1
EXHIBIT 1
SUIZA FOODS CORPORATION
and
XXXXXX TRUST AND SAVINGS BANK
as Rights Agent
RIGHTS AGREEMENT
March 6, 1998
2
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..................................... 7
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............................................. 8
8. Cancellation and Destruction of Rights Certificates................... 10
9. Reservation and Availability of
Capital Stock......................................................... 11
10. Common Stock Record Date.............................................. 12
11. Adjustment of Purchase Price, Number and Kind of Shares, or
Number of Rights...................................................... 12
12. Certificate of Adjusted Purchase Price or Number of Shares............ 19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.. 20
14. Fractional Rights and Fractional Shares............................... 22
15. Rights of Action...................................................... 23
16. Agreement of Rights Holders........................................... 23
17. Rights Certificate Holder Not Deemed a Stockholder.................... 24
18. Concerning the Rights Agent........................................... 24
i
3
19. Merger or Consolidation or Change of Name of Rights Agent............. 25
20. Duties of Rights Agent................................................ 25
21. Change of Rights Agent................................................ 28
22. Issuance of New Rights Certificates................................... 28
23. Redemption and Termination............................................ 29
24. Exchange ............................................................. 30
25. Notice of Certain Events.............................................. 31
26. Notices ............................................................. 31
27. Supplements and Amendments............................................ 32
28. Successors............................................................ 33
29. Determinations and Actions by the Board of Directors, Etc............. 33
30. Benefits of this Agreement............................................ 33
31 Severability.......................................................... 33
32. Governing Law......................................................... 34
33. Counterparts.......................................................... 34
34. Interpretation........................................................ 34
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
ii
4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 6, 1998 (the "Agreement"), between
Suiza Foods Corporation, a Delaware corporation (the "Company"), and Xxxxxx
Trust and Savings Bank, (the "Rights Agent").
BACKGROUND
On February 27, 1998 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, par value $.01 per
share, of the Company (the "Common Stock") outstanding at the Close of Business
on March 18, 1998 (the "Record Date"), and has authorized the issuance of one
Right (as such number may be adjusted pursuant to the provisions of SECTION
11(p)) for each share of Common Stock of the Company issued between the Record
Date (whether originally issued or delivered from the Company's treasury) and
the Distribution Date, each Right initially representing the right to purchase
one share of Common Stock of the Company upon the terms and subject to the
conditions set forth below (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Acquiring Person" means any Person that, together with
all Affiliates and Associates of such Person, is the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, but does
not include (i) the Company; (ii) any Subsidiary of the Company; (iii)
any employee benefit plan of the Company or of any Subsidiary of the
Company; (iv) any Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan; (v) any person
that becomes an Acquiring Person pursuant to a Permitted Transaction;
(vi) any Person that has become an Acquiring Person inadvertently and,
within five Business Days of being requested by the Company to advise
it regarding the same, certifies to the Company that such Person
acquired beneficial ownership of shares of Common Stock in excess of
14.9% inadvertently or without knowledge of the terms of the Rights and
such certification is accepted as true by a Requisite Majority acting
in good faith, and such Person divests as promptly as practicable a
sufficient amount of Common Stock so that such Person would no longer
hold in excess of 14.9% of the Common Stock then outstanding; and (vii)
any Person that becomes an Acquiring Person solely as a result of a
reduction in the number of outstanding shares of Common Stock in a
transaction that is approved by a Requisite
1
5
Majority, provided that such Person will immediately be an Acquiring
Person in the event such Person thereafter acquires any additional
shares of Common Stock (other than as a result of a stock split or
stock dividend) while the Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding.
(c) "Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act and in effect on the date of this
Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and
will be deemed to "beneficially own," any securities that:
(i) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after
the passage of time or upon the occurrence of certain events)
pursuant to any agreement, arrangement, or understanding
(whether or not in writing) or upon the exercise of conversion
rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person will not be deemed
the "Beneficial Owner" of, or to "beneficially own," (A)
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, (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Distribution
Date or (C) securities issuable upon exercise of Rights, which
were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or
pursuant to SECTION 3(a) or SECTION 22 (the "Original Rights")
or pursuant to SECTION 11(i) in connection with an adjustment
made with respect to any Original Rights;
(ii) such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), including pursuant to any agreement,
arrangement, or understanding, whether or not in writing;
provided, however, that a Person will not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this SECTION 1(d)(ii) as a result of an agreement,
arrangement, or understanding to vote such security if such
agreement, arrangement, or understanding: (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 provisions of the General Rules and Regulations
under 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) are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such
Person) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement, or
2
6
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso in SECTION 1(d)(ii)), or
disposing of any voting securities of the Company;
provided, however, that nothing in this SECTION 1(d) will cause a
Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such Person's participation in good faith in a bona
fide firm commitment underwriting until the expiration of forty days
after the date of such acquisition.
(e) "Business Day" means any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of Texas or
Illinois are authorized or obligated by law or executive order to
close.
(f) "Close of Business" on any given date will mean 5:00 p.m.,
Dallas, Texas time, on such date; provided, however, that if such date
is not a Business Day it will mean 5:00 p.m., Dallas, Texas time, on
the next succeeding Business Day.
(g) "Common Stock" means the common stock, par value $.01 per
share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company will mean the capital
stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person.
(h) "Continuing Director" means (i) any member of the Board of
Directors of the Company who (i) is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person and (ii) was either a
member of the Board of Directors of the Company on the date of this
Agreement or who subsequently became a director of the Company and
whose initial election or initial nomination for election was approved
by a majority of the Continuing Directors then on the Board of
Directors of the Company.
(i) "Distribution Date" means the Close of Business on the
tenth Business Day (unless extended by vote of a Requisite Majority)
after the earlier to occur of (i) the Stock Acquisition Date or (ii)
the date any Person commences or publicly announces an intention to
commence a tender offer or exchange offer for the Common Stock which
would result in, upon the consummation of such offer, the Person making
such offer, together with all of its Affiliates and Associates, being
the Beneficial Owner of 15% or more of the Common Stock then
outstanding (including any such date that is after the date of this
Agreement and prior to the issuance of the Rights); provided, however,
that if the tender offer or exchange offer that gave rise to the
Distribution Date is cancelled, terminated or otherwise withdrawn
within ten Business Days of its announcement, such offer shall be
deemed never to have been made and no Distribution Date shall occur
with respect thereto.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
3
7
(k) "NASDAQ" means the National Association of
Securities Dealers Automated Quotation System.
(l) "Permitted Transaction" means a stock acquisition or a
tender or exchange offer pursuant to a definitive agreement by which a
Person (who is not at the time an Acquiring Person) would become an
Acquiring Person and which has been approved by a Requisite Majority
prior to the execution of the definitive agreement providing for the
acquisition or the public announcement of the offer, as the case may
be.
(m) "Person" means any individual, firm, corporation,
partnership, limited liability company or other public or private
entity.
(n) "Redemption Price" with respect to each Right means $.01,
as such amount may from time to time be adjusted in accordance with
SECTION 11. All references herein to the Redemption Price means the
Redemption Price as in effect at the time in question.
(o) "Requisite Majority" means, at any time, the affirmative
vote of a majority of the Continuing Directors then in office.
(p) "Rights Dividend Declaration Date" is February 27, 1998,
the date the Board of Directors of the Company declared a dividend
distribution of one Right for each share of Common Stock outstanding on
the Record Date.
(q) "Rights Shares" means the shares of Common Stock issuable
or issued upon the exercise of the Rights.
(r) "Section 11(a)(ii) Event" means any event described in
SECTION 11(a)(ii).
(s) "Section 13 Event" means any event described in clauses
(i), (ii), or (iii) of SECTION 13(a).
(t) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include,
without limitation, a report filed pursuant to ss. 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become an Acquiring Person.
(u) "Subsidiary" means, with reference to any Person, any
entity of which an amount of voting securities sufficient to elect at
least a majority of the directors or similar Persons of such entity is
beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(v) "Trading Day" means a day on which the principal national
securities exchange or quotation system 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
4
8
Stock are not listed or admitted to trading on any national securities
exchange, a Business Day.
(w) "Triggering Event" means any Section 11(a)(ii) Event or
any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (which, in accordance with SECTION 3, prior to the Distribution Date are
also the holders of the Common Stock) in accordance with the terms and
conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
pursuant to this Section or successor Rights Agents pursuant to Section 21 as it
may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Prior to the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of this SECTION 3(b)) by the
certificates for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock will
be deemed also to be certificates for Rights) and not by separate
certificates, and (ii) the Rights 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, at the expense of the
Company, send by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the Distribution Date, at the address
of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of EXHIBIT A (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided in this Agreement. In the event
that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to SECTION 11(p), at the time of distribution of
the Rights Certificates, the Company will make the necessary and
appropriate rounding adjustments (in accordance with SECTION 14(a)) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) As soon as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the
form of EXHIBIT B, 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 will also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as defined in SECTION 7), the transfer of any
certificates representing
5
9
shares of Common Stock in respect of which Rights have been issued will
also constitute the transfer of the Rights associated with such shares
of Common Stock.
(c) Rights will be issued in respect of all shares of Common
Stock that are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing
such shares of Common Stock will also be deemed to be certificates for
Rights, and will bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO
CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN
SUIZA FOODS CORPORATION (THE "COMPANY") AND XXXXXX TRUST AND
SAVINGS BANK (THE "RIGHTS AGENT") DATED AS OF MARCH 6, 1998
(AS AMENDED FROM TIME TO TIME, THE "RIGHTS AGREEMENT"), THE
TERMS OF WHICH ARE HEREBY INCORPORATED IN THIS CERTIFICATE BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED
BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY
THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS
CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON
THE DATE OF MAILING, WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF
A WRITTEN REQUEST. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON
WHO IS, WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
NULL AND VOID.
With respect to the shares of Common Stock issued after the
Record Date, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates will be evidenced by such certificates
alone and registered holders of Common Stock will also be the
registered holders of the associated Rights, and the transfer of any of
such certificates will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
6
10
Section 4. Form of Rights Certificates.
The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse of the rights
certificates) will each be substantially in the form set forth in
EXHIBIT A and may have such marks of identification or designation and
such legends, summaries, or endorsements 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 or quotation system 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, the Rights
Certificates, whenever distributed, will be dated as of the Record Date
and on their face will entitle the holders of such Rights Certificates
to purchase such number of shares of Common Stock as is set forth in
such Rights Certificates at the price set forth in such Rights
Certificates (such exercise price per share, the "Purchase Price"), but
the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price will be subject to adjustment as provided
in this Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Financial Officer, its President or any Vice President, either
manually or by facsimile signature, will have affixed thereto the
Company's seal or a facsimile thereof, and will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates will be countersigned
by the Rights Agent, either manually or by facsimile signature and will
not be valid for any purpose unless so countersigned. In case any
officer of the Company who has signed any of the Rights Certificates
ceases 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 Certificate may be
signed on behalf of the Company by any Person who, at the actual date
of the execution of such Rights Certificate, is 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 principal office or offices designated
as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued under this Agreement. Such books will show the
names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on the face of the Rights
Certificates, and the date of each of the Rights Certificates.
7
11
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 7(e) and SECTION 14,
at any time after the Distribution Date, and at or prior to the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined, or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of Rights Shares (or, following a Triggering
Event, Common Stock, other securities, cash, or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up,
combine, or exchange any Rights Certificate or Rights Certificates will
make such request in writing delivered to the Rights Agent, and will
surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined, or exchanged at the principal office
or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company will be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder has completed and signed the
certificate contained in the form of assignment on the reverse side of
such Rights Certificate and has provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company requests in good faith.
Thereupon, the Rights Agent will, subject to SECTION 4, SECTION 7(e)
and SECTION 14, 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 any Rights
Certificate.
(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 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) Subject to SECTION 7(e), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement including, without limitation, the
restrictions on exercisability set forth in SECTION 9(c), SECTION
11(a)(iii), SECTION 23(a) and SECTION 24) in whole or in part at any
time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate
on the reverse side of the Rights Certificate duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent
designated for such
8
12
purpose, together with payment of the aggregate Purchase Price for each
share of Common Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the Close of Business on
March 18, 2008, (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in SECTION 23 or (iii) the time at
which such rights are exchanged as provided in SECTION 24 (the earlier
of such times being the "Expiration Date")).
(b) The Purchase Price for each share of Common Stock pursuant
to the exercise of a Right will initially be $210, subject to
adjustment from time to time as provided in SECTION 11, and SECTION
13(a). The Purchase Price will be payable in accordance with SECTION
7(c).
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment of the Purchase Price
for the shares of Common Stock (or other shares, securities, cash or
other assets, as the case may be) to be purchased and an amount equal
to any applicable transfer tax, the Rights Agent will, subject to
SECTION 20(k), promptly (i) (A) requisition from any transfer agent of
the shares of Common Stock (or make available, if the Rights Agent is
the transfer agent for such shares) certificates for the total number
of shares of Common Stock to be purchased (the Company hereby
irrevocably authorizing its transfer agent to comply with all such
requests) or (B) if the Company has elected to deposit the shares of
Common Stock with a depository agent, requisition from the depository
agent depository receipts representing such number of shares of Common
Stock as are to be purchased (in which case certificates for the shares
of Common Stock represented by such receipts will be deposited by the
transfer agent with the depository agent) and the Company will direct
the depository agent to comply with such request; (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with SECTION 14; (iii) after receipt of
such certificates or depository receipts, cause such certificates or
depository receipts 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) 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)) will be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event that the
Company is obligated to issue other securities (including Common Stock)
of the Company, pay cash, or distribute other property pursuant to
SECTION 11(a), the Company will make all arrangements necessary so that
such other securities, cash, or other property are available for
distribution by the Rights Agent, if and when appropriate. The Company
reserves the right to require prior to the occurrence of a Triggering
Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Common Stock would be issued.
(d) If the registered holder of any Rights Certificate
exercises less than all the Rights evidenced by such certificate, a new
Rights Certificate evidencing the unexercised
9
13
Rights will be issued by the Rights Agent and 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, subject to
the provisions of SECTION 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by any Person referred to in
CLAUSES (i) through (iii) below will become null and void without any
further action and no holder of such Rights will have any rights
whatsoever with respect to such Rights, under any provision of this
Agreement or otherwise: (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee from an Acquiring
Person (or from any Associate or Affiliate of an Acquiring Person) that
becomes a transferee after the Acquiring Person becomes such, or (iii)
a transferee from an Acquiring Person (or of any such Associate or
Affiliate) that becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding regarding the
transferred Rights or (B) a transfer that the Board of Directors of the
Company has determined is part of an agreement, plan, arrangement, or
understanding that has as a substantial purpose or effect the avoidance
of this SECTION 7(e). The Company will use reasonable efforts to insure
that the provisions of this SECTION 7(e) and SECTION 4(b) are complied
with, but will have no liability under this Agreement to any holder of
Rights Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person, or any of its
Affiliates, Associates, or transferees.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company will be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this SECTION 7
unless such registered holder has (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company requests in good faith.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, will be cancelled by it, and no Rights
Certificates will be issued in lieu thereof except as expressly permitted by any
of the provisions of this Agreement. The Company will deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent will so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent will deliver all
cancelled Rights Certificates to the Company, or will, at the written request of
the Company, destroy such cancelled Rights Certificates, and in such case will
deliver a certificate of destruction to the Company.
10
14
Section 9. Reservation and Availability of Capital Stock.
(a) The Company will use its best efforts to reserve and keep
available out of its authorized and unissued shares of Common Stock
(and/or or other securities) or its authorized and issued shares of
Common Stock (and/or or other securities) held in its treasury, the
number of shares of Common Stock (and/or other securities) that will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock (and, following the
occurrence of a Triggering Event, Common Stock or other securities)
issuable and deliverable upon the exercise of the Rights may be listed
on any national securities exchange or automated quotation system, the
Company will use its reasonable 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 or automated quotation system
upon official notice of issuance upon such exercise.
(c) The Company will use its best efforts to (i) file, as soon
as practicable following the first occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with SECTION
11(a)(iii), a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights or issued in an
exchange pursuant to SECTION 24 on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are
no longer exercisable for such securities, and (B) the Expiration Date.
The Company will also take such action as may be appropriate under, or
to ensure compliance with, the applicable state securities laws in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for up to 90 days after the date described in
CLAUSE (i) of this SECTION 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company will 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 no longer remains in effect. In addition, if the
Company determines that a registration statement is required following
the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any provision of
this Agreement to the contrary, the Rights will not be exercisable in
any jurisdiction if the requisite qualification in such jurisdiction
has not been obtained, the exercise of such Rights is not permitted
under applicable law, or a registration statement has not 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 Common
Stock (and/or other securities) delivered upon exercise of Rights will,
at the time of delivery of the certificates for such shares upon
11
15
payment of the Purchase Price, be duly and validly authorized and
issued and fully paid and nonassessable.
(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 that may be payable in respect of the issuance or delivery of
the Rights Certificates and any Common Stock or other certificates
issued upon the exercise of Rights. The Company will not, however, be
required to pay any transfer tax that may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or
the issuance or delivery of Common Stock (or other securities, as the
case may be) in respect of a name other than that of the registered
holder of the Rights Certificates or to issue or deliver any Common
Stock or other certificates in a name other than that of the registered
holder until such tax has 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. Common Stock Record Date. Each Person in whose name
any Rights Share certificate is issued will, for all purposes, be deemed to have
become the record holder of such Rights Shares represented thereby, and such
certificate will be dated, on 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 Common Stock (or
other securities, as the case may be) transfer books of the Company are closed,
such Person will be deemed to have become the record holder of the Rights Shares
on, and such certificate will be dated, the next succeeding Business Day on
which the Common Stock (or other securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights evidenced thereby,
the Rights Certificate holders will not be entitled to any stockholder rights
with respect to Rights Shares, including, without limitation, the right to vote,
to receive dividends or other distributions, or to exercise any preemptive
rights, and will not be entitled to receive any notice of any proceedings of the
Company, except as provided in this Agreement.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares, or Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date of
this Agreement (A) declares a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivides the
outstanding Common Stock, (C) combines the outstanding Common
Stock into a smaller number of shares, or (D) issues any
shares of its capital stock in a reclassification of the
Common Stock (including, without limitation, 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 SECTION 7(e), the Purchase Price in effect at the
time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and
the number and kind of
12
16
shares of Common Stock or capital stock, as the case may be,
issuable on such date, will be proportionately adjusted so
that the holder of any Right exercised after such time will be
entitled to receive, upon payment of the Purchase Price then
in effect, the aggregate number and kind of shares of Common
Stock or capital stock, as the case may be, that, if such
Right had been exercised immediately prior to such date and at
a time when the Common 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. If an event
occurs that would require an adjustment under both this
SECTION 11(a)(i) and SECTION 11(a)(ii), the adjustment
provided for in this SECTION 11(a)(i) will be in addition to,
and will be made prior to, any adjustment required pursuant to
SECTION 11(a)(ii).
(ii) In the event that any Person, alone or together
with its Affiliates and Associates, at any time after the
Rights Dividend Declaration Date, becomes an Acquiring Person,
then, proper provision will be made so that each Right holder
(except as provided in SECTION 7(e)) will thereafter have the
right to receive, upon exercise of such Right at the then
current Purchase Price in accordance with the terms of this
Agreement, such number of Rights Shares equal to the result
obtained by (x) multiplying the then current Purchase Price by
the then number of Rights Shares for which a Right is then
exercisable and (y) dividing that product by 50% of the
Current Market Price (defined in SECTION 11(d)) per share of
Common Stock on the date such Person became an Acquiring
Person (such number of Rights Shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of
Common Stock that are authorized by the Company's articles of
incorporation but not issued, or issued but not outstanding,
are not sufficient to permit the exercise in full of the
Rights in accordance with SECTION 11(a)(ii), the Company will,
upon the exercise of a Right and payment of the applicable
Purchase Price, (A) determine the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current
Value"), and (B) with respect to each Right (subject to
SECTION 7(e)), make adequate provision to substitute for the
Adjustment Shares (1) cash, (2) a reduction in the Purchase
Price, (3) other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred
stock), that a Requisite Majority has deemed to have
essentially the same rights, privileges and preferences as
shares of Common 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
conclusively determined by a Requisite Majority based upon the
advice of a nationally recognized investment banking firm
selected by a Requisite Majority; provided, however, that if
the Company has not made adequate provision to deliver value
pursuant to CLAUSE (B) above within 30 days following the
first occurrence of a Section 11(a)(ii) Event, then the
Company will be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment
13
17
of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares or cash
have an aggregate value equal to the Spread. The term "Spread"
means the excess of (i) the Current Value over (ii) the
Purchase Price. If the Board of Directors determines 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 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Triggering Event, in order that
the Company may seek shareholder approval for the
authorization of such additional shares (such 30-day period,
as it may be extended, being the "Substitution Period"). To
the extent that action is to be taken pursuant to this SECTION
11(a)(iii), the Company (1) will provide, subject to SECTION
7(e), that such action will apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to
seek any required shareholder approval or to decide the
appropriate form of distribution to be made and the value
thereof. In the event of any such suspension, the Company will
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 no longer remains
in effect. For purposes of this SECTION 11(a)(iii), the
Current Value of each Adjustment Share will be the Current
Market Price per share of the Common Stock on the effective
date of the SECTION 11(a)(ii) Event and the per share or per
unit value of any Common Stock Equivalent will be deemed to
equal the Current Market Price per share of the Common Stock
on such date.
(b) In case the Company fixes a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling
them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Stock (and/or Common Stock
Equivalents) (or securities convertible into Common Stock) at a price
per share of Common Stock (or having a conversion price per share, if a
security convertible into Common Stock) less than the Current Market
Price per share of Common Stock on such record date, the Purchase Price
to be in effect after such record date will be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, (i) the numerator of which is the number of
shares of Common Stock outstanding on such record date, plus the number
of shares of Common Stock that the aggregate offering price of the
total number of shares of Common Stock (and/or Common Stock
Equivalents) so to be offered (or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at
such Current Market Price, and (ii) the denominator of which is the
number of shares of Common Stock outstanding on such record date, plus
the number of additional shares of Common Stock (and/or Common Stock
Equivalents) to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible).
In the event that the number of shares of Common Stock issuable under
the terms of a convertible security, or the conversion or exercise
price of such convertible security, changes after the initial issuance
of such convertible security, an adjustment will be made to the
Purchase Price that conforms with the adjustment set forth in this
SECTION 11(b). In case such
14
18
subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such
consideration will be as conclusively determined in good faith by the
Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent and will be
binding on the Rights Agent and the holders of the Rights. Shares of
Common Stock owned by or held for the account of the Company will be
deemed not to be outstanding for the purpose of any such computation.
Such adjustment will 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 will be adjusted to be the Purchase Price
that would then be in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than
a regular quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in
Common Stock, but including any dividend payable in stock other than
Common Stock) or subscription rights or warrants (excluding those
referred to in SECTION 11(b)), the Purchase Price to be in effect after
such record date will be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, (i) the
numerator of which is the Current Market Price per share of Common
Stock on such record date, less the fair market value (as conclusively
determined in good faith by the Board of Directors of the Company,
whose determination will 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 share of Common Stock and (ii) the denominator
of which is such Current Market Price per share of Common Stock. Such
adjustments will be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the
Purchase Price will be adjusted to be the Purchase Price that would
have been in effect if such record date had not been fixed.
(d) The "Current Market Price" per share of Common Stock on
any date will be deemed to be the average of the daily closing prices
per share of such Common Stock for the 30 consecutive Trading Days
immediately prior to 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 (i) 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 (ii) any
subdivision, combination, or reclassification of such Common Stock, and
the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination, or reclassification has not
occurred prior to the commencement of the requisite 30 Trading Day
period, as set forth above, then, and in each such case, the Current
Market Price will be properly adjusted to take into account ex-dividend
trading. The closing price for each day will 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
15
19
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 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 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 of Directors. 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 of
Directors will be used. If the Common Stock is not publicly held or not
so listed or traded, Current Market Price per share will mean the fair
value per share as determined in good faith by the Board of Directors,
the determination of which will be described in a statement filed with
the Rights Agent and will be conclusive for all purposes.
(e) Anything in this Agreement to the contrary
notwithstanding, no adjustment in the Purchase Price will be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided, however, that
any adjustments that by reason of this SECTION 11(e) are not required
to be made will be carried forward and taken into account in any
subsequent adjustment. All calculations under this SECTION 11 will be
made to the nearest cent or to the nearest one-hundredth of a share of
Common Stock. Notwithstanding the first sentence of this SECTION 11(e),
any adjustment required by this SECTION 11 will be made no later than
the earlier of (i) three (3) years from the date of the transaction
that mandates such adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to SECTION
11(a)(ii) or SECTION 13(a), the holder of any Right thereafter
exercised becomes entitled to receive any shares of capital stock other
than Common Stock, then the number of such other shares so receivable
upon exercise of any Right and the Purchase Price will be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common
Stock contained in SECTIONS 11(a), (b), (c), (e), (g), (h), (i), (j),
(k), (m), and (q) and the provisions of SECTIONS 7, 9, 10, 13, and 14
with respect to the Common Stock will 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 under this Agreement will
evidence the right to purchase, at the adjusted Purchase Price, the
number of Rights Shares purchasable from time to time under this
Agreement, all subject to further adjustment as provided in this
Agreement.
16
20
(h) Unless the Company has 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 will
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of Rights Shares (calculated to the nearest
one-hundredth) obtained by (i) multiplying (x) the number of Rights
Shares covered by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (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
lieu of any adjustment in the number of Rights Shares purchasable upon
the exercise of a Right. Each of the Rights outstanding after such an
adjustment in the number of Rights will be exercisable for the number
of Rights Shares 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 will become that number of Rights (calculated to
the nearest one-hundredth) 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 will make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, will be at least ten Business 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 will, 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, the additional Rights
to which such holders are entitled as a result of such adjustment, or,
at the option of the Company, will 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 are
entitled after such adjustment. Rights Certificates so to be
distributed will be issued, executed, and countersigned in the manner
provided for in this Agreement (and may bear, at the option of the
Company, the adjusted Purchase Price) and will 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 Rights Shares, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per Rights
Shares and the number of Rights Shares that were expressed in the
initial Rights Certificates issued under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
number of Rights Shares, the
17
21
Company will take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue such number of fully paid and nonassessable Rights Shares at such
adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires 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 number of Rights Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Rights Shares 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 will deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary
notwithstanding, the Company will 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 its good
faith judgment, the Board of Directors of the Company determines it to
be advisable in order that any (i) consolidation or subdivision of the
Common Stock, (ii) issuance wholly for cash of any shares of Common
Stock at less than the current market price, (iii) issuance wholly for
cash of shares of Common Stock or securities that by their terms are
convertible into or exchangeable for shares of Common 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
Common Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), (ii) merge with, from, or into any other Person
(other than a Subsidiary of the Company in a transaction that complies
with SECTION 11(o)), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of
which complies with SECTION 11(o)), if (x) at the time of or
immediately after such consolidation, merger, or sale there are any
rights, warrants, or other instruments or securities outstanding or
agreements in effect that could reasonably be expected to substantially
diminish or otherwise eliminate the benefits intended to be afforded by
the Rights or (y) prior to, simultaneously with, or immediately after,
such consolidation, merger, or sale, the stockholders of the Person
that constitutes, or would constitute, the "Principal Party" for
purposes of SECTION 13(a) have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
18
22
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by SECTION 23 or
SECTION 27, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the
contrary, in the event that the Company at any time after the Rights
Dividend Declaration Date and prior to the Distribution Date (i)
declares a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivides the outstanding shares of
Common Stock, or (iii) combines the outstanding shares of Common Stock
into a smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, will be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event will 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 is the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which is the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(q) In the event that the Rights become exercisable following
a Section 11(a)(ii) Event, the Company, by action of a Requisite
Majority, may permit the Rights, subject to SECTION 7(e), to be
exercised for 50% of the shares of Common Stock (or cash or other
securities or assets to be substituted for the Adjustment Shares
pursuant to SECTION 11(a)(iii)) that would otherwise be purchasable
under SECTION 11(a) in consideration of the surrender to the Company of
the Rights so exercised and without other payment of the Purchase
Price. Rights exercised under this SECTION 11(q) will be deemed to have
been exercised in full and will be cancelled.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in SECTION 11 or SECTION 13,
the Company will (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with SECTION 25. The Rights Agent will be fully protected in relying
on any such certificate and on any adjustment contained in such certificate, and
shall not be obligated or responsible for calculating any adjustment, nor shall
it be deemed to have knowledge of such an adjustment unless and until it shall
have received such certificate.
19
23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (i) the Company consolidates with, or merges
with, or into, any other Person (other than a Subsidiary of the Company
in a transaction that complies with SECTION 11(o)), and the Company is
not the continuing or surviving Person of such consolidation or merger;
(ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with SECTION 11(o)) consolidates with, or
merges with, or into, the Company, and the Company is 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 is changed into or exchanged for
stock or other securities of any other Person or cash or any other
property; or (iii) the Company sells or otherwise transfers (or one or
more of its Subsidiaries sells or otherwise transfers), in one
transaction or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in one
or more transactions each of which complies with SECTION 11(o)), then,
and in each such case (except as contemplated by SECTION 13(d)), proper
provision will be made so that (A) each holder of a Right, except as
provided in SECTION 7(e) or SECTION 13(e), will thereafter have the
right to receive, upon the exercise of such Right at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, nonassessable, and
freely tradable shares of Common Stock of the Principal Party (as
defined below), not subject to any liens, encumbrances, preemptive
rights, rights of first refusal, or other adverse claims, as are equal
to the result obtained by (1) multiplying the then current Purchase
Price by the number of Rights Shares for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if
a Section 11(a)(ii) Event has occurred prior to the first occurrence of
a Section 13 Event, multiplying the number of such Rights Shares for
which a Right was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and (2) dividing that
product (which, following the first occurrence of a Section 13 Event,
will be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price per
share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (B) such Principal Party will
thereafter be liable for, and will assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" will thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of SECTION 11 will apply only to such Principal Party
following the first occurrence of a Section 13 Event; (D) such
Principal Party will 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 transaction as may be
necessary to assure that the provisions of this Agreement will
thereafter be applicable, as nearly as may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the
Rights; and (E) the provisions of SECTION 11(a)(ii) will be of no
effect following the first occurrence of any Section 13 Event.
20
24
(b) "Principal Party" means
(i) in the case of any transaction described in
CLAUSE (i) or (ii) 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, the Person
that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in
CLAUSE (iii) of the first sentence of SECTION 13(a), the
Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (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" will refer to such other Person; and (2) in
case such Person is a Subsidiary, directly or indirectly, of
more than one Person, with Common Stock that is and has been
so registered, "Principal Party" will refer to whichever of
such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company will not consummate any such consolidation,
merger, sale, or transfer unless the Principal Party has a sufficient
number of authorized shares of its Common Stock that 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 have executed and delivered to the
Rights Agent a supplemental agreement providing for the Principal Party
to assume and perform the terms set forth in SECTIONs 13(a) and (b) and
further providing that, as soon as practicable after the date of any
consolidation, merger, or transfer mentioned in SECTION 13(a), 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 Final
Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
21
25
(d) In the event that the Rights become exercisable under
SECTION 13(a), the Company, by action of a Requisite Majority, may
agree with the Principal Party that the Principal Party may permit the
Rights to be exercised for 50% of the Common Shares of the Principal
Party that would otherwise be purchasable under SECTION 13(a), in
consideration of the surrender to the Principal Party, as the successor
to the Company under SECTION 13(a)(ii), of the Rights so exercised and
without other payment of the Purchase Price. Rights exercised under
this SECTION 13(e) will be deemed to have been exercised in full and
cancelled.
(e) The provisions of this SECTION 13 will similarly apply to
successive mergers, consolidations, and sales or other transfers. In
the event that a Section 13 Event occurs at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised will thereafter become exercisable in the
manner described in SECTION 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company will not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in SECTION
11(p), or to distribute Rights Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there will 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 will 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 will be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of
the Rights on such date as conclusively determined in good faith by the
Board of Directors of the Company will be used.
(b) The Company will not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute
certificates that evidence fractional
22
26
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 provided in this Agreement an
amount in cash equal to the same fraction of the Current Market Price
of one share of Common Stock as of the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right, by the acceptance of the Rights,
expressly waives the 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 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, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, its 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 will be entitled to specific performance of
the obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right
by accepting the Rights 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 principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer, and with the appropriate forms and certificates
fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), 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 of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights
Agent, will be affected by any notice to the contrary; and
23
27
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will 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 will use
its reasonable best 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 Stockholder.
No holder, as such, of any Rights Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the number of
shares of Common Stock or any other securities of the Company that may at any
time be issuable on the exercise of the Rights represented thereby, nor will
anything contained in this Agreement or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in SECTION 25), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate have been exercised in accordance with the
provisions of this Agreement.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement 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 under this Agreement. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done by the Rights
Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of
defending against any claim of liability. The costs and expenses of
enforcing this right of indemnification shall also be paid by the
Company. The indemnification provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement.
(b) The Rights Agent may conclusively rely upon and will be
protected and will 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
24
28
to be genuine and to be signed, executed, and, where necessary,
verified or acknowledged, by the proper Person or Persons.
(c) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and
regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any Person into or with which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation
to which the Rights Agent or any successor Rights Agent is a party, or
any corporation succeeding to the corporate trust or shareholder
services business of the Rights Agent or any successor Rights Agent,
will 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 to this Agreement; provided, however, that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of SECTION 21. In case at the time such
successor Rights Agent succeeds to the agency created by this
Agreement, any of the Rights Certificates 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 have not 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 will 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 is
changed and at such time any of the Rights Certificates 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 have not 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 will 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, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance of such Rights Certificates, will be
bound:
(a) Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel
for the Company), and the opinion
25
29
of such counsel will 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 deems it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person or Adverse Person and the determination of "Current
Market Price") be proved or established by the Company prior to taking
or suffering any action under this Agreement, such fact or matter
(unless other evidence in respect of such fact or matter is
specifically prescribed in this Agreement) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary, or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be
full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent will be liable under this Agreement only
for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will 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 will be deemed to have been made by the
Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
of this Agreement (except the due execution of this Agreement by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature); nor will it be responsible
for any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor will it be responsible
for any adjustment required under the provisions of SECTION 11 or
SECTION 13, or responsible for the manner, method, or amount of any
such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after actual notice of any
such adjustment); nor will it by any act under this Agreement be deemed
to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Common Stock will, when so issued, be validly authorized or issued,
fully paid, or 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.
26
30
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties under
this Agreement from the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer, or
any Assistant Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it will
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 or for
any delay in acting while waiting for those instructions. Any
application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after
the date specified in such application (which date shall not be less
than ten Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any
such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to
such application subject to the proposed action or omission and/or
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer,
or employee of the Rights Agent may buy, sell, or deal in any of the
Rights or other securities of the Company or become pecuniary
interested in any transaction in which the Company may be interested,
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 in this Agreement will preclude the Rights Agent from acting in
any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers vested by this Agreement in it or perform any duty
under this Agreement either itself or by or through its attorneys or
agents, and the Rights Agent will not be answerable or accountable for
any act, default, neglect, or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act,
default, neglect, or misconduct.
(j) No provision of this Agreement will 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 under this Agreement
or in the exercise of its rights if there are reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative response
to clause 1 or 2 of such certificate, the Rights Agent will not take
any further
27
31
action with respect to such requested exercise of transfer without
first consulting with the Company.
(l) The Rights Agent shall not be required to take notice or
be deemed to have notice of any fact, event or determination
(including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the
Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock, by registered or certified mail, and, at the
expense of the Company, to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent resigns or is removed or otherwise becomes
incapable of acting, the Company will appoint a successor to the Rights Agent.
If the Company fails to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who will, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then any 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, will be a
corporation organized and doing business under the laws of the United States or
a State of the United States, in good standing, that is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$25,000,000. After appointment, the successor Rights Agent will 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, except that the
predecessor Rights Agent will deliver and transfer to the successor Rights Agent
any property at the time held by it under this Agreement 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 will file
notice of such appointment in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Common Stock, and mail a notice of
such appointment 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 in such notice, will 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, in its discretion, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number, kind or class
28
32
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 Expiration Date, the Company
(a) will, 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 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 (y) no such Rights
Certificate will be issued if, and to the extent that, the Company is 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 (z) no such Rights Certificate will be issued if, and to
the extent that, appropriate adjustment has otherwise been made in lieu of the
issuance of such Rights Certificate.
Section 23. Redemption and Termination.
(a) The Company may, at its option, by action of a Requisite
Majority, at any time prior to the earlier of (i) the Distribution
Date, or (ii) the Final Expiration Date, redeem all but not fewer than
all the then outstanding Rights at the Redemption Price (the date of
such redemption, the "Redemption Date"), and the Company, at its
option, may pay the Redemption Price either in cash or Common Stock or
other securities of the Company, deemed by the Board of Directors, in
the exercise of its sole discretion, to be at least equivalent in value
to the Redemption Price.
(b) Immediately upon the action of a Requisite Majority
ordering the redemption of the Rights, evidence of which has 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 will be to receive the
Redemption Price. Promptly after the action of a Requisite Majority
ordering the redemption of the Rights, the Company will give notice of
such redemption to the Rights Agent and to the holders of the then
outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears 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. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. Any notice that is mailed in the manner in this
Agreement provided will be deemed given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail,
or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after a Triggering Event, exchange all or part of the then
outstanding and exercisable
29
33
Rights (which will not include Rights that have become void pursuant to
the provisions of SECTION 7(e) hereof) for shares of Common Stock, each
Right being exchangeable for one share of Common Stock, appropriately
adjusted to reflect any transaction specified in SECTION 11(a)(i)
occurring after the Record Date (such number of shares of Common Stock
issuable in exchange for one Right being referred to herein as the
"Exchange Shares"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time
after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any of its
Subsidiaries or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
Plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection
(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 thereafter of a holder of such Rights shall be to receive the
Exchange Shares. 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 that is mailed in
the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the
method by which the exchange of 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 void pursuant to the provisions of SECTION 7(e) hereof) held by
each holder of Rights.
(c) In the event that there shall not be sufficient Common
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 for issuance upon exchange of the
Rights or shall take such other action specified in SECTION 11(a)(iii)
hereof.
(d) The Company shall not be required to issue fractions of
shares of Common Stock to distribute certificates which evidence
fractional Common Stock. In lieu of such fractional shares, the Company
shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares would otherwise be issuable an
amount in cash equal to the same fraction of the Current Market Price
of a whole share of Common Stock. For the purposes of this SUBSECTION
(d), the Current Market Value of a whole share of Common Stock shall be
determined as of the Trading Day immediately prior to the date of
exchange pursuant to this SECTION 24.
30
34
Section 25. Notice of Certain Events.
(a) In case the Company proposes, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Common Stock or to make any other distribution
to the holders of Common Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company), or (ii)
to offer to the holders of Common Stock rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or shares of
stock of any class or any other securities, rights or options, or (iii)
to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares
of Common Stock), or (iv) to effect any consolidation or merger into,
or with any other Person (other than a Subsidiary of the Company in a
transaction that complies with SECTION 11(o)), 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 transaction or a series of related
transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or
more transactions each of which complies with SECTION 11(o)), or (v) to
effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company will give to each holder of a Rights
Certificate, to the extent feasible and in accordance with SECTION 26,
a notice of such proposed action, which will specify the record date
for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the
shares of Common Stock, if any such date is to be fixed, and such
notice will be so given in the case of any action covered by CLAUSE (i)
or (ii) above at least 20 days prior to the record date for determining
holders of the shares of Common Stock for purposes of such action, and
in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Common Stock, whichever is the
earlier.
(b) In case of a Triggering Event, then (i) the Company will
as soon as practicable give to each holder of a Rights Certificate, to
the extent feasible and in accordance with SECTION 26, a notice of the
occurrence of such event, which will specify the event and the
consequences of the event to holders of Rights under this Agreement,
and (ii) all references in SECTION 25(a) to Common Stock will be deemed
thereafter to refer to other securities, if appropriate.
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 will 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:
31
35
Suiza Foods Corporation
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxXxxxxxx
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 will be sent by registered
or certified mail and will be deemed given upon receipt, addressed (until
another address is filed in writing with the Company) as follows:
Xxxxxx Trust and Savings Bank
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
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 (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) will be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplement and Amendments. The Company, by action of
its Board of Directors, and the Rights Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Rights in order to
cure any ambiguity, to correct or supplement any provision contained in this
Agreement that may be defective or inconsistent with any other provisions in
this Agreement, or to make any other provisions in regard to matters or
questions arising under this Agreement that the Company and Rights Agent may
deem necessary or desirable and that will be consistent with, and for the
purpose of fulfilling, the objectives of the Board of Directors in adopting this
Agreement; provided, however, that following the Stock Acquisition Date, this
Agreement shall not be amended in any manner that would adversely affect the
basic economic terms of the Rights; provided, further, that, once the Rights are
no longer redeemable in accordance with SECTION 23 of this Agreement, no
amendment to this Agreement may have the effect of making the Rights redeemable.
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this
Agreement will be effective against the Rights Agent without the execution of
such supplement or amendment by the Rights Agent.
32
36
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind and
inure to the benefit of their respective successors and assigns under this
Agreement.
Section 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, will be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company (with, where specifically provided for in this
Agreement, the concurrence of the Continuing Directors) will have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors (with, where specifically
provided for in this Agreement, the concurrence of the Continuing Directors) or
to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (a)
interpret the provisions of this Agreement, and (b) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, a determination to redeem or not redeem the
Rights, to amend the Agreement or to extend the Distribution Date). All such
actions, calculations, interpretations and determinations (including, for
purposes of CLAUSE (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors (with, where specifically provided
for in this Agreement, the concurrence of the Continuing Directors) in good
faith, will (x) be final, conclusive, and binding on the Company, the Rights
Agent, the holders of the Rights, and all other parties, and (y) not subject the
Board of Directors or the Continuing Directors to any liability to the holders
of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
will 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; and this Agreement will
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 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 will remain in
full force and effect and will 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 will
be reinstated and will not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of Directors.
Without limiting the foregoing, if any
33
37
provision requiring action by a Requisite Majority is held by any court of
competent jurisdiction or other authority to be invalid, void, or unenforceable,
such determination will then be made by the Board of Directors of the Company in
accordance with applicable law and the Company's articles of incorporation and
by-laws.
SECTION 32. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT, AND EACH
RIGHTS CERTIFICATE ISSUED UNDER THIS AGREEMENT WILL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES WILL 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, EXCEPT AS TO
THE RIGHTS AND OBLIGATIONS OF THE RIGHTS AGENT, WHICH SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts will for all purposes be
deemed to be an original, and all such counterparts will together constitute but
one and the same instrument.
Section 34. Interpretation. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions of this
Agreement. References in this Agreement to Sections and Exhibits are references
to the Sections of and Exhibits to this Agreement unless the context requires
otherwise. In this Agreement, the word "or" is not exclusive.
34
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: SUIZA FOODS CORPORATION
By: /s/ XXXXX X. XXXX
-----------------------------------
Name: Xxxxx X. Xxxx
---------------------------------
Title: Vice President
---------------------------------
Attest: XXXXXX TRUST AND SAVINGS BANK,
as Rights Agent
By: /s/ XXXX XXXXXX
-----------------------------------
Name: Xxxx Xxxxxx
---------------------------------
Title: Vice President
---------------------------------
35
39
Certificate No. R- Exhibit A
to Rights Agreement
[FORM OF RIGHTS CERTIFICATE]
________ Rights
NOT EXERCISABLE AFTER MARCH 18, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
Rights Certificate
SUIZA FOODS CORPORATION
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 March 6, 1998 (as amended from time to time, the
"Rights Agreement"), between Suiza Foods Corporation, a Delaware corporation
(the "Company"), and Xxxxxx Trust and Savings Bank (the "Rights Agent"), to
purchase from the Company at any time prior to 5:00 p.m. (Dallas, Texas time) on
March 18, 2008 at the office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one fully paid, nonassessable share
of Common Stock (the "Common Stock") of the Company, at a purchase price of $210
per share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of shares that 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 March 18, 1998 based on the Common Stock as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Common Stock or other securities, that 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
incorporated herein by reference and made a part of this certificate 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 the certain circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at
1
40
the above-mentioned office of the Rights Agent and are also available upon
written request to the Rights Agent. All capitalized terms not otherwise defined
have the meaning set forth in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, 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, (ii) a
transferee of any such Acquiring Person, Associate, or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
Person who, after such transfer, became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights will become null and void and no
holder of this certificate will have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal 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 Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered have
entitled such holder to purchase. If this Rights Certificate is exercised in
part, the holder will be entitled to receive upon surrender of this certificate
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right. In addition, in certain circumstances the Rights may
be exchanged, in whole or in part, for shares of the Common Stock. Immediately
upon the action of the Board of Directors of the Company authorizing any such
exchange, and without any further action or any notice, the Rights (other than
Rights that are not subject to such exchange) will terminate and the Rights will
only enable holders to receive the shares issuable upon such exchange. Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
the Rights will require the concurrence of a majority of the Continuing
Directors.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate will be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company that may at any time be issuable
on the exercise hereof, nor will anything contained in the Rights Agreement or
herein be construed to confer upon the holder of this certificate, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate have been exercised as provided in the Rights Agreement.
2
41
This Rights Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of
--------------------
ATTEST: SUIZA FOODS CORPORATION
By:
-------------------------------- -------------------------------
Title:
-----------------------------
Countersigned:
-------------------------------
By
----------------------------
Authorized Signature
3
42
[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 transfer 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
acknowledges that this Assignment is voidable by the Company if it contains any
material misstatement of fact by the transferor.
Dated:
------------------------- ----------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned, or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] 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 Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
4
43
FORM OF ELECTION TO PURCHASE
The signature to the foregoing Assignment and Certificate 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.
To: SUIZA FOODS CORPORATION:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security or other identifying number:
----------
Please print name and address:
--------------------------------------
----------------------------------------------------------------------
If such number of Rights are not all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights will
be registered in the name of and delivered to:
Please insert social security or other identifying number:
----------
Please print name and address:
--------------------------------------
----------------------------------------------------------------------
The undersigned acknowledges that this Election to Purchase is voidable
by the Company if it contains any material misstatement of fact by the
undersigned.
Dated:
------------------------- ----------------------------------
Signature
Signature Guaranteed:
5
44
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person or
an Adverse Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated:
------------------------- ----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
6
45
Exhibit B
to Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SUIZA FOODS CORPORATION COMMON STOCK
On February 27, 1998, the Board of Directors of Suiza Foods
Corporation(the "Company") declared a dividend of one common share purchase
right (a "Right") for each outstanding share of common stock, $.01 par value per
share (the "Common Shares"), of the Company. The dividend will be made to the
shareholders of record at the close of business on March 18, 1998 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
one Common Share, at a price of $210 (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of March 6, 1998 (the "Rights Agreement") between the Company
and Xxxxxx Trust and Savings Bank as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten Business Days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares (an "Acquiring Person") or (ii) ten Business
Days following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of such outstanding
Common Shares (the earlier of such dates being the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached to the certificate. A majority of the
Continuing Directors (not associated with Acquiring Person) may in their
discretion vote to extend the Distribution Date.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares 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 Shares outstanding even without such notation or a copy of this Summary
of Rights being attached to such Certificate, will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (the "Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 18, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
X-0
00
Xxx Xxxxxxxx Price payable and the number of Common Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination, or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than the then
current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets or of
subscription rights or warrants (other than those referred to above).
In the event that any person or entity becomes an Acquiring Person (the
beneficial owner of 15% or more of the Common Shares), provision will be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will then be void), will have the right to purchase from
the Company upon exercise that number of Common Shares having a market value of
two times the applicable exercise price of the Right ($210).
The Rights Agreement excludes from the definition of Acquiring Persons
who certify to the Company that they inadvertently acquired in excess of 14.9%
of the outstanding Common Shares and thereafter divest such excess Common Shares
or who acquire 15% or more of the Common Shares in a Permitted Transaction. A
"Permitted Transaction" is a stock acquisition or tender or exchange offer
pursuant to a definitive agreement which would result in a person beneficially
owning 15% or more of the Common Shares and which has been approved by the Board
of Directors (including a majority of the Continuing Directors) prior to the
execution of the agreement or the public announcement of the offer.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each holder of a Right
will have the right to purchase from the acquiring company, upon the exercise of
the Right at the then applicable exercise price, that number of shares of common
stock of the acquiring company that at the time of such transaction will have a
market value of two times the applicable exercise price of the Right ($210).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and, in lieu of
such fractional shares, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the date of
exercise.
After a person becomes an Acquiring Person, the Company's Board of
Directors may exchange the Rights, other than those Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one share of
Common Stock per Right, subject to adjustment. However, the Board of Directors
cannot conduct an exchange at any time after any Person, together with its
Affiliates and Associates, becomes the Beneficial Owner of 50% or more of the
outstanding Common Stock.
B-2
47
At any time prior to a Distribution Date, a Requisite Majority may
redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"). In addition, the Board of Directors may extend or reduce
the period during which the Rights are redeemable, so long as the Rights are
redeemable at the time of such extension or reduction. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to extend the Final Expiration Date, except that from and after the date any
Person becomes an Acquiring Person, no such amendment may adversely affect the
economic interests of the holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote, or to receive dividends.
B-3
