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ARCTIC CAT INC.
and
XXXXX FARGO BANK MINNESOTA, N.A.
Rights Agent
RIGHTS AGREEMENT
Dated as of September 17, 2001
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TABLE OF CONTENTS
Section Page
1. Certain Definitions.......................................................1
2. Appointment of Rights Agent...............................................5
3. Issue of Rights Certificates..............................................5
4. Form of Rights Certificates...............................................7
5. Countersignature and Registration.........................................8
6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates....................................8
7. Exercise of Rights; Purchase Price; Expiration
Date of Rights........................................................9
8. Cancellation and Destruction of Rights Certificates......................11
9. Reservation and Availability of Capital Stock............................12
10. Preferred Stock Record Date..............................................13
11. Adjustment of Purchase Price, Number and Kind of
Stock or Number of Rights............................................13
12. Certificate of Adjusted Purchase Price or Number of
Stock................................................................21
13. Consolidation, Merger or Sale or Transfer of Assets,
Cash Flow or Earning Power...........................................22
14. Fractional Rights and Fractional Stock...................................24
15. Rights of Action.........................................................26
16. Agreement of Rights Holders..............................................26
17. Rights Certificate Holder Not Deemed a Shareholder.......................27
18. Concerning the Rights Agent..............................................27
19. Merger or Consolidation or Change of Name of Rights Agent................28
20. Duties of Rights Agent...................................................28
21. Change of Rights Agent...................................................30
i
22. Issuance of New Rights Certificates......................................31
23. Redemption and Termination...............................................31
24. Exchange.................................................................32
25. Notice of Certain Events.................................................33
26. Notices..................................................................34
27. Supplements and Amendments...............................................35
28. Successors...............................................................35
29. Benefits of this Agreement...............................................35
30. Administration of Agreement..............................................35
31. Severability.............................................................36
32. Governing Law............................................................36
33. Counterparts.............................................................36
34. Descriptive Headings.....................................................36
Exhibit A: Certificate of Designation, Preferences and Rights of Series B Junior
Participating Preferred Stock
Exhibit B: Form of Rights Certificate
Exhibit C: Summary of Shareholders' Rights Plan
ii
RIGHTS AGREEMENT
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RIGHTS AGREEMENT, dated as of September 17, 2001 (the "Agreement"),
between Arctic Cat Inc., a Minnesota corporation (the "Company"), and Xxxxx
Fargo Bank Minnesota, N.A., a Minnesota corporation (the "Rights Agent").
WITNESSETH
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WHEREAS, on September 17, 2001, the Board of Directors of the Company
(the "Board") authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each outstanding share of the Company's Common Stock,
$.01 par value per share (the "Common Stock") outstanding at the close of
business on October 2, 2001 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a share of Series B Junior Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation, Preferences and Rights of
Series B Junior Participating Preferred Stock attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth (the "Rights") and
further authorized the issuance of one Right with respect to each share of
Common Stock that would become outstanding after the close of business on the
Record Date in accordance with the terms and subject to the conditions
hereinafter set forth;
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 (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, without the prior approval of a
majority of the Board of Directors, shall be the Beneficial Owner (as
such term is hereinafter defined) of voting securities having fifteen
percent (15%) or more of the then voting power of the Company, but
shall not include the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan; provided,
however, that if a Person is the Beneficial Owner at the close of
business on the date of this Agreement of fifteen percent (15%) or more
of the voting power of the Company, such Person shall not be deemed an
Acquiring Person unless and until such Person acquires any additional
Common Stock in any manner other than pursuant to a stock dividend,
stock split, recapitalization or similar transaction that does not
affect the percentage of outstanding Common Stock beneficially owned by
such Person; provided further, however, that Suzuki Motor Corporation
("Suzuki") shall not be deemed an Acquiring Person unless and until
such time as Suzuki, together with all of its Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter
defined), without the prior approval of a majority of the Board of
Directors, shall be the Beneficial Owner (as such term is hereinafter
defined) of voting securities having more than thirty-two percent (32%)
of the voting power of the Company. Notwithstanding the foregoing, no
Person
1
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 to fifteen percent (15%) (thirty-two percent (32%)
with respect to Suzuki) or more of the then voting power of the Company
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of fifteen percent (15%) (thirty-two percent (32%)
with respect to Suzuki) or more of the then voting power of the Company
then outstanding by reason of shares purchased by the Company and
shall, after such share purchases by the Company, become the Beneficial
Owner of additional Common Stock of the Company representing 1% or more
of the shares of Common Stock then outstanding, then such Person shall
be deemed to be an "Acquiring Person." Notwithstanding the foregoing,
if a majority of the members of the Company's Board of Directors then
in office determines in good faith that a Person who would otherwise be
an "Acquiring Person", as defined pursuant to the foregoing provisions
of this paragraph (a), has become such inadvertently without any
intention of changing or influencing control of the Company, and such
Person divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act as in effect on
the date hereof), directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to
acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights at any
time prior to the occurrence of a Triggering Event, but
thereafter including the Rights acquired from and after the
Distribution Date (as defined in Section 3(a) below) other
than pursuant to Section 3(a) below), warrants or options, or
otherwise; provided, however that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own,"
securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote 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
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(B) if the agreement, arrangement or understanding to vote
such security: (1) arises solely from a revocable proxy given
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act, and (2) is not 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 and other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in clause
(B) of subparagraph (ii) of this paragraph (c)) or disposing
of any voting securities of the Company.
Notwithstanding the foregoing, a Person shall not be deemed to be the
"Beneficial Owner" of or to "beneficially own" any securities that are issued,
or proposed to be issued, to such Person pursuant to any stock option plan or
other employee compensation plan or arrangement of the Company or any of its
Subsidiaries or any securities for which such Person serves as a trustee
pursuant to an employee stock ownership or similar plan of the Company.
Furthermore, directors and officers of the Company shall not be deemed to
beneficially own each others Common Stock solely due to their status as a
director or officer of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of
Minnesota or New York are authorized or obligated by law or executive
order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., Minneapolis, Minnesota time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
Minneapolis, Minnesota time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company (as such term is defined in the introductory
paragraphs above), which on the date of this Agreement includes Class B
Common Stock, or any other shares of capital stock of the Company into
which the Common Stock shall be reclassified or changed, except that
"Common Stock" when used with reference to any Person other than the
Company shall mean the shares of capital stock of such Person (if such
Person is a corporation) of any class or series, or units of equity
interests in such Person (if such Person is not a corporation) of any
class or series, the terms of which do not limit (as a
3
fixed amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such class or series or
the amount of assets distributable on such class or series upon any
voluntary or involuntary liquidation, dissolution or winding up of such
Person and do not provide that such class or series is subject to
redemption at the option of such Person, or any shares of capital stock
or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that if at any time there
shall be more than one such class or series of capital stock or equity
interests of such Person, "Common Stock" of such Person shall include
all such classes and series substantially in the proportion of the
total number of shares or other units of each class or series
outstanding at such time.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Expiration Date" and "Final Expiration Date" shall have
the meanings set forth in Section 7 hereof.
(i) "Flip-in Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(j) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity and shall
include any successor (by merger or otherwise) of such entity.
(k) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, no par value, of the Company.
(l) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(m) "Subsidiary" shall mean, with reference to any other
Person, any corporation of which a majority of any class of equity
security is beneficially owned, directly or indirectly, by such other
Person.
(n) "Triggering Event" shall mean the Flip-In Event or any
event described in Section 13(a) hereof
(o) "Voting power of the Company" shall mean the collective
voting power of the Common Stock of the Company.
In addition, for purposes of this Agreement, the following terms have
the meanings indicated in the specified sections of this Agreement: "Act" shall
have the meaning set forth in Section 9(c) hereof; "Adjustment Shares" shall
have the meaning set forth in Section 11(a)(ii) hereof; "Board" shall have the
meaning set forth in the preamble; "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof; "Company" shall have the meaning
set forth in the preamble; "current market price" shall have the meaning set
forth in Section 11(d) hereof; "Current Value" shall have the meaning set forth
in Section 11(a)(iii) hereof; "Equivalent Preferred Stock" shall have the
meaning set forth in Section 11(b) hereof; "Exchange Act" shall have the meaning
set forth in section 1(b) hereof; "Exchange Ratio" shall have the meaning set
forth in Section 24(a) hereof; "Flip-In Trigger Date" shall have the meaning set
forth in Section
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11(a)(iii) hereof; "Future Director" shall have the meaning set forth in Section
11(d)(i) hereof; "Nasdaq" shall have the meaning set forth in Section 11(d)(i)
hereof; "Principal Party" shall have the meaning set forth in Section 13(b)
hereof; "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof, "Record Date" shall have the meaning set forth in the preamble;
"Redemption Price" shall have the meaning set forth in Section 23(a)(i) hereof,
"Rights" shall have the meaning set forth in the preamble; "Rights Agent" shall
have the meaning set forth in the preamble; "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof; "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof; "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof "Summary of Rights" shall have the
meaning set forth in Section 3(b) hereof, and "Trading Day" shall have the
meaning set forth in Section 11(d)(i) hereof.
Any determination required by the definitions contained in this Section
1 shall be made by the Board in their good faith judgment, which determination
shall be final and binding on the Rights Agent.
Section 2. Appointment of the 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. In the event the Company appoints one or more Co-Rights
Agents, the respective duties of the Rights Agent and any Co-Rights Agent shall
be as the Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the
tenth (10th) Business Day after the Stock Acquisition Date, or (ii) the
close of business on the tenth (10th) Business Day (or such later date
as may be determined by action of the majority of the members of the
Company's Board of Directors prior to such time as any Person becomes
an Acquiring Person) after the date of the commencement of, or first
public announcement of the intent of any Person (other than the
Company, any Subsidiary of the Company or any employee benefit plan of
the Company or of any Subsidiary of the Company or any entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan), to commence, a tender or exchange offer
which would result in such person becoming 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 (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for 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 (y) the Rights (and the right to receive certificates
therefor) will be transferable only in connection with the transfer of
the underlying shares of Common Stock (including a transfer to the
Company). As soon as practicable after the Distribution Date, the
Rights Agent will send by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the
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address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit B hereto (the
"Rights Certificates"), evidencing one Right for each share of Common
Stock so held. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of the Shareholders' Rights Plan,
in substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, 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, the Rights will be evidenced
by such certificates for the Common Stock and the registered holders of
the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration
Date (as such term is defined in Section 7 hereof), the surrender for
transfer of any of the certificates for the Common Stock outstanding on
the Record Date 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 or the
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 the Rights Agreement between
Arctic Cat Inc. and Xxxxx Fargo Bank Minnesota, N.A., dated as
of September 17, 2001, (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of Arctic Cat
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. Arctic Cat Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under
certain circumstances, Rights issued to, or held by, an
Acquiring Person, or an Affiliate or Associate thereof (as
such terms are 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
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and the registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the surrender
for 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 the Company purchases or acquires any Common Stock after the Record
Date but prior to the Distribution Date, any Rights associated with such Common
Stock shall be deemed canceled and retired so
6
that the Company shall not be entitled to exercise any Rights associated with
the Common Stock which is no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
exercise and of assignment to be printed on the reverse thereof) shall
each be substantially in the form attached hereto as Exhibit B and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of 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 Rights 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
Preferred Stock (or Common Stock, as the case may be) as shall be set
forth therein at the price per share set forth therein (the "Purchase
Price"), but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Rights 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 any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, except a transferee purchasing from or through a nationally
recognized broker-dealer where such transferee and such transferee's
Associates and Affiliates do not collectively acquire, and will not
have acquired during the preceding twenty (20) calendar days, in
combination with the proposed transfer, an amount of Common Stock equal
to more than one percent (1%) of the outstanding shares of Common
Stock, and (iii) a transferee of an Acquiring Person (or 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 or on behalf of 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 majority of the members of the Company's Board of Directors
otherwise conclude in good faith is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible and reasonably
identifiable as such) the following legend:
The Rights represented by this Rights 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). Accordingly,
this Rights Certificate and the Rights
7
represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) of the Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, its President, its Chief
Financial Officer or any Vice President either manually or by facsimile
signature, which shall be attested by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature.
The Rights 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
Rights Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign
such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its offices in South St. Xxxx, Minnesota
or New York, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14 hereof, at any
time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates (other than Rights Certificates
representing rights that have become null and void pursuant to Section
7(e) hereof or that have been exchanged pursuant to Section 24 hereof)
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock as the Rights
Certificate or Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine
or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, split up,
combined or exchanged 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
8
whatsoever with respect to the transfer of any such surrendered Rights
Certificate or Certificates until the registered holder shall have
completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate or
Certificates 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 7(e), Section 14 and Section 24, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price Expiration Date of
Rights.
(a) The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided
herein including without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof)
in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to
exercise on the reverse side thereof duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one
one-hundredth of a share of Preferred Stock (or, if applicable, such
other number of shares or other securities) as to which the Rights are
exercised, at or prior to the earlier of (i) the close of business on
September 17, 2011 (the "Final Expiration Date"), or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (such
earlier time being herein referred to as the "Expiration Date"). 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 Rights Certificate with respect to the Rights associated
with such shares of Common Stock in accordance with and subject to the
provisions of this Agreement, including the provisions of Section 7(e)
hereof, as of the date such Person becomes a record holder of shares of
Common Stock.
(b) The Purchase Price for each one one-hundredth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially
be Eighty Dollars ($80), and shall be subject to adjustment from time
to time as provided in Section 11 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c)
below.
9
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to exercise duly
executed, accompanied by payment of the Purchase Price for the shares
to be purchased and an amount equal to any applicable transfer tax, the
Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates
for the number of shares of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company, in its sole discretion, shall
have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from
the depositary agent depositary receipts representing such number of
one one-hundredth of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred 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
fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified check,
cashier's check, bank draft or money order payable to the order of the
Company, except that if so provided by the Board, the payment of the
Purchase Price following the Flip-In Event and until the first
occurrence of an event described in Section 13 may be made wholly or in
part by delivery of a certificate or certificates (with appropriate
stock powers executed in blank attached thereto) evidencing a number of
shares of Common Stock of the Company equal to the then Purchase Price
divided by the closing price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the Trading Day immediately
preceding the date of such exercise. In the event that the Company is
obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a)(iii) hereof, the
Company will make all arrangements necessary so that such other
securities, cash, and/or property are available for distribution by the
Rights Agent, if and when appropriate. In addition, in the case of an
exercise of the Rights by a holder pursuant to Section 11(a)(ii), the
Rights Agent shall return such Rights Certificate to the registered
holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Rights Certificate no
longer include the rights provided by Section 11(a)(ii) of the Rights
Agreement and if less than all the Rights represented by such Rights
Certificate were so exercised, the Rights Agent shall indicate on the
Rights Certificate the number of Rights represented thereby which
continue to include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate
shall exercise (except pursuant to Section 11(a)(ii)) less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Rights
10
Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of a Flip-In Event, any Rights
beneficially owned by (a) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (b) except as provided below or in
Section 4(b), a transferee of an Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, and (c) except as provided below, a transferee of
an Acquiring Person (or 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 (i) a transfer
(whether or not for consideration) from the Acquiring Person to or on
behalf of 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 (ii) a
transfer which the majority of the members of the Company's Board of
Directors otherwise conclude in good faith is part of a plan,
arrangement or understanding which has as a primary purpose or effect
avoidance of this Section 7(e), shall become null and void without any
further action, and any holder of such Rights shall thereupon have no
right to exercise such Rights under any provision of this Agreement. A
majority of the members of the Company's Board of Directors may in
appropriate circumstances waive application of this Section 7(e) and
the requirements of Section 4(b) to any transfer by an Acquiring Person
in connection with a transfer or series of transfers which cause an
Acquiring Person to become the Beneficial Owner of voting securities
having less than fifteen percent (15%) of the voting power of the
Company. The Company shall use all reasonable efforts to insure that
the provisions of this Section 7(e) hereof are complied with, but shall
have no liability to any holder of Rights for the inability to make any
determinations with respect to an Acquiring Person or any of their
respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder of any
Rights Certificate upon the occurrence of any purported exercise as set
forth in this Section 7 unless the certificate contained in the
appropriate form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such exercise shall have been
completed and signed by the registered holder thereof and the Company
shall have been provided with such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) of such Rights
Certificate or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
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 Rights
11
Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares
of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) or any authorized and
issued shares of Preferred Stock (and following the occurrence of a
Triggering Event, Common Stock and/or other securities) held in its
treasury, the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
that, except as provided in Section 11(a)(iii) and subject to Section
7(e) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable upon the exercise of the Rights may be listed on
any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the Distribution Date, a registration
statement under the Securities Act of 1933 (the "Act"), with respect to
the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii)
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
date of the expiration of the Rights. The Company will also take such
action as may be appropriate under the Blue Sky laws of the various
states. The Company may temporarily suspend, for a period of time not
to exceed ninety (90) calendar days, the exercisability of the Rights
in order to prepare and file any required registration statement. Upon
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction
unless the requisite qualification in such jurisdiction shall have been
obtained, the exercise thereof shall have been permitted under
applicable law and a registration statement shall have been declared
effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares or securities.
12
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a person other than, or
the issuance or delivery of the shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) 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 Rights
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. Preferred Stock Record Date. Each person in whose name any
certificate for shares of Preferred Stock (or Common Stock, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares of Preferred Stock (or Common Stock,
as the case may be) represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock, as the case
may be) transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock, as the case may be) transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights 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 Purchase Price, Number and Kind of Stock or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number
13
and kind of shares of Preferred 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, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred 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 Preferred Stock
transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company,
or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall, at any time after
the date of this Agreement, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is an
acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price
and on terms determined by at least a majority of the members of the
Board of Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking
firms, to be (a) at a price which is fair to shareholders and not
inadequate (taking into account all factors which such members of the
Board deem relevant, including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in
the best interests of the Company and its shareholders, then, promptly
following ten (10) Business Days after the date of the occurrence of
such event (the "Flip-In Event"), proper provision shall be made so
that each holder of a Right (except as provided below and in Section
7(e) hereof) shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one one-hundredths of a share
of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of a Flip-in Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date
of such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that (x) the number of shares of Common
Stock which are authorized by the Company's articles of incorporation,
but which are not outstanding or
14
reserved for issuance for purposes other than upon exercise of the
Rights, are not sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of this Section
11(a), or (y) if the majority of the members of the Company's Board of
Directors determine that such action is necessary or appropriate and
not contrary to the interests of holders of Rights (excluding those
owned by the Acquiring Person), 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 Purchase Price
(such excess, the "Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase 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 of Directors of the Company has deemed
to have the same value as shares of Common Stock (such shares of
preferred stock "Common Stock Equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) calendar days following the later of (x) the first occurrence of a
Flip-In 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 "Flip-in Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread.
If the Board of Directors of the Company 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) calendar day period set forth above may be extended to
the extent necessary, but not more than ninety (90) calendar days after
the Flip-In Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such thirty (30) calendar day period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences
of this Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek
such shareholder approval for such 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 purposes of this Section
11(a)(iii), the value of the Common Stock shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the Flip-In Trigger Date and the value of any Common
Stock Equivalent shall be deemed to have the same value as the Common
Stock on such date.
15
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if
a security convertible into Preferred Stock or equivalent preferred
stock) less than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares
of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board, whose 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. Shares of
Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred 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 quarterly cash dividend out of
the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)) the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, less the fair market value (as determined in
good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a
16
share of Preferred Stock and the denominator of which shall be such
current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall
be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall
be adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the current
market price per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the
current market price per share of the Common Stock is determined during
a period following the announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of
such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, 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 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 shares of Common
Stock 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 shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq") or such other system then in use, or, if on
any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board shall be used. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange,
17
a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by the majority of the
members of the Company's Board of Directors whose determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes, or, if at the time of such determination
there is an Acquiring Person and a majority of the members of the Board
of Directors are Future Directors, by a nationally recognized
investment banking firm selected by the Board of Directors, which shall
have the duty to make such determination in a reasonable and objective
manner, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes. "Future
Director" shall mean (a) any director who is an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or an employee,
director, representative, nominee or designee of any Acquiring Person
or of any such Affiliate or Associate, (b) any director who was not a
member of the Board of Directors immediately prior to the time any
Person becomes an Acquiring Person, or (c) any director who is elected
to the Board of Directors as a result of a proxy or consent
solicitation or similar shareholder initiative if any participant in
such initiative has stated (or a majority of the Board of Directors has
determined in good faith) that such participant (or its Affiliates or
Associates) intends to take, or may consider taking, any action that
would result in (i) that person becoming an Acquiring Person or (ii) a
merger, consolidation, or sale of a majority of the assets or voting
power of the Company which would cause a Triggering Event or any person
becoming a Principal Party; provided, however, that in each case any
such director shall no longer be deemed to be a Future Director at the
expiration of 180 calendar days after the date such director was
elected to the Board of Directors.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in clause
(i) of this Section 11(d) (other than the last sentence thereof). If
the current market price per share of Preferred Stock cannot be
determined in the manner provided above, the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an amount
equal to 100 times the current market price per share of Common Stock,
as appropriately adjusted for stock splits, stock dividends or similar
transactions after the date hereof. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by the majority of the members of the
Company's Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes or, if at the time of such determination there is an Acquiring
Person and a majority of the members of the Board of Directors are
Future Directors, by a nationally recognized investment banking firm
selected by the Board of Directors, which shall have the duty to make
such determination in a reasonable and objective manner, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or
18
decrease of at least one percent (1%) in the Purchase 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 of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3) years from the date
of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in Section 11(a), (b), (c),
(e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7,
9, 10, 13 and 14 hereof with respect to the Preferred 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 Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of shares
of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredth of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredth of a share covered
by the Right immediately prior to this adjustment, by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred
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 one one-hundredth of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date
19
for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) calendar days
later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on
such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredth of a share of Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if any,
of the shares of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of Preferred Stock,
Common Stock or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their sole
discretion the majority of the members of the Company's Board of
Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the
20
Preferred Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred 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 or more transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole) to, any
other Person if at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or
securities outstanding or agreement in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
(o) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 23
hereof, take (or permit any Subsidiary to take) any action the purpose
or effect of which is to diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the date of this Agreement and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock shall be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
(q) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Stock.
Whenever an adjustment is made as provided in Sections 11 and 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 Preferred Stock
and the Common Stock a copy of such certificate, and (c) mail a brief summary
21
thereof to each holder of a Rights Certificate in accordance with Section 26
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash
Flow or Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (w) the Company shall be a party to any
statutory share exchange with any other Person after which the Company
is a subsidiary of any other Person, (x) the Company shall consolidate
with, or merge with and into, any other Person, and the Company shall
not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or any Subsidiary of the Company), then, and in each such
case, proper provision shall be made so that: (i) each holder of a
Right, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable shares of Common Stock of the
Principal Party (as hereinafter defined), free and clear of liens,
rights of call or first refusal, encumbrances or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the then number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable immediately
prior to the first occurrence of an event described in clauses (w),
(x), (y) and (z) of this Section 13 (or, if a transaction described in
Section 11(a)(ii) hereof has occurred prior to the first occurrence of
an event described in clauses (w), (x), (y) and (z) of this Section
13(a), multiplying the number of such one one-hundredths of a share for
which a Right was exercisable prior to the first occurrence of an event
described in Section 11(a)(ii) by the Purchase Price in effect
immediately prior to such first occurrence) and (2) dividing that
product (which, following the first occurrence of an event described in
clauses (w), (x), (y) and (z) of this Section 13(a) shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to
Section 11(d)(i) hereof) per share 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) in connection with the consummation of
any such
22
transaction as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be
possible, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (w), (x) or
(y) of the first sentence of Section 13(a), the Person that is the
issuer 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, (x) the Person that survives such merger,
consolidation or share exchange or is other party to such merger,
consolidation or statutory share exchange, or, if there is more than
one such Person, the Person the Common Stock of which has the greatest
aggregate value, or (y) if the Person that is the other party to the
merger does not survive the merger, the Person that does survive the
merger (including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving
the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets, operating income or cash flow so
transferred, or, if the Person receiving the greatest portion of the
assets, operating income or cash flow cannot be determined, the Person
the Common Stock of which has the greatest aggregate market value;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (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;
(2) in case such Person is a Subsidiary, directly or indirectly, of 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; and (3)
in case such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless 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 unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of
23
any consolidation, merger or sale of assets mentioned in paragraph (a)
of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date;
(ii) take all other actions as may be necessary to enable the
Principal Party to issue the securities purchasable upon exercise of
the Rights, including but not limited to the registration or
qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities
on such exchanges and trading markets as may be necessary or
appropriate; and
(iii) will 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.
The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described
in subparagraphs (w), (x) or (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons who acquired shares
of Common Stock pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined
to be in accordance with the provisions of Section 11(a)(ii) hereof (or
a wholly owned subsidiary of any such Person or Persons), (ii) the
price per share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of shares
of Common Stock whose shares were purchased pursuant to such tender
offer or exchange offer and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock pursuant to
such transaction is the same as the form of consideration paid pursuant
to such tender offer or exchange offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional Stock.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall
24
be paid to the registered holders of the Rights Certificates with
regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the 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 of the Rights
for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price
of the Rights for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed
or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted sale price
or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the Rights the
fair value of the Rights on such date as determined in good faith by
the Board shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock).
Fractions of shares of Preferred Stock in integral multiples of one
one-hundredth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by
it; provided, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
shares of Preferred Stock represented by such depositary receipts. In
lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-hundredth of a share of Preferred Stock, the
Company may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a share
of Preferred Stock shall be one one-hundredth of the closing sale price
of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, 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 Rights Certificates at the time such Rights are exercised as herein
provided an amount in
25
cash equal to the same fraction of the current market value of one (1)
share of Common Stock. For purposes of this Section 14(c), the current
market value of one (1) share of Common Stock shall be the closing sale
price of a share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d) 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.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations 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 Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office or offices of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of
transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Stock certificate made by
anyone other than the Company 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
26
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use
reasonable efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and 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 negligence, 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 Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons or otherwise
upon the advice of counsel as set forth in Section 20 hereof.
27
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
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, however, 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 Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel 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 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 the
Chief Executive Officer, the President, the Chief Financial Officer or
any Vice President, the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the
28
Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), 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 Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Sections 11 or 13
hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice of any such
adjustment); 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 or Preferred Stock to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chief Executive Officer, the President, the Chief
Financial Officer or any Vice President, the Secretary or any Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall
29
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, or omission,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, or omission,
default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar days' notice in writing mailed to thc Company, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) calendar days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of the States of Minnesota
or New York (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 States
of Minnesota or New York), in good standing, having a principal office in the
States of Minnesota or New York, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000 or (b) an Affiliate
controlled by a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent
30
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Rights 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, granted or
awarded as of the Distribution Date, or upon the exercise, conversion or
exchange of securities hereinafter 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 Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights 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
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) By a decision by the majority of the members of the
Company's Board of Directors, the Board may, at its option, at any time
prior to the close of business on the earlier of (i) the Flip-In Event,
or (ii) the Final Expiration Date, redeem all but not less than all of
the then outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board may be made effective at such
time, on such basis and with such conditions as the Board in its sole
discretion may establish. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after
the first occurrence of an event described in Section 11(a)(ii) until
such time as the Company's right of redemption hereunder has expired.
The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the "current market price", as defined
in Section 11(d)(i) hereof, of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by
the Board of Directors.
(ii) In addition, the majority of the members of the Company's
Board of Directors may redeem all but not less than all of the then
outstanding Rights at the Redemption Price following the occurrence of
a Flip-In Event but prior to any event described in
31
Section 13(a) either (x) if each of the following shall have occurred
and remain in effect: (1) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of shares of Common
Stock in a manner satisfactory to the majority of the members of the
Company's Board of Directors such that such Person is thereafter a
Beneficial Owner of voting securities having less than fifteen percent
(15%) of the voting power of the Company, and (2) there is no other
Person, immediately following the occurrence of the event described in
clause (1), who is an Acquiring Person, or (y) in connection with any
transaction not involving an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
(b) In the case of a redemption permitted under Section
23(a)(i), immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall
have been filed with the Rights Agent 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. In the case of a redemption permitted
only under Section 23(a)(ii), evidence of which shall have been filed
with the Rights Agent, the right to exercise the Rights will terminate
and represent only the right to receive the Redemption Price only after
ten (10) Business Days following the giving of notice of such
redemption to the holders of such Rights. Within ten (10) Business Days
after the action of the Board of Directors, ordering any such
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.
Section 24. Exchange.
(a) The Board may, at its option, at any time after the
occurrence of a Triggering Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that
have become null and void pursuant to the provisions of Section 7(e)
hereof) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board shall not be
empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of fifty (50%) or more of the voting power of the
Company.
(b) Immediately upon the action of the Board ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right
32
thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange shall state the method by which the
exchange of the 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 based on the
number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or equivalent preferred
stock, as such term is defined in Section 11(b) hereof) for some or all
of the Common Stock exchangeable for Rights, at the initial rate of one
one-hundredth of a share of Preferred Stock (or equivalent preferred
stock) for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take
all such action as may be necessary to authorize additional Common
Stock or Preferred Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common
Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the closing price of a share
of Common Stock (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company shall
propose, at any time after the Distribution Date, (a) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(b) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Stock (other than a reclassification
33
involving only the subdivision of outstanding shares of Preferred Stock), or (d)
to effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets,
cash flow or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, or (e) 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 Rights Certificate, to the extent feasible and 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 Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (a) or (b) above at least twenty (20) calendar
days prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) calendar 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
Preferred Stock whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and 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, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Arctic Cat Inc.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Xxxxx Fargo Bank Minnesota, N.A.
Attn: Account Management
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, XX 00000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by
34
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. The Board and the Rights Agent
shall from time to time, if the Board so directs, supplement or amend this
Agreement without the approval of any holders of Rights 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) prior to the Distribution Date, to change or supplement any of the
provisions hereunder which the Board may deem necessary or desirable or (iv)
following the Distribution Date to change or supplement any of the provisions
hereunder in any manner which the Board may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). Notwithstanding the foregoing, following the Distribution
Date, this Agreement shall not be supplemented or amended to lengthen any time
period relating to the Rights, including, without limitation, the time period
during which the Rights may be redeemed, unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of and benefits to the
holders of the Rights (excluding in each case Rights held by an Acquiring Person
or an Associate or Affiliate of an Acquiring Person whose Rights have or may
become null and void pursuant to Section 7(e) hereof). Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment unless the
Rights Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this Agreement. 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. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of 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 Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 30. Administration of Agreement. The majority of the members of
the Company's Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or the Company or as may be necessary or advisable in the
administration of this Agreement, including without limitation the right and
power to interpret the Agreement and to make all determinations deemed necessary
or advisable for the administration of this Agreement. All such acts,
interpretations and determinations done or made by the Board in good faith shall
be final, conclusive and binding on the Company, the Rights Agent and the
holders of the Rights. Accordingly, the majority of the members of the Company's
Board of Directors shall not be
35
liable to the holders of Rights Certificates or any other party for any
determination made, action taken, or action omitted to be taken pursuant to the
terms of this Agreement, if such determination, action or omitted action was
made or taken in good faith.
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 this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth (10th) Business Day following the date of such determination by the Board
of Directors of the Company. Without limiting the foregoing, if any provision
requiring that a determination be made by less than the entire Board is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the entire Board.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the day and year first above written.
ARCTIC CAT INC.
Attest:
By /s/ Xxxxxxx X. Xxxxxxx By /s/ Xxxxxxxxxxx X. Xxxxxx
---------------------- ---------------------------
Its Secretary Its Chief Executive Officer
XXXXX FARGO BANK MINNESOTA, N.A.
Attest:
By /s/ Xxxxx Van Dell By /s/ Xxxxxx Xxxxxx
---------------------- ----------------------------
Xxxxx Van Dell Xxxxxx Xxxxxx
Its Vice President Its Assistant Vice President
---------------------- ----------------------------
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
ARCTIC CAT INC.
Pursuant to Section 302A.401 of the Minnesota
Business Corporation Law
We, Xxxxxxxxxxx X. Xxxxxx, President and Chief Executive Officer, and
Xxxxxxx X. Xxxxxxx, Secretary of Arctic Cat Inc., a corporation organized and
existing under the Minnesota Business Corporation Act, in accordance with the
provisions of Section 302A.401 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the said Corporation, the said Board of
Directors on September 17, 2001 adopted the following resolution creating a
series of three hundred thousand (300,000) shares of preferred stock designated
as Series B Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its Articles
of Incorporation, a series of preferred stock of the Corporation be, and it
hereby is, created, and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock," no par value, and
the number of shares constituting such series shall be three hundred thousand
(300,000). Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided that no decrease shall reduce the number of
shares of Series B Junior Participating Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
Section 2. Dividends and Distribution.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of preferred stock now or hereafter ranking prior and
superior to the shares of Series B Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series B Junior Participating
Preferred Stock, in preference to the holders of shares of Common Stock, $.01
par value per share (the "Common Stock"), of the Corporation and any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series B Junior Participating Preferred Stock, in an
amount per whole share (rounded to the nearest cent), subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Junior Participating
Preferred Stock. In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision (by stock split or otherwise) or combination (by reverse stock split
or otherwise) or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of shares of
Series B Junior Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event
(and rounding the result to the nearest whole number); and provided further that
if at any time after October 2, 2001 the Corporation shall issue any shares of
its capital stock in a reclassification or change of the outstanding shares of
Common Stock (including any such reclassification or change in connection with a
merger in which the Corporation is the surviving corporation), then in such
event the amount to which holders of Series B Junior Participating Preferred
Stock are entitled shall be appropriately adjusted to reflect such
reclassification or change.
(B) The Corporation shall declare a dividend or distribution on the
Series B Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series B Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series B Junior
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid
on the shares of Series B Junior Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series B Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 calendar days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series B Junior Participating Preferred Stock shall
entitle the holder thereof to one hundred (100) votes, subject to adjustment in
the manner set forth in Section 2(A), on all matters on which holders of the
Common Stock or stockholders generally are entitled to vote.
(B) Except as otherwise provided herein or by applicable law, the
holders of shares of Series B Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein or by applicable law, holders of Series
B Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series B Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Junior
Participating Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Junior Participating Preferred Stock, except dividends paid
ratably on the Series B Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
B Junior Participating Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series B Junior Participating Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series B Junior
Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall, upon their cancellation, become
authorized but unissued shares of preferred stock and may be reissued as part of
a new series of preferred stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Series B Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Liquidation Preference"). Following the
payment of the full amount of the Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series B Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Liquidation Preference by
(ii) 100 (as appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii) being herein referred
to as the "Adjustment Number"). Following the payment of the full amount of the
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series B Junior Preferred Stock and Common Stock, respectively,
holders of Series B Junior Participating Preferred Stock and holders of shares
of Common Stock shall proportionately share in the remaining assets in the ratio
of the Adjustment Number (per share of Preferred Stock) to 1 (per share of
Common Stock).
(B) In the event there are not sufficient assets available to permit
payment in full of the Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a parity with the
Series B Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. In the event there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger etc. In case the Corporation shall
enter into any consolidation, merger combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series B Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series B Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series B Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's preferred stock which
may hereafter be authorized as to the payment of dividends and the distribution
of assets, unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series B Junior Participating
Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds (2/3) or more of the
outstanding shares of Series B Junior Participating Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series B Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in liquidating distributions and to have the
benefit of all other rights of holders of Series B Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 17th day of
September, 2001.
Attest:
------------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxx Xxxxxxxxxxx X. Xxxxxx
Secretary President and Chief Executive Officer
Exhibit B
Form of Rights Certificate
Certificate No. R-
Rights
NOT EXERCISABLE AFTER SEPTEMBER 17, 2011, OR EARLIER IF
REDEEMED BY THE COMPANY. 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 REFERRED TO HEREIN. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS 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).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.](1)
---------------------------
(1) The portion of the legend in brackets shall be inserted only if applicable
and shall replace preceding sentence.
Rights Certificate
Arctic Cat 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 Rights
Agreement, dated as of September 17, 2001 (the "Rights Agreement"), between
Arctic Cat Inc., a Minnesota corporation (the "Company"), and Xxxxx Fargo Bank
Minnesota, N.A. (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (Minneapolis, Minnesota time) on September 17, 2011 at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, non-assessable
share of Series B Junior Participating Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of Eighty Dollars ($80) per one
one-hundredth of a share (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Exercise duly executed.
The number of Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of October 2, 2001, based on the Preferred Stock as constituted at such date.
If the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person or Associate or Affiliate of such
Acquiring Person except as provided in Section 4(b) of the Rights Agreement, or
(iii) under certain circumstances, a transferee of persons who became an
Acquiring Person or Affiliate or Associate of such Acquiring Person following
such transfer, such Rights shall become null and void upon the occurrence of a
Flip-In Event described in Section 11(a)(ii) and as described in Section 7(e) of
the Rights Agreement and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to 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 Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent or
the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of shares of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised (other than pursuant to Section 11(a)(ii)
of the Rights Agreement) in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not exercised. If this Rights Certificate shall be
exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights
Agreement, the holder shall be entitled to receive this Rights Certificate duly
marked to indicate that such exercise has occurred as set forth in the Rights
Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated: ________________________
ATTEST: Arctic Cat Inc.
________________________________ By _______________________________
Secretary
Countersigned:
Xxxxx Fargo Bank Minnesota, N.A.
By ____________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________ hereby
sells, assigns and transfers unto ___________________________
--------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
or
[ ] is not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms arc defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Rights Certificate from any person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: _______________________
-------------------------------
Signature
Signature Medallion Guaranteed:
NOTICE
------
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO EXERCISE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: Arctic Cat Inc.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred 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)
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to Section 11(a)(ii) of the Rights
Agreement shall be returned to the undersigned unless such person requests that
the Rights Certificate be registered in the name of and delivered to: (complete
only if Rights Certificate is to be registered in a name other than the
undersigned)
-----------------------------
(Please print name and address)
-----------------------------
-----------------------------
(Please insert social security
or other identifying number)
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
or
[ ] are not
being exercised on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Rights Certificate from any person who is,
was or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: _______________________
-------------------------------
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing Election to Exercise must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
EXHIBIT C
SUMMARY OF SHAREHOLDER RIGHTS PLAN
On September 17, 2001 the Board of Directors of Arctic Cat Inc. (the
"Company") adopted a shareholder rights plan (the "Rights Plan"). The purpose of
the Rights Plan is to deter certain coercive or abusive takeover tactics and to
encourage third parties interested in acquiring the Company to negotiate with
the Board and otherwise assist the Board in representing the interests of all
shareholders. The Rights Plan does not deter negotiated mergers or business
combinations that the Board determines to be in the best interests of the
Company and its stockholders.
To implement the Rights Plan, the Board declared a dividend of one
preferred stock purchase right (the "Right") for each outstanding share of the
Company's Common Stock, $.01 par value per share (the "Common Stock"), payable
to its shareholders of record at the close of business on October 2, 2001 (the
"Record Date"). Except as set forth below, each Right entitles the registered
holder to purchase from the Company one one-hundredth (1/100) of a share of
Series B Junior Participating Preferred Stock, no par value (the "Preferred
Stock"), at a price of $80 per one one-hundredth of a share (the "Purchase
Price"). The terms of the Rights are set forth in a Rights Agreement dated as of
September 17, 2001 (the "Rights Agreement") between the Company and Xxxxx Fargo
Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten (10)
Business Days following (i) a public announcement that, without the prior
consent of the Board of Directors, a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of voting securities having 15% or more of the voting power
of the Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a
public announcement of an intention to make) a tender offer or exchange offer
which would result in any person or group and related persons having beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the earlier of such dates referred to in (i) and (ii) above being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificates. However, Suzuki Motor Corporation ("Suzuki") will not
be deemed an Acquiring Person unless and until such time as Suzuki, together
with all of its affiliates and associates, without the prior approval of a
majority of the Board of Directors, is the beneficial owner of voting securities
having more than thirty-two percent (32%) of the voting power of the Company.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with Common Stock certificates. From as
soon as practicable after the Record Date and until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuance of the Common Stock
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Stock outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 17, 2011, unless earlier redeemed by the Company as
described below.
In the event that any person becomes the beneficial owner of 15% (32%
with respect to Suzuki) or more of the voting power of the Company in a
transaction which has not previously been approved by a majority of the
independent directors, ten (10) Business Days thereafter (the "Flip-In Event")
each holder of a Right will thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price of the Right, Common Stock (or, in
certain circumstances, a combination of cash, other property, Common Stock or
other securities) which has a value of two times the Purchase Price of the Right
(such right being called the "Flip-In Right"). In the event that the Company is
acquired in a merger or other business combination transaction where the Company
is not the surviving corporation or in the event that 50% or more of its assets,
cash flow or earning power is sold, proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price of the Right, common stock of the
acquiring entity which has a value of two times the Purchase Price of the Right
(such right being called the "Flip-Over Right"). The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises the
Flip-In Right. Upon the occurrence of the Flip-In Event, any Rights that are or
were at any time owned by an Acquiring Person shall become null and void insofar
as they relate to the Flip-In Right.
For example, at a Purchase Price of $80 per Right, if any person
becomes the beneficial owner of 15% or more of the voting power of the Company,
ten (10) Business Days thereafter each Right other than a Right owned by such
15% beneficial owner would entitle its holder to purchase $160 worth of the
Company's Common Stock (or other consideration, as noted above) for $80.
Assuming that the Common Stock had a per share value of $16 at such time, the
holder of each Right would effectively be entitled to purchase 10 shares of
Common Stock for $80.
Similarly, assuming, following the Stock Acquisition Date, the
occurrence of a business combination with another entity in which the Company's
Common Stock is converted or exchanged, or a sale of 50% or more of the
Company's assets, cash flow or earning power, each Right would entitle its
holder to purchase $160 worth of the acquiring entity's stock for $80.
The Purchase Price payable, and the number of shares of Preferred 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
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock or (iii)
upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% (32% with respect to Suzuki)
or more of the voting power of the Company and prior to the acquisition by such
person or group of 50% or more of the voting power of the Company, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which have become null and void), in whole or in part, at
an exchange ratio of one share of Common Stock, or one one-hundredth of a share
of Preferred Stock (or of a share of
a class or series of the Company's preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the tenth (10th)
Business Day after the Stock Acquisition Date, or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in part, at a price
of $.001 per Right (the "Redemption Price"), which redemption shall be effective
at such time as the Board of Directors shall establish. Additionally, the
majority of the members of the Company's Board of Directors may, following the
tenth (10th) Business Day after the Stock Acquisition Date, redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price provided
that either (a) the Acquiring Person reduces his, her or its beneficial
ownership to less than 15% (32% with respect to Suzuki) of the voting power of
the Company in a manner which is satisfactory to the majority of the members of
the Company's Board of Directors and there are no other Acquiring Persons, or
(b) such redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not involving an
Acquiring Person or any person who was an Acquiring Person. Upon the effective
date of the redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will entitle the holder to a
minimum preferential quarterly dividend of $1.00 per share, but will entitle the
holder to an aggregate dividend payment of 100 times the dividend declared on
each share of Common Stock. In the event of liquidation, the holders of
Preferred Stock will receive a preferred liquidation payment of $100 per whole
share of Preferred Stock. Each whole share of Preferred Stock will have 100
votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which Common Stock are exchanged, each
share of Preferred Stock will be entitled to receive 100 times the amount and
type of consideration received per share of Common Stock. The rights of the
Preferred Stock as to dividends and liquidations, and in the event of mergers
and consolidations, are protected by customary anti-dilution provisions.
Fractional shares of Preferred Stock in integral multiples of one one-hundredth
of a share of Preferred Stock will be issued unless the Company elects to
distribute depositary receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one one-hundredth
of a share, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.
Until a Right is exercised it will not entitle the holder to any rights
as a shareholder of the Company (other than those as an existing shareholder),
including, without limitation, the right to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be
defective or inconsistent with any other provisions, or in any manner not
adversely affecting the interests of the holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the 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 Rights Agreement.
