Exhibit 4.2
CELESTIAL SEASONINGS, INC.
AND
XXXXXX TRUST AND SAVINGS BANK
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF JULY 19, 1993
AS AMENDED AND RESTATED NOVEMBER 11, 1998
Table of Contents
Page
Recitals ....................................................................................... 1
Section 1. Certain Definitions.................................................................... 1
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Section 2. Appointment of Rights Agent............................................................ 9
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Section 3. Issuance of Rights Certificates........................................................ 9
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Section 4. Form of Rights Certificates............................................................ 11
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Section 5. Execution, Countersignature and Registration........................................... 12
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Section 6. Transfer, Division, Combination and
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Exchange of Rights Certificates;
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Mutilated, Destroyed, Lost or Stolen
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Rights Certificates.................................................................... 13
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Section 7. Exercise of Rights; Purchase Price;
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Expiration Date of Rights.............................................................. 14
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Section 8. Cancellation and Destruction of Rights Certificates.................................... 16
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Section 9. Reservation and Availability of Preferred Stock........................................ 17
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Section 10. Preferred Stock Record Date............................................................ 18
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Section 11. Antidilution Adjustments............................................................... 19
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Section 12. Certification of Adjustments........................................................... 28
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Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................... 28
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Section 14. Fractional Rights and Fractional Shares................................................. 31
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Section 15. Rights of Action........................................................................ 32
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Section 16. Agreement of Rights Holders Concerning Transfer and Ownership of Rights................. 33
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Section 17. Rights Holder Not Deemed a Stockholder.................................................. 33
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Section 18. Concerning the Rights Agent............................................................. 33
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Section 19. Merger or Consolidation or Change of Name of Rights Agent............................... 34
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Section 20. Duties of Rights Agent.................................................................. 35
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Section 21. Change of Rights Agent.................................................................. 36
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Section 22. Issuance of New Rights Certificates..................................................... 37
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Section 23. Redemption and Termination.............................................................. 38
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Section 24. Notice of Certain Events................................................................ 39
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Section 25. Notices................................................................................. 40
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Section 26. Supplements and Amendments.............................................................. 41
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Section 27. Successors.............................................................................. 41
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Section 28. Benefits of this Agreement; Determinations and Actions by the Board of Directors........ 41
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Section 29. Severability.............................................. 42
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Section 30. Governing Law............................................. 42
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Section 31. Counterparts.............................................. 43
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Section 32. Descriptive Headings...................................... 43
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Section 33. Grammatical Construction.................................. 43
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Exhibit A -- Amended and Restated Certificate of Incorporation
Exhibit B -- Form of Rights Certificate
RIGHTS AGREEMENT
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Rights Agreement dated as of July 19, 1993, and amended and restated
as of November 11, 1998, between Celestial Seasonings, Inc., a Delaware
corporation (the "Company") and Xxxxxx Trust and Savings Bank, an Illinois
banking corporation (the "Rights Agent").
W I T N E S S E T H
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WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (the "Right") for each
share of Common Stock (as defined in Section 1) outstanding on the Record Date
(as defined in Section 1) and has authorized the issuance of one Right for each
share of Common Stock issued between the Record Date and the Distribution Date
(as defined in Section 1), and, in certain cases following the Distribution
Date, each Right representing, as of the Record Date, the right to purchase one
one-thousandth of a share of Preferred Stock (as defined in Section 1) upon the
terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be (or has previously
been, at any time after July 19, 1993, whether or not such Person(s) continues
to be) the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
No Person shall become an "Acquiring Person" solely as the result of
(i) an acquisition of Common Stock by the Company which, by reducing the number
of shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Stock then outstanding as
determined above, or (ii) such Person becoming the Beneficial Owner of 15% or
more of the Common Stock then outstanding as determined above solely as a result
of an Exempt Event; provided, however, that if a Person becomes the Beneficial
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Owner of 15% or more of the Common Stock then outstanding as determined above
solely by reason of such a share acquisition by the Company or the occurrence of
such an Exempt Event and such Person shall, after becoming the Beneficial Owner
of such Common Stock, become the Beneficial Owner of any additional shares of
Common Stock by any means whatsoever (other than as a result of the subsequent
occurrence of an Exempt
Event, a stock dividend or a subdivision of the Common Stock into a larger
number of shares or a similar transaction), then such Person shall be deemed to
be an "Acquiring Person."
No Person that would have become an "Acquiring Person" solely on
account of becoming the Beneficial Owner of additional shares of Common Stock
but would have become such inadvertently shall become an Acquiring Person on
such account if such Person divests sufficient shares as soon as practicable so
that the proportionate number of shares of Common Stock beneficially owned by
such Person is less than the level at which such Person would otherwise have
become an Acquiring Person. The determination of whether such Person's becoming
an Acquiring Person would have been inadvertent and the determination of whether
the divestment of sufficient shares has been made as soon as practicable shall
be made by the Board of Directors of the Company.
(b) "Affiliate" shall have the meaning given to such term in Rule 12b-
2 of the General Rules and Regulations under the Exchange Act, as in effect on
July 19, 1993; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
(c) "Associate" of a Person shall mean (i) any corporation or other
organization of which such Person is an officer, director, partner or beneficial
owner of 10% of any class of equity securities; (ii) any trust or other estate
in which such Person has a substantial beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity; and (iii) any
relative or spouse of such Person, or any relative of such spouse; provided
that, for purposes of this Agreement, the term "Associate" shall not include any
Person that is an Exempt Person.
(d) Except as provided below, a Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether or not
then exercisable or effective) to acquire pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a
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Person shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any Affiliate or Associate of such Person until
such tendered securities are accepted for purchase or exchange; and
provided further, that prior to the
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occurrence of a Triggering Event, a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities obtainable upon
exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial Owner
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of, or to beneficially own, any security pursuant to this clause (iii) if
the agreement, arrangement or understanding to vote, or to direct the
voting of, such security (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and applicable rules
and regulations thereunder and (B) is not also then reportable under Item 6
(or any comparable or successor item) of Schedule 13D under the Exchange
Act (or any comparable or successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act or any
successor provision); or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with whom
such Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in subparagraph (iii) of this Section 1(d)) or disposing of any
securities of the Company.
Nothing in this Section 1(d) shall cause a Person engaged in business
as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person shall be treated as the "Beneficial Owner"
of, or to "beneficially own," any securities owned by any other Person that is
an Exempt Person.
(e) "Business Combination" shall have the meaning set forth in Section
13 of this Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Illinois are authorized
or obligated by law or executive order to close.
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(g) "Close of Business" on any given date shall mean 5:00 p.m.,
Chicago, Illinois time, on such date; provided, however, that if such date is
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not a Business Day it shall mean 5:00 p.m., Chicago, Illinois time, on the next
succeeding Business Day.
(h) "Common Stock" when used in any context applicable prior to a
Business Combination shall mean the Common Stock, $.01 par value per share, of
the Company (as the same may be changed by reason of any combination,
subdivision or reclassification of the Common Stock). "Common Stock" when used
with reference to any Person (other than the Company prior to a Business
Combination) shall mean shares of capital stock of such Person (if such Person
is a corporation) of any class or series, or units of equity interests in such
Person (if such Person is not a corporation) of any class or series, the terms
of which shares or units do not limit (as a fixed amount and not merely in
proportional terms) the amount of dividends or income payable or distributable
on such shares or units or the amount of assets distributable on such shares or
units upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person and do not provide that such shares or units are subject to
redemption at the option of such Person, or any shares of capital stock or units
of equity interests into which the foregoing shall be reclassified or changed;
provided, however, that if at any time there shall be more than one such class
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or series of capital stock of or equity interests in such Person, "Common Stock"
of such Person shall include all such classes and series substantially in the
proportion of the total number of shares or other units of each such class or
series outstanding at such time.
(i) "Current Market Price" per share of Common Stock, Preferred Stock
or Equivalent Shares on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock, Preferred Stock or Equivalent
Shares for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date for the purpose of any computation under this
Agreement except computations made pursuant to Section 11(a)(iv), and for the
Trading Day immediately prior to such date for the purpose of any computation
under Section 11(a)(iv); provided, however, that in the event that the Current
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Market Price per share of Common Stock, Preferred Stock or Equivalent Shares is
determined during a period following the announcement by the issuer of such
Common Stock, Preferred Stock or Equivalent Shares of (i) a dividend or
distribution on such Common Stock, Preferred Stock or Equivalent Shares other
than a regular quarterly cash dividend, or (ii) any subdivision, combination or
reclassification of such Common Stock, Preferred Stock or Equivalent Shares, and
prior to the expiration of 30 Trading Days after the "ex-dividend" date for such
dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market Price" shall
be appropriately adjusted to take into account such dividend, distribution,
subdivision, combination or reclassification. The closing price
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for each Trading Day shall be the last sale price, regular way, on such day, or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, on such day, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Stock, Preferred Stock or Equivalent Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal United States national securities exchange on which the Common
Stock, Preferred Stock or Equivalent Shares are listed or admitted to trading
or, if the Common Stock, Preferred Stock or Equivalent Shares are not listed or
admitted to trading on any United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market on such day, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use. If on such day the Common Stock,
Preferred Stock or Equivalent Shares are not quoted by any such organization,
the average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Common Stock, Preferred Stock
or Equivalent Shares selected by the Board of Directors of the Company shall be
used. If no such market maker is making a market, the fair market value of such
shares on such day as determined in good faith by the Board of Directors of the
Company or the Board of Directors of the issuer of such Common Stock, Preferred
Stock or Equivalent Shares shall be used, which determination shall be described
in a statement filed with the Rights Agent and shall be binding and conclusive
for all purposes. The term "Trading Day" shall mean a day on which the principal
United States national securities exchange on which the Common Stock, Preferred
Stock or Equivalent Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Stock, Preferred Stock or Equivalent
Shares are not listed or admitted to trading on any United States national
securities exchange, but are traded in the over-the-counter market and reported
by NASDAQ, then any day for which NASDAQ reports the high bid and low asked
prices in the over-the-counter market, or if the Common Stock, Preferred Stock
or Equivalent Shares are not traded in the over-the-counter market and reported
by NASDAQ, then a Business Day. If the Common Stock, Preferred Stock or
Equivalent Shares have not been so listed or admitted to trading for 30 or more
Trading Days or traded in the over-the-counter market and reported by NASDAQ for
30 or more Trading Days, "Current Market Price" per share shall mean the fair
market value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding and conclusive for all purposes.
(j) "Distribution Date" shall mean the earlier of (i) the day after
the Company's right to redeem the Rights pursuant to Section 23(a)(i) expires
and (ii) the tenth day after
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commencement or public disclosure of an intention to commence (including,
without limitation, any such commencement or public disclosure which occurs on
or after July 19, 1993 and prior to the issuance of the Rights) a tender offer
or exchange offer by a Person if, after acquiring the maximum number of
securities sought pursuant to such offer, such Person, or any Affiliate or
Associate of such Person, would be an Acquiring Person.
(k) "Equivalent Shares" shall mean any class or series of capital
stock of the Company, other than the Preferred Stock, which is entitled to
participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of any class or series
of Equivalent Shares for purposes of Section 11, the number of shares, or
fractions of a share, of such class or series of capital stock that is entitled
to the same dividend or distribution as a whole share of Preferred Stock shall
be deemed to be one share.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute.
(m) "Exchange Date" shall mean the time at which the Rights are
exchanged pursuant to Section 11(a)(iv).
(n) "Exempt Event" shall mean with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock solely as a
result of the occurrence of a Triggering Event and the effect of such Triggering
Event on the last proviso of clause (ii) of the definition of Beneficial Owner,
other than a Triggering Event in which such Person becomes an Acquiring Person.
(o) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any Subsidiary
of the Company, (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan, (v) the Vestar Group,
each member thereof and each Person of which the Vestar Group or one or more
members thereof owns (a) more than fifty percent (50%) of the voting stock or
other voting interests and (b) stock or other interests representing more than
fifty percent (50%) of the total value of the stock or other interests of such
Person, provided that neither the Vestar Group nor any member thereof nor any
such Person shall continue to be an "Exempt Person" by virtue of this (v) after
the earliest date on which the Vestar Group, the members thereof and any such
Persons are the Beneficial Owners (whether or not indicated on any report on
Schedule 13D or 13G filed by any of them) in the aggregate of less than 5% of
the outstanding Common Stock (determined without taking into account any
securities exercisable or exchangeable for, or convertible into, Common Stock,
other than any such securities beneficially owned by the Vestar Group, the
members thereof or any such Persons) and (vi) Xxxxxx Xxxxxx and the members of
his Family
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Group.
(p) "Expiration Date" shall mean the Close of Business on July 19,
2003.
(q) "Family Group" shall mean a Person's spouse, descendants and
spouses of descendants, trustees of trusts established for the benefit of such
persons (acting in their capacity as trustees of such trusts), and executors of
estates of such persons (acting in their capacity as executors of such estates).
For purposes of this Section 1(r), "spouses" includes widows and widowers until
first remarried.
(r) "Person" shall mean any individual, firm, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity, and shall include any "group" as that term is used in Rule 13d-
5(b) under the Exchange Act (or any successor provision).
(s) "Preferred Stock" shall mean the Company's Junior Participating
Preferred Stock, Series A, $.01 par value per share, having the rights and
preferences set forth in the Amended and Restated Certificate of Incorporation
attached hereto as Exhibit A.
(t) "Principal Party" shall mean, (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from the Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value, and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the assets or earning power transferred pursuant to such Business Combination
or, if each Person that is a party to such Business Combination 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 reasonably
be determined, whichever of such Persons is the issuer of the Common Stock which
has the greatest aggregate market value; provided, however, that in any such
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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 one or
more other Persons, then (x) "Principal Party" shall refer to whichever of such
other Persons has Common Stock that is and has been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act; (y)
if the Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party"
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shall refer to whichever of such other Persons is the issuer of the Common Stock
which has the greatest aggregate market value; or (z) if the Common Stock of
none of such other Persons has been so registered, "Principal Party" shall refer
to whichever of such other Persons (other than an individual) is the Person
which has the equity securities with the greatest aggregate market value. In
case such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth above shall apply to each of the chains of ownership
having an interest in such joint venture as if such Person were a Subsidiary of
both or all of such joint venturers and the Principal Parties in each such chain
shall bear the obligations set forth in Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such interests.
(u) "Purchase Price" with respect to each Right shall initially be
$85 per one one-thousandth of a share of Preferred Stock ($42.50 after
adjustment for the Company's common stock split on September 25, 1998), shall be
subject to adjustment from time to time as provided in Sections 11 and 13, and
shall be payable in lawful money of the United States of America in cash or by
certified check or bank draft payable to the order of the Company.
(v) "Record Date" shall mean the Close of Business on July 19, 1993.
(w) "Redemption Date" shall mean the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(x) "Schedule 13D" and "Schedule 13G" have the meanings assigned
under Regulation 13D under the Exchange Act and include any successor schedules
or reports.
(y) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statute.
(z) "Stock Acquisition Date" shall mean the first date (including,
without limitation, any such date which is on or after July 19, 1993 and prior
to the issuance of the Rights) of public disclosure by the Company, an Acquiring
Person or otherwise that a Person has become an Acquiring Person.
(aa) "Subsidiary" shall have the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on July 19, 1993.
(bb) "Triggering Event" shall mean a Person becoming an Acquiring
Person.
(cc) "Vestar Group" shall mean Vestar Capital Partners, Inc.,
Vestar/Celestial Investment Limited Partnership, all of the general partners
thereof and the members of their respective Family Groups.
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Section 2. Appointment of Rights Agent. The Company hereby appoints
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the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
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(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares of
Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued after the Record Date and prior to the earliest of the Distribution
Date, the Redemption Date, the Exchange Date or the Expiration Date (which
certificates for Common Stock shall be deemed to also be certificates evidencing
the Rights), and not by separate certificates; (ii) the registered holders of
such shares of Common Stock shall also be the registered holders of the Rights
associated with such shares; and (iii) the Rights shall be transferable only in
connection with the transfer of shares of Common Stock, and the surrender for
transfer of any certificate for such shares of Common Stock shall also
constitute the surrender for transfer of the Rights associated with such shares.
As soon as practicable after the Company has notified the Rights Agent of the
occurrence of the Distribution Date, the Rights Agent shall mail, by first-
class, insured, postage prepaid mail, 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, one or more
certificates evidencing the Rights ("Rights Certificates"), in substantially the
form of Exhibit B hereto, evidencing one Right (as adjusted from time to time
pursuant to this Agreement) for each share of Common Stock so held. From and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(o) of this Agreement, at
the time of distribution of the Rights Certificates, the Company may make the
necessary and appropriate adjustments (in accordance with Section 14(a) of this
Agreement) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights.
(b) Rights shall be issued in respect of all shares of Common Stock
which are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold pursuant to (i)
the exercise of stock options issued prior to the Distribution Date or under any
employee plan
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or arrangement created prior to the Distribution Date, or (ii) upon the
exercise, conversion or exchange of securities issued by the Company prior to
the Distribution Date, issue Rights and Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
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however, that (x) no such Rights and Rights Certificate shall
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be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued, if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date or shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Celestial
Seasonings, Inc. and Xxxxxx Trust and Savings Bank, as Rights Agent,
dated as of _________, 1993 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Celestial Seasonings,
Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. Celestial Seasonings,
Inc. will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.
Under certain circumstances, Rights that were, are or become
beneficially owned by Acquiring Persons or their Associates or
Affiliates (as such terms are defined in the Rights Agreement) may
become null and void and the holder of any of such Rights (including
any subsequent holder) shall not have any right to exercise such
Rights.
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Section 4. Form of Rights Certificates.
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(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment to be printed on the reverse thereof) shall be in
substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of this Agreement, the
Rights Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number of such securities and the
Purchase Price shall be subject to adjustment as provided in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i) any
Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the earlier of
the Distribution Date and the Stock Acquisition Date, by a Person known by the
Company to be: (A) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person; (B) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee after the Acquiring Person becomes such; or (C) a
direct or indirect transferee of an Acquiring Person (or of an Associate or
Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (x) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in an Associate or
Affiliate of such Acquiring Person) or to any Person with whom such Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (y) a direct or indirect transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which has
as a primary purpose or effect the avoidance of Section 7(e) of this Agreement,
or (ii) any Rights Certificate issued pursuant to this Agreement upon transfer,
exchange, replacement or adjustment of any other Rights Certificate beneficially
owned by a Person referred to in this Section 4(b), shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
-11-
Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 7(e) of the Rights
Agreement.
Section 5. Execution, Countersignature and Registration.
--------------------------------------------
(a) Each Rights Certificate shall be executed on behalf of the Company
by the Company's Chairman of the Board and Chief Executive Officer, Vice
Chairman of the Board, President and Chief Operating Officer or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Company's Secretary or an Assistant Secretary, either manually or by facsimile
signature. Each Rights Certificate shall be countersigned by the Rights Agent
either manually or, if permitted by the Company, by facsimile signature and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed a Rights Certificate shall cease to be such
officer of the Company before countersignature by the Rights Agent and issuance
and delivery 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 Certificate had not
ceased to be such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any Person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, 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 by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
-12-
Section 6. Transfer, Division, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
----------------------------------------------------------------------
(a) Subject to the provisions of Section 14, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the Redemption Date, the Exchange Date and the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate trust office of the Rights Agent. 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. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
-13-
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
------------------------------------------------------
Rights.
------
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth of a share of Preferred Stock,
subject to adjustment from time to time as provided in Sections 11 and 13.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time on or after the Distribution Date and prior to the earliest of the
Expiration Date, the Exchange Date and the Redemption Date, by surrendering the
Rights Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal corporate trust
office of the Rights Agent, together with payment of the Purchase Price for each
one one-thousandth of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock (or, following a Triggering Event or a Business Combination,
other securities, cash or other assets, as the case may be) to be purchased and
an amount in cash, certified bank check or bank draft payable to the order of
the Company equal to any applicable transfer tax required to be paid by the
surrendering holder pursuant to Section 9(d), the Rights Agent shall, subject to
the provisions of this Agreement, thereupon promptly (i)(A) requisition from any
transfer agent for the Preferred Stock (or make available, if the Rights Agent
is the transfer agent for such shares) certificates for the total number of one
one-thousandths of a share of Preferred Stock (or other securities, as the case
may be) to be purchased (and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests), or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock (or other
securities, as the case may be) issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock
(or other securities, as the case may be) as are to be purchased (in which case
certificates for the Preferred Stock (or other securities, as the case may be)
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary agent to comply
with such request; (ii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such
-14-
name or names as may be designated by such holder; and (iii) if appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 of this Agreement and,
promptly after receipt thereof, cause the same to be delivered to or upon the
order of the registered holder of such Rights Certificate. In the event that the
Company is obligated to issue other securities (including shares of Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
this Agreement, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date or the Stock Acquisition Date by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such, or (iii) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a direct or indirect transfer which the
Board of Directors of the Company determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall, immediately upon the occurrence of a Triggering Event and
without any further action, be null and void and no holder of such Rights shall
have any rights whatsoever with respect to such Rights whether under this
Agreement or otherwise, provided, however, that, in the case of transferees
under clause (ii) or clause (iii) above, any Rights beneficially owned by such
transferee shall be null and void only if and to the extent such Rights were
formerly beneficially owned by a Person who was, at the time such Person
beneficially owned such Rights, or who later became, an Acquiring Person or an
Affiliate or Associate of such Acquiring Person. The Company shall
-15-
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder of
a Rights Certificate or to any other Person as a result of the Company's failure
to make, or any delay in making (including any such failure or delay by the
Board of Directors of the Company) any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(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 the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of exercise,
transfer, division, 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
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
-16-
Section 9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other securities held in
its treasury) free from preemptive rights or any right of first refusal, a
sufficient number of shares of Preferred Stock (and, following the occurrence of
a Triggering Event, shares of Common Stock and/or other securities) to permit
the exercise in full of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event, shares of Common
Stock and/or other securities) issuable upon the exercise of Rights may be
listed on any United States national securities exchange, to use its best
efforts to cause, from and after the time that the Rights become exercisable,
all such shares and/or other securities reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares
-17-
of Preferred Stock (or Common Stock and/or other securities as the case may be)
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
(e) The Company shall use its best efforts (i) as soon as practicable
following a Triggering Event (provided the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) of this Agreement), or as soon as is required by law
following the Distribution Date, as the case may be, to prepare and file a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company shall also use its
best efforts to take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event described in clause (i) of the first sentence of this paragraph
of Section 9, the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
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 Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
-------- -------
surrender and payment is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares (and/or such other securities, as the case may be) on, and such
certificate shall be dated, the next succeeding Business Day on
-18-
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are open.
Section 11. Antidilution Adjustments. The Purchase Price, the number
------------------------
and kind of securities, cash and other property obtainable upon exercise of each
Right and the number of Rights outstanding shall be subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time on or after July
19, 1993 (A) pay a dividend or make a distribution on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide (by a stock split or
otherwise) the outstanding Preferred Stock into a larger number of shares, (C)
combine (by a reverse stock split or otherwise) the outstanding Preferred Stock
into a smaller number of shares, or (D) issue any securities in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the surviving
corporation), then in each such event the Purchase Price and the redemption
price set forth in Section 23, as each is in effect at the time of the record
date for such dividend or distribution, or of the effective date of such
subdivision, combination or reclassification, shall be proportionately adjusted
by multiplying the Purchase Price and such redemption price by a fraction the
numerator of which shall be the total number of shares of Preferred Stock
outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the total number of shares of Preferred Stock
outstanding immediately following the occurrence of such event. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering Event, proper provision
shall be made so that each holder of a Right, except as otherwise provided in
this Agreement, shall thereafter have the right to receive, and the Company
shall issue, upon exercise thereof at the then-current Purchase Price required
to be paid in order to exercise a Right in accordance with the terms of this
Agreement, in lieu of the number of one one-thousandths of a share of Preferred
Stock or other securities receivable upon exercise of a Right prior to the
occurrence of the Triggering Event, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then-current
Purchase Price by the number of one-thousandths of a share of Preferred Stock or
other securities for which a Right was then exercisable (without giving effect
to such Triggering Event) and (y) dividing that product by 50% of the Current
Market Price per share of Common Stock on the date of the occurrence of the
Triggering Event (such number of shares being referred to as the "Adjustment
Shares"); provided, however, that if the transaction or event that would
-------- -------
otherwise give rise to the foregoing
-19-
adjustment is also subject to the provisions of Section 13 of this Agreement,
then only the provisions of Section 13 of this Agreement shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii). Upon the occurrence
of such Triggering Event, the Purchase Price required to be paid in order to
exercise a Right shall be unchanged, and the Purchase Price shall be
appropriately adjusted to reflect, and shall thereafter mean, the amount
required to be paid per share of Common Stock upon exercise of a Right.
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii), the Company may, if the Board of Directors of the Company
determines that such action is necessary or appropriate and not contrary to the
interests of holders of Rights (and, in the event that the number of shares of
Common Stock which are authorized by the Company's certificate of incorporation,
but which are 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 in accordance with Section 11(a)(ii), the Company shall) take one
or more of the following actions: (A) reduce the Purchase Price required to be
paid in order to exercise a Right by any amount (the "Reduction Amount"), in
which event the number of Adjustment Shares and/or the amount of any Substitute
Consideration (as hereinafter defined) issuable in respect of each Right (the
Adjustment Shares, if any, and the Substitute Consideration, if any, issuable in
respect of a Right are herein collectively referred to as the "Total
Consideration") shall be reduced so that the aggregate value of the Total
Consideration issuable in respect of each Right is equal to the Current Value
(as hereinafter defined) less the Reduction Amount (herein the "Adjusted Current
Value"), and/or (B) make adequate provision with respect to each Right to
substitute for all or part of the Adjustment Shares otherwise obtainable upon
exercise of a Right: (1) cash, (2) other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Company has determined to have the same
value as shares of Common Stock (such shares or units of preferred stock being
referred to as "Common Stock Equivalents")), (3) debt securities of the Company,
(4) other assets, or (5) any combination of the foregoing (collectively,
"Substitute Consideration"), having an aggregate value which, when added to the
value of the Adjustment Shares (if any) in respect of which no substitution is
being made, is equal to the Adjusted Current Value. If the Board of Directors
determines to issue or deliver any equity securities (other than Common Stock or
Common Stock Equivalents), debt securities and/or other assets pursuant to this
Section 11(a)(iii), the value of such securities and/or assets shall be
determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors
of the Company. If the Company is required to make adequate provision to deliver
value pursuant to the first sentence of this Section 11(a)(iii) and the Company
shall not have made such adequate provision to deliver value within ninety (90)
days following the first occurrence of a
-20-
Triggering Event (the "Substitution Period"), then notwithstanding any provision
of Section 11(a)(ii) or this Section 11(a)(iii) to the contrary, the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the excess of the Current Value over the Purchase
Price. If both Common Stock and cash are to be delivered pursuant to the
preceding sentence, amounts of both Common Stock and cash shall be delivered
upon surrender of each Right in a ratio of Common Stock to cash that bears the
same ratio as the total value of all Common Stock to be delivered (as determined
pursuant to this Section 11(a)(iii)) bears to the total value of all cash to be
delivered; provided, however, that
-------- -------
the Company may adjust such ratio to avoid issuing any fractional shares of
Common Stock so long as the method of adjustment is applied consistently to each
holder of Rights entitled to receive value thereon pursuant to this Section
11(a)(iii). To the extent that the Company determines that some action is to be
taken pursuant to the first and/or third sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights but in no event to a time later than the expiration
of the Substitution Period. 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. Upon any change in the Adjustment Shares
obtainable upon exercise of a Right pursuant to this Section 11(a)(iii), the
Purchase Price shall thereafter mean the amount, if any, required to be paid
upon exercise of a Right for the Adjustment Shares, if any, and the Substitute
Consideration, if any, then issuable or deliverable upon exercise of a Right,
and the Board of Directors of the Company shall make any necessary provisions to
ensure that the provisions of Section 11(e) shall thereafter apply as
appropriate to the Total Consideration. For purposes of this Section 11(a)(iii),
(A) "Current Value" shall be the product derived by multiplying (x) the number
of Adjustment Shares issuable in respect of each Right determined under Section
11(a)(ii), by (y) the Current Market Price per share of Common Stock on the date
of the Triggering Event, and (B) the value of each share of Common Stock and
each share or unit of any "Common Stock Equivalent" shall be deemed conclusively
to be equal to the Current Market Price per share of the Common Stock on the
date of the Triggering Event.
(iv) The Board of Directors of the Company may, at its option, at any
time and from time to time after the first occurrence of a Triggering Event,
cause the Company to exchange, for all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof), shares of Common Stock or
Common Stock Equivalents at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any
-21-
stock split, stock dividend or similar transaction occurring after July 19, 1993
(such exchange ratio being hereinafter referred to as the "Exchange Ratio"). Any
partial exchange shall be effected on a pro rata basis based on the number of
Rights (other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to this Section 11(a)(iv) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock and/or Common Stock
Equivalents equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any such
exchange and in addition, the Company shall promptly mail a notice of any such
exchange to all of the holders of such Rights in accordance with Section 25 of
this Agreement; provided, however, that the failure to give, any delay in giving
-------- -------
or any defect in, such notice shall not affect the validity of such exchange.
Each such notice of exchange will state the method by which the exchange of the
Common Stock or Common Stock Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. In
the event that the number of shares of Common Stock which is authorized but not
outstanding or reserved for issuance for a purpose other than exercise of the
Rights is not sufficient to permit any exchange of Rights as contemplated in
accordance with this Section 11(a)(iv), the Board of Directors of the Company
shall take all such action within its power as may be necessary to authorize
additional shares of Common Stock for issuance upon exchange of the Rights. The
Company shall not be required to issue fractions of shares of Common Stock or
Common Stock Equivalents or to distribute certificates which evidence fractional
shares of Common Stock or Common Stock Equivalents. In lieu of such fractional
shares of Common Stock or Common Stock Equivalents, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock or Common Stock Equivalents would otherwise be
issuable an amount in cash equal to the product derived by multiplying (x) the
subject fraction, by (y) the last sale price of the Company's Common Stock on
the fifth Trading Day following the public announcement of the exchange by the
Company, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices on such day, in either case on a when issued basis
(taking into account the exchange), as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange (or, if the Company's Common Stock is not
so listed or traded, then as determined in the manner provided under the
definition of "Current Market Price," adjusted to take into account the
exchange). For the purposes of this Section 11(a)(iv) the value of any Common
Stock Equivalent on any date shall be the same as the value of the Common Stock,
as determined pursuant to the previous sentence, on such date.
-22-
(b) If the Company shall at any time on or after July 19, 1993 fix a
record date for the issuance of rights, options or warrants to holders of
Preferred Stock entitling them to subscribe for or purchase Preferred Stock or
Equivalent Shares (or securities convertible into Preferred Stock or Equivalent
Shares) at a price per share of Preferred Stock or Equivalent Shares (or, in the
case of a convertible security, having a conversion price per share of Preferred
Stock or Equivalent Shares) less than the Current Market Price per share of
Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and Equivalent Shares (if any)
outstanding on such record date, plus the number of shares of Preferred Stock or
Equivalent Shares, as the case may be, which the aggregate exercise and/or
conversion price for the total number of shares of Preferred Stock or Equivalent
Shares, as the case may be, which are obtainable upon exercise and/or conversion
of such rights, options, warrants or convertible securities would purchase at
such Current Market Price, and the denominator of which shall be the number of
shares of Preferred Stock and Equivalent Shares (if any) outstanding on such
record date, plus the number of additional shares of Preferred Stock or
Equivalent Shares, as the case may be, which may be obtained upon exercise
and/or conversion of such rights, options, warrants or convertible securities.
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Preferred Stock and Equivalent Shares
owned by or held for the account of the Company or any Subsidiary 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 issued following such
adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(c) In case the Company shall at any time after July 19, 1993 fix a
record date for the making of a distribution to holders of Preferred Stock
(including any such distribution made in connection with a reclassification of
the Preferred Stock or a consolidation or merger in which the Company is the
surviving corporation) of securities (other than Preferred Stock and rights,
options or warrants referred to in Section 11(b)), cash (other than a regular
periodic cash dividend at an annual rate not in excess of: (x) 125% of the
annual rate of the regular cash dividend paid on the Preferred Stock during the
immediately preceding fiscal year (or, if the Preferred Stock was not
outstanding during such preceding fiscal year, then 125% of the annual rate of
the regular cash dividend paid on the Common Stock
-23-
during such year), or (y) in the event that a regular cash dividend was not paid
on the Preferred Stock (or Common Stock) during such preceding fiscal year, 5%
of the Current Market Value of the Preferred Stock on the date such regular cash
dividend was first declared), property, evidences of indebtedness, or assets,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by a the Board of Directors of the Company whose
determination shall be described in a statement filed with the Rights Agent) of
such securities, cash, property, evidences of indebtedness or assets to be so
distributed in respect of one share of Preferred Stock, and the denominator of
which shall be such Current Market Price per share of Preferred Stock on such
record date. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not made following
such adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d) Except as provided below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Purchase Price; provided, however, that any adjustments
-------- -------
which by reason of this Section 11(d) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent, to the
nearest ten-thousandth of a share of Common Stock, or to the nearest ten-
millionth of a share of Preferred Stock, as the case may be. Notwithstanding the
first sentence of this Section 11(d), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) of this Agreement, the holder of any Right thereafter exercised
shall become entitled to receive any securities of the Company other than shares
of Preferred Stock, thereafter the Purchase Price and the number of such other
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in this Section 11 and the provisions of Sections 7, 9, 10, 12, 13, 14
and 24 with respect to the shares of Preferred Stock shall apply on like terms
to any such other securities.
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
-24-
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(g) Unless the Company shall have exercised its election as provided
in Section 11(h), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(a)(i), 11(b) and 11(c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one one-
thousandths of a share of Preferred Stock (calculated to the nearest one ten-
millionth of a share of Preferred Stock) obtained by (i) multiplying the number
of one one-thousandths of a share of Preferred Stock covered by a Right
immediately prior to adjustment pursuant to this Section 11(g) by the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(h) The Company may elect, on or after the date of any adjustment of
the Purchase Price or any adjustment to the number of shares of Preferred Stock
for which a Right may be exercised, to adjust the number of Rights, in lieu of
an 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 Right outstanding prior
to such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment by the Purchase
Price in effect immediately after such adjustment. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 days after 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(h) the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date a new Rights Certificate evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record, in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment and
upon surrender thereof (if required by the Company), new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for in this Agreement (and may bear, at
the option of the Company, the adjusted Purchase
-25-
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-thousandth of a share of Preferred Stock and the
number of shares of Preferred Stock which were expressed in the initial Rights
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of one one-thousandth of a
share of Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable one one-thousandth shares of such Preferred Stock at such adjusted
Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
--------
however, that the Company shall deliver to such holder a due xxxx or other
-------
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination 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 or exercisable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Preferred Stock, shall not
be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not (i) consolidate
with, (ii) merge with or into, or (iii) directly or indirectly sell, lease, or
otherwise transfer or dispose of (in one transaction or a series of related
transactions) assets or
-26-
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries taken as a whole, to any other Person if (A) at the
time of or immediately after such consolidation, merger, sale, lease, transfer
or disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer or disposition the stockholders (or equity holders) of the
Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation, merger,
sale, lease, transfer or disposition unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Stock Acquisition
Date it will not, except as permitted by Section 11(a)(iv), 26 or 29(b) of this
Agreement, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will,
directly or indirectly, diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, if the
Company shall at any time prior to the Distribution Date (i) pay a dividend or
distribution on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then the number of
Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, and the Purchase Price
under, and the number of one one-thousandths of a share of Preferred Stock
issuable in respect of, the Rights, shall be proportionately adjusted, so that
following such event one Right (with the Purchase Price and the number of one
one-thousandths of a share proportionately adjusted thereunder) shall thereafter
be associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date. For example, if the
Company effects a two-for-one stock split at a time when each Right (if it
becomes exercisable) would entitle the holder to purchase one one-thousandth of
a share of Preferred Stock for a Purchase Price of $"Z", then following such
stock split each previous Right would be split into two current Rights and
thereafter each current Right, upon becoming exercisable, would (subject to
further adjustment) entitle the holder to purchase one two-thousandth of a share
of Preferred Stock at a Purchase Price of 1/2 x $"Z".
-27-
Section 12. Certification of Adjustments. Whenever an adjustment is
----------------------------
made as provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Stock a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or, if no
Rights Certificates have been issued, to each holder of a certificate
representing shares of Common Stock) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. Any adjustment to be made pursuant to Sections
11 and 13 of this Agreement shall be effective as of the date of the event
giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(m) and Section 11(n) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) and Section 11(n) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of any other
Person, cash or any other property) or (iv) the Company shall, directly or
indirectly, sell, lease, exchange, mortgage, pledge or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall directly or indirectly
sell, lease, exchange, mortgage, pledge or otherwise transfer or dispose of), in
one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
any of its Subsidiaries in one or more transactions each and all of which comply
with Section 11(m) and Section 11(n) of this Agreement).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as
-28-
otherwise provided in this Agreement) shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price immediately prior to
the first occurrence of a Triggering Event multiplied by the number of one one-
thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event (without giving
effect to the Triggering Event) in accordance with the terms of this Agreement,
such number of shares of Common Stock of the Principal Party as shall be equal
to the result obtained by (x) multiplying the Purchase Price immediately prior
to the first occurrence of a Triggering Event by the number of one one-
thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event (without giving
effect to the Triggering Event), and (y) dividing that product by 50% of the
Current Market Price per share of the Common Stock of such Principal Party
immediately prior to the consummation of such Business Combination. All shares
of Common Stock of any Person for which any Right may be exercised after
consummation of a Business Combination as provided in this Section 13(a) shall,
when issued upon exercise thereof in accordance with this Agreement, be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof of any kind or nature whatsoever.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party, and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13, (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an
-29-
appropriate form under the Securities Act with respect to the Rights and the
securities purchasable upon exercise of the Rights, (B) use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and remain effective (with a prospectus at all times meeting
the requirements of the Securities Act) until the Expiration Date, (C) deliver
to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act, (D)
use its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the state securities or "blue sky"
laws of such jurisdictions as may be necessary or appropriate, (E) use its best
efforts to list the Rights and the securities purchasable upon exercise of the
Rights on a United States national securities exchange, and (F) obtain waivers
of any rights of first refusal or preemptive rights in respect of the Common
Stock of the Principal Party subject to purchase upon exercise of outstanding
Rights, (iii) the Company and the Principal Party shall have furnished to the
Rights Agent an opinion of independent counsel stating that such supplemental
agreement is a legal, valid and binding agreement of the Principal Party
enforceable against the Principal Party in accordance with its terms, and (iv)
the Company and the Principal Party shall have filed with the Rights Agent a
certificate of a nationally recognized firm of independent accountants setting
forth the number of shares of Common Stock of such issuer which may be purchased
upon the exercise of each Right after the consummation of such Business
Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). Following a
Business Combination, the provisions of Section 11(a)(ii) of this Agreement
shall be of no effect.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, cash or other property for which a Right is exercisable or
the number of Rights outstanding or associated with each share of Common Stock
or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 13, unless the terms of this
Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or
-30-
otherwise eliminate the benefits intended to be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the event
the nature of the organization of any Principal Party shall preclude or limit
the acquisition of Common Stock of such Principal Party upon exercise of the
Rights as required by Section 13(a) as a result of a Business Combination, it
shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company may at its option pay to the registered holders
of the Rights Certificates with respect to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of a Right
for the Trading Day immediately prior to the date on which such fractional
Rights otherwise would have been issuable. The closing price for any Trading Day
shall be the last sale price on such day, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal United States national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices on such day in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on such day the Rights are not
quoted by any such system, the average of the closing bid and asked prices on
such day as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on such day no such
market maker is making a market in the Rights, the current market value of the
Rights on such day shall be determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which
-31-
are integral multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock). Fractions of shares of
Preferred Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Stock. In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company may
at its option (i) issue scrip or warrants in registered form (either represented
by a certificate or uncertificated) or in bearer form (represented by a
certificate) which shall entitle the holder to receive a full one one-thousandth
of a share of Preferred Stock upon the surrender of such scrip or warrants
aggregating a full one one-thousandth of a share of Preferred Stock, or (ii) pay
to the registered holders of Rights Certificates at the time such Rights
Certificates are exercised as provided in this Agreement an amount in cash equal
to the same fraction of the current market value of a share of Preferred Stock.
For purposes of this Section 14(b), the current market value of a share of
Preferred Stock shall be the closing price of a share of Preferred Stock (as
determined pursuant to the second sentence of the definition of "Current Market
Price" in Section 1) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by his acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all rights
----------------
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his rights pursuant to this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders Concerning
--------------------------------------
-32-
Transfer and Ownership of Rights. Every holder of a Right by accepting the same
--------------------------------
consents and agrees with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the Common Stock
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. Rights Holder Not Deemed a Stockholder.
--------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to
vote or to receive dividends or distributions or shall be deemed for any purpose
the holder of Preferred Stock or any other securities, cash or other property
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained in this Agreement 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, including, without
limitation, any right (i) to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, (ii) to give or
withhold consent to any corporate action, (iii) to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 24), (iv) to
receive dividends, distributions or subscription rights, (v) to institute, as a
holder of Preferred Stock or other securities issuable on exercise of the Rights
represented by any Rights Certificate, any derivative action on behalf of the
Company, or otherwise, until and only to the extent that the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to pay
---------------------------
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss,
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liability, or expense, incurred without negligence, bad faith, willful
misconduct or breach of this Agreement on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, when necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent. Any corporation into which the Rights Agent or any successor Rights Agent
-----
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
--------
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate 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
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board and Chief Executive Officer, the Vice Chairman of the Board, the
President and Chief Operating Officer, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change or
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23 or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice of any change
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or adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Preferred Stock, Common Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Preferred Stock, Common Stock or other securities 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 performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board and Chief Executive Officer, the Vice Chairman of the
Board, the President and Chief Operating Officer, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement 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.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail.
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The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Common Stock or Preferred
Stock by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding any other provision of this
Agreement, 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 any 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 registered holder of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws of the
United States or of the State of Colorado (or of any other state of the United
States so long as such corporation is authorized to conduct a corporate trust or
banking business in the State of Colorado) in good standing, which is authorized
under such laws to exercise corporate trust powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. 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 such purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock or Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
-----------------------------------
of the provisions of this Agreement or of the Rights Certificates to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing new Rights in such form as may be approved by the Board of Directors
of the Company to reflect any adjustment or change in the Purchase Price per
share and the number or kind or class of securities, cash or other property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.
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Section 23. Redemption and Termination.
--------------------------
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) 12:00 midnight (Boulder, Colorado time) ending
the tenth day following the Stock Acquisition Date, and (ii) the Expiration
Date, redeem all but not less than all the then-outstanding Rights at a
redemption price of $.005 per Right (appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of this
amended and restated Agreement).
(b) At the time and date of effectiveness set forth in any resolution
of the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the redemption price; provided, however, that such
-------- -------
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. Notwithstanding anything contained in this
Agreement or the Rights Certificates to the contrary, the Rights shall not be
exercisable until such time as the Company's right of redemption under Section
23(a) has expired. As soon as practicable after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and 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 issuance of Rights Certificates, on the registry books of the
transfer agent for the Common Stock. Any notice which is mailed in the manner
provided in this Agreement shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the redemption price will be made. In any case, failure to
give such notice by mail, or any defect in the notice, to any particular holder
of Rights shall not affect the sufficiency of the notice to other holders of
Rights. In the case of a redemption permitted under this Section 23, the Company
may, at its option, discharge all of its obligations with respect to the Rights
by (i) issuing a press release announcing the manner of redemption of the Rights
and (ii) mailing payment of the redemption price to the registered holders of
the Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the issuance of the Rights Certificates, on the
registry books of the transfer agent for the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void without any further
action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically
-38-
set forth in this Section 23, and other than in connection with the purchase of
shares of Common Stock prior to the earlier of the Distribution Date and the
Expiration Date.
(c) Following the occurrence of a Stock Acquisition Date and following
the expiration of the right of redemption under Section 23(a) but prior to the
occurrence of a Business Combination, the right of redemption set forth in
Section 23(a) shall be reinstated and thereafter shall be subject to the
provisions of this Section, provided each of the following shall have occurred
--------
and remain in effect: (x) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in a
transaction, or series of transactions, which did not result in the occurrence
of a Business Combination such that such Person is thereafter a Beneficial Owner
of 5% or less of the outstanding shares of Common Stock, (y) there are no other
Persons, immediately following the occurrence of the event described in clause
(x), who are Acquiring Persons, and (z) the transfer or other disposition
described in clause (x) above was other than pursuant to a transaction, or
series of transactions, which directly or indirectly involved the Company or any
of its Subsidiaries.
Section 24. Notice of Certain Events. In case the Company, on or
------------------------
after the Distribution Date, shall propose to (a) 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
periodic cash dividend at an annual rate not in excess of 125% of the annualized
rate of the cash dividend paid on the Preferred Stock during the immediately
preceding fiscal year), or (b) offer to the holders of its Preferred Stock
rights, options, or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify any record date for the purposes of
such stock dividend or distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution, or winding up is to take place and if
such holders will or may participate therein, the date of participation therein
by the holders of Common Stock and/or Preferred Stock, if any such date
-39-
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein, if any, by
the holders of Preferred Stock, whichever shall be the earlier. The failure to
give notice as required by this Section 24 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.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11(a)(ii)
or 13.
Section 25. Notices. Notices or demands authorized by this Agreement
-------
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Celestial Seasonings, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Celestial Account Representative
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
-40-
Section 26. Supplements and Amendments.
--------------------------
(a) At any time prior to the Distribution Date, the Board of Directors
of the Company may, except as provided in Section 26(c), and the Rights Agent
shall, if so directed, supplement or amend any provision of this Agreement
without the approval of any holders of Rights.
(b) From and after the Distribution Date, the Board of Directors of
the Company may, except as provided in Section 26(c), and the Rights Agent
shall, if so directed, amend this Agreement without the approval of any holders
of Rights Certificates (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained in this Agreement which may be defective or inconsistent
with any other provision of this Agreement, or (iii) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person).
(c) No supplement or amendment to this Agreement shall be made which
changes the Purchase Price, the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable or the
redemption price or provides for an earlier Expiration Date.
(d) Immediately upon the action of the Board of Directors providing
for any amendment or supplement pursuant to this Section 26, and without any
further action and without notice, such amendment or supplement shall be deemed
effective. Promptly following the adoption of any amendment or supplement
pursuant to this Section 26, the Company shall deliver to the Rights Agent a
copy, certified by the Secretary or any Assistant Secretary of the Company, of
resolutions of the Board of Directors of the Company adopting such amendment or
supplement. Upon such delivery, the amendment or supplement shall be
administered by the Rights Agent as part of this Agreement in accordance with
the terms of this Agreement, as so amended or supplemented.
Section 27. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement; Determinations and Actions by
---------------------------------------------------------
the Board of Directors. Nothing in this Agreement shall be construed to give to
----------------------
any Person other than the Company, the Rights Agent and the registered
holders of Rights any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights.
-41-
For purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act (or any successor provision); provided,
--------
however, that any such calculation made for purposes of determining the
-------
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(d) of this
Agreement. The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company or the Company, or
as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights, to exchange or not exchange the Rights for
Common Stock or other securities of the Company, or to amend or supplement this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of the Company in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board of Directors of the Company to any liability to the holders of
the Rights.
Section 29. Severability.
------------
(a) If any term, provision, covenant or restriction of this Agreement
or the application thereof to any Person or to any circumstance is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) If legal counsel to the Company delivers to the Company a written
opinion to the effect that, as a result of changes in federal law or Delaware
law, any term, provision, covenant or restriction of this Agreement may be
invalid, void, or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each Rights Certificate
-------------
issued hereunder shall be deemed to be a
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contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the internal laws of such state
applicable to contracts to be made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed in
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
Section 33. Grammatical Construction. Throughout this Agreement,
------------------------
where such meanings would be appropriate, (a) any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms (e.g., references
----
to "he" shall also include "she" and "it" and references to "who" and "whom"
shall also include "which"), and (b) the plural form of nouns and pronouns shall
include the singular and vice-versa.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
CELESTIAL SEASONINGS, INC.
By_________________________________
ATTEST: Title:
By_________________________
Title:
XXXXXX TRUST AND SAVINGS BANK
By_________________________________
ATTEST: Title:
By_________________________
Title:
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