EXHIBIT 1
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Ultra Pac, Inc.
and
Norwest Bank Minnesota, N.A.
Rights Agent
Rights Agreement
Dated as of February 27, 1998
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TABLE OF CONTENTS
Page
Section 1. Certain Definitions............................................ 1
Section 2. Appointment of Rights Agent.................................... 4
Section 3. Issuance of Rights Certificates................................ 4
Section 4. Form of Rights Certificates.................................... 6
Section 5. Countersignature and Registration.............................. 7
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates................................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.. 9
Section 8. Cancellation and Destruction of Rights Certificates............ 10
Section 9. Availability of Capital Stock.................................. 10
Section 10. Preferred Shares Record Date................................... 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights............................................... 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..... 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................. 20
Section 14. Fractional Rights and Fractional Shares........................ 23
Section 15. Rights of Action............................................... 24
Section 16. Agreement of Rights Holders.................................... 24
Section 17. Rights Certificate Holder Not Deemed a Shareholder............. 25
Section 18. Concerning the Rights Agent.................................... 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent...... 26
Section 20. Duties of Rights Agent......................................... 26
Section 21. Change of Rights Agent......................................... 28
Section 22. Issuance of New Rights Certificates............................ 29
Section 23. Redemption..................................................... 29
Section 24. Exchange....................................................... 31
Section 25. Notice of Certain Events....................................... 32
Section 26. Notices........................................................ 33
Section 27. Supplements and Amendments..................................... 33
Section 28. Determination and Actions by the Board of Directors, etc....... 33
Section 29. Successors..................................................... 34
Section 30. Benefits of this Agreement..................................... 34
Section 31. Severability................................................... 34
Section 32. Governing Law.................................................. 34
Section 33. Counterparts................................................... 34
Section 34. Descriptive Headings........................................... 35
Signatures....................................................................35
i
Page
Exhibit A - Form of Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock........A-1
Exhibit B - Form of Rights Certificate.....................................B-1
Exhibit C - Summary of Rights to Purchase Preferred Shares.................C-1
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RIGHTS AGREEMENT
Agreement, dated as of February 27, 1998, between Ultra Pac, Inc., a
Minnesota corporation (the "Company"), and Norwest Bank Minnesota, N.A. (the
"Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding on March 18, 1998 (the
"Record Date"), each Right representing the right to purchase one one-hundredth
of a Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties 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 (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding, but
shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit plan of
the Company or any Subsidiary of the Company, or (iv) any entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of (a) an acquisition
of Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company
then outstanding or (b) the acquisition by such Person of newly issued
Common Shares directly from the Company (it being understood that a
purchase from an underwriter or other intermediary is not directly from
the Company); provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company
then outstanding by reason of share purchases by the Company or the
receipt of newly-issued Common Shares directly from the Company and
shall, after such share purchases or direct issuance by the Company,
become the Beneficial Owner of any additional Common Shares of the
Company, 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 Section 1(a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an Acquiring Person, as defined
pursuant to the foregoing provisions of this Section 1(a), then such
Person shall not be deemed to be an "Acquiring Person" for any purposes
of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (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, warrants or options, or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, (x) securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, (y) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering
Event or (z) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;
or (B) the sole or shared right to vote or dispose pursuant to
any agreement, arrangement or understanding; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule
13D or Schedule 13G under the Exchange Act (or any comparable
or successor report); or (C) has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act); or
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(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding, whether written or oral (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 to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of Minnesota
are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., Xxxxxx, Minnesota time, on such date; PROVIDED, HOWEVER, that if
such date is not a Business Day it shall mean 5:00 P.M., Xxxxxx,
Minnesota time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the shares of Common Stock, no par value, of the Company.
"Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) of such other
Person with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management
of such Person.
(g) "Continuing Director" shall mean (i) any member of the
Board of Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person or of
any such Affiliate or Associate, and was a member of the Board prior to
the date of this Agreement, or (ii) any Person who subsequently becomes
a member of the Board, while such Person is a member of the Board, who
is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, if such Person's nomination for election
or election to the Board is recommended or approved by a majority of
the Continuing Directors.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
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(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(k) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(l) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, no par value, of the Company having the
rights and preferences set forth in the Form of Certificate of
Designation, Preferences and Rights attached to this Agreement as
Exhibit A.
(m) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(n) "Section 11(a)(ii) Event" shall mean an event described in
Section 11(a)(ii) hereof.
(o) "Shares 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.
(p) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
(q) "Triggering Event" shall mean a Section 11(a)(ii) Event or
an event described in Section 13(a) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth day after the Shares Acquisition 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 prior to such time as
any Person becomes an Acquiring Person) after the date of the
commencement 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 or entity
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organized, appointed or established by the Company for or pursuant to
the terms of any such plan) of, or of the first public announcement of
the intention of any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such
plan) to commence, a tender or exchange offer the consummation of which
would result in any Person becoming the Beneficial Owner of Common
Shares aggregating 15% or more of the then outstanding Common Shares
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be certificates for
Rights) and not by separate certificates, (y) the Rights will be
transferable only in connection with the transfer of Common Shares and
(z) each transfer of Common Shares (including a transfer to the
Company) shall constitute a transfer of the Rights associated with such
Common Shares. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Rights Certificate, in substantially
the form of Exhibit B hereto (a "Rights Certificate"), evidencing one
Right for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the close of business on the
Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for Common Shares outstanding as
of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in
the last sentence of this Section 3 (c)) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
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This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between Ultra Pac, Inc. and Norwest
Bank Minnesota, N.A. dated as of February 27, 1998
(the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy
of which is on file at the principal executive
offices of Ultra Pac, Inc. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Ultra Pac, Inc. will mail to the holder
of this certificate a copy of the Rights Agreement
without charge after receipt of a written request
therefor. As described in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring
Person or any Associate or Affiliate thereof (all as
defined in the Rights Agreement) shall become null
and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the Record Date
but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates and the forms of election to
purchase and of assignment to be printed on the reverse thereof, shall
be substantially the same as Exhibit B hereto, and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the terms, provisions and restrictions
elsewhere herein, the Rights Certificates shall entitle the holders
thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the price per one one-hundredth
of a Preferred Share set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate
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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, whether written or oral, regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company
has determined in good faith is part of a plan, arrangement or
understanding, whether written or oral, which has as a primary purpose
or effect avoidance of the second paragraph of Section 11(a)(ii)
hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
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 11(a)(ii) of such Agreement.
The provisions of the second paragraph of Section 11(a)(ii) shall apply
whether or not any Rights Certificate actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any Person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such Person was not such an officer.
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Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Rights Certificates of each series issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 14 and 24
hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier of the
Redemption Date or the Final Expiration Date, any Rights Certificate or
Rights Certificates (other than Rights Certificates representing Rights
that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred,
split-up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a Preferred Share (or Common Shares,
other securities or property, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitle such holder
to purchase. Any registered holder desiring to transfer, split-up,
combine or exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be
transferred, split-up, combined or exchanged at the principal office of
the Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall, subject to Sections 4 and 11(a)(ii) hereof,
countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with
any transfer, split-up, combination or exchange of Rights Certificates.
(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, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate, if mutilated, the Company will make and deliver a
new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 11(a)(ii) hereof, the registered holder
of any valid 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) hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price (as defined below) for each one
one-hundredth of a Preferred Share (or Common Shares, other securities,
cash or other assets, as the case may be) as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on
February 27, 2008 (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share to be issued upon exercise of a Right shall initially
be $25.00, shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate on the reverse side of the Rights Certificate duly
executed, accompanied by payment of the Purchase Price for the shares
(or other securities or property, as the case may be) to be purchased
and an amount equal to any applicable transfer tax required to be paid
by the holder of such Rights Certificate in accordance with Section 9
hereof by wire transfer, certified check, cashier's check or money
order payable to the order of the Company, or such other payment method
reasonably required by the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available if the Rights Agent is the transfer agent of
the Preferred Shares) certificates for the number of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests or (B) requisition from
the depositary agent depositary receipts as provided in Section 14(b)
hereof, representing such number of one one-hundredths of a Preferred
Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent and the Company hereby directs
the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company or such other entity the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Rights Certificate. In the
event that the Company elects or is obligated to issue other securities
(including Common
9
Shares) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a)(iii) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or
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 to the registered
holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, 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.
(f) Notwithstanding any statement to the contrary contained in
this Agreement or in any Rights Certificate, if the Distribution Date
or the Shares Acquisition Date shall occur prior to the Record Date,
the provisions of this Agreement, including (without limitation)
Sections 3 and 11(a)(ii), shall be applicable to the Rights upon their
issuance to the same extent such provisions would have been applicable
if the Record Date were the date of this Agreement.
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 to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Rights Certificates to the Company, or shall, 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. 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
Preferred Shares (and, following the occurrence of a Distribution Date,
out of its authorized and unissued Common Shares
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and/or other securities or out of its authorized and issued shares held
in its treasury), the number of Preferred Shares (or Common Shares
and/or other securities, as the case may be) that will be sufficient to
permit the exercise in full of all outstanding Rights as provided in
this Agreement.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares (or
Common Shares and/or other securities, as the case may be) delivered
upon exercise of Rights shall be, at the time of delivery of the
certificates for such Preferred Shares (or Common Shares and/or other
securities, as the case may be) (subject to any necessary payment of
the Purchase Price), duly and validly authorized and issued and fully
paid and nonassessable shares.
(c) 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 or of any Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery
of certificates or depositary receipts for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name
other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares (or Common
Shares and/or other securities, as the case may be) upon the exercise
of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
(d) So long as the Preferred Shares (and, following the
occurrence of a Distribution Date, Common Shares and/or other
securities, as the case may be) issuable and deliverable upon the
exercise of the Rights may be listed on any inter-dealer quotation
system or 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.
(e) The Company shall use its best efforts to (i) file on the
appropriate form, 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 hereunder, a registration statement under
the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights, (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
11
securities, and (B) the Final Expiration Date. 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(e), 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, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration
statement has been declared effective. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted
under applicable law or a registration statement shall not have been
declared effective.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights certificate
evidencing such Rights was duly surrendered and payment of the applicable
Purchase Price (and any applicable transfer taxes) was made (or Rights were duly
surrendered in exchange for Common Shares pursuant to Section 24 hereof);
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon
which the Preferred Shares (or Common Shares and/or other securities, as the
case may be) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
(or Common Shares and/or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of Preferred Shares (or Common Shares and/or other securities, as the case may
be) 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
and obtainable upon exercise of each Right, and the number of Rights
outstanding, are subject to adjustment from time to time as provided in Sections
11 and 13 of this Agreement.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in
12
Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue any shares of
its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with
a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when
the Preferred Shares transfer books of the Company were open,
he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination
or reclassification; PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If
an event occurs which would require adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement,
in the event any Person shall become an Acquiring Person, each
holder of a valid Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement,
and in lieu of Preferred Shares, such number of Common Shares
of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which, a Right is
then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company's Common
Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of the event described above. In the
event that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take
any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
From and after the time when a Person becomes an
Acquiring Person (a "Section 11(a)(ii) Event") any Rights that
are or were acquired or beneficially owned by (i) any
Acquiring Person (or any Associate or Affiliate of such
Acquiring Person), (ii) a transferee of such Acquiring Person
(or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person became an Acquiring
Person or (iii) a transferee of such Acquiring Person (or of
13
any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person's becoming
an Acquiring Person and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or
understanding, whether written or oral, regarding the
transferred Rights or (B) a transfer which the Board of
Directors has determined in good faith is part of a plan,
arrangement or understanding, whether written or oral, which
has as a primary purpose or effect the avoidance of this
Section 11(a)(ii), shall each be void and any holder of such
Rights shall thereafter have no exercise or any other rights
whatsoever with respect to such Rights under any provision of
this Agreement or otherwise. No Rights Certificate shall be
issued pursuant to Section 3, this Section 11(a)(ii) or
Section 24 that represents Rights beneficially owned by an
Acquiring Person or any Associate or Affiliate thereof whose
Rights would be void pursuant to the preceding sentence; no
Rights Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person or any Associate
or Affiliate thereof whose Rights would be void pursuant to
the preceding sentence or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Rights Certificate
delivered to the Rights Agent for transfer to an Acquiring
Person, Associate or Affiliate thereof whose Rights would be
void pursuant to the preceding sentence shall be cancelled.
(iii) In lieu of issuing Common Shares of the
Company in accordance with Section 11(a)(ii) hereof, the
Company may, in the sole discretion of the Board of Directors,
elect to (and, in the event that the Board of Directors has
not exercised the exchange right contained in Section 24
hereof and there are not sufficient issued but not outstanding
and authorized but unissued Common Shares to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall) take all such
action as may be necessary to authorize, issue or pay, upon
the exercise of the Rights, cash (including by way of a
reduction of the Purchase Price), property, other securities
or any combination thereof having an aggregate value equal to
the value of the Common Shares of the Company which otherwise
would have been issuable pursuant to Section 11(a)(ii), which
aggregate value shall be determined by the Board of Directors.
For purposes of the preceding sentence, the value of the
Common Shares shall be determined pursuant to Section 11(d)
hereof and the value of any equity securities which the Board
of Directors determines to be a "common stock equivalent"
(including the Preferred Shares, in such ratio as the Board of
Directors shall determine) shall be deemed to have the same
value as the Common Shares. Any such election by the Board of
Directors must be made and publicly announced within 60 days
following the date on which the event described in Section
11(a)(ii) shall have occurred. Following the occurrence of the
event described in Section 11(a)(ii), the Board of Directors
may suspend the exercisability of the Rights for a period of
up to 60 days following the date on
14
which the event described in Section 11(a)(ii) shall have
occurred to the extent that the directors have not determined
whether to exercise the Company's right of election under this
Section 11(a)(iii). 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.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred
Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section
11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares outstanding
on such record date plus the number of Preferred Shares which could be
purchased at the current per share market price for the aggregate
offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) and the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible); PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent. Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly
cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to
15
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share
market price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share and the denominator of which
shall be such current per share market price of the Preferred Shares;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise
of one Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution is not
so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices (determined as provided in the next
sentence) per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such
date, and for the purpose of any computation under Section 11(a)(iii)
hereof, the "current per share market price" of a Security on any date
shall be deemed to be the average of the daily closing prices per share
of such Security for the 30 consecutive Trading Days immediately
following such date; provided, however, that in the event that the
current per share market price of the Security is determined during a
period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such
Security or securities convertible into such shares (other than the
Rights), or (B) any subdivision, combination or reclassification of
such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security as if such dividend, distribution,
combination or reclassification has not been declared. 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 on the Nasdaq National Market or, if the Security is
listed or admitted for trading on a national exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading, or, if the
Security is not listed on the Nasdaq National Market or 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 any other
system then in use, or, if on any such date the Security is not quoted
by any such
16
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange,
a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i).
If the Preferred Shares are not publicly traded, the "current per share
market price" of the Preferred Shares shall be conclusively deemed to
be the current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If neither
the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair
value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-millionth of a Preferred Share or one
ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other
than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares
contained in Sections 11(a), 11(b) and 11(c), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights all subject to further adjustment
as provided herein.
17
(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 11(c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of
a Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 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 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the 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 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 one one-hundredths of a Preferred Share issuable
upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price and
the number of one one-hundredths of a Preferred Share which
18
were expressed in the initial Rights Certificates issued hereunder,
without prejudice to the validity of such Rights Certificate(s) or the
application of the provisions hereof.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares
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 issuing to the holder of any Right
exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Shares, issuance wholly
for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance
of rights, options or warrants referred to in Section 11(b), hereafter
made by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Shares Acquisition Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case (i) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of
Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding
immediately after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with
19
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If, after the Shares Acquisition Date, directly or
indirectly, (w) the Company shall consolidate with, or merge with and
into, any other Person, (x) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in
connection with such merger or consolidation all or part of the
outstanding Common Shares are changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any
other property, (y) the Company shall sell, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person other
than the Company or one or more of its wholly-owned Subsidiaries, or
(z) any Acquiring Person or any Associate or Affiliate of any such
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, (A) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for Common Shares, for
shares of other equity securities of the Company or for securities
exercisable for or convertible into shares of equity securities of the
Company (Common Shares or otherwise) or otherwise obtain from the
Company, with or without consideration, any additional shares of such
equity securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro rata
distribution to all holders of Common Shares), (B) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of assets, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries
without obtaining a written opinion from a nationally recognized
investment banking firm that the terms of such transaction or
arrangement are no less favorable to the Company than the Company would
be able to obtain in arm's-length negotiation with an unaffiliated
third party, (C) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of in one transaction
or a series of transactions, to, from or with the Company or any of the
Company's Subsidiaries (other than incidental to the lines of business,
if any, engaged in as of the date hereof between the Company and such
Acquiring Person or
20
Associate or Affiliate) assets having an aggregate fair market value of
more than $5,000,000, (D) shall receive any compensation from the
Company or any of the Company's Subsidiaries other than compensation
for full-time employment as a regular employee at rates in accordance
with the Company's (or its Subsidiaries') past practices, or (E) shall
receive the benefit, directly or indirectly (except proportionately as
a stockholder and except if resulting from a requirement of law or
governmental regulation), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries, then, and in each
such case, (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable in accordance with the terms of this
Agreement, and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable
Common Shares of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the number of one one-hundredths of
a Preferred Share for which a Right is then exercisable and dividing
that product by (B) 50% of the then current per share market price of
the Common Shares of the Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation
to the Common Shares thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (w)
or (x) of the first sentence of Section 13(a), the Person that
is the issuer of any securities into which Common Shares of
the Company are converted in such merger or consolidation, and
if no securities are so issued, the Person that is the
surviving entity of such merger or consolidation (including
the Company if applicable); and
(ii) in the case of any transaction described in (y)
or (z) of the first sentence in Section 13(a), the Person that
is the party receiving the greatest portion of the assets,
securities, earning power or other benefit transferred
pursuant to such transaction or transactions;
21
provided, however, that in any such case described in clauses (b)(i)
and (b)(ii): (1) if the Common Shares of such Person are not at such
time and have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Shares of
which are and have been so registered, "Principal Party" shall refer to
such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one person, the Common Shares 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 Shares having
the greatest aggregate market value; and (3) in case such Person is
owned, directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same person,
the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have
sufficient Common Shares authorized to permit the full exercise of the
Rights and 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 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 Final
Expiration Date;
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act; and
(iii) take such actions as may be necessary or
appropriate under the blue sky laws of the various states.
The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there
are any rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the
benefits
22
intended to be afforded by the Rights. The provisions of this Section
13 shall similarly apply to successive mergers, consolidations, sales
or transfers.
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
the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use, or, if on any such
date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall
be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share) upon exercise of the Rights or
to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one one-hundredth
of a Preferred Share). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts, pursuant
to an appropriate agreement between the Company and a depositary
selected by it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts.
In lieu of fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of 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 Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as determined
23
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Distribution Date, 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 may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), 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 Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates will
be transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the
24
Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer and with appropriate forms and certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated certificate for Common Shares) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated certificate for Common Shares
made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary; 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 any 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.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising, directly or indirectly,
therefrom. In no case shall the Rights Agent be liable for special, indirect,
incidental or consequential loss or damage of any kind whatsoever (including but
not
25
limited to lost profits), even if the Rights Agent has been advised of the
possibility of such loss or damage.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
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
26
authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice that such change
or adjustment is required); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any Preferred Shares (or Common Shares and/or other
securities, as the case may be) to be issued pursuant to this agreement
or any Rights Certificate or as to whether any Preferred Shares (or
Common Shares and/or other securities, as the case may be) will, when
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
27
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, prior to the Shares Acquisition Date, instructions with respect
to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company, or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(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 reasonable care was exercised in the selection and
continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and thereafter be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the 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 either (A) a corporation organized and doing business under the laws of
the United States or of
28
any state of the United States, in good standing, authorized under such laws to
exercise corporate trust or stock transfer powers, and subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (B) an affiliate of such a corporation. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares or Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
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.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of
Directors pursuant to paragraph (b) of this Section 23 and shall not be
redeemed in any other manner.
(b) The Board of Directors of the Company may, at its option,
at any time prior to such time as any Person becomes an Acquiring
Person, redeem all, but not less than all, of the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); PROVIDED, HOWEVER,
if the Board of Directors of the Company authorizes redemption of the
Rights on or after the date of a change (resulting from a proxy or
consent solicitation) in a majority of the directors in office at the
commencement of such solicitation if any Person who is a participant in
such solicitation has stated (or, if upon the commencement of such
solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which
would result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event, then the redemption is not
effective for a period of 180 days following such date, unless there
are Continuing Directors then in office and such authorization receives
the concurrence of a majority of such Continuing Directors.
29
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. If redemption
of the Rights is to be effective as of a future date, the Rights shall
continue to be exercisable, subject to Section 11(a)(ii) hereof, until
the effective date of the redemption, provided that nothing contained
herein shall preclude the Board of Directors from subsequently causing
the Rights to be redeemed at a date earlier than the previously
scheduled effective date of the redemption. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based on the
current per share market price of the Common Shares at the time of
redemption) or any other form of consideration deemed appropriate by
the Board of Directors.
(c) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph
(b) of this Section 23 (or at the effective time of such redemption
established by the Board of Directors of the Company pursuant to
paragraph (b) of this Section 23), and without any further action and
without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive
the Redemption Price. The Company shall promptly give public notice of
any such redemption; PROVIDED, HOWEVER, that the failure to give, or
any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (b) of this
Section 23 or if later, the effectiveness of the redemption of the
rights pursuant to the last sentence of paragraph (b), the Company
shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. The Company may, at its option,
discharge all of its obligations with respect to the Rights by (i)
issuing a press release announcing the manner of redemption of the
Rights, (ii) depositing with a bank or trust company having a capital
and surplus of at least $100 million, funds necessary for such
redemption, in trust, to be applied to the redemption of the Rights so
called for redemption and (iii) arranging for the mailing of the
Redemption Price to the registered holders of the Rights; then, and
upon such action, all outstanding Rights Certificates shall be null and
void without further action by the Company. Neither the Company nor any
of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically
set forth in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the Shares
Acquisition Date.
30
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof. Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant 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 Common Shares equal to the number of valid Rights held by
such holder. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b) hereof) for Common
Shares exchangeable for Rights, at the initial rate of one
one-hundredth of a Preferred Share (or equivalent preferred share) for
each Common Share, as appropriately adjusted to reflect adjustments in
the voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common
Share.
(d) In the event that there shall not be sufficient Common
Shares or Preferred Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance
with this Section 24, the Company shall take all
31
such action as may be necessary to authorize additional Common Shares
or Preferred Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Rights Certificates with
regard to which such fractional Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall
be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or
to make any other distribution to the holders of its Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv)
to effect any consolidation or merger into or with, or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common
Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise), then, in each such
case, the Company shall give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for such event, and the date of
participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining
holders of the Preferred Shares for purposes of such action, and in the
case of any such other action, at least 10 days prior to the date of
the taking of such proposed action or the date of participation therein
by the holders of the Common Shares and/or Preferred Shares, whichever
shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of the occurrence of such
32
event, which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any 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:
Ultra Pac, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be deemed given or made upon
receipt and shall be addressed (until another address is filed in writing with
the Company) as follows:
Norwest Bank Minnesota, N.A.
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Shareholder Relations
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the 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
provisions 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 (except the interests of
any Acquiring Person and its Affiliates and Associates), which amendment shall
be effective only if there are Continuing Directors and shall require the
occurrence of a majority of such Continuing Directors.
Section 28. Determination and Actions by the Board of Directors, etc..
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, or the Company, or as may be
necessary or advisable in the administration of this Agreement,
33
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, without
limitation, a determination to redeem or not redeem the Rights or to amend the
Agreement and whether any proposed amendment adversely affects the interests of
the holders of Rights Certificates). For all purposes of this Agreement, any
calculation of the number of Common Shares or other securities outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares or any other securities 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 as in effect on the date of 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 in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights Certificates
and all other parties unless the Board of Directors specifically states that
such action, calculations, interpretation or determination is not final,
conclusive and binding, and (y) not subject the Board of Directors to any
liability to the holders of the Rights Certificates.
Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person or corporation other than the Company, the
Rights Agent and the registered holders of valid Rights Certificates (and, prior
to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of valid Rights Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
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.
34
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.
35
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.
ULTRA PAC, INC.
Attest:
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx Xxxxx
-------------------------------- -----------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx Xxxxx
Title: Secretary Title: President and Chief Executive
Officer
NORWEST BANK MINNESOTA, N.A.
Attest:
By: /s/ Xxxx Xxxxx By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------- -----------------------------------
Name: Xxxx Xxxxx Name: Xxxxx Xxxxxxxxxx
Title: Vice President Title: Officer
36
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
ULTRA PAC, INC.
(Pursuant to Section 302A.401 of the
Minnesota Business Corporation Law)
-------------------------------------
We, Xxxxxx Xxxxx, President and Chief Executive Officer, and Xxxxx X.
Xxxxx, Secretary, of Ultra Pac, Inc. a corporation organized and existing under
the Minnesota Business Corporation Act, in accordance with the provisions of
Section 302A.401 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the said Corporation, the said Board of
Directors on ________ ________, 199___ adopted the following resolution creating
a series of ______________________(_________) shares of preferred stock
designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Articles
of Incorporation, a series of preferred stock of the Corporation be, and it
hereby is, created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall initially be ______________. Such number of shares may be increased
or decreased by resolution of the Board of Directors; PROVIDED, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a
A-1
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities or rights issued
by the Company convertible into Series A Preferred Stock AND FURTHER PROVIDED
that the Board of Directors shall increase the number of shares constituting the
Series A Preferred Stock to the extent necessary for the Company to have
available sufficient shares of such Series A Preferred Stock available to
fulfill all of the Company's obligations to holders of securities and Rights of
the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, no par value (the "Common Stock"), of the
Company, and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, dividends payable when and as dividends are
declared on the Company's Common Stock in an amount, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, declared on the Company's Common Stock (except
as provided in the next sentence). In the event the Company shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Company.
(B) Except as otherwise provided herein, in any other
Certificate of Designation, Preferences and Rights creating a series of
Preferred Stock or any similar stock, or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Company having general
A-2
voting rights shall vote together as one class on all matters submitted
to a vote of shareholders of the Company.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Articles of
Incorporation, or in any other Certificate of Designation, Preferences and
Rights creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 5. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock. In the event the Company shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 6. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of
A-3
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 8. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Company's Preferred Stock.
Section 9. Amendment. The Articles of Incorporation of the Company
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this _______
day of ___________, 199___.
-----------------------------------------
Xxxxxx Xxxxx
President and Chief Executive Officer
ATTEST:
-------------------------------------
Xxxxx X. Xxxxx
Secretary
A-4
EXHIBIT B
Form of Rights Certificate
Certificate No. _____ _____ Rights
NOT EXERCISABLE AFTER _______________ _______, 2008 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.01 PER RIGHT, AND ARE VOIDABLE AND
SUBJECT TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. [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 THE SECOND PARAGRAPH OF SECTION
11(A)(II) OF SUCH AGREEMENT.]*
Rights Certificate
Ultra Pac, 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 February 27, 1998 (the "Rights Agreement") between Ultra
Pac, Inc., a Minnesota corporation (the "Company"), and Norwest Bank Minnesota,
N.A. (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., Xxxxxx, Minnesota time on February 27, 2008 at the principal office
of the Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid nonassessable share of Series A Junior
Participating Preferred Stock, no par value (the "Preferred Shares"), of the
Company, at a purchase price of $25.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Rights Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of February 27, 1998, based on the Preferred
-------------------------
* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of one one-hundredths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent, 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
Preferred Shares as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for Preferred Shares
or shares of the Company's Common Stock, no par value, on the terms set forth in
the Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredths of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________________, 19__.
ATTEST: ULTRA PAC, INC.
By:
------------------------------------ ------------------------------------
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By:
--------------------------------
Authorized Signature
B-3
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, __________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________
(Please print social security or other identifying number of transferee)
this Rights Certificate, together with all 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: _________________________, 19__
_____________________________________
Signature
Signature Guaranteed: __________________________________________________________
Signature must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate |_| is |_| is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as
such terms are defined in 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 any such
Person.
Dated: _________________________, 19__
_____________________________________
Signature
Signature Guaranteed: __________________________________________________________
NOTICE
The signatures 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.
The signature must be guaranteed by an Eligible Guarantor
Institution as defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate.)
To: Ultra Pac, Inc.
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of such 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 Preferred Shares be issued in
the name of:
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
___________________________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address)
___________________________________________________
(Please insert social security or other identifying number)
Dated: _________________________, 19__
_____________________________________
Signature
Signature Guaranteed: __________________________________________________________
Signatures must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate |_| are
|_| are not being exercised by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of any such Person (as
such terms are defined in 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 any such
Person.
Dated: _________________________, 19__
_____________________________________
Signature
Signature Guaranteed: __________________________________________________________
NOTICE
The signatures 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.
The signature must be guaranteed by an Eligible Guarantor
Institution as defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-7
NOTICE
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-8
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES UNDER PLAN ADOPTED BY
SOURCE SERVICES CORPORATION
On February 27, 1998, the Board of Directors of Ultra Pac, Inc. (the
"Company") declared a dividend of one Right for each outstanding common share (a
"Right"), no par value (the "Common Shares"), of the Company. The dividend is
payable on March 18, 1998 (the "Record Date") to the shareholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock, no par value (the "Preferred Shares"), of the Company at a price of
$25.00 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and Norwest Bank
Minnesota, N.A., as Rights Agent (the "Rights Agent").
Until the earlier of (i) the close of business on the tenth day after
the first public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of 15% or more of the outstanding
Common Shares (an "Acquiring Person"), or (ii) the close of business on the
tenth day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership of such person or group of 15% or more of such outstanding Common
Shares (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced by the Common Share certificates, will be transferable
only by the transfer of the Common Shares associated with such Rights and any
transfer of the Common Shares (including a transfer to the Company) will
constitute a transfer of the Rights. As described below, after a person or group
becomes an Acquiring Person, the Rights may not be redeemed and may only be
amended in limited circumstances.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date, upon
transfer or new issuance of Common Shares, will contain a legend incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date, even without
such notation or a copy of this Summary of Rights being attached, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until a person, entity or group becomes
an Acquiring Person. The Rights will expire on February 27, 2008 (the "Final
Expiration Date"), unless the
C-1
Final Expiration Date is extended or unless the Rights are redeemed earlier by
the Company, in each case, as described below.
If a person or group of affiliated or associated persons becomes an
"Acquiring Person" by obtaining beneficial ownership of more than 15% of the
then outstanding Common Shares, each holder of a Right (other than those
described in the next sentence) will thereafter have the right to receive, upon
exercise, Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the Purchase Price
of the Right. All Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will be
void.
At any time after the first date of public announcement by the Company
or an Acquiring Person than an Acquiring Person has become such (a "Shares
Acquisition Date"), if (i) the Company is the surviving corporation in a merger
with any other company or entity, (ii) the Company is acquired in a merger or
other business combination transaction, (iii) 50% or more of the Company's
consolidated assets or earning power are sold, or (iv) an Acquiring Person
engages in certain "self-dealing" transactions with the Company, each holder of
a Right or a (other than those whose rights have become void) will thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price of the Right, that number of shares of common stock of the
surviving or acquiring company which at the time of such transaction will have a
market value of two times the exercise price of such Right.
At any time after a person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, without any additional payment, for Common Shares at
an exchange ratio of one Common Share (or of a share of a class or series of the
Company's preferred shares having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the Shares Acquisition Date, the Board of
Directors of the Company may redeem all, but not less than all, of the Rights at
a price of $.01 per Right (the "Redemption Price"). Under certain circumstances
set forth in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
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The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Continuing
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
Any of the provisions of the Rights may be amended by the Board of
Directors of the Company prior to the Shares Acquisition Date. After the Shares
Acquisition Date, the provisions of the Rights Agreement may be amended by the
Board to make changes which do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person) which amendment shall
require the concurrence of a majority of the Continuing Directors.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
February 27, 1998. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
