shall determine that a registration statement is
required following the Distribution Date, and a Section 11(a)(ii) Event has
not occurred, the Company may temporarily suspend the exercisability of
Rights until such time as a registration statement has been declared
effective. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the requisite
qualification or exemption in such jurisdiction shall not have been obtained,
the exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such
actions as may be necessary to ensure that all shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay, when
due and payable, any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any shares of Common Stock (or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of shares of Common Stock (or other securities, as the
case may be) in respect of a name other than that of, the registered holder
of the Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates or depositary receipts for shares of Common
Stock (or other securities, as the case may be) in a name other than that of
the registered holder upon the exercise of any Rights until such tax shall
have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of such shares of Common Stock (or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Common Stock (or other
securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
on, and such certificate shall be dated, the next succeeding Business Day on
which the
11
Common Stock (or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of Common Stock or capital stock, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and
kind of shares of Common Stock or capital stock, as the case may be,
which, if such Right had been exercised immediately prior to such date
and at a time when the Common Stock 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, combination or
reclassification.
(ii) Subject to Section 24, in the event any Person becomes an
Acquiring Person, then each holder of a Right (except as provided below
and in Section 7(e)) shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then current Purchase Price in
accordance with the terms of this Agreement, such number of shares of
Common Stock as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of shares of Common Stock
for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event and (y) dividing that product
(which, following such first occurrence shall thereafter be referred to
as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to
Section 11(d)) per share of Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's certificate of incorporation, but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights, is not
12
sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value"), and (B)
with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company which the Board of Directors of the Company
has deemed to have substantially the same value or economic rights as
shares of Common Stock ("common share equivalents"), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value
(less the amount of any reduction in the Purchase Price), where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(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) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. For purposes of the preceding sentece, the term
"Spread" shall mean the excess of (i) the Current Value over (ii) the
Purchase Price. If the Board of Directors of the Company shall
determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be extended,
the "Substitution Period"). To the extent that action is to be taken
pursuant to the first and/or third sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e),
that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek such shareholder approval
for such authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value
of each Adjustment Share shall be the current market price (as
determined pursuant to Section 11(d)) per share of Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any "common share
equivalent" shall be deemed to equal the current market price per
share of Common Stock.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of shares of
Common Stock entitling them to
13
subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) shares of Common Stock (or shares
having the same rights, privileges and preferences as the shares of Common
Stock ("equivalent common shares")) or securities convertible into shares of
Common Stock or equivalent common shares at a price per share of Common Stock
or per equivalent common share (or having a conversion price per share, if a
security convertible into shares of Common Stock or equivalent common shares)
less than the current market price (as determined pursuant to Section 11(d))
per share of Common Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
on such record date, plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock and/or
equivalent common shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be
the number of shares of Common Stock outstanding on such record date, plus
the number of additional shares of Common Stock and/or equivalent common
shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in shares of Common Stock, but including any
dividend payable in stock other than Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the current market price (as determined pursuant
to Section 11(d)) per share of Common Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of
Common Stock and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d)) per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
14
adjusted to be the Purchase Price which would have been in effect if such
record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "current market price"
per share of Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date, and for purposes of computations made pursuant to Section
11(a)(iii), the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of
Common Stock for the ten (10) consecutive Trading Days immediately following
such date; provided, however, that in the event that the current market price
per share of Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into such shares of Common Stock (other than the
Rights), or (B) any subdivision, combination or reclassification of such
Common Stock, and the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification shall
not have occurred prior to the commencement of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, then, and in
each such case, the "current market price" shall be properly adjusted to take
into account any trading during the period prior to such ex-dividend date or
record date. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("Nasdaq")
or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date as determined in
good faith by the Board of Directors of the Company shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
15
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one ten-thousandth of a share
of Common Stock. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any capital stock of the Company other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Common Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of shares of Common Stock (calculated to the nearest
one-ten-thousandth) obtained by (i) multiplying (x) the number of shares of
Common Stock covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of shares of Common Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common Stock for
which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but,
16
if the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of
the holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of shares of Common
Stock which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares
of Common Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date the shares of Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that the Board of Directors of the Company, in its good
faith judgment, shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance wholly for
cash of any shares of Common Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Common Stock or securities which
by their terms are convertible into or exchangeable for shares of Common
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
17
referred to in this Section 11, hereafter made by the Company to holders of
its Common Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o)), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o)), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer there are any
rights, warrants or other instruments or securities outstanding or agreements
in effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale or
transfer, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of such adjustment unless
and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event that, directly or indirectly, at any time after
a Person has become an Acquiring Person, (x) the Company shall consolidate with,
or merge with and into, any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o)), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other
18
Person or the Company or cash or any other property, or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or one or more of its wholly-owned
Subsidiaries in one or more transactions each of which complies with Section
11(o)), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e), shall
thereafter have the right to receive upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, and in
lieu of shares of Common Stock of the Company, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable shares
of Common Stock of the Principal Party (as such term is hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of shares of Common Stock for
which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event, and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by (2) 50% of
the current market price (determined pursuant to Section 11(d)) per share of
Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 shall apply only to
such Principal Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of Common Stock) in
connection with the consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonaby may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect
19
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in paragraph (a) of
this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus
at all times meeting the requirements of the Act) until the Expiration
Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted
20
to trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported to the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by Nasdaq or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional
shares of Common Stock, the Company shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
one share of Common Stock. For purposes of this Section 14(b), the current
market value of one share of Common Stock shall be the closing price of one
share of Common Stock (as determined pursuant to Section 11(d)) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent
pursuant to Sections 18 and 20, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in such holder's own behalf and for such holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his or her right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject
to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
21
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate)
is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificates made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e), shall be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, the
Company must use reasonable efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose to be the holder of the shares of
Common Stock or any other securities of the Company which may at any time be
issuable upon the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in
Section 25), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have
been exercised in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for
22
other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice
of counsel as set forth in Section 20.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature
of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at the time any of the Rights Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed, and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case, at that time, any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of
23
the Board, President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recital contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including Rights becoming void pursuant to
Section 7(e)) or any adjustment required under the provisions of Section 11,
Section 13 or Section 24 or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not
24
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided, however, that reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock, by registered or
certified mail or overnight mail service, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock, by registered or certified mail or
overnight mail service, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his or her Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business in good standing under the laws of the United States or
any state of the United States and which is authorized under such laws to
exercise corporate trust or share transfer powers. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by
it hereunder, and execute and deliver any further reasonable assurance,
conveyance, act or deed necessary for the purpose. Not later
25
than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21 or any defect therein shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities issued by
the Company prior to the Distribution Date, issue Rights Certificates
representing an appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be
issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. REDEMPTION AND TERMINATION. (a) The Board of Directors
of the Company may, at its option, at any time prior to the earlier of (i)
the Close of Business on the tenth day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the Record
Date, the Close of Business on the tenth day following the Record Date), or
(ii) the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.00l per Right, as such amount
may be appropriately adjusted to reflect any share split, share dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, shares of
Common Stock (based on the "current market price", as defined in Section
11(d), of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors. The redemption
of the Rights by the Board of Directors may be made effective at such time,
on such basis and with such conditions as the Board of Directors in its sole
discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will
26
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the
action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books
of the Rights Agent, or prior to the Distribution Date, on the registry books
of the transfer agent for the Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
Section 24. EXCHANGE. (a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 7(e)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered
to effect such exchange at any time after any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of fifty percent (50%) or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any
partial exchange will be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute common share equivalents (as such term is defined
in Section 11(a)(iii)) for some or all of the shares of Common Stock
exchangeable for Rights.
(d) In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in
27
accordance with this Section 24, the Company shall take all such actions as
may be necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock,
there shall be paid to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this subsection
(e), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to Section
11(d)) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
or (ii) to offer to the holders of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or stock
of any class or any other securities, rights or options, or (iii) to effect
any reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding Common Stock), or (iv) to
effect any consolidation or merger into or with any other Person (other than
a Subsidiary of the Company in a transaction which complies with Section
11(o)), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one transaction or
a series of related transactions, of more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o)), or (v)
to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common Stock, if any
such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty (20) days prior
to the record date for determining holders of the Common Stock for purposes
of such action, and in the case of any such other action, at least twenty
(20) days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the shares of Common Stock,
whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) shall occur,
then the Company shall as soon as practicable thereafter give to each holder
of a Rights Certificate, to the extent feasible and in accordance with
Section 26, a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii).
28
Section 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
The Sportsman's Guide, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Norwest Bank Minnesota, N.A.
Shareowner Services
000 Xxxxx Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Manager-Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions
with respect to the Rights which the Company may deem necessary or desirable,
any such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent; provided, however, that from and after such
time as any Person becomes an Acquiring Person, this Agreement shall not be
amended in any manner which would adversely affect the interests of the
holders of Rights. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock. Without limiting the foregoing, the Company may at
any time prior to such time as any Person becomes an Acquiring Person amend
this Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) to
a percentage that (subject to exceptions for specified Persons or groups
excepted from the definition of "Acquiring Person") is not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
shares of Common Stock then known by the Company to be beneficially owned by
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, any
Person organized, appointed or established by the Company for or pursuant
29
to the terms of any such plan or, to the extent excepted from the definition
of "Acquiring Person", other specified persons or groups) and (ii) 10.0%.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary
or advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, but not limited to, a
determination to redeem or not redeem the Rights or to amend this Agreement).
All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to
the foregoing) which are done or made by the Board of Directors of the
Company in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board of Directors of the Company to any liability to
the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 shall be reinstated and shall not expire
until the Close of Business on the tenth day following the date of such
determination by the Board of Directors of the Company.
30
Section 32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Minnesota and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.
Attest: THE SPORTSMAN'S GUIDE, INC.
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxx
--------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx Xxxx
Title: Senior Vice President of Title: Chairman and Chief
Finance, Secretary Executive Officer
and Treasurer
Attest: NORWEST BANK MINNESOTA, N.A.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President Title: Vice President
31
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER MAY 11, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.00l PER RIGHT, AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]
A-1
Rights Certificate
THE SPORTSMAN'S GUIDE, INC.
This certifies that __________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of May 11, 1999 (the "Rights
Agreement"), between The Sportsman's Guide, Inc., a Minnesota corporation
(the "Company"), and Norwest Bank Minnesota, N.A., a national banking
association (the "Rights Agent"), to purchase from the Company at any time
prior to 5:00 P.M. (Minnesota time) on May 11, 2009 at the office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one fully paid, nonassessable share of Common Stock, $.01 par value
(the "Common Stock"), of the Company, at a purchase price (the "Purchase
Price") of $50 per share of Common Stock, upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above,
are the number and Purchase Price as of May 11, 1999, based on the Common
Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate
or Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person or an Affiliate or Associate of such Person, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Common Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are
subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned offices of
the Rights Agent and are available upon written request.
A-2
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices 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 aggregate number of shares of Common Stock as the
Rights evidenced by the Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may, in each case at the option of the Company,
be (i) redeemed by the Company at its option at a redemption price of $.00l
per Right or (ii) exchanged in whole or in part for shares of Common Stock or
other securities of the Company. Immediately upon the action of the Board of
Directors of the Company authorizing redemption, the Rights will terminate
and the only right of the holders of Rights will be to receive the redemption
price.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting shareholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned manually or by facsimile
signature by the Rights Agent.
A-3
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _____________, ____
ATTEST: THE SPORTSMAN'S GUIDE, INC.
________________________________ By: _______________________
Secretary Name:
Title:
Countersigned:
[ ]
By: ___________________________
Authorized Signature
A-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ___________________________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated:_____________, ____
______________________________________
Signature
Signature Guaranteed:
A-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:_____________, ____ ______________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
TO: THE SPORTSMAN'S GUIDE, INC.
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Rights Certificate to purchase the shares of
Common Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares
(or other securities) be issued in the name of and delivered to:
Please insert social security
or other identifying number
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
Dated:_____________, ____
______________________________________
Signature
Signature Guaranteed:
A-7
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:_____________, ____ ______________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
A-8
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On May 11, 1999, the Board of Directors of The Sportsman's Guide, Inc.
(the "Company") declared a dividend distribution of one Right for each
outstanding share of the Company's common stock, $.01 par value ("Common
Stock"), to shareholders of record at the close of business on May 21, 1999.
Each Right entitles the registered holder to purchase from the Company one
share of Common Stock at a purchase price (the "Purchase Price") of $50 per
share of Common Stock, subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement") dated
as of May 11, 1999 between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
certificates will be distributed. The Rights will separate from the Common
Stock and the Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (with such exceptions as are set forth in the Rights
Agreement) (an "Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors
prior to such time as any person or group becomes an Acquiring Person)
following the commencement of or announcement of an intention to make a
tender or exchange offer, which, if consummated, would result in a person or
group becoming the beneficial owner of 15% or more of the outstanding shares
of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after
May 21, 1999 will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 11, 2009, unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights
certificates will be mailed to holders of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights. Except as otherwise
provided in the Rights Agreement, only shares of Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution Date, a
person or group becomes an Acquiring Person, each holder of a Right will
thereafter have the right to receive,
B-1
upon exercise, Common Stock having a market value equal to two times the
Purchase Price of the Right. If an insufficient number of shares of Common
Stock is authorized for issuance, then the Board would be required to
substitute cash, property or other securities of the Company for the Common
Stock. Notwithstanding any of the foregoing, following the occurrence of the
event set forth in this paragraph, all rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However, Rights are not
exercisable following the occurrence of the event set forth in this paragraph
until such time as the Rights are no longer redeemable by the Company as set
forth below.
For example, at an exercise price of $50 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an
event set forth in the preceding paragraph would entitle its holder to
purchase $100 worth of Common Stock (or other consideration, as noted above)
at a purchase price per share equal to 50% of the then current market price
of a share of Common Stock. Assuming that the Common Stock had a per share
value of $10 at such time, the holder of each valid Right would be entitled
to purchase ten shares of Common Stock for $50.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation, or (ii)
50% or more of the Company's assets or earning power is sold or transferred,
each holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a market value equal to two
times the Purchase Price (i.e., at a 50% discount from the then current
market price of such common stock). The events set forth in this paragraph
and in the second preceding paragraph are referred to as the "Triggering
Events."
The purchase price payable, and the number of shares of Common Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of,
the shares of Common Stock, (ii) if holders of the Common Stock are granted
certain rights, options or warrants to subscribe for Common Stock or
convertible securities at less than the current market price of the Common
Stock, or (iii) upon the distribution to holders of the Common Stock of
evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred
to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Common Stock will be issued. In lieu
thereof, there shall be paid to registered holders of Rights Certificates an
amount in cash based on the market price of the shares of Common Stock on the
last trading day prior to the date of exercise.
B-2
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which
will have become void), in whole or in part, at an exchange ratio of one
share of Common Stock (or other equity securities of the Company having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
In general, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (subject to adjustment and payable in
cash, Common Stock or other consideration deemed appropriate by the Board of
Directors) at any time until ten days following the Stock Acquisition Date.
Immediately upon the action of the Board of Directors authorizing any
redemption, the Rights will terminate and the only right of the holders of
Rights will be to receive the redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not result in the recognition of taxable income by shareholders or the
Company, shareholders may, depending upon the circumstances, recognize
taxable income after a Triggering Event.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
shares of Common Stock then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%, except
that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights.
A copy of the Rights Agreement is available free of charge from the
Company. This description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
B-3
