AVADO BRANDS, INC.
and
SUNTRUST BANK,
as Rights Agent
Rights Agreement
Dated as of August 13, 2002
TABLE OF CONTENTS
Section
Section 1. Certain Definitions
Section 2. Appointment of Rights Agent
Section 3 Issuance of Rights Certificates
Section 4 Form of Rights Certificates
Section 5 Countersignature and Registration
Section 6 Transfer, Split-Up, Combination and Exchange of Rights
Rights Certificates; Mutilaged, Destroyed, Lost or
Stolen Rights Certificates
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights
Section 8. Cancellation and Destruction of Rights Certificates
Section 9. Reservation and Availability of Preferred Shares
Section 10. Preferred Shares Record Date
Section 11. Adjustment of Purchase Price, Number and Kind of
Securities or Number of Rights
Section 12. Certificate of Adjusted Purchase Price or Number
of Securities
Section 13. Consolidation, Merger or Sale or Transfer of Assets,
Cash Flow or Earning Power
Section 14. Fractional Rights and Fractional Securities
Section 15. Rights of Action
Section 16. Agreement of Rights Holders
Section 17. Rights Certificate Holder Not Deemed a Shareholder
Section 18. Concerning the Rights Agent
Section 19. Merger or Consolidation or Change of Name of Rights Agent
Section 20. Duties of Rights Agent
Section 21. Change of Rights Agent
Section 22. Issuance of New Rights Certificates
Section 23. Redemption and Termination
Section 24. Exchange
Section 25. Notice of Certain Events
Section 26. Notices
Section 27. Supplements and Amendments
Section 28. Determinations and Actions by the Board, etc
Section 29. Successors
Section 30. Benefits of this Agreement
Section 31. Severability
Section 32. Governing Law
Section 33. Counterparts
Section 34. Descriptive Headings
EXHIBITS
Exhibit A -- Form of Articles of Amendment to the Articles of Incorporation to
Create a New Series of Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights to Purchase Preferred Shares
Page 2
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 13, 2002 (the "Agreement"), between
Avado Brands, Inc., a Georgia corporation (the "Company"), and SunTrust Bank, a
Georgia banking corporation (the "Rights Agent").
WITNESSETH:
WHEREAS, on August 6, 2002, the Board of Directors of the Company (the
"Board") authorized and declared a dividend of one preferred share purchase
right (a "Right") for each Common Share (as hereinafter defined) of the Company
outstanding at the Close of Business (as hereinafter defined) on September 4,
2002 (the "Record Date"), each Right initially representing the right to
purchase one one-thousandth of a Preferred Share (as hereinafter defined), upon
the terms and subject to the conditions herein set forth, and further authorized
and directed the issuance of one Right with respect to each Common Share issued
or delivered by the Company (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earlier of the Close
of Business on the Distribution Date (as hereinafter defined) and the Expiration
Date (as hereinafter defined) or as provided in Section 22 of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Associates and Affiliates of such Person, shall be the Beneficial Owner of
15% or more of the then outstanding Common Shares, but shall not include (i) any
Exempted Person, (ii) the Company, (iii) any Related Person, (iv) any Person who
becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding as a result of a reduction in the number of Common Shares
outstanding due to the repurchase of Common Shares by the Company unless and
until such Person, after becoming aware that such Person has become the
Beneficial Owner of 15% or more of the then outstanding Common Shares, acquires
beneficial ownership of additional Common Shares representing 1% or more of the
Common Shares then outstanding, (v) any such Person who has reported or is
required to report such ownership (but less than 20%) on Schedule 13G under the
Exchange Act (or any comparable or successor report) or on Schedule 13D under
the Exchange Act (or any comparable or successor report) which Schedule 13D does
not state any intention to or reserve the right to control or influence the
management or policies of the Company or engage in any of the actions specified
in Item 4 of such schedule (other than the disposition of the Common Shares)
and, within 10 Business Days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person acquired Common
Shares which caused such Person to Beneficially Own 15% or more (but less than
20%) of the then outstanding Common Shares inadvertently or without knowledge of
the terms of the Rights and who, together with all Associates and Affiliates,
thereafter does not acquire additional Common Shares while the Beneficial Owner
of 15% or more of the Common Shares then outstanding; provided, however, that if
the Person requested to so certify fails to do so within 10 Business Days, then
such Person shall become an Acquiring Person immediately after such 10 Business
Day period or (vi) if the Continuing Directors of the Company determine in good
faith that a Person who would otherwise be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person" as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect as of the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or Associates,
beneficially owns, directly or indirectly,
(ii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, warrants, options or other
rights (in each case, other than upon exercise or exchange of the Rights);
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange;
Page 3
(iii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (iii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act and (B) is not reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iv) 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 or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (iii) of this paragraph (d)) or disposing of any voting
securities of the Company;
provided, however, that a Person will not be deemed a "Beneficial Owner" of
or to "beneficially own" any securities if such Beneficial Ownership arises
solely as a result of such Person's status as a "clearing agent" as defined in
Section 3(a)(23) of the Exchange Act; provided, further, that nothing in this
paragraph (d) shall cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of 40 calendar days after the date
of such acquisition, and then only if such securities continue to be owned by
such Person at such expiration of 40 calendar days or such later date as the
Continuing Directors may determine in any special case. 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 the
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.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of Georgia (or such other state
in which the principal office of the Rights Agent is located) are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., Atlanta
time, on such date; provided, however, that if such date is not a Business Day,
it shall mean 5:00 P.M., Atlanta time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean the
shares of Common Stock, par value $0.01 per share, of the Company, or in the
event of a subdivision, combination or consolidation with respect to such shares
of Common Stock, the shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Shares" when used with reference to any
Person other than the Company, including an Issuer, shall mean shares of the
capital stock (or equity interests) with the greatest voting power of such
Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(h) "Continuing Director" shall mean (i) any member of the Board, while
such individual 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 individual who
subsequently becomes a member of the Board, while such individual 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 individual's nomination for election or election
to the Board is recommended or approved by a majority of the Continuing
Directors.
(i) "Distribution Date" shall mean the earlier of (i) the Close of Business
on the tenth calendar day following the Share Acquisition Date, or (ii) the
Close of Business on the tenth Business Day (or, unless the Distribution Date
shall have previously occurred, such later date as may be specified by the
Continuing Directors) after the commencement of, or the first public
announcement of the intention by any Person (other than the Company or any
Related Party) to commence (which intention to commence remains in effect for
five Business Days after such announcement) a tender or exchange offer by any
Person (other than the Company or any Related Person), if upon the consummation
thereof such Person would become an Acquiring Person (including, in the case of
both (i) and (ii), any such date which is after the date of this Agreement and
prior to the issuance of the Rights); provided, however, that if a tender or
exchange offer is terminated prior to the occurrence of a Distribution Date,
then no Distribution Date shall occur as a result of such tender or exchange
offer.
Page 4
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(k) "Exempted Person" shall mean (i) Xxx X. XxXxxx, Xx., or any of his
Affiliates other than the Company and its Subsidiaries (a "XxXxxx Party") and
(ii) any Person who or which is the Beneficial Owner of Common Shares
beneficially owned by an Exempted Person; provided, however, that any XxXxxx
Party shall cease to be an Exempted Person as of the date that such XxXxxx Party
ceases to beneficially own 15% or more of the then outstanding Common Shares.
(l) "Expiration Date" shall mean the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23, and (iii) the time at which all exercisable Rights are
exchanged as provided in Section 24.
(m) "Final Expiration Date" means the fifth anniversary of the Record Date.
(n) "Flip-in Event" shall mean any event described in clauses (A), (B) or
(C) of Section 11(a)(ii) hereof.
(o) "Flip-over Event" shall mean any event described in clauses (i), (ii)
or (ii) of Section 13(a).
(p) "Nasdaq" shall mean the National Association of Securities Dealers
Automated Quotation System.
(q) "NYSE" shall mean the New York Stock Exchange.
(r) "Person" shall mean any individual, firm, corporation, partnership,
limited liability company or other legal entity, and includes any successor (by
merger or otherwise) of such entity.
(s) "Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock, with a par value of $0.01 per share, of the Company having the
relative rights, preferences and limitations as set forth in the form of
Articles of Amendment attached to this Agreement as Exhibit A.
(t) "Purchase Price" shall initially mean $9.50 per one one-thousandth of a
Preferred Share, subject to adjustment from time to time as provided in this
Agreement, payable in lawful money of the United States of America in accordance
with Section 7(b) hereof.
(u) "Redemption Price" shall mean $0.001 per Right, subject to adjustment
by resolution of the Board to reflect any stock split, stock dividend or similar
transaction occurring after the Record Date.
(v) "Related Person" shall mean (i) any Subsidiary of the Company or
(ii) any employee benefit or stock ownership plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan.
(w) "Right" shall have the meaning set forth in the preamble of this
Agreement.
(x) "Rights Agent" shall have the meaning set forth in the preamble of this
Agreement, unless and until a successor Rights Agent has become such pursuant to
the terms of this Agreement, and thereafter, "Rights Agent" means such successor
Rights Agent.
(y) "Rights Certificate" shall mean certificates evidencing the Rights, in
substantially the form attached as Exhibit B.
(z) "Share Acquisition Date" shall mean the earlier of the date of (i) the
first date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed or amended pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such or (ii) the public disclosure of facts by the Company or
an Acquiring Person indicating that a Person has become such; provided, however,
that if such Person is determined not to have become an Acquiring Person
pursuant to clauses (v) or (vi) of Section 1(a), then no Share Acquisition Date
shall be deemed to have occurred.
(aa) "Subsidiary" when used with reference to any Person shall mean any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person.
(bb) "Trading Day" shall mean any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.
Page 5
(cc) "Triggering Event" shall mean any Flip-in Event or Flip-over Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the Common Shares of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights shall be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the certificates
representing Common Shares registered in the names of the record holders thereof
(which certificates representing Common shares shall be deemed also to be
certificates for Rights) and not by separate certificates, (ii) the Rights shall
be transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company), and (iii) the surrender for
transfer of any certificates evidencing Common Shares in respect of which Rights
have been issued will also constitute the transfer of the Rights associated with
the Common Shares evidenced by such certificates.
(b) The Company will send, as promptly as practicable following the Record
Date, a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (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 and will make the Summary of Rights available to any
holder of Rights who may so request from time to time prior to the Expiration
Date. With respect to certificates for the Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights shall be evidenced by such
certificates registered in the names of the holders thereof together with a copy
of the Summary of Rights attached thereto and the registered holders of the
Common Shares shall also be the registered holders of the associated Rights.
Until the earlier of the Close of Business on the Distribution Date or the
Expiration Date, the surrender for transfer of any certificates representing
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 such Common Shares.
(c) Rights shall be issued by the Company in respect of all Common Shares
(other than Common Shares issued upon the exercise or exchange of any Right)
issued or delivered by the Company (whether originally issued or delivered from
the Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates evidencing such Common
Shares will have stamped on, impressed on, printed on, written on, or otherwise
affixed to them the following legend or such similar legend as the Company may
deem appropriate and as is 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 or transaction reporting system on which the Common Shares may
from time to time be listed or quoted, or to conform to usage:
"This Certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between avado brands, inc. and
SUNTRUST BANK, dated as of August 13, 2002 (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 AVADO BRANDS, INC. The Rights are not
exercisable prior to the occurrence of certain events specified in the Rights
Agreement. Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may be exchanged, may expire, may be amended, or
may be evidenced by separate certificates and no longer be evidenced by this
Certificate. avado bRANDS, INC. will mail to the holder of this Certificate a
copy of the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights that are or were
beneficially owned by an Acquiring Person or any Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement) may become
null and void."
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Shares
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Shares represented by such certificates.
Page 6
(d) The Company shall promptly notify the Rights Agent of the occurrence of
a Distribution Date and request its transfer agent to provide to the Rights
Agent a shareholder list together with all other relevant information. As
promptly as practicable after the Distribution Date, the Company will prepare
and execute, the Rights Agent will countersign and will, at the Company's
expense, send or cause to be sent, 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 evidencing one Right for each Common Share so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per Common Share has been made pursuant to Section 11(n)
hereof, at the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights shall be evidenced
solely by such Rights Certificates. The failure to mail a Rights Certificate
shall not affect the legality or validity of the Rights.
Section 4. Form of Rights Certificates.
(a)The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B attached hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect the
rights, duties or responsibilities of the Rights Agent) 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 or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage. The Rights Certificates shall be in machine printable
format and in a form reasonably satisfactory to the Rights Agent. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever issued, on their face will entitle the holders thereof to purchase such
number of one one-thousandths of a Preferred Share as are set forth therein at
the Purchase Price set forth therein, but the Purchase Price, the number and
kind of securities issuable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment as provided herein.
(b)Any Rights Certificate issued pursuant to Section 3, Section 11(i)
or Section 22 hereof that represents Rights which are null and void pursuant to
Section 11(a)(ii) hereof and any Rights Certificate issued pursuant to Section 6
or 11 hereof upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall be subject to and contain
(to the extent feasible) the following legend or such similar legend as the
Company may deem appropriate and as is 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:
"The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was an Acquiring Person or an Affiliate or an Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement). This
Rights Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 11(a)(ii) or Section 13 of the Rights
Agreement."
The provisions of Section 11(a)(ii) hereof shall be operative regardless of
whether the foregoing legend is contained on any such Rights Certificate.
Section 5. Countersignature and Registration.
(a)The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be countersigned by the Rights Agent, either
manually or by facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
Page 7
(b)Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices 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 or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books will show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates 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), 7(d) and 14, at any time
after the Close of Business on the Distribution Date and prior to the Expiration
Date, any Rights Certificate or Rights Certificates representing exercisable
Rights 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-thousandths of a Preferred Share (or other securities,
as the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any such Rights Certificate or Rights Certificates must make such
request in a writing delivered to the Rights Agent and must surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent designated for such
purpose. 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 properly 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 or the Rights Agent shall reasonably request.
Thereupon or as promptly as practicable thereafter, subject to the provisions of
Sections 4(b), 7(d) and 14, the Company will prepare, execute and deliver to the
Rights Agent, and the Rights Agent will countersign and deliver, 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, if requested by the Company, 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 prepare, execute and deliver a new
Rights Certificate of like tenor to the Rights Agent and the Rights Agent will
countersign and deliver such new Rights Certificate to the registered holder in
lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a)The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein, including without
limitation, any restrictions on exercisability set forth in Section 11(a)(ii))
in whole or in part at any time after the Close of Business on the Distribution
Date and prior to the Expiration 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 office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price for the
total number of one one-thousandth of a Preferred Share (or other securities, as
the case may be) as to which such surrendered Rights are exercised.
(b)Upon receipt of a Rights Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the Preferred Shares (or other securities, 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
the provisions of Section 9(d) by certified check, cashier's check or money
order payable to the order of the Company, the Rights Agent will promptly (i)
(A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent) certificates representing
the number of one one-thousandths of a Preferred Share to be purchased (and the
Company hereby irrevocably authorizes and directs its transfer agent to comply
with all such requests), or, (B) if the Company elects to deposit Preferred
Page 8
Shares issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a Preferred Share as are to be purchased (and
the Company hereby irrevocably authorizes and directs such depositary agent to
comply with all such requests), (ii) after receipt of such certificates (or
depositary receipts, as the case may be), 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, (iii) when
appropriate, requisition from the Company or any transfer agent therefor (or
make available, if the Rights Agent is the transfer agent) certificates
representing the number of equivalent common shares to be issued in lieu of the
issuance of Common Shares in accordance with the provisions of Section
11(a)(iii), (iv) when appropriate, after receipt of such certificates, 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, (v) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of the issuance of fractional shares in accordance with
the provisions of Section 14 or in lieu of the issuance of Common Shares in
accordance with the provisions of Section 11(a)(iii), (vi) when appropriate,
after receipt, deliver such cash to or upon the order of the registered holder
of such Rights Certificate, and (vii) when appropriate, deliver any due xxxx or
other instrument provided to the Rights Agent by the Company for delivery to the
registered holder of such Rights Certificate as provided by Section 11(l).
(c)In case the registered holder of any Rights Certificate exercises less
than all the Rights evidenced thereby, the Company will prepare, execute and
deliver a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such new
Rights Certificate to the registered holder of such Rights Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.
(d)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 any purported transfer, split up, combination or exchange of any
Rights Certificate pursuant to Section 6 or exercise of a Rights Certificate as
set forth in this Section 7 unless the registered holder of such Rights
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the
reverse side of the Rights Certificate surrendered for such transfer, split up,
combination, exchange or 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 may reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Rights Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Rights Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares. The Company
covenants and agrees that:
(a)It will cause to be reserved and kept available out of its authorized
and unissued Preferred Shares or any Preferred Shares held in its treasury, a
number of Preferred Shares that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with Section 7.
(b)So long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of the Rights may be listed on a national securities exchange, or
quoted on Nasdaq, it will endeavor to cause, from and after such time as the
Rights become exercisable, all securities reserved for issuance upon the
exercise of Rights to be listed on such exchange, or quoted on Nasdaq, upon
official notice of issuance upon such exercise.
(c)It will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights, at the time
of delivery of the certificates for such securities, shall be (subject to
payment of the Purchase Price) duly authorized, validly issued, fully paid and
nonassessable securities.
Page 9
(d)It will pay when due and payable any and all U.S. federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates representing
securities issued upon the exercise of Rights; provided, however, that the
Company will not be required to pay any transfer tax or charge 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 representing securities issued upon the exercise of Rights in a name
other than that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise, or to issue or deliver any certificates or
depositary receipts representing securities issued upon the exercise of any
Rights until any such tax or charge has been paid (any such tax or charge 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.
(e)It will use its best efforts (i) to file on an appropriate form, as soon
as practicable following the later of the Share Acquisition Date and the
Distribution Date, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time 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 to permit it to become effective. Upon any such
suspension, the Company will 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 determines that a registration statement should be filed under
the Securities Act or any state securities laws following the Distribution Date,
the Company may temporarily suspend the exercisability of the Rights in each
relevant jurisdiction until such time as a registration statement has been
declared effective and, upon any such suspension, the Company will 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. Notwithstanding anything in this Agreement to
the contrary, the Rights will not be exercisable in any jurisdiction if the
requisite registration or qualification in such jurisdiction has not been
effected or the exercise of the Rights is not permitted under applicable law.
(f)Notwithstanding anything in this Agreement to the contrary, after the
later of the Share Acquisition Date and the Distribution Date it will not take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or otherwise
diminish the benefits intended to be afforded by the Rights.
(g)In the event that the Company is obligated to issue other securities of
the Company and/or pay cash pursuant to Section 11, 13, 14 or 24 it will make
all arrangements necessary so that such other securities and/or cash are
available for distribution by the Rights Agent, if and when appropriate.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate representing Preferred Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights will 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 Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
transfer books of the Company for the Preferred Shares (or Common Shares and/or
other securities, as the case may be) are closed, such Person shall be deemed to
have become the record holder of such securities on, and such certificate shall
be dated, the next succeeding Business Day on which the transfer books of the
Company for the Preferred Shares (or Common Shares and/or other securities, as
the case may be) are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate will not be entitled to any rights
of a holder of any security for which the Rights are or may become exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions, or to exercise any preemptive rights, and will not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Page 10
Section 11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights. The Purchase Price, the number and kind of securities issuable
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares, or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification and/or the number and/or kind
of shares of capital stock issuable on such date upon exercise of a Right, shall
be proportionately adjusted so that the holder of any Right exercised after such
time is entitled to receive upon payment of the Purchase Price then in effect
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
transfer books of the Company for the Preferred Shares were open, the holder of
such Right would have owned upon such exercise (and, in the case of a
reclassification, would have retained after giving effect to such
reclassification) and would have 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 issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) or Section 13, 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) or
Section 13.
(ii) Subject to the provisions of Section 24, if:
(A) any Person becomes an Acquiring Person; or
(B) any Acquiring Person or any Affiliate or Associate of any Acquiring
Person, directly or indirectly, (1) merges into the Company or otherwise
combines with the Company and the Company is the continuing or surviving
corporation of such merger or combination (other than in a transaction subject
to Section 13), (2) merges or otherwise combines with any Subsidiary of the
Company, (3) in one or more transactions (otherwise than in connection with the
exercise, exchange or conversion of securities exercisable or exchangeable for
or convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries) transfers cash, securities or any other property to the
Company or any of its Subsidiaries in exchange (in whole or in part) for shares
of any class of capital stock of the Company or any of its Subsidiaries or for
securities exercisable or exchangeable for or convertible into shares of any
class of capital stock of the Company or any of its Subsidiaries, or otherwise
obtains from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities exercisable or exchangeable for
or convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries (otherwise than as part of a pro rata distribution to all
holders of shares of any class of capital stock of the Company, or any of its
Subsidiaries), (4) sells, purchases, leases, exchanges, mortgages, pledges,
transfers or otherwise disposes (in one or more transactions) to, from, with or
of, as the case may be, the Company or any of its Subsidiaries (otherwise than
in a transaction subject to Section 13), any property, including securities, on
terms and conditions less favorable to the Company than the Company would be
able to obtain in an arm's-length transaction with an unaffiliated third party,
(5) receives any compensation from the Company or any of its Subsidiaries other
than compensation as a director or a regular full-time employee, in either case
at rates consistent with the Company's (or its Subsidiaries') past practices, or
(6) receives the benefit, directly or indirectly (except proportionately as a
shareholder), 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; or
Page 11
(C) during such time as there is an Acquiring Person, there is any
reclassification of securities of the Company (including any reverse stock
split), or any recapitalization of the Company, or any merger or consolidation
of the Company with any of its Subsidiaries, or any other transaction or series
of transactions involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person), other than a
transaction subject to Section 13, which has the effect, directly or indirectly,
of increasing by more than 1% the proportionate share of the outstanding shares
of any class of equity securities of the Company or any of its Subsidiaries, or
of securities exercisable or exchangeable for or convertible into equity
securities of the Company or any of its Subsidiaries, of which an Acquiring
Person, or any Affiliate or Associate of any Acquiring Person, is the Beneficial
Owner;
then, and in each such case, from and after the latest of the Distribution
Date, the Share Acquisition Date and the date of the occurrence of such Flip-in
Event, proper provision shall be made so that each holder of a Right, except as
provided below, will thereafter have the right to receive, upon exercise thereof
in accordance with the terms of this Agreement at an exercise price per Right
equal to the product of the then-current Purchase Price multiplied by the number
of one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of such Flip-in Event (or, if
any other Flip-in Event shall have previously occurred, the product of the
then-current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the date
of the first occurrence of a Flip-in Event), in lieu of Preferred Shares, such
number of Common Shares as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other Flip-in Event shall have
previously occurred, multiplying the then-current Purchase Price by the number
of one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the first occurrence of a Flip-in Event), and
dividing that product by (y) 50% of the current per share market price of the
Company's Common Shares (determined pursuant to Section 11(d)) on the date of
the occurrence of such Flip-in Event. Notwithstanding anything in this Agreement
to the contrary, from and after the first occurrence of a Flip-in Event, any
Rights that are Beneficially Owned by (A) any Acquiring Person (or any Affiliate
or Associate of any Acquiring Person), (B) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee after the
occurrence of a Flip-in Event, or (C) a transferee of any Acquiring Person (or
any such Affiliate or Associate) who became a transferee prior to or
concurrently with the occurrence of a Flip-in Event pursuant to either (1) a
transfer (with or without consideration in respect thereof) from an Acquiring
Person to holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which a majority of the Continuing Directors of the
Company have determined is part of a plan, arrangement or understanding which
has the purpose or effect of avoiding the provisions of this Section 11(a)(ii),
and subsequent transferees of any of such Persons, shall be null and void
without any further action and any holder of such Rights will thereafter have no
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company will use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) and Section 4(b) are
complied with, but shall have no liability to any holder of Rights Certificates
or any other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. Upon the occurrence of a Flip-in Event, no Rights Certificate that
represents Rights that are or have become void pursuant to the provisions of
this Section 11(a)(ii) will thereafter be issued pursuant to Section 3 or
Section 6, and any Rights Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this Section 11(a)(ii) shall be canceled. Upon the occurrence of a Flip-over
Event, any Rights that shall not have been previously exercised pursuant to this
Section 11(a)(ii) shall thereafter be exercisable only pursuant to Section 13
and not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip-in Event, if there are not sufficient
Common Shares authorized but unissued or issued but not outstanding to permit
the issuance of all the Common Shares issuable in accordance with Section
11(a)(ii) upon the exercise of a Right, the Board will use its best efforts
promptly to authorize and, subject to the provisions of Section 9(e), make
available for issuance additional Common Shares or other equity securities of
the Company having equivalent voting rights and an equivalent value (as
determined in good faith by the Board) to the Common Shares (for purposes of
this Section 11(a)(iii), "equivalent common shares"). In the event that
equivalent common shares are so authorized, upon the exercise of a Right in
accordance with the provisions of Section 7, the registered holder shall be
entitled to receive (A) Common Shares, to the extent any are available, and (B)
a number of equivalent common shares, which the Board has determined in good
Page 12
faith to have a value equivalent to the excess of (x) the aggregate current per
share market value on the date of the occurrence of the most recent Flip-in
Event of all the Common Shares issuable in accordance with Section 11(a)(ii)
upon the exercise of a Right (the "Exercise Value") over (y) the aggregate
current per share market value on the date of the occurrence of the most recent
Flip-in Event of any Common Shares available for issuance upon the exercise of
such Right; provided, however, that if at any time after 90 calendar days after
the latest of the Share Acquisition Date, the Distribution Date and the date of
the occurrence of the most recent Flip-in Event, there are not sufficient Common
Shares and/or equivalent common shares available for issuance upon the exercise
of a Right, then the Company shall be obligated to deliver, upon the surrender
of such Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available), equivalent common shares (to the extent available)
and then cash (to the extent permitted by applicable law and any agreements or
instruments to which the Company is a party in effect immediately prior to the
Share Acquisition Date), which securities and cash have an aggregate value equal
to the excess of (1) the Exercise Value over (2) the product of the then-current
Purchase Price multiplied by the number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to the date of the
occurrence of the most recent Flip-in Event (or, if any other Flip-in Event
shall have previously occurred, the product of the then-current Purchase Price
multiplied by the number of one one-thousandths of a Preferred Share for which a
Right would have been exercisable immediately prior to the date of the
occurrence of such Flip-in Event if no other Flip-in Event had previously
occurred). To the extent that any legal or contractual restrictions prevent the
Company from paying the full amount of cash payable in accordance with the
foregoing sentence, the Company will pay to holders of the Rights as to which
such payments are being made all amounts which are not then restricted on a pro
rata basis and will continue to make payments on a pro rata basis as promptly as
funds become available until the full amount due to each such Rights holder has
been paid.
(b)If the Company fixes 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 securities having equivalent rights, privileges
and preferences as the Preferred Shares (for purposes of this Section 11(b),
"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
current per share market price of the Preferred Shares (determined pursuant to
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 is
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current per share market price and the
denominator of which is 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
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which is in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board, 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 will 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)If the Company fixes a record date for the making of a distribution to
all holders of Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness, cash (other than a
regular periodic cash dividend), assets, stock (other than a dividend payable in
Preferred Shares) or subscription rights, options or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which is
Page 13
the current per share market price of the Preferred Shares (as determined
pursuant to Section 11(d)) on such record date or, if earlier, the date on which
Preferred Shares begin to trade on an ex-dividend or when issued basis for such
distribution, less the fair market value (as determined in good faith by the
Board, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the evidences of indebtedness, cash, assets or
stock so to be distributed or of such subscription rights, options or warrants
applicable to one Preferred Share, and the denominator of which is 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 issuable 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 will 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 Common Shares on any date shall be deemed to be the average of
the daily closing prices per share of such Common Shares for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Common Shares
of (A) a dividend or distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares (other than the Rights)
or (B) any subdivision, combination or reclassification of such Common Shares,
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 take into account
ex-dividend trading or to reflect the current per share market price per Common
Share equivalent. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, the last
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 Common Shares are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Shares
selected by the Board. If the Common Shares are not publicly held or not so
listed or traded, or are not the subject of available bid and asked quotes,
"current per share market price" will mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current per share
market price" of the Preferred Shares shall be determined in the same manner as
set forth above for Common Shares in Section 11(d)(i), other than the last
sentence thereof. If the current per share market price of the Preferred Shares
cannot be determined in the manner provided above, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be an amount
equal to the current per share market price of the Common Shares multiplied by
one one-thousand (as such number may be appropriately adjusted to reflect events
such as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement). If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, or the subject of available bid and asked quotes, "current per
share market price" of the Preferred Shares will mean the fair value per share
as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent. For all purposes of this Agreement,
the current per share market price of one one-thousandth of a Preferred Share
shall be equal to the current per share market price of one Preferred Share
divided by one thousand.
(e)Except as set forth below, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in such 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 a Common Share or other 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 and (ii) the Expiration Date.
Page 14
(f)If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares (and the Purchase Price
in respect thereof) contained in this Section 11, and the provisions of Sections
7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the Purchase Price
in respect thereof) will apply on like terms to any such other securities (and
the Purchase Price in respect thereof).
(g)All Rights originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder will evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of a Preferred Share
issuable from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h)Unless the Company has exercised its election as provided in Section
11(i), upon each adjustment of the Purchase Price pursuant to Section 11(b) or
Section 11(c), each Right outstanding immediately prior to the making of such
adjustment will thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths 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-thousandths of a Preferred Share
issuable upon exercise of a Right immediately prior to such adjustment of the
Purchase Price 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-thousandths of a Preferred Share issuable
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-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights (calculated
to the nearest one one-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
will 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. Such 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 calendar 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 will, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to the provisions of Section 14, the additional Rights to
which such holders are entitled as a result of such adjustment, or, at the
option of the Company, will 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
are entitled after such adjustment. Rights Certificates so to be distributed
shall be issued, executed, and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j)Without respect to any adjustment or change in the Purchase Price and/or
the number and/or kind of securities issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number and kind of securities which were
expressed in the initial Rights Certificate issued hereunder.
(k)Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-thousandth of the then par value, if any, of the
Preferred Shares or below the then par value, if any, of any other securities of
the Company issuable upon exercise of the Rights, the Company will 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 or such other securities, as the case may be, at such adjusted
Purchase Price.
Page 15
(l)In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or
other 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 delivers to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.
(m)Notwithstanding anything in this Agreement to the contrary, the Company
shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that in its good faith judgment the Continuing Directors determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of Preferred Shares at less than the
current per share market price therefor, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
shareholders.
(n)Notwithstanding anything in this Agreement to the contrary, in the event
that the Company at any time after the Record Date and prior to the Distribution
Date (i) pays a dividend on the outstanding Common Shares payable in Common
Shares, (ii) subdivides the outstanding Common Shares, (iii) combines the
outstanding Common Shares into a smaller number of shares, or (iv) issues any
shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which is the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(n) shall be made successively whenever such a dividend is
paid or such a subdivision, combination or reclassification is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Securities.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will 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 Preferred Shares and the
Common Shares a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Rights Certificate in accordance with Section 26. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of any such adjustment
unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow
or Earning Power.
(a)If, at any time after a Person has become an Acquiring Person:
(i) the Company consolidates with, or merges with or into, any other Person
(other than an Exempted Person or a Subsidiary of the Company) and the Company
is not the continuing or surviving corporation of such consolidation or merger;
or
(ii) any Person (other than an Exempted Person or a Subsidiary of the
Company) consolidates with the Company, or merges with or into the Company, and
the Company is the continuing or surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Common Shares is changed into or exchanged for stock or other securities
of any other Person or cash or any other property; or
Page 15
(iii) the Company, directly or indirectly, sells or otherwise transfers (or
one or more of its Subsidiaries sells or otherwise transfers), in one or more
transactions, assets, cash flow or earning power (including without limitation
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing in the aggregate more than 50% of the assets, cash
flow or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons other than an Exempted Person or the Company or one or
more of its wholly owned Subsidiaries;
then, and in each such case, proper provision shall be made so that from
and after the latest of the Share Acquisition Date, the Distribution Date and
the date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date, such number of duly authorized,
validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is exercisable
immediately prior to the Share Acquisition Date and dividing that product by (y)
50% of the current per share market price of the Common Shares of the Issuer
(determined pursuant to Section 11(d)), on the date of the occurrence of such
Flip-over Event; (B) the Issuer will thereafter be liable for, and will assume,
by virtue of the occurrence of such Flip-over Event, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term "Company" will
thereafter be deemed to refer to the Issuer; and (D) the Issuer will take such
steps (including without limitation the reservation of a sufficient number of
its Common Shares to permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to assure that the
provisions hereof are thereafter applicable, as nearly as reasonably may be
possible, in relation to its Common Shares thereafter deliverable upon the
exercise of the Rights.
(b)For purposes of this Section 13, "Issuer" means (i) in the case of any
Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person that is
the continuing, surviving, resulting or acquiring Person (including the Company
as the continuing or surviving corporation of a transaction described in Section
13(a)(ii) above), and (ii) in the case of any Flip-over Event described in
Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets, cash flow or earning power (including without limitation
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
provided, however, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term "Issuer" means such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term "Issuer" means whichever of
such Persons is the issuer of the equity security having the greatest aggregate
market value. Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a Person having outstanding equity
securities, then, and in each such case, (x) if the Issuer is directly or
indirectly wholly owned by a corporation or other legal entity having
outstanding equity securities, then all references to Common Shares of the
Issuer shall be deemed to be references to the Common Shares of Person having
outstanding equity securities which ultimately controls the Issuer, and (y) if
there is no Person having outstanding equity securities, (I) proper provision
shall be made so that the Issuer creates or otherwise makes available for
purposes of the exercise of the Rights in accordance with the terms of this
Agreement, a kind or kinds of security or securities having a fair market value
at least equal to the economic value of the Common Shares which each holder of a
Right would have been entitled to receive if the Issuer had been a Person having
outstanding equity securities; and (II) all other provisions of this Agreement
will apply to the issuer of such securities as if such securities were Common
Shares.
(c)The Company will not consummate any Flip-over Event if, (i) at the time
of or immediately after such Flip-over Event, there are or would be any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the shareholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event unless
Page 16
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this Section 13
and further providing that as promptly as practicable after the consummation of
any Flip-over Event, the Issuer will: (A) prepare and file a registration
statement under the Securities Act with respect to the Rights and the securities
issuable upon exercise of the Rights on an appropriate form, and use its best
efforts to cause such registration statement to (1) become effective as soon as
practicable after such filing and (2) remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the Expiration Date;
(B) take all 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; and (C) deliver to holders of the Rights
historical financial statements for the Issuer and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d)The provisions of this Section 13 will similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Flip-over Event occurs at any time after the occurrence of a Flip-in Event,
except for Rights that have become void pursuant to Section 11(a)(ii), Rights
that shall not have been previously exercised will cease to be exercisable in
the manner provided in Section 11(a)(ii) and will thereafter be exercisable in
the manner provided in Section 13(a).
Section 14. Fractional Rights and Fractional Securities.
(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, the Company shall pay as promptly as practicable to the
registered holders of the Rights Certificates with regard to which such
fractional Rights otherwise would 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 otherwise would have been issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by Nasdaq or such other system then in use, or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board. If the Rights are not publicly held or are
not so listed or traded, or are not the subject of available bid and asked
quotes, the current market value of one Right will mean the fair value thereof
as determined in good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent.
(b)The Company shall not be required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-thousandth 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-thousandth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-thousandth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement provides that the holders of such depositary
receipts 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-thousandth of a Preferred Share, the Company may
pay to any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section 14(b),
the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common
Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; provided, however, that if the
Page 17
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day shall be conclusively deemed to be
an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one one-thousand (as such number may be appropriately adjusted to reflect events
such as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
provided further, however, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent.
(c)Following the occurrence of a Triggering Event, the Company will not be
required to issue fractions of Common Shares or other securities issuable upon
exercise or exchange of the Rights or to distribute certificates which evidence
any such fractional securities. In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such security. For purposes of this
Section 14(c), the current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing price thereof
(as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise or exchange; provided, however, that if neither the Common
Shares nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid and
asked quotes, the current market value of one Common Share or such other
security will mean the fair value thereof as determined in good faith by the
Board, whose determination will mean the fair value thereof as shall be
described in a statement filed with the Rights Agent.
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, 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 holder of any 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 shall be entitled to specific
performance of the obligations under this Agreement, 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 are transferable only in
connection with the transfer of the Common Shares;
(b)after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form
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
Common Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificate or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary;
(d)such holder expressly waives any right to receive any fractional Rights
and any fractional securities upon exercise or exchange of a Right, except as
otherwise provided in Section 14; and
Page 18
(e)notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent will have any liability to any holder of a Right or
other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, that the Company will use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends,
or be deemed for any purpose the holder of Preferred Shares or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights represented thereby, nor will anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
of this Agreement or exchanged pursuant to the provisions of Section 24.
Section 18. Concerning the Rights Agent.
(a)The Company will pay to the Rights Agent such reasonable compensation as
shall be agreed in writing between the Company and the Rights Agent 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, its directors, officers, employees and agents for, and hold
each of them harmless against, any loss, liability, suit, action, proceeding or
expense, incurred without gross negligence, bad faith, or willful misconduct on
the part of the Rights Agent, for anything done or omitted to be done by the
Rights Agent or such other indemnified party in connection with the acceptance
and administration of this Agreement or the performance of the Rights Agent's
duties hereunder, including the costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly.
(b)The Rights Agent shall be protected and will 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 evidencing Preferred Shares or Common Shares or 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.
(c)The indemnity provided in this Section 18 shall survive the expiration
of the Rights and the termination of this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a)Any Person into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
is a party, or any Person succeeding to the 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 Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. If at the time such successor Rights Agent succeeds 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 if 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 will have the full force provided in the Rights
Certificates and in this Agreement.
Page 19
(b)If at any time the name of the Rights Agent changes and at such time any
of the Rights Certificates have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and if at that time any of the Rights
Certificates have not 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 will 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 advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b)Whenever in the performance of its duties under this Agreement the
Rights Agent deems 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, the President, any Vice
President, the Secretary or the Treasurer of the Company and delivered to the
Rights Agent, and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c)The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d)The Rights Agent will 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 will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution and delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Rights Certificate (except its countersignature thereof);
nor will it be responsible for any breach by the Company of any covenant
contained in this Agreement or in any Rights Certificate; nor will it be
responsible for any adjustment required under the provisions of Sections 11 or
13 (including any adjustment which results in Rights becoming void) or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor will it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of stock or
other securities will, when issued, be duly authorized, validly issued, fully
paid and nonassessable.
(f)The Company will perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g)The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman, 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 will not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the date of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
Page 20
(h)The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein will preclude the Rights Agent from acting in any
other capacity for the Company or for any other Person.
(i)The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will 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 the Rights Agent was not grossly negligent in
the selection and continued employment thereof. The Rights Agent will not be
under any duty or responsibility to ensure compliance with any applicable
federal or state securities laws in connection with the issuance, transfer or
exchange of Rights Certificates.
(j)If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, either (i) the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 or 2 thereof, or (ii) any other actual or suspected
irregularity exists, the Rights Agent will not take any further action with
respect to such requested exercise, transfer, split up, combination or exchange
without first consulting with the Company, and will thereafter take further
action with respect thereto only in accordance with the Company's written
instructions.
(k)No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares or the Common Shares by registered or
certified mail, and to the holders of the Rights Certificates by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 calendar days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the holders
of the Rights Certificates by first class mail. If the Rights Agent resigns or
is removed or otherwise becomes incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of 30 calendar 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 will, 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 a Person organized and doing business under the laws of the United
States or of the State of Georgia (or of any other state of the United States so
long as such corporation is authorized to do business as a banking institution
in the State of Georgia), in good standing, having a principal office in the
State of Georgia, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million. 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 Preferred Shares or the
Common 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, will not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Page 21
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 to reflect any adjustment or change in the Purchase
Price per share and the number or kind of securities issuable upon exercise of
the Rights made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold pursuant to
the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are exercisable or exchangeable for, or
convertible into Common Shares, and (b) may, in any other case, if deemed
necessary, appropriate or desirable by the Continuing Directors of the Company,
issue Rights Certificates representing an equivalent number of Rights as would
have been issued in respect of such Common Shares if they had been issued or
sold prior to the Distribution Date, as appropriately adjusted as provided
herein as if they had been so issued or sold; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, in its good
faith judgment the Board determines that the issuance of such Rights Certificate
could have a material adverse tax consequence to the Company or to the Person to
whom or which such Rights Certificate otherwise would be issued and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment otherwise has been made in lieu of the issuance thereof.
Section 23. Redemption.
(a)Prior to the Expiration Date, the Company may, at its option and with
the approval of the Board, redeem all but not less than all of the then
outstanding Rights at the Redemption Price at any time prior to the Close of
Business on the Share Acquisition Date; provided, however, that if the Board
authorizes redemption of the Rights, then there must be Continuing Directors
then in office and such authorization shall require the concurrence of a
majority of such Continuing Directors if (A) such authorization occurs on or
after the time a Person becomes an Acquiring Person or (B) such authorization
occurs on or after the date of a change (resulting from proxy or consent
solicitation) in a majority of the directors in office at the commencement of
such solicitation or solicitations if any Person who is a participant in any
such solicitation or solicitations has stated (or, if upon the commencement of
the earliest such solicitation, a majority of the Continuing 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. Any such redemption shall be effective
immediately upon the action of the Board ordering the same, unless such action
of the Board expressly provides that such redemption shall be effective at a
subsequent time or upon the occurrence or nonoccurrence of one or more specified
events (in which case such redemption shall be effective in accordance with the
provisions of such action of the Board).
(b)Immediately upon the effectiveness of the redemption of the Rights as
provided in Section 23(a), 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,
without interest thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce such
redemption and, within 10 calendar days thereafter, will give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; provided, however, that the failure to give, or any defect
in, any such notice will not affect the validity of the redemption of the
Rights. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights will state the method by which the payment of
the Redemption Price shall be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the Board
(based upon the fair market value of such other consideration, determined by the
Board in good faith) or any combination thereof. The Company may, at its option,
combine the payment of the Redemption Price with any other payment being made
concurrently to holders of Common Shares and, to the extent that any such other
payment is discretionary, may reduce the amount thereof on account of the
concurrent payment of the Redemption Price. If legal or contractual restrictions
prevent the Company from paying the Redemption Price (in the form of
consideration deemed appropriate by the Board) at the time of redemption, the
Company will pay the Redemption Price, without interest, promptly after such
time as the Company ceases to be so prevented from paying the Redemption Price.
Page 22
Section 24. Exchange.
(a)The Board may, at its option, at any time after the Share Acquisition
Date and prior to the Expiration Date, exchange all or part of the then
outstanding and exercisable Rights (which will not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii)) 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 Record Date (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Any such exchange shall be effective immediately upon the
action of the Board ordering the same, unless such action of the Board expressly
provides that such exchange shall be effective at a subsequent time or upon the
occurrence or nonoccurrence of one or more specified events (in which case such
exchange shall be effective in accordance with the provisions of such action of
the Board). Notwithstanding the foregoing, (i) the Board will not be empowered
to effect such exchange at any time after any Person (other than the Company or
any Related Person), who or which, together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the then
outstanding Common Shares and (ii) no exchange shall be effected in the
circumstances set forth in clauses (A) or (B) of the proviso to Section 23(a)
unless there are Continuing Directors then in office and such exchange is
approved by a majority of such Continuing Directors.
(b)Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right with
respect to such Rights thereafter of the holder of such Rights shall be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the effectiveness
of the exchange of any Rights as provided in Section 24(a), the Company will
publicly announce such exchange and, within 10 calendar days thereafter, will
give notice of 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; provided,
however, that the failure to give, or any defect in, such notice will not affect
the validity of such exchange. Any notice that 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 shall be effected and, in the event of any partial
exchange, the number of Rights which shall 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)) held by
each holder of Rights.
(c)In any exchange pursuant to this Section 24, the Company, at its option,
may substitute for any Common Share exchangeable for a Right (i) equivalent
common shares (as such term is used in Section 11(a)(iii)), (ii) cash, (iii)
debt securities of the Company, (iv) other assets, or (v) any combination of the
foregoing, in any event having an aggregate value, as determined in good faith
by the Board (whose determination shall be described in a statement filed with
the Rights Agent), equal to the current market value of one Common Share
(determined pursuant to Section 11(d)) on the Trading Day immediately preceding
the date of the effectiveness of the exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a)If, after the Distribution Date, the Company proposes (i) to pay any
dividend payable in stock of any class to the holders of Preferred Shares or to
make any other distribution to the holders of Preferred Shares (other than a
regular periodic cash dividend), (ii) to offer to the holders of Preferred
Shares rights, options 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 assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, to any other Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries, (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 reclassification of the Common Shares then,
in each such case, the Company will give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which specifies the record date for the purposes of such stock
dividend, distribution or offering of rights, options or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given, in
the case of any action covered by clause (i) or (ii) above, at least 10 calendar
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 calendar 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 is the earlier.
Page 23
(b)In case any Triggering Event occurs, then, in any such case, the Company
will as soon as practicable thereafter give to the Rights Agent and each holder
of a Rights Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.
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 by
the Company with the Rights Agent) or by facsimile or other generally accepted
means of electronic transmission as follows:
Avado Brands, Inc.
Xxxxxxx at Washington
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. XxXxxx, Xx.
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
Attention: Xxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing by the Rights Agent with the Company) or by facsimile
transmission as follows:
SunTrust Bank
Stock Transfer Department
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Department Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares) 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. Subject to the penultimate sentence
of this Section 27, this Agreement may be supplemented or amended at the times
and for the purposes set forth below; provided, however, that no proposed
supplement or amendment to this Agreement shall be effective unless (i) there
are Continuing Directors and (ii) a majority of such Continuing Directors, at a
meeting of the Board duly called and held, votes in favor of the adoption of
such proposed supplement or amendment. Prior to the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last sentence
of this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment shall cause the Rights
again to become redeemable or cause this Agreement again to become
supplementable or amendable otherwise than in accordance with the provisions of
this sentence. Without limiting the generality or effect of the foregoing, this
Agreement may be supplemented or amended to provide for such voting powers for
the Rights and such procedures for the exercise thereof, if any, as the
Continuing Directors of the Company may determine to be appropriate. Upon the
delivery of a certificate that is signed by a Continuing Director and which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent will execute such supplement or amendment;
provided, however, that the failure or refusal of the Rights Agent to execute
such supplement or amendment will not affect the validity of any supplement or
amendment adopted by the Continuing Directors of the Company, any of which shall
be effective in accordance with the terms thereof. Notwithstanding anything in
this Agreement to the contrary, no supplement or amendment may be made which
decreases the stated Redemption Price to an amount less than $0.001 per Right or
may change the rights or duties of the Rights Agent under this Agreement without
the execution of such supplement or amendment by the Rights Agent.
Page 24
Section 28. Determinations and Actions by the Board, Etc. The Board shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). For
all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares 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. 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 in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties and (y) not subject the Board, or any of the directors on the
Board to any liability to the holders of the Rights.
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 other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of Common Shares) any legal or equitable right, remedy
or claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, registered holders
of the Common 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;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 hereof shall be reinstated (with
prompt notice to the Rights Agent) and shall not expire until the Close of
Business on the tenth Business Day following the date of such determination by
the Board. Without limiting the foregoing, if any provision requiring a specific
group of directors of the Company to act is held to by any court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board in accordance with applicable law
and the Company's Articles of Incorporation and Bylaws.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
internal substantive laws of the State of Georgia and for all purposes shall be
governed by and construed in accordance with the internal substantive 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.
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.
Page 25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
AVADO BRANDS, INC.
By:
--------------------------------
Name:
Title:
Attest:
By:
------------------------------
Name:
Title:
SUNTRUST BANK
By:
--------------------------------
Name:
Title:
Attest:
By:
------------------------------
Name:
Title:
Page 26
EXHIBIT A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
AVADO BRANDS, INC.
Pursuant to Sections 14-2-602, 14-2-1002 and 14-2-1006 of the Georgia
Business Corporation Code
I.
The name of the corporation is Avado Brands, Inc. (the "Corporation").
-------------
II.
Pursuant to Section 14-2-602 of the Georgia Business Corporation Code and
the authority conferred upon the Board of Directors by the Articles of
Incorporation of the Corporation, as heretofore amended and restated (the
"Articles of Incorporation"), the Articles of Incorporation are hereby amended
to create a new series of shares of Special Stock, designated as "Series A
Junior Participating Preferred Stock," by adding the following additional Part A
after the last paragraph of ARTICLE TWO:
A. SERIES A JUNIOR PARTICIPATING PREFERRED STOCK. There is hereby
established a series of the corporation's authorized Special Stock, which shall
have the following designations, preferences, limitations, and relative rights:
1. DESIGNATION AND AMOUNT. The shares of such series shall be designated as
"Series A Junior Participating Preferred Stock" (the "Series A Preferred
Stock"). The number of shares constituting such series shall be 75,000 and such
series shall have the following preferences, limitations, and relative rights:
2. DIVIDENDS AND DISTRIBUTIONS.
(i) The holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock 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, quarterly dividends payable in cash on the payment
date of any quarterly dividend for the Common Stock, or if there should be no
such payment date, then on the 45th day after the end of each fiscal quarter
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock of the
corporation or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. If the corporation shall at any
time after the date hereof declare or pay any dividend on 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) 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 clause (b) of the preceding
sentence shall be automatically 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.
(ii) The corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in subparagraph (i) of this paragraph 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, if no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the shareholders of the corporation.
If the corporation shall at any time after the date hereof declare or pay any
dividend on 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) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be automatically adjusted by multiplying such number
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(ii) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the corporation having general voting rights shall vote
together as one voting group on all matters submitted to a vote of shareholders
of the corporation.
(iii) Except as set forth herein, 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 and any other
capital stock of the corporation having general voting rights as set forth
herein) for taking any corporate action.
4. CERTAIN RESTRICTIONS.
(i) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the corporation shall not:
(a) declare or pay dividends on, or make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(b) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(c) redeem or purchase or otherwise acquire for consideration shares of any
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, provided that the corporation may
at any time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(d) purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(ii) The corporation shall not permit any subsidiary of the corporation to
purchase or otherwise acquire for consideration any shares of stock of the
corporation unless the corporation could, under subsection (i) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
5. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Special Stock to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the corporation, no distribution shall be made (a)
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 amount per share equal to the greater of (i) $1,000, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or (ii) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate amount to be
distributed per share to holders of Common Stock, or (b) to the holders of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the corporation shall at any time
after the date hereof declare or pay any dividend on 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)
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 (a) of
the preceding sentence shall be automatically 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.
7. CONSOLIDATION, MERGER, ETC. In case the corporation shall enter into any
consolidation, merger, statutory share exchange, 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 the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of 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.
If the corporation shall at any time after the date hereof declare or pay any
dividend on 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) into a greater or lesser number of
shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
8. NO REDEMPTION. The shares of Series A Preferred Stock shall not be
redeemable.
9. RANKING. The Series A Preferred Stock shall rank junior to all other
series of the corporation's Special Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such other series shall provide
otherwise.
10. AMENDMENT. At any time when any shares of Series A Preferred Stock are
outstanding, the Articles of Incorporation, as amended hereby, shall not be
amended in any manner that 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 a majority or more
of the then outstanding shares of Series A Preferred Stock, voting separately as
a class.
11. FRACTIONAL SHARES. Series A Preferred Stock may be issued in fractions
of a share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series A
Preferred Stock."
III.
The foregoing amendment was duly adopted by the Corporation's Board of
Directors on August 6, 2002. As provided in Section 14-2-602 of the Georgia
Business Corporation Code, shareholder action was not required.
AVADO BRANDS, INC.
By:
--------------------------------
Name:
Title:
Dated: August 13, 2002
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- ____ ___ Rights
NOT EXERCISABLE AFTER [____________, 2012] OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN
THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF SHALL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
Rights Certificate
AVADO BRANDS, INC.
This certifies that ___________, or its 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 [________________, 2002] as the same may be amended from
time to time (the "Rights Agreement"), between AVADO BRANDS, INC., a Georgia
corporation (the "Company"), and SUNTRUST BANK (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., Atlanta time, on
[_______________], 2007 at the office or agency of the Rights Agent designated
for such purpose, or of its successor as Rights Agent, one one-thousandth of a
fully paid non-assessable share of Series A Junior Participating Preferred
Stock, with a par value of $0.01 per share (the "Preferred Stock"), of the
Company, at a purchase price of $9.50 per one one-thousandth of a share of
Preferred Stock (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-thousandths of a share of Preferred Stock 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 _________ __, _____, based on the Preferred
Stock as constituted at such date. As provided in the Rights Agreement, the
Purchase Price, the number of one one-thousandth of a share of Preferred Stock
(or other securities or property) which may be purchased upon the exercise of
the Rights and the number of 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 such
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. The Company will mail to the holder of this Rights Certificate a copy
of the Rights Agreement without charge after receipt of a written request
therefor.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock 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
$0.01 per Right or (ii) may be exchanged in whole or in part for shares of
Preferred Stock or shares of the Company's Common Stock, no par value.
No fractional shares of Preferred Stock or Common Stock shall be issued
upon the exercise or exchange of any Right or Rights evidenced hereby (other
than fractions of Preferred Stock which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment shall be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred Stock
or of any other securities of the Company which may at any time be issuable on
the exercise or exchange hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised or exchanged as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of_________________,______.
ATTEST: AVADO BRANDS, INC.
By:__________________________________ By:_________________________
Countersigned:
______________________, as Rights Agent
By:_________________________________
Authorized Signatory
[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
transfer unto:
-------------------------------------------
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
-------------------------------------------
Rights represented by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.
Dated:___________________, __________ _______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by, were not acquired by the undersigned
from, and are not being sold, assigned or transferred to, an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
--------------------------------
Signature
[Form of Reverse Side of Rights Certificate-- CONTINUED]
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO EXERCISE RIGHTS REPRESENTED BY THE
RIGHTS CERTIFICATE)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock (or other securities or property) issuable upon the exercise of
such Rights and requests that certificates for such shares of Preferred Stock
(or such other securities) be issued in the name of:
-------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
-------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number:
-------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
-------------------------------------------
Dated:___________________, __________ ________________________________
Signature
(SIGNATURE MUST CONFORM TO HOLDER
SPECIFIED ON RIGHTS CERTIFICATE)
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by, were not acquired by the undersigned
from, and are not being sold, assigned or transferred to, an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------
Signature
[Form of Reverse Side of Rights Certificate-- CONTINUED]
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as
the case may be, must conform to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event 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, such
Assignment or Election to Purchase will not be honored.
EXHIBIT C
AVADO BRANDS, INC.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
Introduction:
On August 6, 2002, the Board of Directors (the "Board") of Avado Brands,
Inc., a Georgia corporation (the "Company"), declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $0.01 per share. The dividend is payable on September 4, 2002
to the shareholders of record on September 4, 2002.
The Board has adopted a Rights Agreement to protect the Company's
shareholders from coercive or otherwise unfair takeover tactics. In general
terms, it works by imposing a significant penalty upon any person or group which
acquires 15% or more of our outstanding common stock without the approval of our
Board. The Rights Agreement should not interfere with any merger or other
business combination approved by the Board.
For those interested in the specific terms of the Rights Agreement as made
between our Company and SunTrust Bank, as the Rights Agent, on August 13, 2002,
we provide the following summary description. Please note, however, that this
description is only a summary, and is not complete, and should be read together
with the entire Rights Agreement, which has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K dated August
13, 2002. A copy of the agreement is available free of charge from the Company.
Rights: The Board authorized the issuance of a Right with respect to each
outstanding share of common stock on September 4, 2002. The Rights will
initially trade with, and will be inseparable from, the common stock. The Rights
are evidenced only by certificates that represent shares of common stock. New
Rights will accompany any new shares of common stock we issue after September 4,
2002 until the Distribution Date described below.
Exercise Price: Each Right will allow its holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock ("Preferred Share") for $9.50 once the Rights become exercisable. This
portion of a Preferred Share will give the shareholder approximately the same
dividend, voting, and liquidation rights as would one share of common stock.
Prior to exercise, the Right does not give its holder any dividend, voting, or
liquidation rights.
Exercisability: The Rights will not be exercisable until:
- 10 calendar days after the public announcement that a person or group has
become an "Acquiring Person" by obtaining beneficial ownership of 15% or
more of the Company's outstanding common stock, or, if earlier;
- 10 business days (or a later date determined by the Board before any
person or group becomes an Acquiring Person) after a person or group
begins a tender or exchange offer which, if completed, would result
in that person or group becoming an Acquiring Person;
provided, however, that Xxx X. XxXxxx, Xx. is exempted from these
provisions.
We refer to the date when the Rights become exercisable as the
"Distribution Date." Until that date, the common stock certificates will also
evidence the Rights, and any transfer of shares of common stock will constitute
a transfer of Rights. After that date, the Rights will separate from the common
stock and be evidenced by Rights certificates that we will mail to all eligible
holders of common stock. Any Rights held by an Acquiring Person are void and may
not be exercised.
Trigger Events: Consequences of a Person or Group becoming an Acquiring
Person:
- Flip In. If a person or group becomes an Acquiring Person, all holders of
Rights except the Acquiring Person may, for $9.50, purchase shares
of the Company's common stock with a market value of $19.00, based on
the market price of the common stock prior to such acquisition.
- Flip Over. If the Company is later acquired in a merger or similar
transaction after the Distribution Date, all holders of Rights
except the Acquiring Person may, for $9.50, purchase shares of the
acquiring corporation with a market value of $19.00 based on the
market price of the acquiring corporation's stock, prior to such merger.
Inadvertent Purchases: If a person triggers the Rights but the Board
determines that Acquiring Person status came about inadvertently and the person
does not acquire additional shares, the Person is deemed not to have become an
Acquiring Person.
Preferred Share Provisions: Each Preferred Share, if issued:
- will not be redeemable;
- will entitle holders to quarterly dividend payments of $1.00 per share,
or an amount equal to 1,000 times the dividend paid on one share of
common stock, whichever is greater;
- will entitle holders upon liquidation either to receive $1,000 per share
or an amount equal to 1,000 times the payment made on one share of common
stock, whichever is greater;
- will have the same voting power as 1,000 shares of common stock; and
- if shares of the Company's common stock are exchanged via merger,
consolidation, or a similar transaction, will entitle holders to a
per share payment equal to the payment made on one share of common stock.
The value of a one one-thousandth interest in a Preferred Share should
approximate the value of one share of common stock.
The Preferred Shares will be junior to all other preferred stock of the
Company as to dividends and upon liquidation, but will rank senior to the common
stock as to dividends and upon liquidation.
Expiration: The Rights will expire on September 4, 2007.
Redemption: The Board may redeem the Rights for $0.001 per Right at any
time before any person or group becomes an Acquiring Person. If the Board
redeems any Rights, it must redeem all of the Rights. Once the Rights are
redeemed, the only right of the holders of Rights will be to receive the
redemption price of $0.001 per Right. The redemption price will be adjusted if
we have a stock split or stock dividends of the common stock. Notwithstanding
the foregoing and subject to applicable law, a majority of the continuing
directors of the Company (defined to include the Company's incumbent directors
and their successors who are nominated by a majority of the incumbent directors,
but specifically excluding representatives of an Acquiring Person) must concur
with the redemption of the Rights on or following the date that a person becomes
an Acquiring Person or a majority of the Board is replaced due to actions of any
person or group who may become an Acquiring Person or who may cause a Flip-in
Event or a Flip-over Event.
Exchange: After a person or group becomes an Acquiring Person, but before
an Acquiring Person owns 50% or more of the Company's outstanding common stock,
the Board, with the concurrence of a majority of the continuing directors, may
extinguish the Rights by exchanging one share of common stock or an equivalent
security for each Right, other than Rights held by the Acquiring Person.
Anti-Dilution: The Board may adjust the purchase price of the Preferred
Shares, the number of Preferred Shares issuable and the number of outstanding
Rights to prevent dilution that may occur from a stock dividend, a stock split,
a reclassification of the Preferred Shares or common stock. No adjustments to
the Exercise Price of less than 1% will be made.
Amendments: For so long as the Rights are redeemable, the Company may,
except with respect to the redemption price, amend the Rights in any manner,
without the consent of the holders of the Rights, so long as there are
continuing directors in office, a majority of whom vote in favor of the proposed
amendment. After the Rights are no longer redeemable, the Company may not,
except with respect to the redemption price, amend the Rights in any manner that
adversely affects the interests of holders of the Rights.
