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RIGHTS AGREEMENT
between
THE STEAK n SHAKE COMPANY
and
COMPUTERSHARE INVESTOR SERVICES, LLC
as Rights Agent
Dated as of May 16, 2001
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INDEX
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Page
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Section 1 Certain Definitions................................................1
Section 2 Appointment of Rights Agent........................................4
Section 3 Issuance of Right Certificates.....................................4
Section 4 Form of Right Certificates.........................................6
Section 5 Countersignature and Registration..................................6
Section 6 Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates..........................................6
Section 7 Exercise of Rights; Purchase Price; Expiration Date of Rights......7
Section 8 Cancellation and Destruction of Right Certificates.................8
Section 9 Availability of Capital Stock......................................8
Section 10 Date of Ownership..................................................9
Section 11 Adjustment of Purchase Price, Number of Stock or
Number of Rights..................................................10
Section 12 Certificate of Adjusted Purchase Price or
Number of Stock...................................................16
Section 13 Consolidation, Merger or Sale or Transfer
of Assets or Earning Power........................................16
Section 14 Fractional Rights and Fractional Stock............................17
Section 15 Rights of Action..................................................18
Section 16 Agreement of Right Holders........................................18
Section 17 Right Certificate Holder Not Deemed a Shareholder.................19
Section 18 Concerning the Rights Agent.......................................19
Section 19 Merger or Consolidation or Change of Name of Rights Agent.........20
Section 20 Duties of Rights Agent............................................20
Section 21 Change of Rights Agent............................................22
Section 22 Issuance of New Right Certificates................................23
Section 23 Redemption........................................................23
Section 24 Exchange..........................................................24
Section 25 Notice of Certain Events..........................................25
Section 26 Supplements and Amendments........................................26
Section 27 Successors........................................................27
Section 28 Benefits of this Agreement........................................27
Section 29 Severability......................................................27
Section 30 Governing Law.....................................................27
Section 31 Counterparts......................................................27
Section 32 Descriptive Headings..............................................27
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RIGHTS AGREEMENT
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This Agreement is made and entered into as of May 16, 2001, between The
Steak n Shake Company, an Indiana corporation (the "Company"), and Computershare
Investor Services, LLC, a Delaware limited liability company, (the "Rights
Agent").
RECITALS
--------
The Board of Directors of the Company has authorized and declared a
dividend of one stock purchase right (a "Right") for each share of Common Stock
(as hereinafter defined) of the Company outstanding as of the Close of Business
on May 31, 2001 (the "Record Date"). Each Right represents the right to purchase
one one-hundredth (1/100) of a share of Series A Preferred Stock of the Company
(a "Preferred Stock Unit"), upon the terms and subject to the conditions herein
set forth. The Board of Directors of the Company has further authorized and
directed the issuance of one Right with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined). The Rights Agent has agreed to accept its
appointment as such, and to carry out the duties imposed on it hereunder.
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Stock of the
Company then outstanding, but shall not include the Company, any Subsidiary (as
such term is hereinafter defined) of the Company, any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common Stock
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an acquisition of
Common Stock by the Company that, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the Common Stock of the Company then outstanding by reason of share purchases by
the Company and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Stock of the Company, then such Person
shall be deemed to be an "Acquiring Person".
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act (as such term is hereinafter defined).
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "Beneficially Own" any securities:
(i) that such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to -------- ------- Beneficially Own,
securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided however, that a
-------- ------- Person shall not be deemed the Beneficial Owner
of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) that are Beneficially Owned, directly or indirectly, by any
other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso
to Section 1(c)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding that such Person would be
deemed to Beneficially Own hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which the New York Stock Exchange or banking institutions in the State of
Indiana or Illinois are authorized or obligated by law or executive order to
close.
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(e) "Close of Business" on any given date shall mean 5:00 P.M., Eastern
Standard Time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern Standard Time, on the next
succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall mean the
shares of the Company designated in its Articles of Incorporation, as amended,
as "Common Stock". "Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock or other equity interest with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons that ultimately control such
first-mentioned Person.
(g) "Company" shall have the meaning set forth in the preamble hereof.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Exchange Date" shall mean the time at which such Rights are exchanged
as provided in Section 24 hereof.
(k) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(l) "Final Expiration Date" shall mean the Close of Business on May 16,
2011.
(m) "Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(n) "Preferred Stock Unit" shall mean one one-hundredth (1/100) of a share
of the Series A Preferred Stock of the Company.
(o) "Preferred Stock" shall mean the shares of the Company designated in
the Articles of Incorporation of the Company, as amended, as "Series A Preferred
Stock".
(p) "Purchase Price" shall initially be $40.00 for each Preferred Stock
Unit purchasable pursuant to the exercise of a Right, and shall be subject to
adjustment from time to time as provided in Section 11 and 13 hereof and shall
be payable in lawful money of the United States of America in accordance with
Section 7(c).
(q) "Record Date" shall have the meaning set forth in the second paragraph
hereof.
(r) "Redemption Date" shall mean the time at which the Rights are redeemed
as provided in Section 23 hereof.
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(s) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(t) "Right" shall have the meaning set forth in the second paragraph
hereof.
(u) "Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.
(v) "Rights Agent" shall have the meaning set forth in the preamble hereof.
(w) "Rights Agreement" shall have the meaning set forth in Section 3(c)
hereof.
(x) "Security" shall have the meaning set forth in Section 11(d) hereof.
(y) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such or such earlier date as a majority of the Directors shall become
aware of the existence of an Acquiring Person.
(z) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or other
equity interest is owned, directly or indirectly, by such Person.
(aa) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
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 Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (a) the tenth business day after the Shares
Acquisition Date or (b) the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Stock for or pursuant to the terms of any such plan) of, or of the first
public announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Stock for or pursuant to
the terms of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any person becoming the Beneficial Owner
of Common Stock aggregating 30% or more of the then outstanding Common Stock,
including any such date which is after the date of this Agreement and prior to
the issuance of the Rights (the earlier of such dates being herein referred to
as the "Distribution Date"), (i) the Rights will be evidenced by the
certificates for Common Stock registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (ii) the Rights Certificates will not be
transferable except as a part of the transfer of certificates for Common Stock,
and until the Distribution Date (or the earlier of the Redemption Date or the
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Final Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a separate Right Certificate, in substantially the form of Exhibit A
hereto (a "Right Certificate"), evidencing one Right for each share of Common
Stock so held. Following the Close of Business on the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) The Company will make available, as promptly as practicable following
the Record Date, a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit B hereto, to any holder of Rights from time to
time prior to the Expiration Date upon the request of the holders.
(c) Certificates for Common Stock issued after the Record Date but prior to
the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date (whether as an original issuance of Common Stock or as a
transfer or re-registration of outstanding Common Stock) shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN THE STEAK n
SHAKE COMPANY AND COMPUTERSHARE INVESTOR SERVICES, LLC, DATED AS OF
MAY 16, 2001 (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE STEAK n SHAKE COMPANY. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH
RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER
BE EVIDENCED BY THIS CERTIFICATE. THE STEAK n SHAKE COMPANY WILL MAIL
TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT
WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. AS
DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) SHALL
BECOME NULL AND VOID.
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(d) In the event that the Company purchases or acquires any Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Stock shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock
that are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of the National Association of Securities
Dealers, Inc. or any stock exchange on which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the provisions of Sections
11, 13, and 22 hereof, the Right Certificates shall entitle the holders thereof
to purchase such number of Preferred Stock Units as shall be set forth therein
at the price per Preferred Stock Unit set forth therein (the "Purchase Price"),
but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment as provided
herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President, or any of its Vice Presidents, either
manually or by facsimile signature and shall be attested by the Secretary or any
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless countersigned. In case any officer of
the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or such other office designated for such
purpose, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates and the date of each of the Right Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates entitling the registered holder to purchase a like number of
Preferred Stock Units (or other securities, as the case may be) as the Right
Certificate or Right Certificates by the surrender of the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose, duly endorsed with
signature guaranteed as provided for in the form of Right Certificate, and with
the Certificate as to beneficial ownership duly executed by the registered
holder. Thereupon the Rights Agent shall countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right 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 Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's or Rights
Agent's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each Preferred Stock
Unit (or other securities, as the case may be) as to which the Rights are
exercised, at or prior to the earliest of (a) the Final Expiration Date, (b) the
Redemption Date, or (c) the Exchange Date.
(b) The Purchase Price for each Preferred Stock Unit (or other securities,
as the case may be) pursuant to the exercise of a Right shall initially be
$40.00, shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with Section 7(c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
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check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (a) (i) requisition from any transfer agent of the Preferred
Stock certificates for the total number of shares of Preferred Stock to be
purchased (and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests), or (ii) requisition from the Company's
depositary agent, if any, depositary receipts representing such number of shares
of Preferred Stock as are to be purchased, in which case certificates for the
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent (and the Company hereby directs its depositary
agent to comply with such request), (b) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (c) promptly after receipt of such
certificates (or depositary receipts), cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (d) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have completed
and signed the certificate contained in the form of election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
exercise; and 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.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
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Section 9. Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Stock or any
authorized and issued Preferred Stock held in its treasury, the number of shares
of Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7, and may, if the Board of
Directors deems advisable, so reserve and keep available a sufficient number of
shares of Common Stock (and/or other securities) which may be required to permit
the exercise in full of the Rights pursuant to this Agreement. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all securities delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(b) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Stock (or Common Stock and/or other securities, as the case may
be) upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax that may be payable in respect of any transfer or delivery
of Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or Common Stock
and/or other securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or to deliver any certificates or depositary receipts for
Preferred Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
(c) The Company covenants and agrees that it will (i) prepare and file, as
soon as practicable after the Distribution Date, a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), on an appropriate
form with respect to the securities issuable upon exercise of the Rights, (ii)
use its best efforts to cause the registration statement to become effective as
soon as practicable after filing, and (iii) use its best efforts to cause the
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act and the rules and regulations
thereunder) until the earlier of the exercise of all of the Rights and the
Expiration Date. The Company will also take all actions required to comply with
the state securities laws applicable to the Rights and Preferred Stock (or
Common Stock and/or other securities, as the case may be) issuable upon exercise
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed 90 days, the exercisability of the Rights in order to prepare and file
the registration statement. Upon any such suspension, the Company shall issue a
public announcement and notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, and the Company
shall issue a public announcement and notice to the Rights Agent when the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction in which any requisite registration or qualification has not been
obtained or any requisite notice of exemption has not been filed.
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Section 10. Date of Ownership. Each person in whose name any certificate
for Preferred Stock (or Common Stock and/or other securities as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Stock (or Common Stock and/or other
securities as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or Common Stock and/or
other securities as the case may be) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Stock (or Common
Stock and/or other securities as the case may be) for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (1) declare a dividend on the Preferred Stock payable in
Preferred Stock, (2) subdivide the outstanding Preferred Stock, (3) combine
the outstanding Preferred Stock into a smaller number of Preferred Stock or
(4) issue any securities in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock that, if such Right
had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. The
adjustments provided for in this Section 11(a) shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
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(ii) In the event (1) any Person alone or together with its Affiliates
and Associates shall become an Acquiring Person, or (2) during such time as
there is an Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split) or recapitalization or
reorganization of the Company 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 beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof, each holder of a Right shall, for a period of sixty (60)
days after the later of the occurrence of any such event or the effective
date of the registration statement referred to in Section 9 hereof, have a
right to receive, upon exercise thereof at a price equal to the then
current Purchase Price in accordance with the terms of this Agreement such
number of shares of Preferred Stock (or, in the discretion of the Board,
Common Stock) as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of Preferred Stock Units for
which a Right is then exercisable and (y) dividing that product by 50% of
the then current per share market price of the Company's Common Stock
(determined pursuant to Section 11(d) hereof) on the date such Person
became an Acquiring Person. In the event that any Person shall, become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
From and after the occurrence of the earlier of the events described in
clauses (i) and (ii) above, any Rights that are or were acquired or
beneficially owned by such Acquiring Person (or any Associate or Affiliate
of such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate shall be issued pursuant to Section 3
that represents Rights Beneficially Owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any time upon
the transfer of any Rights to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate;
and any Right Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof shall be cancelled.
If any event described in clauses (i) and (ii) above shall occur, then the
Company shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under this Section 11
(a)(ii).
(iii) If the Board of Directors elects to issue Common Stock as
provided in the foregoing subparagraph (ii), and if there shall not be
sufficient Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), then the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock
for issuance upon exercise of the Rights, including the calling of a
meeting of shareholders. If the Company shall, after good faith effort, be
unable to take all such action as may be necessary to authorize such
additional shares of Common Stock, the Company shall substitute, for each
share of Common Stock that would otherwise be issuable upon exercise of a
Right, a number of shares of Preferred Stock (or a security with
substantially similar rights, privileges, preferences, voting power and
economic rights) such that the current per share market price of one
Preferred Stock Unit (or such other security) is equal to the current per
share market price of one share of Common Stock as of the date of issuance
of such Preferred Stock (or other security).
11
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Stock (or shares having the same rights, privileges and
preferences as the Preferred Stock ("equivalent preferred shares")) or
securities convertible into Preferred Stock or equivalent preferred shares at a
price per share of Preferred Stock or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred shares) less than the then current per share market price
of the Preferred Stock (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the purchase price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock that the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock 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). In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a distribution
to all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Preferred Stock and the denominator of which shall be such current per share
market price of the Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
12
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security") for the purpose of this
Section 11(d)(i) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market
price of the Security is determined during a period following the
announcement by the issuer of such Security of (1) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (2) any subdivision,
combination or reclassification of such Security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System
("Nasdaq") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the Company.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is not listed
or admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Stock is not publicly traded, the "current per share market price" of the
Preferred Stock shall be conclusively deemed to be the current per share
market price of the Common Stock as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by one
hundred. If neither the Common Stock nor the Preferred Stock are publicly
held or so listed or traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments that 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 hundredth of a share of
Preferred Stock or one one-hundredth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (a)
twelve months from the date of the transaction which requires such adjustment or
(b) the date of the expiration of the right to exercise any Rights.
13
(f) If, as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any securities of the Company other than Preferred Stock, thereafter the number
of such other securities so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Sections 11(a) through 11(c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 with respect to the Preferred Stock shall apply on like
terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Preferred
Stock obtained by (a) multiplying (x) the number of Preferred Stock Units
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(b) 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 shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of shares of Preferred
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of Preferred Stock Units that were expressed
in the initial Right Certificates issued hereunder.
14
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price of the Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of the
Preferred Stock, Common Stock or other securities of the Company, if any,
issuable upon such exercise over and above the number of shares of Preferred
Stock, Common Stock 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 shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exchangeable for Preferred Stock, or (iv)
dividends on Preferred Stock payable in Preferred Stock or issuance of rights,
options or warrants referred to hereinabove in Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Rights Agreement and prior to the
Distribution Date the Company shall (i) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the Common Stock (by reclassification or
otherwise than by payment of dividends in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in any such case (A) the number
of shares of Preferred Stock purchasable after such event upon proper exercise
of each Right shall be determined by multiplying the number of shares of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (B) each
share of Common Stock outstanding immediately after such event shall have issued
with respect to it that number of Rights that each share of Common Stock
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in the preceding sentence shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
15
Section 12. Certificate of Adjusted Purchase Price or Number of Stock.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Stock and Common
Stock a copy of such certificate and (c) if a Distribution Date has occurred,
mail a brief summary thereof to each holder of a Right Certificate. The Rights
Agent shall be fully protected in relying on such certificate and shall not be
deemed to have knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event, directly or indirectly, (i) the Company shall consolidate
with, or merge with and into, any other Person, (ii) any Person shall
consolidate with the Company, or merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for securities of any other Person (or the Company) or cash or
any other property, or (iii) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (1) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of Preferred Stock
Units for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of shares of Preferred Stock, such number of shares
of freely tradeable Common Stock of such other Person (including the Company as
successor thereto or as the surviving corporation), free and clear of any liens,
rights of call or first refusal, encumbrances or other adverse claims, as shall
equal the result obtained by (A) multiplying the then current Purchase Price by
the number of Preferred Stock Units for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Stock of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (2) the issuer of such Common Stock shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (3) the
term "Company" shall thereafter be deemed to refer to such issuer; and (4) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its Common Stock in accordance with Section 9
hereof) in connection with such consummation as may be necessary to ensure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Stock thereafter deliverable upon the exercise
of the Rights.
(b) The Company shall not consummate any such consolidation, merger, sale
or transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in Section 13(a) hereof and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a) hereof, such issuer at its own expense shall:
16
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, will use its best
efforts to cause such registration statement to become effective
as soon as practicable after such filing and will use its best
efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Act and the rules and regulations thereunder) until the
Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or
appropriate; and
(iii) deliver to holders of the Rights historical financial statements
for such issuer and each of its Affiliates which comply in all
material respects with the requirements for registration on Form
10 under the Exchange Act.
(c) The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements that, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
17
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Stock (other than
fractions that are integral multiples of one one-hundredth of a share of
Preferred Stock). Fractions of a share of Preferred Stock in integral multiples
of one one-hundredth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
Beneficial Owners of the Preferred Stock represented by such depositary
receipts. In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-hundredth of a share of Preferred Stock, the Company shall
pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Preferred Stock. For the purposes of this
Section 14(b), the current market value of a share of Preferred Stock shall be
the closing price of the Preferred Stock (as determined pursuant to the second
sentence of Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
such holder's right to receive any fractional Rights or any fractional shares
upon exercise of a Right except as expressly provided above.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), 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 Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
18
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be deemed for any purpose to be the
holder of the Preferred Stock or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate as such, any of the rights of a
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 or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent and its
Affiliates for, and to hold them harmless against, any damage loss, liability,
cost or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent or its Affiliates, for anything done
or omitted by the Rights Agent or its Affiliates in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any demand or claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Stock or Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
19
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its own choice (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
20
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct. In no
event shall the Rights Agent be liable for special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits).
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Stock, Common Stock or other
securities to be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Stock, Common Stock or other securities will, when
issued, be validly authorized and issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out of 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 of the Board, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) 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 Rights Agreement
and the date on and/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 such 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 case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
21
(i) 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 shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(j) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(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 days' notice in writing mailed to the Company and to each transfer agent
of the Preferred Stock and Common Stock by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Preferred Stock and Common Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (i)
an entity organized and doing business under the laws of the United States or
the State of Indiana (or of any other state of the United States) validly
existing and that is authorized to act as Rights Agent hereunder. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock or
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
22
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at any time
prior to the tenth business day after any Person becomes an Acquiring Person,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $.001 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
provided, however, that during the time period in which the Rights may be
redeemed, the Board of Directors of the Company may extend the time during which
the Rights may be redeemed for a time period as may be determined by the Board
of Directors. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of the
event described in Section 11(a)(ii) until such time as the Company's right of
redemption hereunder has expired. The redemption of the Rights by the Board of
Directors of the Company may be made effective at such time, on such basis and
with such conditions as the Board of Directors of the Company, in its sole
discretion, may establish. The Company may, at is option, pay the Redemption
Price in cash, Common Stock (based on the current market price at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) In addition, in the exercise of its sole discretion the Board of
Directors of the Company may redeem all but not less than all of the then
outstanding Rights at the Redemption Price following the occurrence of a Shares
Acquisition Date but prior to any event described in Section 13(a) either (a) in
connection with any event specified in Section 13(a) in which all holders of
Preferred Stock Units are treated alike and not involving (other than as a
holder of Preferred Stock Units being treated like all other such holders) an
Acquiring Person or an Affiliate or Associate of an Acquiring Person or any
other Person in which such Acquiring Person, Affiliate or such Associate has any
interest, or any other Person acting directly or indirectly on behalf of or in
association with any such Acquiring Person, Affiliate or Associate, or (b)
following the occurrence of an event set forth in, and the expiration of any
period during which the holder of Rights may exercise the rights under Section
11(a)(ii) if and for as long as the Acquiring Person is not thereafter the
Beneficial Owner of 15% or more of the outstanding Common Stock, and at the time
of redemption there are no other persons who are Acquiring Persons.
23
(c) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, 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. Within ten days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall 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
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section
23, and other than in connection with the purchase of Common Stock prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any time
after any person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
involving either the Preferred Stock or the Common Stock occurring after the
date hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding Common Stock for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of such
person, becomes the Beneficial Owner of more than 50% of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 24(a) and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
24
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for some or all of the Common Stock
exchangeable for Rights, at the initial rate of one Preferred Stock Unit (or
equivalent preferred shares) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that shares of Preferred Stock delivered in
lieu of each share of Common Stock shall have the same voting rights as one
share of Common Stock.
(d) The Company shall not be required to issue fractions of a share of
Common Stock or Preferred Stock or to distribute certificates which evidence
fractional shares of Common Stock or Preferred Stock. In lieu of such fractional
shares of Common Stock or Preferred Stock, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional share of Common Stock or Preferred Stock would otherwise be issuable
an amount in cash equal to the same fraction of the current market value of a
whole share of Common Stock or Preferred Stock. For the purposes of this Section
24(d), the current market value of a whole share of Common Stock or Preferred
Stock Unit shall be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall propose
(i) to pay any dividend payable in shares of any class to the holders of its
Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Stock rights or warrants to subscribe for or to
purchase any additional Preferred Stock or shares of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding Preferred Stock), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 10 days prior to the record date for determining
holders of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Stock, whichever shall be the earlier.
25
(b) In case the event set forth in Section 11(a)(ii) hereof shall occur,
then (i) the Company shall as soon as practicable thereafter give to each holder
of a Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof
and (ii) all references in the foregoing Section 25(a) to Preferred Stock shall
be deemed thereafter to refer also, if appropriate, to Common Stock and/or, if
appropriate, other securities of the Company.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
The Steak n Shake Company
500 Century Building
00 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Computershare Investor Services, LLC
0 Xxxxx XxXxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxx
with a copy to: Xxxxx Xxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, including but not limited to
extending the Final Expiration Date, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided,
however, that this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights.
26
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Benefits 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 Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement and this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Indiana and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State and with the Indiana Business
Corporation Law.
Section 32. Counterparts. This Agreement may be executed in one or more
counterparts with the same effect as if each party had signed the same document;
that all counterparts shall be construed together and shall constitute one and
the same document; and that facsimile transmissions of the executed version of
this Agreement or any counterpart thereof shall have the same force and effect
as the original.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
THE STEAK n SHAKE COMPANY
By /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, President
Attest:
By: /s/ Xxxx X. Xxx
--------------------------------
Xxxx X. Xxx, Secretary
Computershare Investor Services, LLC
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------
Title: Relationship Manager
--------------------------------
Attest:
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxx
-------------------------------
Title:
------------------------------
28
Exhibit A
---------
Form of Right Certificate
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER MAY 16, 2001 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
Right Certificate
THE STEAK n SHAKE COMPANY
This certifies that __________________________, or registered assigns, is
the registered owner of the number Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 16, 2001, (the "Rights Agreement"),
between The Steak n Shake Company, an Indiana corporation (the "Company"), and
Computershare Investor Services, LLC (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., Eastern Standard Time, on May 16, 2011
at the office of the Rights Agent designated for such purpose, or at the office
of its successor as Rights Agent, one one-hundredth of a fully paid and
non-assessable share of Preferred Stock (a "Preferred Stock Unit") of the
Company, at a purchase price of $40.00 per Preferred Stock Unit (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares of Preferred Stock that may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of May 31, 2001, based on the
Preferred Stock Units as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of shares of Preferred Stock which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights and obligations of the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.
A-1
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Preferred Stock or other securities as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right or (ii) may be exchanged in whole or in part for the Company's
Common Stock.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fraction shares which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts), but
in lieu thereof, a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Preferred Stock or of any
other securities of the Company that may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purchase
until it shall have been countersigned by the Rights Agent.
A-2
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ___________________.
ATTEST: THE STEAK n SHAKE COMPANY
By:
----------------------------------------
------------------------------------
Countersigned:
------------------------------------
By: --------------------------------
Authorized Signature
A-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate)
FOR VALUE RECEIVED __________________________________________ hereby sells,
assigns and transfers unto _____________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:__________________, 20___
---------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
CERTIFICATE
-----------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
---------------------------------------
Signature
A-4
Form of Reverse Side of Right Certificate --- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To THE STEAK n SHAKE COMPANY:
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Right Certificate to purchase the Preferred Stock, Common
Stock or such other securities issuable upon the exercise of such Rights and
requests that certificates for such Preferred Stock, Common Stock or such other
securities be issued in the name of:
Please insert social security
or other identifying number:
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
(Please print name and address)
Dated: _________________, 20____
---------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
A-5
CERTIFICATE
-----------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
---------------------------------------
Signature
NOTICE
------
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or 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, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
A-6
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 16, 2001, the Board of Directors of The Steak n Shake Company (the
"Company") adopted a Shareholder Rights Plan (the "Rights Plan") effective as of
May 16, 2001. The purposes of the Rights Plan are to deter certain coercive
takeover tactics and enable the Board of Directors to represent effectively the
interests of shareholders and other constituencies of the Company in the event
of a takeover attempt. The Rights Plan does not deter negotiated mergers or
business combinations that the Board of Directors determines to be in the best
interest of the Company and its shareholders.
To implement the Rights Plan the Board of Directors declared a dividend of
one preferred share purchase right (a "Right") for each share of outstanding
Common Stock of the Company (the "Common Stock"). The dividend is payable to
shareholders of record on May 31, 2001 (the "Record Date"). Each Right entitles
the registered holder to purchase from the Company one one-hundredth of a share
of Preferred Stock (a "Preferred Stock Unit") at a price of $40.00 per Preferred
Stock Unit (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Computershare Investor Services, LLC, as Rights Agent
(the "Rights Agent").
Rights Attach to Common Stock Initially
Initially and until a Distribution Date (as defined below) occurs, the
Rights are attached to all shares of Common Stock and no separate Rights
certificates will be issued. During this initial period,
o the Rights are not exercisable;
o the Rights are transferred with the Common Stock and are not
transferable separately from the Common Stock;
o new Common Stock certificates or book entry shares issued will contain
a notation incorporating the Rights Agreement by reference; and
o the transfer of any shares of Common Stock will also constitute the
transfer of the Rights associated with those shares.
Distribution of Rights
Separate certificates evidencing the Rights will be mailed to holders of
record of the Common Stock in the event a "Distribution Date" occurs. A
Distribution Date occurs on the earlier of the following two events (or such
later date as may be determined by the Board of Directors):
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o 10 business days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") have
acquired beneficial ownership of 15% or more of the outstanding Common
Stock; or
o 10 business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation
of which would result in the beneficial ownership by a person or group
of 30% or more of the outstanding Common Stock.
Acquisitions by the following persons will not result in the person
becoming an Acquiring Person: the Company, any subsidiary or an employee benefit
plan of the Company.
After a Distribution Date, the Rights would be tradeable separately from
the Common Stock. After the Distribution Date and after the Company's right to
redeem (as described below) has expired, the Rights would be exercisable in two
different ways depending on the circumstances as set forth below.
Right to Purchase Company Stock
After a Distribution Date and after the Company's redemption right has
expired, each holder of a Right (except those held by the Acquiring Person and
its affiliates and associates) would have the right to purchase, upon exercise,
that number of shares of Preferred Stock (or, in certain circumstances, shares
of Common Stock or other similar securities of the Company in lieu of Preferred
Stock) having a market value of two times the exercise price of the Right (such
right being called the "Subscription Right"). The Subscription Right would be
exercisable for a 60-day period after the effective date of a registration
statement under the Securities Act of 1933, as amended, covering the Preferred
Stock (or Common Stock or other securities).
Right to Purchase Acquiring Person Stock
Alternatively, if the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, each holder of a Right could then purchase shares of the
acquiring company having a market value of two times the exercise price of the
Right (such right being called the "Merger Right"). Each holder of a Right
(other than an Acquiring Person) will continue to have the Merger Right whether
or not such holder exercises the Subscription Right.
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Exchange of Company Stock for Rights
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Common Stock or the announcement of a tender or exchange offer that could result
in the beneficial ownership by a Person or group of 30% or more of the
outstanding Common Stock, and prior to the acquisition by such Person or group
of more than 50% of the outstanding Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or
group, which will have become void), in whole or in part, at an exchange ratio
of one share of Common Stock per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Common Stock or Preferred Stock
will be issued (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Common Stock or Preferred
Stock on the last trading day prior to the date of exercise.
Adjustment of Shares
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Stock, (ii)
upon the grant to holders of the Preferred Stock of certain rights or warrants
to subscribe for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the then
current market price of the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable on Preferred Stock) or of subscription rights or warrants
(other than those referred to above).
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities issuable, upon exercise of the Rights are also subject to
adjustment in the event of a split of the Common Stock, or a dividend on the
Common Stock payable in Common Stock, or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.
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Redemption
At any time prior to the close of business on the tenth business day
following the acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 15% or more of the outstanding Common Stock
or the announcement of a tender or exchange offer that could result in the
beneficial ownership by a Person or group of 30% or more of the outstanding
Common Stock and subject to extension of the redemption period by the Board of
Directors, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish. Additionally the Company may, following the time that a person has
become an Acquiring Person, redeem the then outstanding Rights in whole, but not
in part, at the Redemption Price provided that such redemption is (i) in
connection with a merger or other business combination transaction or series of
transactions involving the Company in which all holders of Common Stock are
treated alike but not involving an Acquiring Person or any person who was an
Acquiring Person or (ii) following an event giving rise to, and the expiration
of the exercise period for, the Subscription Right if and for as long as no
person beneficially owns securities representing 15% or more of the Company's
outstanding Common Stock. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Expiration of Rights
The Rights will expire on May 16, 2011 unless the expiration date is
extended by amendment as described below or unless the Rights are redeemed or
exchanged by the Company as described above.
Amendments
As long as the Rights are redeemable, the terms of the Rights may be
amended by the Board of Directors of the Company without the consent of the
holders of the Rights, except that no such amendment may adversely affect the
interests of the holders of the Rights.
Miscellaneous
The number of outstanding Rights and the number of shares of Preferred
Stock issuable upon exercise of each Right are subject to adjustment under
certain circumstances.
Because of the nature of the dividend, liquidation and voting rights of the
Preferred Stock, the value of the shares of Preferred Stock that may be
purchased upon exercise of each Right should approximate the value of one share
of Common Stock.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of the
Rights Agreement is available free of charge from the Company upon request to
the Corporate Secretary of the Company.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
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