RYAN'S RESTAURANT GROUP, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
SHAREHOLDER RIGHTS AGREEMENT
FEBRUARY 18, 2005
Table of Contents
Page
Section 1. Certain Definitions............................................................................................1
Section 2. Appointment of Rights Agent....................................................................................8
Section 3. Issue of Right Certificates....................................................................................8
Section 4. Form of Right Certificates.....................................................................................9
Section 5. Countersignature and Resignation..............................................................................10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.................................................11
Section 7. Exercise of Rights; Exercise Price; Final Expiration Date of Rights...........................................12
Section 8. Cancellation and Destruction of Right Certificates............................................................13
Section 9. Reservation and Availability of Common Stock..................................................................13
Section 10. Common Stock Record Date......................................................................................15
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights...................................15
Section 12. Certificate of Adjusted Exercise Price or Number of Shares....................................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power..........................................23
Section 14. Fractional Rights and Fractional Shares.......................................................................26
Section 15. Rights of Action..............................................................................................27
Section 16. Agreement of Right Holders....................................................................................27
Section 17. Right Certificate Holder Not Deemed a Shareholder.............................................................28
Section 18. Concerning the Rights Agent...................................................................................28
Section 19. Merger or Consolidation or Change of Name of Rights Agent.....................................................28
Section 20. Duties of Rights Agent........................................................................................29
Section 21. Change of Rights Agent........................................................................................31
Section 22. Issuance of New Right Certificates............................................................................32
Section 23. Redemption....................................................................................................32
Section 24. Exchange......................................................................................................35
Section 25. Notice of Certain Events......................................................................................36
Section 26. Notices.......................................................................................................37
Section 27. Supplements and Amendments....................................................................................37
Section 28. Successors....................................................................................................38
Section 29. Determinations and Actions by the Board of Directors..........................................................38
Section 30. Benefits of this Agreement....................................................................................39
Section 31. Severability..................................................................................................39
Section 32. Governing Law.................................................................................................39
Section 33. Counterparts..................................................................................................39
Section 34. Descriptive Headings..........................................................................................39
Exhibit A -- Form of Right Certificate
Exhibit B -- Form of Summary of Rights
SHAREHOLDER RIGHTS AGREEMENT
This Shareholder Rights Agreement (as the same may from time to time be
amended or supplemented, this "Agreement"), is entered into as of February 18,
2005, between Ryan's Restaurant Group, Inc., a South Carolina corporation (the
"Company"), and American Stock Transfer & Trust Company, a New York bank, (the
"Rights Agent", which term shall include any successor Rights Agent hereunder).
W I T N E S S E T H
WHEREAS, on January 24, 2005 the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each whole share of Common Stock, $1.00 par value per share, of the
Company (the "Common Stock") outstanding as of the Close of Business on February
2, 2005 (the "Record Date") and authorized the issuance of one Right for each
whole share of Common Stock of the Company which is issued or which becomes
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one half of a
share of Common Stock, upon the terms and conditions set forth herein (the
"Rights"); and
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall on any date
hereafter, be the Beneficial Owner of 20% or more of the shares of Common Stock
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, or (iii) any employee benefit plan of the Company or any of its
Subsidiaries. The Persons described in clauses (i) through (iii) above are
referred to herein as "Exempt Persons". No Person shall become an "Acquiring
Person" as the result of 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 (together with all Affiliates and
Associates of such Person) to 20% or more of the Common Stock of the Company
then outstanding; provided, however, that if any Person, together with all
Affiliates and Associates of such Person (other than Exempt Persons), shall
become the Beneficial Owner of 20% or more of the Common Stock of the Company
then outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
additional shares of Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person." If the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person" became the Beneficial Owner of a number of shares of Common Stock such
that the Person would otherwise qualify as an "Acquiring Person" inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause such
Person to be an "Acquiring Person" or (B) such Person was aware of the extent of
its Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without any
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intention of changing or influencing control of the Company, then such Person
shall not be deemed to be or to have become an "Acquiring Person" for any
purposes of this Agreement unless and until such Person shall have failed to
divest itself, as soon as practicable (as determined, in good faith, by the
Board of Directors of the Company), of Beneficial Ownership of a sufficient
number of shares of Common Stock so that such Person would no longer otherwise
qualify as an "Acquiring Person". In calculating beneficial ownership for
purposes of determining whether a Person is an Acquiring Person, shares held for
or pursuant to the terms of an employee benefit plan of the Company or any of
its subsidiaries shall not be counted, and voting or investment power among
related entities that might otherwise be deemed "affiliates" or "associates"
shall be aggregated only to the extent that such power is required to be
aggregated for purposes of compliance with Exchange Act Section 13(d) and
Section 13(g) reporting obligations.
(b) "Adjustment Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement,
and voting or investment power among related entities that might otherwise be
deemed "affiliates" or "associates" shall be aggregated only to the extent that
such power is required to be aggregated for purposes of compliance with Exchange
Act Section 13(d) and Section 13(g) reporting obligations; provided, however,
that no Exempt Person shall be deemed an Affiliate or an Associate.
(e) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, beneficially
own, directly or indirectly (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement) or has the right to dispose of;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or after the passage of time)
pursuant to any agreement, arrangement or understanding, upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own" (1) securities tendered pursuant
to a tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; (2) securities issuable upon exercise of Rights at any
time prior to the occurrence of an Adjustment Event; or (3) securities issuable
upon exercise of Rights from and after the occurrence of an Adjustment Event, if
such Rights were acquired by such Person or such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or Section
22 or pursuant to Section 11(a)(i) in connection with an adjustment made with
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respect to any of the Rights heretofore specified in this clause (3); or (B) the
right to vote pursuant to any agreement, arrangement or understanding (whether
or not in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under this clause
(B) if the agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy given to such Person or any of such
Person's Affiliates or Associates in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act, or (2) is made in connection
with, or is to otherwise participate in, a proxy or consent solicitation made or
to be made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act, in the case of either clause (1)
or (2) of this proviso whether or not such agreement, arrangement or
understanding is also then reportable by such person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (B) of Section 1(e)(ii) hereof) or disposing of any
securities of the Company; provided, however, that (1) no Person engaged in
business as an underwriter of securities shall be deemed the Beneficial Owner of
any securities acquired through such Person's participation as an underwriter or
selling group member in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition; (2) no Person who is a
director or an officer of the Company shall be deemed the Beneficial Owner of
any securities of the Company that are beneficially owned by any other director
or officer of the Company solely as a result of his or her position as director
or officer of the Company; (3) any agreement, arrangement or understanding
(whether or not in writing), or any communication or discussion, among two or
more Persons with respect to any matter relating to the management, operation or
conduct of the business of the Company, including any discussion or agreement
on, or any communication with respect to, a position with respect to any such
matter and the disclosure of such communication, discussion, agreement or
position to other Persons (including shareholders of the Company) or to the
Company shall not constitute an agreement, arrangement or understanding
contemplated by Section 1(e)(ii)(B).
(f) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the Commonwealth of
Massachusetts are authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.
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(h) "Common Stock" shall mean the Common Stock, $1.00 par value
per share, of the Company, except that "common stock" when used with reference
to any Person other than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such Person, or the equity
securities or other equity interest having power to control or direct the
management, of such person or, if such Person is a subsidiary of another Person,
the Person which ultimately controls such first-mentioned Person and which has
issued and outstanding such capital stock, equity securities or equity
interests.
(i) "Current Per Share Market Price" shall have the meaning set
forth in Section 11(d).
(j) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(k) "Distribution Date" shall have the meaning defined in
Section 3(a) hereof.
(l) "Equivalent Common Stock" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(m) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(n) "Exchange Rate" shall have the meaning set forth in Section
24(a) hereof
(o) "Exercise Price" shall have the meaning set forth in
Section 4 hereof.
(p) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(q) "Group" shall mean two or more Persons acting as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of the Common Stock.
(r) "Outside Directors" shall mean members of the Board who are
not officers of the Company or any of its Subsidiaries and who are not Acquiring
Persons or representatives, nominees, Affiliates or Associates of Acquiring
Persons.
(s) "Person" shall mean any individual, firm, corporation,
partnership or other entity or Group, and shall include any successor (by merger
or otherwise) thereof; provided, however, that when two or more Persons act as a
partnership, limited partnership, syndicate or other Group for the purpose of
acquiring, holding disposing of the Common Stock, such partnership, limited
partnership, syndicate or other Group shall be deemed to be a single Person.
(t) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(u) "Qualified Offer" shall mean a tender offer for all
outstanding shares of Common Stock which meets all of the following
requirements:
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(i) the same per share price and consideration is
offered for all shares of Common Stock
in the Qualified Offer, provided that such per share price and consideration is
no less than the then current market price for shares of Common Stock,
(ii) the consideration is at least 80 percent cash (and
any non-cash portion is
comprised of shares listed on a national exchange or the Nasdaq National Market,
to be adjusted to reflect any decrease in the value of such shares prior to the
consummation of the Qualified Offer) and is to be paid upon consummation of the
Qualified Offer for all tendered or exchanged shares of Common Stock in the
Qualified Offer,
(iii) on or prior to the date such offer is commenced
within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, such Person:
(A) has on hand cash or cash equivalents for
the full amount necessary to consummate such offer and has
irrevocably committed in writing to the Company to utilize
such cash or cash equivalents for purposes of such offer if
consummated and to set apart and maintain available such cash
or cash equivalents for such purposes until the offer is
consummated or withdrawn; or
(B) has all financing in the full amount
necessary to consummate such offer and has:
(1) entered into, and provided to
the Company certified copies of, definitive financing
agreements (including exhibits and related documents)
for funds for such offer which, when added to the
amount of cash and cash equivalents available,
committed in writing, set apart and maintained in the
same manner as described in clause (A) above, are in
an amount not less than the full amount necessary to
consummate such offer, which agreements are with one
or more responsible financial institutions or other
entities having the necessary financial capacity and
ability to provide such funds, and are subject only
to customary terms and conditions (which shall in no
event include conditions requiring access by such
financial institutions to non-public information to
be provided by the Company, conditions based on the
accuracy of any information concerning the Company,
or conditions requiring the Company to make any
representations, warranties or covenants in
connection with such financing), and
(2) provided to the Company copies
of all written materials prepared by such Person for
such financial institutions in connection with
entering into such financing agreements; provided
that, "the full amount necessary to consummate such
offer" in either clause (A) or (B) above shall be an
amount sufficient to pay for all shares of Common
Stock outstanding on a fully diluted basis the cash
portion of the consideration pursuant to the offer
and the second-step transaction required by clause
(v) below and all related expenses;
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(iv) the offering Person requests the Company to call
a special meeting of the Company's shareholders for the purpose of
voting on a resolution accepting such offer and authorizing the
redemption of the Rights, and contains a written agreement of such
Person to pay (or share with any other offering Person) at least
one-half of the Company's costs of such special meeting,
(v) such offer remains open for at least 30 Business
Days; provided, however, that (x) if there is any increase in the price
of such offer, such offer must remain open for at least an additional
15 Business Days after the last such increase, (y) such offer must
remain open for at least 15 Business Days after the date that any bona
fide alternative offer is made which, in the opinion of one or more
investment banking firms designated by the Company, provides for
consideration per share in excess of that provided for in such offer,
and (z) such offer must remain open for at least 15] Business Days
after the date, if any, on which such Person reduces the per share
price offered in accordance with clause (v)(y) below (provided, in the
case of each of clauses (x), (y) and (z) above, in no event will such
offer have been outstanding for less than 30] Business Days); provided
further, however, that such offer need not remain open, as a result of
this clause (iii), beyond (1) the time which any other offer satisfying
the criteria for a Qualified Offer is then required to be kept open
under this clause (iii), or (2) the scheduled expiration date, as such
date may be extended by public announcement on or prior to the then
scheduled expiration date, of any other tender or exchange offer for
Common Stock with respect to which the Board of Directors has agreed to
redeem the Rights immediately prior to acceptance for payment of Common
Stock thereunder (unless such other offer is terminated prior to its
expiration without any Common Stock having been purchased thereunder);
(vi) such offer is accompanied by a written opinion,
in customary form, of a nationally recognized investment banking firm
which is addressed to the Company and the holders of Common Stock other
than such Person and states that the price to be paid to holders
pursuant to the offer is fair from a financial point of view to such
holders and includes any written presentation of such firm showing the
analysis and range of values underlying such conclusions and such
written opinion and any such presentation is updated and provided to
the Company within two Business Days prior to the date such offer is
consummated;
(vii) prior to or on the date that such offer is
commenced within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, such Person makes an irrevocable
written commitment to the Company and, with respect to clause (x) to
its stockholders, (x) to consummate a transaction or transactions
promptly upon the completion of such offer (and in no event later than
five Business Days thereafter), whereby all Common Stock not purchased
in such offer will be acquired at the same cash price per share paid in
such offer, subject only to the condition that the Board of Directors
shall have granted any approvals required to enable such Person to
consummate such transaction or transactions following consummation of
such offer without obtaining the vote of any other stockholder, (y)
that such Person will not make any amendment to the original offer
which reduces the per share price offered (other than a reduction to
reflect any dividend declared by the Company, other than a regular
quarterly dividend, after the commencement of such offer or any
material change in the capital structure of the Company initiated by
the Company after the commencement of such offer, whether by way of
reclassification, recapitalization, reorganization, repurchase or
otherwise), changes the form of consideration offered, or reduces the
number of shares being sought or which is in any other respect
materially adverse to the Company's stockholders, and (z) that neither
6
such Person nor any of its Affiliates or Associates will make any offer
for or purchase any equity securities of the Company for a period of
one year after the commencement of the original offer if such original
offer does not result in the tender of at least 85% of the outstanding
shares of Common Stock not owned by such Person (including its
Affiliates and Associates), unless another tender offer by another
party for all outstanding Common Stock is commenced that (a)
constitutes a Qualified Offer (in which event, any new offer by such
Person or of any Affiliates or Associates must be at a price no less
than that provided for in such original offer) or (b) is approved by
the Board of Directors of the Company (in which event, any new offer by
such Person or of any of its Affiliates or Associates must be at a
price no less than that provided for in such approved offer); and
(viii) in addition to each of the requirements set
forth above, such offer is not subject to any financing, funding or
similar condition, nor any condition relating to completion of or
satisfaction with any due diligence or similar investigation, and,
subject to the foregoing, otherwise provides for usual and customary
terms and conditions.
(v) "Record Date" shall have the meaning set forth in the
recital clause of this Agreement.
(w) "Redemption Date" shall have the meaning set forth in
Section 7(a).
(x) "Rights" shall have the meaning set forth in the recital
clause of this Agreement.
(y) "Right Certificate" shall have the meaning set forth in
Section 3(a).
(z) "Section 11(a)(ii) Adjustment Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(aa) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii)(A), (B), or (C) hereof.
(bb) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(cc) "Share Acquisition Date" shall mean the first date on
which there shall be a public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such.
(dd) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
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(ee) "Subsidiary" of any Person shall mean any other
corporation or other entity of which a majority of the voting equity securities
or voting interests is owned, directly or indirectly, by such Person, or which
is otherwise controlled by such Person.
(ff) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(gg) "Summary of Rights" shall have the meaning set forth in
Section 3(b).
(hh) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise and shall in no event be liable for
the acts or omissions of any such co-Rights Agent. In the event the Company
appoints one or more co-Rights Agents, the respective duties of the Rights Agent
and any co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates
(a) Until the earlier of (i) the Close of Business on the 10th
calendar day after the Share Acquisition Date, (ii) the Close of Business on the
10th Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person shall become
an Acquiring Person) after the date of (x) the commencement, by any Person,
other than an Exempt Person, of, or (y) the first public announcement of the
intention of any Person (other than an Exempt Person) to commence a tender or
exchange offer if, upon consummation thereof, such Person would be an Acquiring
Person, including any such date which is after the date of this Agreement and
prior to the issuance of the Rights (the earliest of such dates being herein
referred to as the "Distribution Date"), the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by certificates for the Common Stock
registered in the names of the holders of the Common Stock (which certificates
for Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and the Rights will be transferable only in connection
with the transfer of the underlying shares of Common Stock. The Board of
Directors of the Company may defer the date set forth in clause (ii) in the
preceding sentence to a specified later date or to an unspecified later date to
be determined by action of the Directors of the Company. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date, the Rights Agent will send, 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, at the address of such holder shown on the
records of the Company, one or more certificates, in substantially the form
attached hereto as Exhibit A (the "Right Certificates"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided
herein. As of and after the Close of Business on the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
8
(b) On the Record Date, or thereafter, the Company will send a
notification of the existence of the Rights, by postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date or the earlier of the Redemption Date or the Final
Expiration Date, the Rights will be evidenced by such certificates for the
Common Stock with or without a copy of the Summary of Rights in the form
attached hereto as Exhibit B (the "Summary of Rights") attached thereto, and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or earlier redemption,
expiration or termination of the Rights), the transfer of any of the
certificates for the Common Stock outstanding on the Record Date, even without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
(c) Certificates for the Common Stock issued after the Record
Date, but prior to the earlier of the Distribution Date, the Redemption Date or
the Final Expiration Date, shall be deemed also to be certificates for Rights,
and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Shareholder Rights Agreement between
Ryan's Restaurant Group, Inc. and American Stock Transfer & Trust
Company, as Rights Agent, dated as of February 18, 2005, as amended and
restated from time to time (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of Ryan's Restaurant Group, 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. Ryan's Restaurant Group, Inc. will mail
to the holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances, Rights issued
to Acquiring Persons or any Affiliates or Associates thereof (as defined
in the Rights Agreement) and any subsequent holder of such Rights may
become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date or the earlier of the Redemption Date or the Final Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the transfer of
any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates. In the event
that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed cancelled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock
which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) shall
each be substantially in the form of Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
9
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation 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 Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, and on
their face shall entitle the holders thereof to Purchase such number of shares
of Common Stock as shall be set forth therein at the price set forth therein
(the "Exercise Price"), but the number of such shares and the Exercise Price
shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person or (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or of such Affiliate or Associate) to
holders of equity interests in such Acquiring Person (or of such Affiliate or
Associate) or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights, or (B)
a 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 11 hereof, and any Right Certificate issued pursuant to
Section 6 or Section 11 upon transfer, exchange, replacement or adjustment of
any other Right Certificate referred to in this sentence, shall contain the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). This Right
Certificate and the Rights represented hereby may become null
and void under certain circumstances as specified in Section 11
of the Rights Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or any Associate or
Affiliate thereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or any Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the Company with the same force and effect as though the Person who signed
such Right Certificates had not ceased to be such officer of the Company; and
10
any Right Certificates may be signed on behalf of the Company by any Person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at one of its offices designated as the appropriate place
for surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 4(b), Section 11,
Section 14 and Section 24 hereof, at any time after the Close of Business on the
Distribution Date, and at, or prior to, the Close of Business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Certificates, entitling the registered holder to purchase a
like number of shares of Common Stock (or following an Adjustment Event, other
securities, cash or other assets as the case may be) as the Right Certificate or
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Certificates to be transferred, split up,
combined or exchanged, with the form of assignment and certificate duly
executed, at the office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 11 and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Right Certificate or
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security 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 Right Certificate if
11
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Final Expiration Date of
Rights.
(a) Subject to Section 11(a)(ii) hereof, the registered holder
of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including, without limitation, the restrictions on
exercisability set forth in Xxxxxxx 0, Xxxxxxx 00(x)(xxx) and Section 23(a)), in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate set
forth on the reverse side thereof completed and duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Exercise Price for the total number of
shares of Common Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercised, at or prior to
the earlier of (i) the Close of Business on February 18, 2008 (the "Final
Expiration Date"), (ii) if this Agreement is not ratified by holders of a
majority of the shares of Common Stock voting on the issue at the Company's
first annual meeting of shareholders following February 18, 2008, immediately
following such annual meeting; (iii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the "Redemption Date") or (iv) the time which
such Rights are exchanged as provided in Section 24. Except as set forth in
Section 11(a) hereof and notwithstanding any other provision of this Agreement,
any Person who prior to the Distribution Date becomes a record holder of shares
of Common Stock may exercise all of the rights of a registered holder of a Right
Certificate with respect to the Rights associated with such shares of Common
Stock in accordance with the provisions of this Agreement, as of the date such
Person becomes a record holder of shares of Common Stock.
(b) The Exercise Price for each half share of Common Stock
pursuant to the exercise of a Right shall initially be $11 (equivalent to $22
for each share of Common Stock), shall be subject to adjustment from time to
time provided in Section 11 and Section 13 hereof, and shall be payable in
lawful money of the United States of America in accordance with Section 7(c)
below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
set forth on the reverse side thereof completed and duly executed, accompanied
by payment of the Exercise Price for the shares (or, following an Adjustment
Event, other securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax (as determined by
the Rights Agent) in cash, or by certified check or bank draft payable to the
order of the Company, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i)(A) requisition from any transfer agent of the shares of
Common Stock (or make available, if the Rights Agent is the transfer agent
therefor) certificates for the number of shares of Common Stock 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 Common Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of shares of Common Stock as are to be
purchased (in which case certificates for the shares of Common Stock represented
by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash,
if any, to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) promptly after receipt of such certificates or
depository receipts, cause the same to be delivered to or upon the order of the
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registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to issue other
securities of the Company, pay cash or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights 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 Right Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock (and, following the occurrence of an Adjustment Event, other securities or
out of its authorized and issued shares held in its treasury) the number of
shares of Common Stock (and, following the occurrence of an Adjustment Event,
other securities) that, as provided in this Agreement will be sufficient to
13
permit the exercise in full of all outstanding Rights; provided, that such
action need not be taken with respect to shares of Common Stock (or other
securities) issuable upon occurrence of an Adjustment Event until the occurrence
of such event.
(b) If at the time the Rights become exercisable, the then
outstanding shares of Common Stock are listed on any national or regional
securities exchange or are quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or any successor thereto or
other comparable quotation system, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares of
Common Stock (and, following the occurrence of an Adjustment Event, other
securities) reserved for issuance upon such exercise to be quoted on such system
or listed on such exchange, as the case may be.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event as of which the consideration to be delivered by the Company
upon exercise of the Rights has been determined in accordance with this
Agreement, or as soon as required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Common Stock or other
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus that at all times meets the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities, and (B) the date of the expiration of
the Rights. The Company will also take such action as may be appropriate under,
and which will ensure compliance with, the securities or blue sky laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon 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. Notwithstanding any such
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.
(d) The Company covenants and agrees that it will take all such
action as may be reasonably necessary to ensure that all shares of Common Stock
(and, following the occurrence of an Adjustment Event, other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that, subject to
Section 6, it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any certificates for shares of Common
Stock (or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a Person
14
other than, or in respect of the issuance or delivery of securities in a name
other than that of, the registered holder of the Right Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates for
securities in a name other than that of the registered holder upon the exercise
of any Rights until such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Common Stock Record Date. Each Person in whose name any
certificate for Common Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares of Common
Stock represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Stock transfer books of the Company are open. Prior to the exercise of the Right
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights. The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), then, except as
otherwise provided in this Section 11(a), the Exercise Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of Common Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of
shares of Common Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the
Common Stock (or other capital stock, as the case may be) transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of the Company issuable upon the exercise thereof. If an event occurs
which would require an adjustment under both Section 11(a)(i) and Section
15
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Section 24, in the event
(A) any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, at any time after the date of this Agreement, directly
or indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination and the Common Stock of the Company shall remain
outstanding and not changed into or exchanged for stock or other securities of
any other Person or the Company or cash or any other property, (2) shall, in
one or more transactions, transfer any assets to the Company in exchange (in
whole or in part) for shares of any equity security of the Company or any of
its Subsidiaries or for securities exercisable for or convertible into shares
of any equity security of the Company or any of its Subsidiaries or otherwise
obtain from the Company, with or without consideration, any additional shares of
any equity security of the Company or securities exercisable for or convertible
into shares of any equity security of the Company or any of its Subsidiaries
(other than as part of a pro rata distribution to all holders of Common Stock),
(3) shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one or more transactions), to, from or with, as the case
may be, the Company or any of its Subsidiaries, assets on terms and conditions
less favorable to the Company than the Company would be able to obtain in arm's-
length negotiation with an unaffiliated third Person, (4) shall engage in any
transaction with the Company involving the sale, purchase, lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction or a series
of transactions), other than incidental to the lines of business currently
engaged in as of the date hereof by the Company and such Acquiring Person, or
Associate or Affiliate, of assets having an aggregate fair market value of more
than $5,000,000, (5) shall receive any compensation from the Company or any of
the Company's Subsidiaries other than compensation for full time employment as a
regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) shall receive the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans other than in
the ordinary course of business), advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided by the
Company or any of its Subsidiaries, or
(B) any Person (other than an Exempt Person), shall
become an Acquiring Person, or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any reverse stock
split), or recapitalization of the Company, or any merger or consolidation of
the Company with any of its Subsidiaries or any other transaction or series of
transactions (whether or not with or into or otherwise involving an Acquiring
Person) which has the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, then, and in each such case, proper provision shall be made so
that each holder of a Right, except as provided in this paragraph (ii), shall
thereafter have a right to receive, upon exercise of such Right at the then
current Exercise Price in accordance with the terms of this Agreement, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Exercise Price by the then number
of one half shares of Common Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event and (y) dividing that
16
product (which, following such first occurrence, shall thereafter be referred to
as the "Exercise Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Per Share Market Price of the Common Stock (determined
pursuant to Section 11(d)) on the date of the occurrence of any one of the
events listed above in this Section 11(a)(ii) (such number of shares is herein
called the "Adjustment Shares"); provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13 shall
apply and no adjustment shall be made pursuant to this Section 11(a)(ii). The
Company shall not enter into any transaction of the kind listed in this Section
11(a)(ii) if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which as
a result of the consummation of such transaction, would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a 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 this Section 11(a),
shall become null and void without any further action and no holder or
beneficial owner of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 11(a) and Section 4(b) hereof are complied with, but shall have no
liability to any holder or beneficial owner of Right Certificates or any other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or any Affiliates and Associates thereof or any transferee of
any of them hereunder.
(iii) In the event that the number of shares of Common
Stock which is authorized by the Company's articles of organization but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Company shall: (A) determine the excess
of (1) the value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Exercise Price (such excess is herein called
the "Spread"), and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable Exercise
Price, (1) cash, (2) a reduction in the Exercise Price, (3) Common Stock or
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock which the Board has deemed to have the
same value as shares of Common Stock (such shares or units of shares of
preferred stock are herein called "Equivalent Common Stock")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board based upon the advice of a
competent investment banking firm selected by the Board; provided, however, if
17
the Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Adjustment Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares or
cash have an aggregate value equal to the Spread. If the Board shall determine
in good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Adjustment Date, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such thirty (30) day period, as it may
be extended, is herein called the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the first or
second sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek an
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For the purpose of this Section 11(a)(iii),
the value of Adjustment Shares shall be the Current Per Share Market Price of
the Common Stock on the Section 11(a)(ii) Adjustment Date, and the per share or
per unit value of any Equivalent Common Stock shall be deemed to equal the
Current Per Share Market Price of the Common Stock on such date.
(b) If the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Common
Stock entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Stock or Equivalent Common
Stock or securities convertible into Common Stock or Equivalent Common Stock at
a price per share of Common Stock or per share of Equivalent Common Stock (or
having a conversion price per share, if a security convertible into Common Stock
or Equivalent Common Stock) less than the Current Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of the Common Stock on such record
date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date, plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock or Equivalent Common Stock to be offered (and the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Per Share Market Price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date, plus the
number of additional shares of Common Stock or Equivalent Common Stock to be
18
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of the Company issuable upon the exercise
thereof. 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 the Current Per Share Market Price thereof determined in accordance
with Section 11(d) hereof. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
periodic cash dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Common Stock, but including any
dividend payable in stock other than Common Stock) or options, subscription
rights or warrants (excluding those referred to in Section 11(b)), the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Per Share Market Price (as
determined pursuant to Section 11(d) hereof) of Common Stock on such record
date, less the Current Per Share Market Price (as determined pursuant to Section
11(d) hereof) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such options, subscription rights or warrants applicable
to one share of Common Stock and the denominator of which shall be the Current
Per Share Market Price (as determined pursuant to Section 11(d) hereof) per one
share of Common Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of the Company issuable upon the exercise
thereof. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would be in effect
if such record date had not been fixed.
(d) For the purpose of this Agreement, the "Current Per Share
Market Price" of any share of Common Stock or any other stock or any Right or
other security or any other property shall be determined as provided in this
Section 11(d).
(i) In the case of a publicly-traded stock or other
security (hereinafter in this Section 11(d)(i) a "Security"), the Current Per
Share Market Price on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to
such date; provided, however, that for the purpose of computations made
pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price on
any date shall be deemed to be the average of the daily closing prices per
share of such Security for the ten (10) consecutive Trading Days immediately
following such date; and provided further, that in the event that the Current
Per Share Market Price of any Security is determined during a period following
the announcement by the issuer of such Security of (x) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into shares of such Security (other than the Rights) or (y) any
19
subdivision, combination or reclassification of such Security, and prior to
the expiration of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Per Share Market
Price shall be properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Securities are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such Security is
listed or admitted to trading; or, if not listed or admitted to trading on any
national securities exchange, the last quoted price (or, if not so quoted, the
average of the last quoted high bid and low asked prices) in the
over-the-counter market, as reported by NASDAQ or such other system then in use;
or, if, on any such date no bids for such Security are quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such Security selected by the Board
of Directors of the Company. If on any such date no market maker is making a
market in such Security, the Current Per Share Market Price of such Security on
such date shall be determined reasonably and with good faith to the holders of
the Rights by the Board of Directors of the Company, including, if at the time
of such determination there is an Acquiring Person, a majority of the Outside
Directors then in office, or if there are no Outside Directors, by a competent
investment banking firm selected by the Board of Directors, which determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which such Security is listed or admitted to trading is open for the transaction
of business or, if such Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) If a Security is not publicly held or not so
listed or traded, "Current Per Share Market Price" shall mean the fair value
per share of stock or per other unit of such Security, determined reasonably
and with utmost good faith to the holders of the Rights by the Board of
Directors of the Company, including, if at the time of such determination there
is an Acquiring Person, a majority of the Outside Directors then in office, or
if there are no Outside Directors, by a competent investment banking firm
selected by the Board of Directors, which determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights.
(iii) In the case of property other than securities,
the Current Per Share Market Price thereof shall be determined reasonably and
with utmost good faith to the holders of Rights by the Board of Directors of
the Company, including, if at the time of such determination there is an
Acquiring Person, a majority of the Outside Directors then in office, or if
there are no Outside Directors, by a competent investment banking firm selected
20
by the Board of Directors, which determination shall be described in a statement
filed with the Rights Agent and shall be binding upon the Rights Agent and the
holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least l% in the Exercise Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Exercise Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Section 11(a) through
(c), (e), (g) through (k), and (m), inclusive, and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Common Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares (or fractions
thereof) of Common Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of shares of
Common Stock (calculated to the nearest one ten-thousandth) obtained by (i)
multiplying (x) the number of shares covered by a Right immediately prior to
this adjustment by (y) the Exercise Price in effect immediately prior to such
adjustment of the Exercise Price, and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Common Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of shares of Common Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
21
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price per share and the number of shares which were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then par value, if any, of the number of
shares of Common 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 shares of Common Stock at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the number of
shares of Common Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Exercise Price in effect
prior to such adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the
contrary, the Company shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Common Stock,
issuance wholly for cash of any shares of Common Stock at less than the Current
Per Share Market Price, issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or exchangeable for shares
22
of Common Stock, stock dividends or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Common Stock, shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with, (ii) merge with or into,
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person or Persons if (x) at the time
of or immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments outstanding or agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale the shareholders of a
Person who constitutes, or would constitute, the "Principal Party" for the
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the
Distribution Date it will not, except as permitted by Section 23 or Section 24
hereof, 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 substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
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
Common Stock a copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment contained therein and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, on or after the Share Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11(o) hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger (y) any Person (other than a Subsidiary of the Company in a transaction
which is not prohibited by Section 11(o) hereof) shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell, mortgage or otherwise transfer (or one
or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
23
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which is not prohibited by Section 11(o) hereof)
then, and in each such case, proper provision shall be made so that: (i) each
holder of a Right, except as provided otherwise herein, shall have the right to
receive, upon the exercise thereof at the then current Exercise Price in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid and nonassessable shares of freely tradeable Common Stock
of the Principal Party (as hereinafter defined in Section 13(b)), free and clear
of rights of call or first refusal, liens, encumbrances or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the then current
Exercise Price by the number of one half shares of Common Stock for which a
Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of one half shares of
Common Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Exercise Price in effect
immediately prior to such first occurrence) and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "Exercise Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the Current Per Share Market Price (determined pursuant to Section
11(d) hereof) of the Common Stock of such Principal Party on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
to permit exercise of all outstanding Rights in accordance with this Section
13(a)) in connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights. The Company shall not enter into any transaction of
the kind set forth in this subsection if at the time of the consummation of such
transaction there are any options, warrants, rights, conversion or exchange
provisions or securities outstanding or any agreements or arrangements in effect
which, as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. If,
in the case of a transaction of the kind described in clause (z) of the first
sentence of this subsection, the Person or Persons to whom assets or earning
power are sold or otherwise transferred are individuals, then the preceding
sentences of this subsection shall be inapplicable, and the Company shall
require as a condition to such sale or transfer that such Person or Persons pay
to each holder of a Rights Certificate, upon its surrender to the Rights Agent
and in exchange therefor (without requiring payment by such holder), cash in the
amount determined by multiplying the then current Exercise Price by the number
of one half shares of Common Stock for which a Right is then exercisable.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the issuer
24
of any securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the Person
that is the other party to the merger or consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other Person; and
(y) in case such Person is a Subsidiary, directly or indirectly, or more than
one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value of shares
outstanding.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto (x) the Principal Party shall have
a sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13, and (y) the Company and each Principal Party
and each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
Section 13(a) and (b) and further providing that, as soon as practicable after
the date of any consolidation, merger, sale or transfer of assets mentioned in
Section 13(a), the Principal Party at its own expense will
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts to
cause such registration statement to become effective as soon as practicable
after such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus that at all times meets the requirements
of the Securities Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or appropriate;
(iii) use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(iv) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all material respects with the requirements for registration on Form
10 under the Exchange Act.
25
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. If any Section 13 Event shall occur
at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which
have not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there may be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price per Right for
the Trading Day immediately prior to such date on which fractional Rights would
have been otherwise issuable. The closing price for any Trading Day shall be the
last sale price, regular way, or, in case no such sale takes place on such
Trading Day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading; or,
if not listed or admitted to trading on any national securities exchange, the
last quoted price (or, if not so quoted, the average of the last quoted high bid
and low asked prices) in the over-the-counter market, as reported by NASDAQ or
such other system then in use; or, if, on any such Trading Day no bids for the
Rights are quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date no
market maker is making a market in the Rights the current market value of the
Rights on such Trading Day shall be determined reasonably and with utmost good
faith to the holders of the Rights 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.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value per share of
Common Stock. For purposes of this Section 14(b), the current market value per
share of Common Stock shall be the closing price per share of Common Stock
determined pursuant to Section 11(d) hereof for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
26
Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Right evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Holders of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to enforce
the provisions of this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and with the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be
transferable only simultaneously and together with the transfer of shares of
Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6 and 11, the Company and the Rights
Agent may deem and treat the person in whose name a Right Certificate (or, prior
to the Distribution Date, the associated Common Stock certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as the result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligations; provided, however, that the Company must use
its reasonable best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
27
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against any loss, liability, or expense, incurred without gross
negligence, recklessness, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Stock or other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or in
reliance upon the advice of counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or shareholder services business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
28
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by
it (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 and
the determination of Current Per Share 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 herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any duly authorized officer of the Company and delivered
to the Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, recklessness, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
29
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a) hereof) or any
adjustment required under the provisions of Sections 3, 11, 13, 23 or 24 hereof
or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12 hereof), nor shall it be responsible for any
determination by the Board of Directors of the Company of current market value
of the Rights or Common Stock pursuant to the provisions of Section 14 hereof;
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 Common Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable; nor shall it be under any obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more of the registered
holders of the Rights Certificates shall furnish the Rights Agent with security
and indemnity to its satisfaction for any costs and expenses which may be
incurred; nor shall it be liable for any failure to perform any duties except as
specifically set forth herein and no implied covenants or obligations shall be
read into this Agreement against the Rights Agent, whose duties and obligations
shall be determined solely by the express provisions hereof.
(f) The Company agrees that it will inform the Rights Agent
promptly upon the Company's determination that a Person has become an Acquiring
Person, and the Rights Agent will not be responsible for making such
determination prior to such notice by the Company. The Company agrees that it
will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any duly authorized
officer of the Company, and is authorized to apply to any such officer 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. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in such application on or after the date specified in
such application (which date shall not be less than five Business Days after the
date any officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
30
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers vested in it or perform any of its duties hereunder either directly or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorney or agent or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided the Rights Agent exercised
reasonable care in the selection or continued employment of such agent.
(j) If, with respect to any Right 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) or clause
(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 thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent (with or without cause) upon
thirty (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
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation or trust company
organized and doing business under the laws of the United States or of the State
of North Carolina or the State of South Carolina (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of North Carolina or the State of South
Carolina), in good standing, which is authorized under such laws to exercise
shareholder services or corporate trust powers and is subject to supervision or
examination by federal or state authority or (b) an Affiliate of a corporation
described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
31
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price and the number or kind or class of shares of stock or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall 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 Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of
Directors pursuant to subparagraph (b) of this Section 23 or by shareholder
action pursuant to subparagraph (c) of this Section 23 and shall not be redeemed
in any other manner.
(b) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (x) the Close of Business on the tenth day
following the Share Acquisition Date (or, if the Share Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), or (y) the Final Expiration Date, redeem all but not
less than all of the then outstanding Rights at a redemption price of $.001 per
Right, as such amount may be appropriately adjusted, as determined by the Board
of Directors, to reflect any transaction of the kind described in clauses (A)
through (D) of Section 11(a)(i) occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). In considering
whether to redeem the Rights, the Board of Directors of the Company may consider
the best long-term and short-term interests of the Company, including, without
limitation, the effects of the redemption of the Rights upon employees,
suppliers and customers of the Company or any Subsidiary of the Company and
communities in which offices or other establishments of the Company or any
Subsidiary of the Company are located and all other pertinent factors. The
redemption of the Rights by the Board of Directors may be effective at such
time, on such basis and with such conditions as such Board of Directors in its
sole discretion may establish. In addition to the right of redemption reserved
in the first sentence of this subsection (a), the Board of Directors may redeem
all, but not less than all, of the then outstanding Rights at the Redemption
Price after the occurrence of a Share Acquisition Date, but prior to the
occurrence of any transaction of the kind described in Section 11(a)(ii)(A) or
(C) or Section 13(a), if either (i) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of shares of Common Stock in
one transaction or series of transactions, not directly or indirectly involving
the Company or any of its Subsidiaries and which did not result in the
occurrence of any transaction of the kind described in Section 11(a)(ii)(A) or
(C) or Section 13(a), as shall result in such Person thereafter being a
Beneficial Owner of 10% or less of the outstanding shares of Common Stock of the
Company, and after such transfer or other disposition there are no other
Acquiring Persons, or (ii) in connection with any transaction of the kind
described in Section 11(a)(ii)(A) or Section 13(a) in which all holders of the
Common Stock of the Company are treated the same and which shall not involve an
Acquiring Person, an Affiliate or Associate of an Acquiring Person, any other
Person in which such Acquiring Person, Affiliate or Associate has any interest
or any other Person acting, directly or indirectly, on behalf of or in
association with such Acquiring Person, Affiliate or Associate. Notwithstanding
any other provision of this Agreement, the Rights shall not be exercisable after
the first occurrence of an event specified in Section 11(a)(ii) until such time
as the Company's right of redemption hereunder has expired.
(c) (i) In the event the Company receives a Qualified Offer,
the Board of Directors of the Company shall call a special meeting of
shareholders (the "Special Meeting") for the purpose of voting on a resolution
(i) accepting such Qualified Offer, as such Qualified Offer may be amended or
revised by the offering Person from time to time to increase the price per share
to be paid to holders of shares of Common Stock, and (ii) authorizing the
redemption of all but not less than all the then outstanding Rights at the
Redemption Price pursuant to subparagraph (c)(ii) of this Section 23 (the
"Resolution"). The Special Meeting shall be held on a date selected by the Board
of Directors, which date shall not be less than 90 or more than 120 days after
the later of (A) the date such Qualified Offer is received by the Company (the
"Offer Date") and (B) the date of any previously scheduled meeting of
shareholders to be held within 60 days after the Offer Date; provided, however,
that if (x) such other meeting shall have been called for the purpose of voting
on a resolution with respect to another Qualified Offer and (y) the Offer Date
is not later than 15 days after the date such other Qualified Offer was received
by the Company, then both the Resolution and such other resolution shall be
voted on at such meeting (in addition to any other matters or resolutions to be
considered at such meeting) and such meeting shall be deemed to be the Special
Meeting; provided, however, that in any 12-month period the Company shall not be
required to hold more than one Annual Meeting and one Special Meeting; and
provided further, that if the Company shall publicly announce that the Board of
Directors has determined that it is in the best interest of shareholders to seek
an alternative transaction so as to obtain greater value for shareholders than
that provided by such Qualified Offer, then such vote shall be postponed to a
meeting called by the Board of Directors which shall occur within 90 days after
33
the date of such announcement. The Board of Directors shall set a date for
determining the shareholders of record entitled to notice of and to vote at the
Special Meeting in accordance with the Company's Articles of Incorporation,
By-Laws and applicable law. At the offering Person's request, the Company shall
include in any proxy soliciting material prepared by it in connection with the
Special Meeting proxy soliciting material submitted by the offering Person;
provided, however, that the offering Person, by written agreement with the
Company contained in or delivered with such request, shall have indemnified the
Company against any and all liabilities resulting from any statements found to
be defamatory, misstatements, misleading statements or omissions contained in or
omitted from the offering Person's proxy soliciting materials and have agreed to
pay the Company's incremental costs incurred as a result of including such
material in the Company's proxy soliciting material. Notwithstanding anything to
the contrary contained this Agreement, if the Board of Directors determines that
it is in the best interests of shareholders to seek an alternative transaction
so as to obtain greater value for shareholders than that provided by any
Qualified Offer, the Company shall be entitled to include information relating
to such alternative transaction in the proxy soliciting material prepared by it
in connection with the Special Meeting.
(ii) If at the Special Meeting the Resolution, or a resolution
with respect to another Qualified Offer, receives the affirmative vote of at
least two-thirds of the shares of Common Stock outstanding and entitled to vote
as of the record date of the Special Meeting, not giving effect to any
affirmative votes cast by the offering Person or any of its Affiliates, then all
of the Rights shall be redeemed by such shareholder action at the Redemption
Price, effective immediately prior to the consummation of the Qualified Offer
(provided that the Qualified Offer is consummated prior to 60 days after the
date of the Special Meeting).
(iii) Nothing in this subparagraph (c) shall be construed as
limiting or prohibiting the Company or any offering Person from proposing or
engaging in any acquisition, disposition or other transfer of any securities of
the Company, any merger or consolidation involving the Company, any sale or
other transfer of assets of the Company, any liquidation, dissolution or
winding-up of the Company, or any other business combination or other
transaction, or any other action by the Company or such offering Person;
provided, however, that the holders of Rights shall have the rights set forth in
this Rights Agreement with respect to any such acquisition, disposition,
transfer, merger, consolidation, sale, liquidation, dissolution, winding-up,
business combination, transaction or action.
(d) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to subparagraph (b)
of this Section 23, or upon effectiveness of the redemption of the Rights
pursuant to subparagraph (c) of this Section 23, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase of value any Rights at
34
any time in any manner other than that specifically set forth in this Section
23, or in connection with the purchase, acquisition or redemption of shares of
Common Stock prior to the Distribution Date.
(e) The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock (based on the Current Per Share Market Price of the
Common Stock as of the time of redemption) or any other form of consideration
deemed appropriate by the Board.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after any Person shall have become an Acquiring Person, exchange all
or any part of the then outstanding and exercisable Rights (which shall not
include Rights which have become void pursuant to the provisions of Section
11(a)(ii)) for Common Stock of the Company at an exchange rate of one share of
Common Stock per Right, appropriately adjusted to reflect any transaction
specified in clauses (A) through (D), inclusive, of Section 11(a)(i) occurring
after the date hereof (such exchange rate being hereinafter called the "Exchange
Rate"); provided, however, that the Board of Directors shall not be empowered to
effect such an exchange at any time after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person, shall have
become the Beneficial Owner of 50% or more of the Common Stock of the Company
then outstanding.
(b) Immediately after any action by the Board of Directors of
the Company directing the exchange of any Rights pursuant to subsection (a) of
this Section 24, notice of which shall be filed with the Rights Agent, and
without any further action and without any notice, the right to exercise such
Rights shall terminate and each registered holder of such Rights shall
thereafter be entitled to receive only the number of shares of Common Stock
which shall equal the number of Rights held by such registered holder multiplied
by the Exchange Rate. The Company shall give prompt public notice of any
exchange directed pursuant to such subsection (a); provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such exchange. Within 10 days after action by such Board of Directors
directing the exchange of such Rights, the Company shall mail a notice of
exchange to all registered holders of such Rights at their last addresses
appearing upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not received by the registered holder to whom sent; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of any such exchange. Each such notice shall state the
method by which the exchange of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata among the registered holders of
the Rights based upon the number of Rights held (excluding Rights which have
become void pursuant to the provisions of Section 11(a)(ii)); and in such case,
a new Rights Certificate evidencing the Rights not being exchanged shall be
prepared and executed by the Company and countersigned and delivered by the
Rights Agent to the registered holder of such Rights subject to the provisions
of Section 14.
35
(c) In the event that there shall be an insufficient number of
shares of Common Stock authorized but unissued or issued and held in the
treasury of the Company to permit an exchange of Rights directed by the Board of
Directors of the Company, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance upon such
exchange of the Rights. In any such exchange, the Company may, at its option,
substitute Equivalent Common Stock for some or all of the Common Stock otherwise
exchangeable for the Rights.
(d) The Company shall not be required to issue fractional
shares of Common Stock in exchange for Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company shall pay to the registered holders of the Rights
with respect to which such fractional Common Stock would otherwise be issuable
an amount in cash equal to the same fraction of the Current Per Share Market
Value of Common Stock (as determined as provided in Section 11(d)) for the
Trading Day immediately prior to the date of such exchange.
Section 25. Notice of Certain Events
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any other distribution to the holders of
Common Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Common
Stock rights or warrants to subscribe for or to purchase any additional shares
of Common Stock or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Common Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Common Stock), or (iv) to effect any consolidation or merger into or with, or to
effect any sale, non-ordinary course mortgage or other transfer (or to permit
one or more of its Subsidiaries to effect any sale, non-ordinary course mortgage
or other transfer), in one transaction or a series of related transactions, of
50% or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other person (other than a Subsidiary of the Company
in one or more transactions each of which is not prohibited by Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to be
fixed, and such notice shall be so given, in the case of any action covered by
clause (i) or (ii) above, at least ten (10) days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action,
and in the case of any such other action, at least ten (10) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Common Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
36
registered holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Ryan's Restaurant Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
Attn: Secretary
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 Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date,
the Company and the Rights Agent shall, if so directed by the Company,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holder
of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect, as determined solely by the Company, the interests of the holders of the
Rights or the Right Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended pursuant to clause (iii) of this sentence (A) to
lengthen any time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to,
registered holders of the Rights, or (B) to lengthen any time period relating to
when the Rights may be redeemed if at such time the Rights are not then
37
redeemable. Upon the delivery of such certificate from an appropriate officer of
the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made on or after
the Distribution Date which changes the Redemption Price, the Final Expiration
Date, the Exercise Price or the number of shares (or portions thereof) of Common
Stock for which a Right is exercisable. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors.
(a) For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.
(b) The Board of Directors of the Company (with, where
specifically provided for herein, the approval of a majority of the Outside
Directors) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board (with, where specifically provided for herein, the approval of a majority
of the Outside Directors) or to the Company, or as may be necessary or advisable
in the administration of this Agreement, including without limitation, the right
and power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the 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 (or, where specifically provided for herein, by a majority of the
Outside Directors) in good faith shall (x) be final, conclusive and binding on
the Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject any member of the Board of Directors or any of the Outside
Directors to any liability to the holders of the Rights or to any other person.
(c) Without limiting the foregoing, nothing contained herein
shall be construed to suggest or imply that the Board of Directors shall not be
entitled to reject any Qualified Offer or any other tender offer or other
acquisition proposal, or to recommend that holders of Common Stock reject any
Qualified Offer or any other tender offer or other acquisition proposal, or to
take any other action (including, without limitation, the commencement,
prosecution, defense or settlement of any litigation and the submission of
additional or alternative offers or other proposals) with respect to any
38
Qualified Offer or any other tender offer or other acquisition proposal that the
Board of Directors believes is necessary or appropriate in the exercise of such
fiduciary duty.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from the Agreement would adversely affect the purpose or effect
of the Agreement, the right of redemption set forth in Section 23 hereof shall
be reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of South Carolina and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
to be made and to be performed entirely within South Carolina.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
[SIGNATURE PAGE FOLLOWS]
39
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.
RYAN'S RESTAURANT GROUP, INC.
By:
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Secretary
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
--------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
Exhibit A
[Form of Right Certificate]
Certificate No. R-______________ __________ Rights
NOT EXERCISABLE AFTER FEBRUARY 18, 2008 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN OR AS OTHERWISE PROVIDED IN THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. [UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.] [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID UNDER CERTAIN
CIRCUMSTANCES AS SPECIFIED IN SECTION 11(a) OF THE RIGHTS AGREEMENT.]
RIGHT CERTIFICATE
RYAN'S RESTAURANT GROUP, INC.
This certifies that ________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Shareholder Rights Agreement dated as of February 18, 2005 (the "Rights
Agreement") between Ryan's Restaurant Group, Inc. (the "Company"), and American
Stock Transfer & Trust Company (the "Rights Agent"), as amended, restated or
otherwise modified from time to time, to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to the Close of Business on February 18, 2008, at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one half of a fully paid and nonassessable share of common stock,
$1.00 par value per share (the "Common Stock"), of the Company, at an exercise
price of $11 per half share (the "Exercise Price") (equivalent to $22 for each
share), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase and the related Certificate duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise thereof) set forth above and the Exercise Price per
share set forth above, are the number and Exercise Price as of February 2, 2005,
based on the Common Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
1
Agreement), (ii) a transferee of any such Acquiring Person, Affiliate or
Associate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a Person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Right shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Common Stock or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal offices of the
Company and the Rights Agent and are also available upon written request to the
Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Rights evidenced by the Right
Certificate or Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $.001 per Right (payable in cash, Common
Stock or other consideration deemed appropriate by the Board of Directors), or
may be exchanged, in whole or in part, for Common Stock.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder, as such, of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
2
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________, _____.
ATTEST: Ryan's Restaurant Group, Inc.
By: By:
--------------------------- -----------------------------
Secretary [President]
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
------------------------------------
Title
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________ hereby sells, assigns and
transfers unto _________________________________________ (please print name and
address of transferee) this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
________________________ Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of substitution.
Dated:
-------------------------- -------------------------------
Signature
Signature Guaranteed:____________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate __ are __ are not
being transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned __ did __ did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated:
-------------------------- -------------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the
Rights represented by the Right Certificate.)
To: Ryan's Restaurant Group, Inc.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
--------------------------------------------------------------------------------
(Please print name and address)
---------------------------------------
(Please insert social security
or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
---------------------------------------
(Please insert social security
or other identifying number)
Dated:
----------------, ----
----------------------------------------
Signature
Signature Guaranteed:
----------------------------
5
Exhibit B
RYAN'S RESTAURANT GROUP, INC.
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On January 24, 2005, the Board of Directors of Ryan's Restaurant Group,
Inc. (the "Company") declared a dividend distribution of one Common Stock
Purchase Right for each outstanding share of Common Stock of the Company to
stockholders of record at the close of business on February 2, 2005. Each Right
entitles the registered holder to purchase from the Company one half share of
Common Stock, $1.00 par value per share (the "Common Stock"), at a cash exercise
price of $11 per half share, subject to adjustment. The description and terms of
the Rights are set forth in a Shareholder Rights Agreement between the Company
and American Stock Transfer & Trust Company, as Rights Agent, as amended,
restated or otherwise modified from time to time.
Initially, the Rights will not be exercisable, will be attached to all
outstanding shares of Common Stock, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earliest of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") (other than an Exempt Person as defined in the Agreement) has acquired
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the date of said announcement being referred to as the "Share Acquisition
Date") and (ii) 10 business days following the commencement of a tender offer or
exchange offer that would result in a Person or group owning 20% or more of the
outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (a) the Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates, (b) new
Common Stock certificates issued after February 2, 2005 will contain a notation
incorporating the Shareholder Rights Agreement by reference, and (c) the
surrender for transfer of any certificates for Common Stock will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 18, 2008 (or, if the Rights
Agreement is not ratified by holders of a majority of the shares of Common Stock
voting on the issue at the Company's first annual meeting of shareholders after
February 18, 2005, immediately following such annual meeting) unless previously
redeemed by the Company as described below. The Rights will not become
exercisable in connection with a "Qualified Offer" as defined in the Shareholder
Rights Agreement.
As soon as practicable after the Distribution Date, Right Certificates
will be mailed to holders of record of Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
1
Directors, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that (i) a Person acquires beneficial ownership of 20% or
more of the Company's Common Stock, (ii) the Company is the surviving
corporation in a merger with an Acquiring Person or any Affiliate or Associate
and the Common Stock is not changed or exchanged, (iii) an Acquiring Person
engages in one of a number of self-dealing transactions specified in the
Shareholder Rights Agreement, or (iv) an event occurs which results in an
Acquiring Person's ownership interest being increased by more than 1% (e.g., a
reverse stock split), proper provision will be made so that each holder of a
Right will thereafter have the right to receive upon exercise thereof at the
then current exercise price, that number of shares of Common Stock (or in
certain circumstances, cash, property, or other securities of the Company)
having a market value of two times such exercise price. However, the Rights are
not exercisable following the occurrence of any of the events set forth above
until such time as the Rights are no longer redeemable as set forth below.
Notwithstanding any of the foregoing, rights that are or were beneficially owned
by an Acquiring Person shall become null and void.
In the event that, at any time following the Share Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction or (ii) 50% or more of the Company's assets or earning power is
sold, each holder of a Right shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a market value equal to
two times the exercise price of the Right.
At any time after any person becomes an Acquiring Person and prior to
such the time such Person, together with its Affiliates and Associates, becomes
the Beneficial Owner of 50% or more of the outstanding Common Stock, the Board
of Directors of the Company may exchange the Rights (other than Rights which
have become void), in whole or in part, at the exchange rate of one share of
Common Stock per Right, subject to adjustment as provided in the Rights
Agreement.
The exercise price payable, and the number of shares of Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Stock, (ii) if holders of the Common Stock are granted certain rights or
warrants to subscribe for Common Stock or securities convertible into Common
Stock at less than the current market price of the Common Stock, or (iii) upon
the distribution to holders of the Common Stock of evidence of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the exercise price will be
required until cumulative adjustments amount to at least 1% of the exercise
price. No fractional shares of Common Stock will be issued and, in lieu thereof,
an adjustment, in cash will be made based on the fair market value of the Common
Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier of the date on which a Section
11(a)(ii) Event (as defined in the Rights Agreement) occurs and February 7,
2008, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $0.001 per Right, payable in cash or securities or
2
both (the "Redemption Price"). Immediately upon the action of the Board of
Directors of the Company ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price. However, in the event the Company receives a Qualified Offer
(as defined below), the rights may be redeemed by way of shareholder action
taken at a special meeting of shareholders called by the Board for the purpose
of voting on a resolution accepting the Qualified Offer and authorizing the
redemption of the Rights pursuant to the provisions of the Rights Agreement. The
special meeting must be held not less than 90 and more than 120 days after the
date the Qualified Offer is received. Such an action by shareholders requires
the affirmative vote of a two-thirds of all shares of Common Stock and any other
stock entitled to vote in the election of directors and management affairs of
the Company, and is effective immediately prior to the consummation of any
Qualified Offer consummated within 60 days after the special meeting. A
"Qualified Offer" is a tender offer for all outstanding shares of Common Stock
not already beneficially owned by such Person that meets the following
conditions:
o the same per share price and consideration is offered for all shares,
is no less than the then current market price for shares of Common
Stock, is at least 80 percent cash (and any non-cash portion is
comprised of shares listed on a national exchange or the Nasdaq
National Market), and is to be paid upon consummation of the Qualified
Offer,
o the Qualified Offer is accompanied by written financing commitments
and/or has on hand cash or cash equivalents, for the full amount of
all financing necessary to consummate the Qualified Offer,
o the Qualified Offer requests that the Company call a special meeting
of shareholders to accept the Qualified Offer and contains a written
agreement of the person making the Qualified Offer to pay at least 50%
of the Company's costs of the special meeting,
o the Qualified Offer by its terms remains open for at least 30 Business
Days plus 15 Business Days after any change in price or after any bona
fide alternative offer for a higher consideration is made,
o the Qualified Offer is accompanied by a written opinion of a
nationally recognized investment banking firm, stating that the price
to be paid to holders pursuant to the Qualified Offer is fair and
including any written presentation of such firm showing the range of
values underlying such conclusion,
o on or before the date the Qualified Offer is commenced, such Person
makes an irrevocable written commitment to the Company:
o to acquire, within 5 Business Days upon completion of the
Qualified Offer, all shares of Common Stock then not beneficially
owned by such Person at the same price, and for the same
consideration, per share as paid in the Qualified Offer,
3
o not to amend its offer to reduce the price, and
o that such Person will not make another offer for the Common Stock
within one year if at least 85% of the common stock not owned by
such Person has not been tendered, and
o such offer is not subject to any financing, funding or similar
condition, does not include any condition relating to completion of or
satisfaction with any due diligence or similar investigation, and
otherwise provides for usual and customary terms and conditions.
In the determination of the fairness of any offer, the Board retains
the authority to reject, advise the shareholders to reject, or take other action
in response to any offer necessary to the exercise of its fiduciary duties.
Immediately upon action of the Board of Directors of the Company
ordering the redemption of the Rights or upon the effectiveness of a redemption
of the Rights pursuant to shareholder adoption of a resolution accepting a
Qualified Offer and authorizing the redemption of the Rights, the only existing
right of a holder shall be to receive the redemption price for the Rights.
Until a Right is exercised, the holder will have no rights as a
stockholder of the Company (beyond those as an existing stockholder), including
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of an acquiring company as set forth above.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement, other than those
relating to the principal economic terms of the Rights, may be amended by the
Board to cure any ambiguity, defect or inconsistency, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement. Amendments adjusting time periods may, under certain
circumstances, be limited.
A copy of the Shareholder Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Shareholder Rights
Agreement.
4
