Exhibit 1
FORM OF
RIGHTS AGREEMENT
BETWEEN
SONIC CORP.
and
[_______________________________]
as Rights Agent
Dated as of June 16, 1997
TABLE OF CONTENTS
Section Page
1. Certain Definitions..................................................... 2
2. Appointment of Rights Agent.............................................. 2
3. Issuance of Rights Certificates......................................... 12
4. Form of Rights Certificates............................................. 15
5. Countersignature and Registration....................................... 16
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates................ 17
7. Exercise of Rights; Exercise Price; Expiration Date of Rights........... 19
8. Cancellation and Destruction of Rights Certificates..................... 24
9. Reservation and Availability of Shares of Preferred Stock............... 24
10. Preferred Stock Record Date............................................. 28
11. Adjustment of Exercise Price, Number and Kind of Shares or Number of
Rights.................................................................. 29
12. Certification of Adjusted Exercise Price or Number of Shares............ 46
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.... 46
14. Fractional Rights and Fractional Shares................................. 54
15. Rights of Action........................................................ 55
16. Agreement of Right Holders.............................................. 56
17. Rights Certificate Holder Not Deemed a Stockholder...................... 57
18. Concerning the Rights Agent............................................. 58
19. Merger or Consolidation of, or Change in Name of, the Rights Agent...... 59
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20. Duties of Rights Agent.................................................. 61
21. Change of Rights Agent.................................................. 64
24. Exchange................................................................ 69
25. Notice of Proposed Actions.............................................. 73
26. Notices................................................................. 74
27. Supplements and Amendments.............................................. 75
28. Successors.............................................................. 76
29. Benefits of this Rights Agreement....................................... 77
30. Determinations and Actions by the Board; etc............................ 77
31. Delaware Contract....................................................... 78
32. Counterparts............................................................ 78
33. Descriptive Headings.................................................... 79
34. Severability............................................................ 79
Exhibit A -- Form of Certificate of Designations of Series A Junior
Preferred Stock
Exhibit B -- Summary of Rights
Exhibit C -- Form of Rights Certificate
ii
RIGHTS AGREEMENT
Agreement, dated as of June 16, 1997, by and between SONIC CORP., a
Delaware corporation (the "Company"), and _______________________________
(the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on June 16, 1997, the Board of Directors of the Company
authorized the issuance, and declared a dividend, of one right (a "Right")
for each share of Common Stock, $.01 par value per share, of the Company
outstanding as of the close of business on June 27, 1997 (the "Record Date"),
each such Right representing the right to purchase one one-thousandth of a
share of Series A Junior Preferred Stock of the Company ("Preferred Stock")
having the rights and preferences set forth in the form of Certificate of
Designations attached hereto as Exhibit A authorized by the Board of
Directors on June 16, 1997, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Redemption Date or the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall 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 shares of any class of Voting Stock (as such term
is hereinafter defined) of the Company then outstanding; provided
that, an Acquiring Person shall not include (i) an Exempt Person (as
such term is hereinafter defined) or (ii) any Person, together with
all Affiliates and Associates of such Person, who or which would be an
Acquiring Person solely by reason of (x) being the Beneficial Owner of
shares of Voting Stock of the Company, the Beneficial Ownership of
which was acquired by such Person pursuant to any action or
transaction or series of related actions or transactions approved by
the Board of Directors before such Person otherwise became an
Acquiring Person or (y) a reduction in the number of issued
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and outstanding shares of Voting Stock of the Company pursuant to a
transaction or a series of related transactions approved by the Board
of Directors of the Company (upon approval, in the case of subclauses
(x) and (y), by a majority of the Continuing Directors (as such term
is hereinafter defined)); provided, further, in the event such Person
described in this clause (ii) does not become an Acquiring Person by
reason of subclause (x) or (y) of this clause (ii) or such Person set
forth in this clause (ii) nonetheless shall become an Acquiring Person
in the event such Person thereafter acquires Beneficial Ownership of
any additional shares of the Voting Stock of the Company, unless the
acquisition of such additional Voting Stock would not result in such
Person becoming an Acquiring Person by reason of subclause (x) or (y)
of this clause (ii). Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith (upon approval by a
majority of the Continuing Directors) that a Person who would
otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a) has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such Person would
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no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not
be deemed an "Acquiring Person" for any purposes of this Rights
Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), as
in effect on the date of this Rights Agreement.
(c) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings);
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, "beneficially owns" (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act); or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or the fulfillment of a condition or both) pursuant to
any agreement, arrangement or understanding, or upon the exercise
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of conversion rights, exchange rights, other rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange or (B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "Beneficially Own", any securities if
the agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given in response to a
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act and
(2) is not at the time reportable by such Person on a Schedule 13D
report under the Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's
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Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except as described in clause (B) of
subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Company.
Notwithstanding anything in this paragraph (c) to the
contrary, if a Person, who together with any other stockholders of the
Company holds, in the aggregate, greater than 50% of the Voting Stock
of the Company, approves any action of the stockholders by written
consent in lieu of a stockholders meeting, such Person shall be deemed
to be the "Beneficial Owner" of all of the Voting Stock that is voted
pursuant to such written consent. Further, notwithstanding anything
in this paragraph (c) to the contrary, a Person engaged in the
business of underwriting securities shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," any securities
acquired in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
Notwithstanding anything in this paragraph (c) to the contrary,
the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the
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Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to the Company shall mean
the Common Stock (presently $.01 par value) of the Company. "Common Stock"
when used with reference to any Person other than the Company which shall
be organized in corporate form shall mean the capital stock or other equity
security with the greatest per share voting power of such Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person. "Common Stock" when
used with reference to any Person other than the Company which shall not be
organized in corporate form shall mean units of beneficial interest which
shall represent the
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right to participate in profits, losses, deductions and credits of such
Person and which shall be entitled to exercise the greatest voting power
per unit of such Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(g) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and who either (i) was a member of the Board
of Directors on the date of this Agreement or (ii) subsequently became a
member of the Board of Directors, and whose nomination for election or
election to the Board of Directors was recommended or approved by a
majority of the Continuing Directors then on the Board of Directors.
(h) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary
of the Company or (iii) any employee benefit plan or employee stock plan of
the Company or any Subsidiary of the Company, or any trust
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or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan.
(k) "Exercise Price" shall have the meaning set forth in Section 4
and 7(b) hereof.
(l) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(d)
hereof.
(m) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Person" shall mean any individual, firm, corporation or other
entity and shall include any successor (by merger or otherwise) of such
entity.
(o) "Preferred Stock" shall mean shares of Series A Junior Preferred
Stock, $.01 par value, of the Company and, to the extent that there is not
a sufficient number of shares of Series A Junior Preferred Stock authorized
to permit the full exercise of the Rights, any other series of Preferred
Stock, $.01 par value, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series A Junior
Preferred Stock.
(p) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(q) "Record Date" shall have the meaning set forth in the recital.
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(r) "Redemption Date" shall have the meaning set forth in Section
7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(t) "Rights Certificate" shall have the meaning set forth in Section
3(d) hereof.
(u) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(v) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that
an Acquiring Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier date as a majority of
the Continuing Directors shall become aware of the existence of an
Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or
indirectly, by such Person or by any corporation or other entity that is
otherwise controlled by such Person.
(x) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
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(y) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(z) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security, instrument
or right, including Rights, shares of Common Stock and Shares of Preferred
Stock.
(aa) "Triggering Event" shall mean any event described in Section
11(a)(ii) or Section 13(a).
(bb) "Voting Stock" shall mean (i) the Common Stock of the Company and
(ii) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with
the Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or
winding up.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
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Section 3. Issuance of Rights Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first class mail, postage prepaid, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company.
(b) Until the Close of Business on the day (or such later date as may
be determined by action of the Board of Directors, upon approval by a majority
of the Continuing Directors) which is the earlier of (i) the tenth day after the
Stock Acquisition Date or (ii) the tenth Business Day after the date of the
commencement by any person (other than an Exempt Person) of, or the first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 15% or more of any class of the then outstanding shares of
Voting Stock of the Company (irrespective of whether any shares are actually
purchased pursuant to any such offer) (the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together with, in the case of
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certificates for Common Stock outstanding as of the Record Date, the Summary
of Rights) and not by separate Rights Certificates and the record holders of
such certificates for Common Stock shall be the record holders of the Rights
represented thereby and (y) each Right shall be transferable only
simultaneously and together with the transfer of a share of Common Stock
(subject to adjustment as hereinafter provided). Until the Distribution Date
(or, if earlier, the Redemption Date or Final Expiration Date), the surrender
for transfer of any certificate for Common Stock shall constitute the
surrender for transfer of the Right or Rights associated with the Common
Stock evidenced thereby, whether or not accompanied by a copy of the Summary
of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock issued (including, without limitation,
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date, or the
Final Expiration Date (or, in certain circumstances as provided in Section 22
hereof, after the Distribution Date) shall have
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impressed, printed, written or stamped thereon or otherwise affixed thereto
the following legend:
This certificate also evidences and entitles the holder
hereof to the same number of Rights (subject to adjustment) as
the number of shares of Common Stock represented by this
certificate, such Rights being on the terms provided under the
Rights Agreement between Sonic Corp., and
____________________________ (the "Rights Agent"), dated as of
June 16, 1997, as it may be amended from time to time (the
"Rights Agreement"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal
executive offices of Sonic Corp. Under certain circumstances, as
set forth in the Rights Agreement, such Rights shall be evidenced
by separate certificates and shall no longer be evidenced by this
certificate. Sonic Corp. shall mail to the registered holder of
this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances as provided in Section 7(e) of the Rights
Agreement, Rights issued to or Beneficially Owned by Acquiring
Persons or their Affiliates or Associates (as such terms are
defined in the Rights Agreement) or any subsequent holder of such
Rights shall be null and void and may not be transferred to any
Person.
(d) 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 mail, postage prepaid, to each record holder of the Common Stock
as of the Close of Business on the Distribution Date, as shown by the records of
the Company, at the address of such holder shown on such records, a
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certificate in the form provided by Section 4 hereof (a "Rights
Certificate"), evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. As of and after the
Distribution Date, the rights shall be evidenced solely by Rights
Certificates and may be transferred by the transfer of the Rights Certificate
as permitted hereby, separately and apart from any transfer of one or more
shares of Common Stock.
Section 4. Form of Rights Certificates.
The Rights Certificates (and the forms of election to purchase shares,
certificate and assignment to be printed on the reverse thereof), when, as and
if issued, shall be substantially in the form set forth in Exhibit C hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Common Stock or the Rights may from time to
time be listed or as the Company may deem appropriate to conform to usage or
otherwise and as are not inconsistent with the provisions of this Rights
Agreement. Subject to the provisions of Section 22 hereof, Rights Certificates
evidencing Rights whenever issued (i) shall be dated as of the date of issuance
of the Rights they represent and (ii) subject to adjustment from time to time as
provided herein, on their face shall entitle the holders thereof to purchase
such number of shares
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(including fractional shares which are integral multiples of one-thousandth
of a share) of Preferred Stock as shall be set forth therein at the price
payable upon exercise of a Right provided by Section 7(b) hereof as the same
may from time to time be adjusted as provided herein (the "Exercise Price").
Section 5. Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by its Chairman of the Board, President, any Vice President or its
Treasurer, either manually or by facsimile signature. Each Rights Certificate
shall be countersigned by the Rights Agent manually and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any Rights Certificate shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery of
the certificate by the Company, such Rights Certificate, nevertheless, may be
countersigned by the Rights Agent and issued and delivered with the same force
and effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate may be signed
on behalf of the Company by any person who, on the date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
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(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of Rights Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Rights Certificate may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Rights Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Rights Certificate or Rights Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer any Rights
Certificate shall surrender the Rights Certificate at the office of the Rights
Agent designated for the surrender of
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Rights Certificates with the form of certificate and assignment on the
reverse side thereof duly endorsed (or enclosed with such Rights Certificate
a written instrument of transfer in form satisfactory to the Company and the
Rights Agent), duly executed by the registered holder thereof or his attorney
duly authorized in writing, and with such signature duly guaranteed. Any
registered holder desiring to split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate to be split up, combined or
exchanged at the office of the Rights Agent designated therefor. Thereupon,
the Rights Agent shall countersign and deliver to the person entitled thereto
a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any
Transfer Tax that may be imposed in connection with any transfer, split up,
combination or exchange of any Rights Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f), 14 and 24
hereof, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and
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cancellation of the Rights Certificate if mutilated, the Company shall issue
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e), 23(b) and 24 hereof). Except as otherwise provided herein, the
Rights may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in [City, State], together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earliest of (i) June 16, 2007 (the
"Final Expiration Date"), (ii) the date on which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), (iii) the date on which
such Rights are exchanged as provided in Section 24 hereof or (iv) the time at
which the Rights expire pursuant to Section 13(e) hereof.
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(b) The Exercise Price shall initially be $85 for each one
one-thousandth (1/1000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of
Preferred Stock or other securities to be acquired upon exercise of a Right
shall be subject to adjustment from time to time as provided in Sections 11
and 13 hereof. The Exercise Price shall be payable in lawful money of the
United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Rights
Certificate representing exercisable Rights with the form of election to
purchase and the certificate contained therein duly executed, accompanied by
payment by certified check, cashier's check, bank draft or money order
payable to the Company of the Exercise Price for the shares to be purchased
and an amount equal to any applicable Transfer Tax required to be paid by the
holder of the Rights Certificate in accordance with Section 9(e) hereof, the
Rights Agent shall thereupon promptly (i) requisition from any transfer agent
of the Preferred Stock of the Company one or more certificates representing
the number of shares of Preferred Stock to be so purchased, and the Company
hereby authorizes such transfer agent to comply with all such requests, (ii)
as provided in Section 14(b), at the election of the Company, cause
depositary receipts to be issued in lieu of fractional shares of Preferred
Stock, (iii) if the election provided for in the immediately
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preceding clause (ii) has not been made, requisition from the Company the
amount of cash to be paid in lieu of the issuance of fractional shares in
accordance with section 14(b) hereof, (iv) after receipt of such Preferred
Stock certificates and, if applicable, depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (v) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Rights Certificate;
provided, however, that in the case of a purchase of securities, other than
Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall
promptly take the appropriate actions corresponding in such case to that
referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this Section 7(c), the Company
may suspend the exercisability of the Rights for a period not in excess of
ninety (90) days, during which the Company seeks to register under the
Securities Act of 1933, as amended (the "Act"), and any applicable securities
law of any other jurisdiction, the shares of Preferred Stock to be issued
pursuant to the Rights.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall
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be issued by the Rights Agent to the registered holder of such Rights
Certificate or his assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that are beneficially owned by
(x) such Acquiring Person (or any Associate or Affiliate of such Acquiring
Person), (y) a transferee of such Acquiring Person (or any such Associate or
Affiliate) who becomes a transferee after the invalidation time or (z) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the invalidation time
pursuant to either (I) a transfer from the Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of this Section 7(e) (upon approval by a majority of the
Continuing Directors) and subsequent transferees of such Persons referred to
in clause (y) and (z) above, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect
to such Rights under any provision of this Rights Agreement. The Company
shall use all
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reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of Rights
Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. No Rights Certificate shall be issued
pursuant to Section 3 hereof that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the provisions of
this Section 7(e) or any Associate or Affiliate hereof; no Rights 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 provisions of this Section
7(e) or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Rights Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose
Rights would be void pursuant to the provisions of this Section 7(e) shall be
cancelled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the form
of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such
23
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall cancel and retire, any Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights Certificates to
the Company, or shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver a certificate
of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of its authorized and issued shares of Preferred Stock
held in its
24
treasury, such number of shares of Preferred Stock as will from time to time
be sufficient to permit the exercise in full of all outstanding Rights and,
after the occurrence of a Triggering Event, shall, to the extent reasonably
practicable, 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 all outstanding Rights.
(b) If the Preferred Stock (or, following the occurrence of a
Triggering Event, the Common Stock and/or other securities) is at any time
listed on a national securities exchange or included for quotation on any
transaction reporting system, then so long as the Preferred Stock (and,
following the occurrence of any such Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon exercise of the Rights may be
listed on such exchange or included for quotation on any such transaction
reporting system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the extent that
it is reasonably likely that the Rights will be exercised), all shares
reserved for such issuance to be listed on such exchange or included for
quotation on any such transaction reporting system upon official notice of
issuance upon such exercise.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all
25
shares of Preferred Stock delivered upon the exercise of Rights (or,
following the occurrence of a Triggering Event, shares of Common Stock and/or
other securities) shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid
and nonassessable.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of an event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date,
as the case may be, a registration statement under the Act, with respect to
the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (x) the date as of which the Rights are no
longer exercisable for such securities, and (y) the date of the expiration of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days, the exercisability of the Rights in order to prepare
and file a registration statement under the Act and permit it to become
effective. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the
26
exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification is such jurisdiction shall
have been obtained and until a registration statement under the Act (if
required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all U.S. federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Rights Certificates or
of any shares of Preferred Stock (or, following the occurrence of a
Triggering Event, Common Stock and/or other securities) issued or delivered
upon the exercise of Rights. The Company shall not, however, be required to
pay any Transfer Tax which may be payable in respect of any transfer or
delivery of a Rights Certificate to a Person other than, or the issuance or
delivery of certificates for Preferred Stock (or, following the occurrence of
a Triggering Event, Common Stock and/or other securities) upon exercise of
Rights in a name other than that of, the registered holder of the Rights
Certificate, and the Company shall not be required to issue or deliver a
Rights Certificate or certificate for Preferred Stock (or, following the
occurrence of a Triggering Event, Common Stock and/or other securities) to a
Person other than such registered holder until any such Transfer Tax shall
have been paid (any such Transfer Tax being payable by the holder of such
Rights Certificate at the time of surrender)
27
or until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of 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
securities represented thereby on, and such certificate shall be dated as of,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Exercise 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
shares on, and such certificate shall be dated as of, the next succeeding
Business Day on which the applicable transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate, as such, shall not be entitled to any rights of a stockholder of
the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
28
Section 11. Adjustment of Exercise Price, Number and Kind of Shares
or Number of Rights. The Exercise Price, the number and kind of shares which
may be purchased upon exercise of a 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 (w) declare a dividend on the Preferred Stock
payable in Preferred Stock, (x) subdivide the outstanding Preferred
Stock, (y) combine the outstanding Preferred Stock into a smaller
number of shares of Preferred Stock or (z) issue any shares of its
capital stock 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),
except as otherwise provided in this Section 11(a), the Exercise 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
29
stock which, 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, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. If an event occurs
which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to this Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event that
any Person (other than an Exempt Person), alone or together with its
Affiliates and Associates, shall become an Acquiring Person, unless
the event causing such Person to become an Acquiring Person is an
acquisition of shares of Common Stock pursuant to a cash tender offer
made pursuant to Section 14(d) of the Exchange Act for all outstanding
shares of Common Stock (other than shares of Voting Stock
30
beneficially owned by the Person making the offer or by its Affiliates
or Associates) at a price and on terms determined by at least a
majority of the Continuing Directors to be (a) at a price which is
fair to stockholders (taking into account all factors which such
members of the Board deem relevant, including, without limitation,
prices which could reasonably be achieved if the Company or its assets
were sold on an orderly basis designed to realize maximum value) and
(b) otherwise in the best interests of the Company and its
stockholders, then, except as otherwise provided in this Section 11,
each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon exercise of such Right
at a price equal to the then current Exercise Price multiplied by the
number of one one-thousandths of a share of Preferred Stock for which
a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Exercise Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is
then exercisable and dividing that product by (y) 50% of the Fair
Market Value
31
of the Company's Common Stock (determined pursuant to Section 11(d)
hereof) on the date of the occurrence of such event; provided, however,
that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing Common Stock in accordance with
Section 11(a)(ii) hereof, the Company may, if the Board of Directors
of the Company, upon approval by a majority of the Continuing
Directors, determines that such action is necessary or appropriate and
not contrary to the interest of holders of Rights (and, in the event
that the number of shares of Common Stock which are authorized by the
Company's Restated Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the
Rights, the Company shall): (A) determine the excess of (1) the value
of the Common Stock issuable upon the exercise of a Right (the
"Current Value") over (2) the Exercise Price (such excess being
referred to as the "Spread") and (B) with respect to each
32
Right, make adequate provision to substitute for such Common Stock,
upon exercise of the Rights, (1) cash, (2) a reduction in the Exercise
Price, (3) other equity securities of the Company (including, without
limitation, shares or units of shares of any series of preferred stock
which the Board of Directors of the Company, upon approval by a
majority of the Continuing Directors, has deemed to have the same value
as Common Stock (such shares or units of shares of preferred stock are
herein called "common stock equivalents")), (4) debt securities of the
Company, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company, upon approval by a majority of the Continuing Directors;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the occurrence of an event described in Section
11(a)(ii), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Exercise Price, Common Stock (to the extent available), and then, if
necessary, cash, which shares and/or cash have an
33
aggregate value equal to the Spread. If the Board of Directors, upon
approval by a majority of the Continuing Directors, shall determine in
good faith that it is likely that sufficient additional Common Stock
could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the
occurrence of an event described in Section 11(a)(ii), in order that
the Company may seek stockholder approval for the authorization of such
additional shares. To the extent that the Company determines that some
action need be taken pursuant to the preceding sentences of this
Section 11(a)(iii), the Company may suspend the exercisability of the
Rights until the expiration of any such period, as extended, in order
to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to this Section
11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no
longer in effect and shall promptly notify the Rights Agent of such
suspen-
34
sion. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the Fair Market Value (as determined pursuant to
Section 11(d) hereof) per share of the Common Stock at the Close of
Business on the date of the occurrence of one of the events described
in Section 11(a)(ii) and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common stock on such
date.
(b) In the event that the Company shall, after the Record Date, 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 stock")) or securities convertible into Preferred Stock
or equivalent preferred stock at a price per share of Preferred Stock or
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the Fair Market Value per share of the Preferred Stock (as defined in
Section 11(d)) on such record date, the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or the equivalent preferred
stock so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Fair Market
Value and the denominator of which shall be the number of
35
shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. 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 Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in
36
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) or 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 Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value per share of the Preferred Stock on such
record date, less the Fair Market Value 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 the Fair Market Value per share of the Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of this Rights Agreement, the "Fair Market Value"
of any share of Preferred Stock, Common
37
Stock or any other stock or any Rights or other security or any other
property on any date shall be determined as provided in this Section 11(d).
In the case of a publicly-traded stock or other security, the Fair Market
Value on any date shall be deemed to be the average of the daily closing
prices per share of such stock or per unit of such other 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 Fair Market
Value per share of any security is determined during a period which includes
any date that is within 30 Trading Days after (i) the ex-dividend date for a
dividend or distribution on such security payable in shares of such security
or securities convertible into shares of such security, or (ii) the effective
date of any subdivision, split, combination, consolidation, reverse stock
split or reclassification of such security, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of Directors
of the Company to take into account ex-dividend or post-effective date
trading. 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
applicable transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange), or, if the securities
are not listed or admitted
38
to trading on the New York Stock Exchange, as reported in the applicable
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any national
securities exchange, the last quoted price (or, if not so quoted, the average
of the high bid and low asked prices) in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use; or, if no bids
for such security are 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 such security selected by the Board of Directors of the
Company (upon approval by a majority of the Continuing Directors). The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which such security is listed or admitted to trading is open for
the transaction of business or, if such security is not listed or admitted to
trading on any national securities exchange, a Business Day. If a security
is not publicly held or not so listed or traded, "Fair Market Value" shall
mean the fair value per share of stock or per other unit of such other
security, as determined in good faith by the Board of Directors of the
Company (upon approval by a majority of the Continuing Directors); provided,
however, that, if the Preferred Stock is not publicly traded, the
39
Fair Market Value of a share of Preferred Stock shall be conclusively deemed
to be the Fair Market Value of a share of Common Stock (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand. In the case of
property other than securities, the "Fair Market Value" thereof shall be
determined in good faith by the Board of Directors of the Company (upon
approval by a majority of the Continuing Directors). Any such determination
of Fair Market Value shall be described in a statement filed with the Rights
Agent and shall be binding upon the Rights Agent and the holders of the
Rights.
(e) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a share, as the case may
be. No adjustment in the Exercise Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. Notwithstanding the preceding sentence, any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates
the adjustment or (ii) the date of the expiration of the right to exercise
the Rights.
40
(f) Irrespective of any adjustment or change in the Exercise Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Exercise Price and the number of shares to be issued upon
exercise of the Rights as in the initial Rights Certificates issued hereunder
but, nevertheless, shall represent the Rights as so adjusted.
(g) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any, of the shares of Preferred Stock, the
Company shall use its best efforts to take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Preferred Stock
at such adjusted purchase price per share.
(h) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Xxxxxxxx 00(x), (x), (x), (x), (x),
(x), (x), (x) and (k), and the
41
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(i) Unless the Company shall have exercised its election as provided
in Section 11(j), upon each adjustment of the Exercise 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 Exercise Price, that number of one one-thousandth of a
share of Preferred Stock (calculated to the nearest one one-millionth of a
share) obtained by (i) multiplying (x) the number of one one-thousandths of a
share covered by a Right immediately prior to this adjustment by (y) the
Exercise Price in effect immediately prior to such adjustment of the Exercise
Price and (ii) dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(j) The Company may elect on or after the date of any adjustment of
the Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandths of a share 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
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each
42
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company 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
Exercise Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date
of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(j), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights
43
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.
(k) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the current market price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, dividends on Preferred
Stock payable in Preferred Stock or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such stockholders.
(l) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock) into
a greater or lesser number of shares
44
of Common Stock, then in any such case (A) the number of one one-thousandths
of a share of Preferred Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-thousandths of a share 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 which each share of Common Stock outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for in
this Section 11(l) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the
45
failure of the Company to make such certification or give such notice shall
not affect the validity of or the force or effect of the requirement for such
adjustment. Any adjustment to be made pursuant to Section 11 or Section 13
of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of 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) Except for any transaction approved by the Board of Directors
(upon approval by a majority of the Continuing Directors), in the event that, at
any time on or after the Distribution Date, (x) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person or
Persons and the Company shall not be the surviving or continuing corporation of
such consolidation or merger, or (y) any Person or Persons shall, directly or
indirectly, consolidate with, or merge with and into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or of the Company or cash or any
other property, or
46
(z) the Company or one or more of its Subsidiaries shall, directly or
indirectly, sell or otherwise transfer to any other Person or any Affiliate
or Associate of such Person, in one or more transactions, or the Company or
one or more of its Subsidiaries shall sell or otherwise transfer to any
Persons in one or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole), then, on the first occurrence of any
such event (except as may be contemplated by Section 13(e) hereof), proper
provision shall be made so that (i) each holder of record of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof and payment of the Exercise Price in
accordance with the terms of this Rights Agreement, such number of shares of
validly issued, fully paid, non-assessable and freely tradeable Common Stock
of the Principal Party (as defined herein), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall,
based on the Fair Market Value of the Common Stock of the Principal Party on
the date of the consummation of such consolidation, merger, sale or transfer,
equal twice the Exercise Price; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, sale
or transfer, all the obligations and duties of the Company pursuant to this
Rights Agreement; (iii) the term "Company"
47
for all purposes of this Rights Agreement shall thereafter be deemed to refer
to such Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with the provisions of Section 9
hereof) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the occurrence of
any event described in clause (x), (y) or (z) above of this Section 13(a).
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer
of the securities into which shares of Common Stock of the Company are changed
or otherwise exchanged or converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of the Common Stock of which has
the greatest market value or (B) if no securities are so issued, (x) the Person
that is the other party to the merger or consolidation and that survives such
merger or consolidation, or, if there is more than one such Person,
48
the Person the Common Stock of which has the greatest market value or (y) if
the Person that is the other party to the merger or consolidation does not
survive the merger or consolidation, the Person that does survive the merger
or consolidation (including the Company if its survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares outstanding;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term "Principal Party" shall refer to such other
Person, or if such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of all of which are and have been so registered,
the term "Principal Party" shall refer to
49
whichever of such Persons is the issuer of the Common Stock having the
greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section 13(a) unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any consolidation, merger or sale or transfer of assets or earning power
referred to in Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the act with
respect to the Rights and the securities purchasable upon exercise of
50
the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Act) until the date of expiration of the
Rights, and similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights
on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act. In the event that any of the transactions
described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the
Rights which have not theretofore been exercised shall, subject to the
provisions of Section 7(e) hereof, thereafter
51
be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect on the benefits
52
intended to be afforded by the Rights in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons (or a wholly-owned subsidiary of any such Person or Persons)
who acquired shares of Common Stock pursuant to a cash tender offer for all
outstanding shares of Common Stock which complies with the provisions of Section
11(a)(ii) hereof relating to fair price determination by a majority of the
Continuing Directors, (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to such cash tender
offer and (iii) the form of consideration being offered to the remaining holders
of shares of Common Stock pursuant to such transaction is the same as the form
of consideration paid pursuant to such cash tender offer. Upon consummation of
any such transaction contemplated by this Section 13(e), all Rights hereunder
shall expire.
53
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights (i.e., Rights
to acquire less than one one-thousandth of a share of Preferred Stock). If the
Company shall determine not to issue such fractional Rights, then, in lieu of
such fractional Rights, there shall be paid to the holders of record of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the Fair Market
Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of
one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-thousandth of a share). In lieu of issuing fractions
of shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares 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 of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one-
54
thousandth of a share, if the Company does not issue such fractional shares
or depositary receipts in lieu thereof, there shall be paid to the holders of
record of Rights Certificates at the time such Rights Certificates are
exercised as herein provided an amount in cash equal to the same fraction of
the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the
55
manner provided in such Rights Certificate and in this Rights 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 Rights 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 Rights Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together, as applicable, with the Summary of Rights), which
certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Rights Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares
of Common Stock;
(b) after the Distribution Date, the Rights 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
56
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificates or the associated Common
Stock 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; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights
57
Certificate shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Stock or any other securities which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning The Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of
58
the Rights Agent, for anything done or omitted to be done by the Rights Agent
in connection with the acceptance and administration of this Rights
Agreement, including the cost and expenses of defending against any claim of
liability relating to the Rights or this Rights Agreement.
(b) The Rights Agent shall be protected against, 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 Rights Agreement in reliance upon any
Rights Certificate or certificate for Preferred 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.
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or
59
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 Rights
Agreement any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; in all such cases such
60
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
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. Any 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 Rights Agreement in reliance upon such certificate.
61
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization
62
or reservation of any shares of Preferred Stock to be issued pursuant to this
Rights Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock will, when issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
[Chairman of the Board, the President or any Vice President or 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 to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and
63
freely as though it were not the Rights Agent under this Rights Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate following the form of
election to purchase set forth on the reverse side of such Rights Certificate
has either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take further action with respect to
the requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and the Preferred Stock
64
by registered or certified mail. The Company may remove the Rights Agent or
any successor Rights Agent (with or without cause) upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock and the Preferred
Stock by registered or certified 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. Notwithstanding the foregoing
provisions of this Section 21, in no event shall the resignation or removal
of a Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then the incumbent Rights Agent or the holder of
record of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States
or of any state thereof, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision
65
or examination in the conduct of its corporate trust or stock transfer
business by federal or state authorities and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence. 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 and Preferred Stock, and
mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
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. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Company shall have the authority to act as the Rights Agent until a
66
successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Exercise Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors (upon approval by a majority of the
Continuing Directors), redeem all but not less than all of the then outstanding
Rights, at any time prior to the Close of Business on the earlier of (i) the
tenth day following the Stock Acquisition Date, provided, however, that, during
the time period relating to when the Rights may be redeemed, the Board of
Directors of the Company (upon approval of a majority of the Continuing
Directors) may extend the time during which the Rights may be redeemed to be at
any time as may be determined by the Board of Directors of the Company and the
Continuing Directors or (ii) the Final Expiration Date, at a redemption price of
$.01 per Right, appropriately adjusted to reflect
67
any stock split, stock dividend or similar transaction after the date hereof
(the "Redemption Price").
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate at the effective time of the action of the
Board of Directors and the Continuing Directors ordering the redemption of the
Rights and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 days after the effective time of the
action of the Board of Directors and the Continuing 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; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Each notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price may
be paid in cash to each Rights holder or by the issuance of shares (and, at the
Company's election pursuant to Section 14(b) hereof, cash or depositary receipts
in lieu of fractions of shares other than fractions
68
which are integral multiples of one one-thousandth (1/1000) of a share) of
Preferred Stock having a Fair Market Value equal to such cash payment.
Section 24. Exchange.
(a) By the vote of a majority of the Board of Directors (upon
approval by a majority of the Continuing Directors), 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 which have become void pursuant to Section 7(e) hereof) for shares of
Common Stock at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (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 an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of any class of voting stock of the Company then
outstanding.
(b) Without any further action and without any notice, the right to
exercise the Rights to be so exchanged will terminate at the effective time of
the action of the Board of Directors and the Continuing Directors ordering the
exchange and the only right thereafter of each holder of such Rights shall be to
receive that number of shares of
69
Common Stock equal to the number of such rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give notice of
the exchange to the holders of such Rights then outstanding 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; provided, however, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
exchange. Each such notice shall state the method by which the exchange for
rights will be effected and, in the event of a partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become
void pursuant to Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock for shares of Common Stock
exchangeable for the Rights, at the initial rate of one one-thousandth of a
share of Preferred Stock 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 the fraction of a share of Preferred
Stock delivered
70
in lieu of each share of Common Stock shall have the same voting rights as
one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall either take such action as may be necessary to authorize
additional Common Stock or Preferred Stock for issuance upon exchange of the
Rights or, alternatively, by the vote of a majority of the Board of Directors
(upon approval by a majority of the Continuing Directors with respect to each
Right, (i) pay cash in an amount equal to the Exercise Price, in lieu of issuing
Common Stock or Preferred Stock in exchange therefor, or (ii) issue debt or
equity securities, or a combination thereof, having a value equal to the Current
Value (as hereinafter defined) of the Common Stock or Preferred Stock
exchangeable for each such Right, where the value of such securities shall be
determined in good faith by the Board of Directors (upon approval by a majority
of the Continuing Directors), or (iii) deliver any combination of cash,
property, Common Stock, Preferred Stock and/or other securities having a value
equal to the Current Value in exchange for each Right. The term "Current
Value," for purposes of this Section 24, shall mean the product of the per share
market price of the Common Stock (determined pursuant to Section 11(d) on the
date of the occurrence of
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the event described above in subparagraph (a)), multiplied by the number of
shares of Common Stock for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or
(iii) of this Section 24(d), the Board of Directors (upon approval by a
majority of the Continuing Directors) may temporarily suspend the
exercisability of the Rights for a period of up to sixty (60) days following
the date on which the event described in Section 24(a) shall have occurred,
in order to seek any authorization of additional Common Stock or Preferred
Stock and/or to decide the appropriate form of distribution to be made
pursuant to the above provision and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Rights Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the fair market value of a whole share of
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Common Stock. For the purposes of this paragraph (e), the fair market value of
a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date, shall propose
(i) to pay any dividend payable in stock 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 stock 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 with or
into, 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 more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of record of a Rights
Certificate, in accordance with Section 26, notice of such proposed action,
which shall
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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 or transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of record of Common Stock or 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 record 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 record of Common Stock or
Preferred Stock, whichever shall be the earlier. The failure to give notice
required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any event described in Section 11(a)(ii) hereof shall
occur, then the Company shall, as soon as practicable thereafter, give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by
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the Rights Agent or by the holder of record of any Rights Certificate to or
on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Sonic Corp.
000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Rights Certificate or Right 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:
____________________________
____________________________
____________________________
Attention: _________________
Notices or demand authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Rights Certificate or
Right 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. For as long as the Rights
are then redeemable and except as provided in the last sentence of this Section
27, the
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Company may in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time
when the Rights are not then redeemable and except as provided in the last
sentence of this Section 27, the Company may, and the Rights Agent shall if
the Company so directs, supplement or amend this Rights Agreement without the
approval of any holders of Rights Certificates (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein or (iii) to change
or supplement the provisions hereunder in any manner which the Company may
deem necessary or desirable, provided that no such supplement or amendment
pursuant to this clause (iii) shall materially adversely affect the interest
of the holders of Rights Certificates. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27,
the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Rights Agreement to the contrary, supplements or
amendments may be made only upon approval by a majority of the Continuing
Directors.
Section 28. Successors. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the
76
benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or corporation other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the holders of Common Stock
in their capacity as holders of the Rights) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the holders of
record of the Rights Certificates (and, prior to the Distribution Date, the
holders of Common Stock in their capacity as holders of the Rights).
Section 30. Determinations and Actions by the Board; etc. The Board
of Directors (upon approval by a majority of the Continuing Directors) shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including,
77
for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith
(and with the approval of a majority of the Continuing Directors then in
office) in accordance with the preceding sentence, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and (y) not subject any director to any
liability to the holders of the Rights. Notwithstanding anything contained in
this Agreement to the contrary, whenever any action, calculation,
interpretation or determination made pursuant to this Agreement requires the
approval of a majority of the Continuing Directors, and no Continuing
Directors are then in office, such action, calculation, interpretation or
determination may not be made.
Section 31. Delaware Contract. This Rights Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
Section 32. Counterparts. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
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Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
SONIC CORP.
Attest:_________________ By: _____________________
Name:
Title:
[RIGHTS AGENT]
Attest:_________________ By: _____________________
Name:
Title:
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