EXHIBIT 4
RIGHTS AGREEMENT
dated as of January 22, 2001
by and between
SIZZLER INTERNATIONAL, INC.
and
THE BANK OF NEW YORK
as Rights Agent
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TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions.......................................................................... 1
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Section 2. Appointment of Rights Agent.................................................................. 6
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Section 3. Issuance of Rights Certificates.............................................................. 6
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Section 4. Form of Right Certificates................................................................... 8
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Section 5. Countersignature and Registration............................................................ 8
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Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
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Mutilated, Destroyed, Lost or Stolen Right Certificates.......................................... 9
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Section 7. Exercise of Rights........................................................................... 10
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Section 8. Cancellation and Destruction of Right Certificates........................................... 12
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Section 9. Reservation and Availability of Capital Stock................................................ 12
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Section 10. Securities Record Date...................................................................... 13
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Section 11. Adjustment of Exercise Price, Number of Shares Issuable Upon
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Exercise of Rights or Number of Rights........................................................... 13
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Section 12. Certificate of Adjusted Exercise Price or Number of Shares Issuable
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Upon Exercise of Rights.......................................................................... 18
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Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
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Power............................................................................................ 19
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Section 14. Fractional Rights and Fractional Shares..................................................... 21
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Section 15. Rights of Action............................................................................ 22
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Section 16. Agreement of Right Holders.................................................................. 22
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Section 17. Right Holder and Right Certificate Holder Not Deemed a
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Shareholder...................................................................................... 23
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Section 18. Concerning the Rights Agent................................................................. 23
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Section 19. Merger or Consolidation or Change of Name of Rights Agent................................... 24
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Section 20. Duties of Rights Agent...................................................................... 24
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Section 21. Change of Rights Agent...................................................................... 27
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Section 22. Issuance of New Right Certificates.......................................................... 28
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Section 23. Redemption of Rights........................................................................ 28
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Section 24. Exchange of Rights.......................................................................... 29
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Section 25. Notice of Certain Events.................................................................... 30
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Section 26. Notices..................................................................................... 30
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Section 27. Supplements and Amendments.................................................................. 31
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Section 28. Certain Covenants........................................................................... 32
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Section 29. Successors.................................................................................. 32
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Section 30. Benefits of this Agreement.................................................................. 32
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Section 31. Severability................................................................................ 32
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Section 32. Governing Law............................................................................... 32
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Section 33. Counterparts................................................................................ 32
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Section 34. Descriptive Headings........................................................................ 33
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Section 35. Determination and Actions by the Board of Directors......................................... 32
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TABLE OF EXHIBITS
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Exhibit A - Certificate of Determination of Preferences of Series B Junior
Participating Preferred Stock of Sizzler International, Inc.
Exhibit A-1-Certificate of Determination of Series B Junior Participating
Preferred Stock of Sizzler International, Inc.
Exhibit B - Form of Right Certificate, Form of Assignment and Form of Election
to Purchase.
Exhibit C - Executive Summary of the Rights Plan.
ii
RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") is made and entered into as of the
22nd day of January, 2001 by and between SIZZLER INTERNATIONAL, INC., a Delaware
corporation (the "Company"), and THE BANK OF NEW YORK, a New York banking
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corporation, as rights agent (the "Rights Agent").
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WHEREAS, the Board of Directors of the Company (the "Board of Directors")
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has authorized and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the Company
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outstanding on January 22, 2001 (the "Record Date"), each Right representing the
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right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions set forth herein, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or the Expiration Date
(as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
"Affiliate" and "Associate" shall have the respective meanings ascribed to
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such terms in Rule 12b-2 promulgated under the Exchange Act, as in effect on the
date hereof.
"Acquiring Person" shall mean any Person that Beneficially Owns 14% or more
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of the Voting Shares of the Company then outstanding; provided, however, that
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the term "Acquiring Person" shall not include: (i) an Exempt Person; (ii) any
Person that would not otherwise be an Acquiring Person but for a reduction in
the number of outstanding Voting Shares resulting from a stock repurchase
program or other similar plan of the Company or from a self tender offer of the
Company, which plan or tender offer commenced on or after the date hereof;
provided, however, that the term "Acquiring Person" shall include such Person
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from and after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and (B) such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 14% or more of the Voting Shares of the Company then
outstanding; (iii) any Person that would not otherwise be an Acquiring Person
but for its Beneficial Ownership of Rights; (iv) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Foundation, ▇▇▇▇▇▇▇ Family Trust Dated 5/6/69,
▇▇▇▇▇▇▇ Irrevocable Trust No. 1, or any children or grandchildren of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ who receive Voting Shares of the Company in a distribution of or from
such foundation or trusts (such persons, foundation and trusts are collectively
referred to herein as the "Trusts"); (v) any Person (excluding the Trusts in
clause (iv)) that is the Beneficial Owner of 14% or more of the outstanding
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Voting Shares of the Company as of January 22, 2001 and thereafter has continued
to be the Beneficial Owner of at least 14% of the Voting Shares of the Company
then outstanding; provided, however, that the term Acquiring Person shall
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include such Person from and after the first date upon which (A) such Person,
since January 22, 2001,
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shall have acquired, without the prior approval of the Board of Directors of the
Company, Beneficial Ownership of additional Voting Shares equal to 1% of the
then outstanding Voting Shares of the Company and (B) such Person, together with
all Affiliates and Associates of such Person, shall Beneficially Own more than
14% or more of the Voting Shares of the Company then outstanding; or (vi) any
Person that is the Beneficial Owner of 14% or more of the outstanding Voting
Shares of the Company solely as the result of the operation of clause (v) of the
definition of "Beneficial Owner" and "Beneficially Own" if and during such
period as the Board of Directors shall have determined that the operation of
such clause should be waived in the best interests of the Company and its
shareholders; provided, however, that any determination pursuant to this clause
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(vi) shall have been made prior to any change in the composition of the Board of
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Directors following the date that such Person shall have become the Beneficial
Owner of such Voting Shares if such change in composition involved the election
of two or more new members of the Board of Directors. In calculating the
percentage of the outstanding Voting Shares that are Beneficially Owned by a
Person for purposes of this definition, Voting Shares that are Beneficially
Owned by such Person shall be deemed outstanding, and Voting Shares that are not
Beneficially Owned by such Person and that are subject to issuance upon the
exercise or conversion of outstanding conversion rights, exchange rights,
rights, warrants or options shall not be deemed outstanding. Any determination
made by the Board of Directors of the Company as to whether any Person is or is
not an Acquiring Person shall be conclusive and binding upon all holders of
Rights.
"Acquisition Date" shall mean the first date of public announcement (which,
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for purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person containing the facts by virtue of which a Person has become an
Acquiring Person.
A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
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"Beneficially Own" any securities:
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(i) that such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Rule 13d-3 promulgated under the
Exchange Act, in each case as in effect on the date hereof;
(ii) that such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is exercisable
immediately, or only after the passage of time, compliance with regulatory
requirements, the fulfillment of a condition or otherwise) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights (other than these Rights), rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed
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the Beneficial Owner of, or to Beneficially Own, securities tendered
pursuant to a tender offer or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange;
(iii) that such Person or any such Person's Affiliates or Associates
has the right to vote, whether alone or in concert with others, pursuant to
any agreement, arrangement
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or understanding; provided, however, that a Person shall not be deemed the
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Beneficial Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (A) arises solely from a
revocable proxy given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made pursuant to and
in accordance with the applicable rules and regulations promulgated under
the Exchange Act, and (B) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report);
(iv) that are Beneficially Owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting (other than voting pursuant to a revocable
proxy as described in the proviso to clause (iii) of this definition of
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"Beneficial Owner") or disposing of any securities of the Company; and
(v) that, on any day on or after the Distribution Date, evidence
Rights that prior to such date were represented by certificates for Common
Shares that such Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section l, a Person engaged in
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business as an underwriter of securities shall not be deemed to be the
Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition, and a Person
serving as a trustee of any of the Trusts shall not be deemed t o be the
Beneficial Owner of or to own beneficially the Voting Shares held in such Trust.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
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on which banking institutions in the State of California or the State of New
York are authorized or obligated by law or executive order to close.
"Certificate of Determination" shall mean the certificate of determination
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of preferences designating the rights, preferences and privileges of the
Preferred Shares in accordance with the Delaware General Corporation Law.
"Close of Business" on any given date shall mean 5:00 p.m., New York City
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time, on such date; provided, however, that if such date is not a Business Day,
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it shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.
"Closing Price" of a stock or other security on any day shall be the last
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sale price, regular way, per share of such stock or unit of such other security
on such day or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, 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 such stock
or other security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such stock or other security is listed or admitted to trading or, if
such stock or other security is not listed or admitted to trading on any
national
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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 on
the Nasdaq National Market ("NASDAQ") or such other system then in use or, if on
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any such date such stock or other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker that makes a market in such stock or other security
and that is selected by the Board of Directors of the Company.
"Common Share" shall mean one share of the Common Stock of the Company, par
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value $.01 per share, unless used with reference to a Person other than the
Company, in which case it shall mean one share of each class of stock of such
Person having the right to vote generally in the election of directors or, if
such Person is a Subsidiary of another Person, one Common Share of the Person
that ultimately controls such Person.
"Common Share Equivalent" shall have the meaning ascribed to it in Section
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11(a)(iii) hereof.
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"Current Market Price" per share of a stock or unit of any other security
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on any date shall mean the average of the daily Closing Prices of such stock or
other security for the 30 consecutive Trading Days through and including the
Trading Day immediately preceding the date in question; provided, however, that
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if any event shall have caused the Closing Price on any Trading Day during such
30-day period not to be fully comparable with the Closing Price on the date in
question (or, if no Closing Price is available on the date in question, on the
Trading Day immediately preceding the date in question), then each such non-
comparable Closing Price so used shall be appropriately adjusted by the Board of
Directors in order to make the Closing Price on each Trading Day during the
period used for the determination of the Current Market Price fully comparable
with the Closing Price on such date in question (or, if applicable, the
immediately preceding Trading Day). "Current Market Price" per share of any
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stock or unit of such other security that is not publicly held or so listed or
traded, and "Current Market Price" of any other property, shall mean the fair
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value per share of such stock or unit of such other security, or the fair value
of such other property, respectively, as determined in good faith by the Board
of Directors of the Company based upon such appraisals or valuation reports of
such independent experts as the Board of Directors shall in good faith determine
appropriate, which determination shall be described in a statement filed by the
Company with the Rights Agent.
"Distribution Date" shall have the meaning ascribed to it in Section 3
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hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
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"Exempt Person" shall mean the Company, any wholly-owned Subsidiary of the
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Company, any employee benefit plan of the Company or of a Subsidiary of the
Company and any Person holding Voting Shares for or pursuant to the terms of any
such employee benefit plan.
"Exercise Price" shall have the meaning ascribed to it in Section 7(c)
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hereof.
"Expiration Date" shall mean the fifth anniversary of the date of this
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Agreement..
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"Person" shall mean any individual, firm, partnership, corporation,
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association, trust, joint venture, limited liability company, unincorporated
organization, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect on the date hereof) or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preferred Share" shall mean one share of the Series B Junior Participating
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Preferred Stock, par value $.5.00 per share, of the Company, which shall have
the rights, preferences and privileges set forth in the Certificate of
Determination of the Preferences attached to this Agreement as Exhibit A.
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"Preferred Share Equivalents" shall have the meaning ascribed to it in
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Section 11(b) hereof.
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"Record Date" shall have the meaning ascribed to it in the recitals hereto.
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"Redemption Date" shall mean the date of the action of the Board of
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Directors of the Company authorizing and directing the redemption of the Rights
pursuant to Section 23(a) hereof or the exchange of the Rights pursuant to
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Section 24(a) hereof.
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"Redemption Price" shall have the meaning ascribed to it in Section 23(a)
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hereof.
"Right Certificate", as that term is used with respect to any period prior
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to the Distribution Date, shall have the meaning ascribed to it in Section 3(b)
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hereof, and, as that term is used with respect to any period on or after the
Distribution Date, shall have the meaning ascribed to it in Section 3(c) hereof.
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"Rights Expiration Date" shall mean the Expiration Date, except if there
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has been a Distribution Date, then it shall mean the fifth anniversary of the
Distribution Date.
"Section 11(a)(ii) Event" shall have the meaning ascribed to it in Section
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11(a)(ii) hereof.
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"Section 13(a) Event" shall have the meaning ascribed to it in Section
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13(a) hereof.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Subsidiary" of any Person shall mean any corporation or other Person of
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which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
"Surviving Person" shall have the meaning ascribed to it in Section 13(a)
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hereof.
"Trading Day" shall mean, as to any stock or other security, a day on which
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the principal national securities exchange on which such stock or other security
is listed or admitted to trading is open for the transaction of business or, if
such stock or other security is not listed or admitted to trading on any
national securities exchange, a Business Day.
"Voting Share" shall mean (i) a Common Share of the Company and (ii) any
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other share of capital stock of the Company entitled
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to vote generally in the election of directors or entitled to vote together with
the Common Shares in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up. References in this Agreement to a percentage or portion of the outstanding
Voting Shares shall be deemed a reference to the percentage or portion of the
total votes entitled to be cast by the holders of the outstanding Voting Shares.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable upon ten days prior written notice to the Rights Agent.
The Rights Agent shall have no duty to supervise, and in no event shall be
liable for, the acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
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(a) "Distribution Date" shall mean the date, after the date hereof, that
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is the earliest of (i) the tenth Business Day (or such later day as shall be
designated by the Board of Directors of the Company) following the date of the
commencement of, or the first public announcement of the intent of any Person
(other than an Exempt Person or the Trusts) to commence, a tender offer or
exchange offer, the consummation of which would cause any Person to become an
Acquiring Person, (ii) the date of the first Section 11(a)(ii) Event or (iii)
the date of the first Section 13(a) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of the Common Shares representing the corresponding Rights. Until the earliest
of the Distribution Date, the Redemption Date or the Expiration Date, the
surrender for transfer of such certificates for Common Shares shall also
constitute the surrender for transfer of the corresponding Rights represented
thereby.
(c) As soon as practicable on or after the Distribution Date, the
Company shall promptly notify the Rights Agent in writing of the occurrence of
the Distribution Date and provide the Rights Agent with the names and addresses
of all record holders of Common Shares (together with all other necessary
information), and after such notification by the Company, the Rights Agent shall
send to each record holder of Common Shares as of the Close of Business on the
Distribution Date, or as soon as practicable thereof, a Right Certificate
substantially in the form of Exhibit B hereto representing one Right for each
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Common Share held. Such Right Certificates shall be sent at the Company's
expense by first-class mail, postage prepaid to the address of each such record
holder shown on the records of the Company. From and after the Distribution
Date, the Rights shall be represented solely by such Right Certificates and may
only be transferred by the transfer of such Right Certificates and the holders
of such Right Certificates (as listed in the records of the Company or any
transfer agent or registrar for such Rights) shall be the record holders of such
Rights.
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(d) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of (i) the Distribution Date, (ii) the Redemption
Date or (iii) the Expiration Date, shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement dated as of January 22, 2001 by
and between Sizzler International, Inc. and The Bank of New York, as Rights
Agent (the "Rights Agreement"), as amended to date, the terms and
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conditions of which are incorporated herein by reference and a copy of
which is on file at the principal executive offices of Sizzler
International, Inc.. Under certain circumstances specified in the Rights
Agreement, such Rights will be represented by separate certificates and
will no longer be represented by this certificate. Under certain
circumstances specified in the Rights Agreement, Rights beneficially owned
by certain Persons may become null and void. Sizzler International, Inc.
will mail to the record holder of this certificate a copy of the Rights
Agreement without charge promptly following receipt of a written request
therefore. As described in the Rights Agreement, Rights Beneficially Owned
by any Person who becomes an Acquiring Person or any Affiliate or Associate
of an Acquiring Person (as such capitalized terms are defined in the Rights
Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
(e) Certificates for Common Shares issued at any time on or after the
Distribution Date and prior to the earlier of the Redemption Date or the Rights
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate does not represent any Right issued pursuant to the terms
of a Right Agreement dated as of January 22, 2001 by and between Sizzler
International, Inc. and The Bank of New York, as Rights Agent.
(f) In the event that at any time on or after the earlier of (i) the
date of the first Section 11(a)(ii) Event or (ii) the date of the first Section
13(a) Event and prior to the earlier (x) of the Redemption Date or (y) the
Rights Expiration Date, the Company shall issue any Common Shares pursuant to
the exercise of conversion rights, exchange rights, rights (other than Rights),
warrants
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or options that shall have been issued or granted prior to the earlier of (A)
the date of the first Section 11(a)(ii) Event or (B) the date of the first
Section 13(a) Event, then, unless the Board of Directors of the Company shall
have provided otherwise at the time of the issuance or grant of such conversion
rights, exchange rights, rights (other than Rights), warrants or options, the
Rights Agent shall, as soon as practicable after the date of such event and
after written notice from the Company of such event, send a Right Certificate
substantially in the form of Exhibit B hereto representing one Right for each
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Common Share so issued by first-class, postage-prepaid mail to the record holder
of such Common Shares at the address of such holder as shown on the records of
the Company.
(g) Notwithstanding the foregoing provisions of this Section, the Rights
Agent shall not send any Right Certificate to any Acquiring Person or any of its
Affiliates or Associates or to any Person if the Rights held by such Person are
Beneficially Owned by an Acquiring Person or any of its Affiliates or
Associates. Any determination made by the Board of Directors of the Company as
to whether any Common Shares are or were Beneficially Owned at any time by an
Acquiring Person or an Affiliate or Associate of an Acquiring Person shall be
conclusive and binding upon all holders of Rights.
Section 4. Form of Right Certificates. The Right Certificates and the form
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of assignment, including certificate, and the form of election to purchase,
including certificate, printed on the reverse thereof, when, as and if issued,
shall be substantially the same as Exhibit B hereto. Such instruments and
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documents may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
(provided that such marks, legends, summaries and endorsements do not affect the
rights, duties or responsibilities of the Rights Agent) 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 upon which the
Rights or the securities of the Company issuable upon exercise of the Rights may
from time to time be listed, or to conform to usage. Subject to Section 22
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hereof, Right Certificates, whenever issued, that are issued in respect of
Common Shares that were issued and outstanding as of the Close of Business on
the Distribution Date, shall be dated as of the Distribution Date.
Section 5. Countersignature and Registration.
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(a) The Right Certificates shall be executed on behalf of the Company by
any of its Chairman of the Board, its Vice Chairman of the Board, its President
or any Vice President, either manually or by facsimile signature, and may have
affixed thereto the Company's seal or a facsimile thereof attested to by its
Secretary or any Assistant Secretary, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be an officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may nevertheless
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be an officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any person who is a proper
officer of the Company to sign such Right Certificate as of the actual date of
such execution, even though such person was not a proper officer at the date of
the execution of this Agreement.
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(b) In case any authorized signatory of the Rights Agent who shall have
countersigned any of the Right Certificates shall cease to be such signatory
before delivery by the Company, such Right Certificates, nevertheless, may be
issued and delivered by the Company with the same force and effect as though the
person who countersigned such Right Certificates had not ceased to be such
signatory; and any Right Certificate may be countersigned on behalf of the
Rights Agent by any person who, at the actual date of the countersignature of
such Right Certificate, shall be a proper signatory of the Rights Agent to
countersign such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such a signatory.
(c) Following the Distribution Date and receipt by the Rights Agent of
all relevant information not in the Rights Agent's control or possession, the
Rights Agent shall keep or cause to be kept at its offices designated for such
purpose pursuant to Section 26 books for registration and transfer of the Right
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Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of Right Certificates, the number of Rights represented
on its face by each Right Certificate and the date of each Right Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
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any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split-up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall deliver such request in
writing to the Rights Agent, and shall surrender the Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose with the form of assignment, including certificate,
on the reverse side thereof completed and duly executed, with signature
guaranteed. Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have properly completed and
signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate. Thereupon, the Rights Agent shall countersign and
deliver to the Person entitled thereto one or more Right Certificates, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates. The Rights Agent shall
have no duty or obligation under this Section 6 or any other similar provision
of this Agreement unless and until it is reasonably satisfied that all such
taxes and/or governmental charges have been paid in full.
(b) Upon receipt by the Company and the Rights Agent of evidence
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of such Right
Certificate if mutilated, the Company shall issue and deliver to the Rights
Agent for delivery to the record
9
holder of such Right Certificate a new Right Certificate of like tenor in lieu
of such lost, stolen, destroyed or mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
---------
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Right Certificate represents, or would represent when held by such
Person, Rights that had become or would become null and void pursuant to Section
7(d) hereof.
---
Section 7. Exercise of Rights.
------------------
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
----------- -
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption Date or the
Rights Expiration Date, the registered holder of any Right Certificate may
exercise the Rights represented thereby in whole or in part upon surrender of
such Right Certificate, with the form of election to purchase, including
certificate, on the reverse side thereof completed and duly executed, with
signature guaranteed, to the Rights Agent at the office of the Rights Agent at
The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Equity Tender and
Exchange, New York, New York, 10286, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Assistant
Treasurer, together with payment of the Exercise Price for each Right exercised.
Upon the exercise of an exercisable Right and payment of the Exercise Price in
accordance with the provisions of this Agreement, the holder of such Right shall
be entitled to receive, subject to adjustment as provided herein, one one-
hundredth of a Preferred Share (or, following the occurrence of a Section
11(a)(ii) Event or a Section 13(a) Event, Common Shares and/or other
securities).
(c) The "Exercise Price" for the exercise of each Right shall initially
--------------
be $10.00 and shall be payable in lawful money of the United States of America
in accordance with Section 7(f) hereof. The Exercise Price and the number of
-----------
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event, Common Shares and/or other securities) to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.
------------ -- --
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the earlier of (i) the date of the first Section 11(a)(ii) Event and (ii)
the date of the first Section 13(a) Event, any Rights that are or were
Beneficially Owned by an Acquiring Person or any Affiliate or Associate of an
Acquiring Person at any time on or after the Distribution Date shall be null and
void, and for all purposes of this Agreement such Rights shall thereafter be
deemed not to be outstanding, and any holder of such Rights (whether or not such
holder is an Acquiring Person or an Affiliate or Associate of an Acquiring
Person) shall thereafter have no right to exercise such Rights.
(e) Prior to the Distribution Date, if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred Shares that would otherwise be issuable after
the Close of Business on the Distribution Date and upon the
10
exercise of each Right and payment of the Exercise Price: (i) cash, (ii) other
equity securities of the Company, (iii) debt securities of the Company, (iv)
other property or (v) any combination of the foregoing, in each case having an
aggregate Current Market Price equal to the aggregate Current Market Price of
the Preferred Shares for which substit ution is made. Subject to Section 7(d)
-----------
hereof, in the event that the Company takes any action pursuant to this Section
-------
7(e), such action shall apply uniformly to all outstanding Rights.
---
(f) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase, including certificate, properly completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable tax or governmental charge required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof by certified check or
---------
cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from the transfer agent of the Preferred
Shares (or, following the occurrence of a Section 11(a)(ii) Event or a Section
13(a) Event, Common Shares and/or securities) certificates for the number of
Preferred Shares or such other securities) to be purchased, and the Company
hereby irrevocably authorizes such transfer agent to comply with all such
requests, and/or, as provided in Section 14 hereof, requisition from the
----------
depositary agent described therein depositary receipts representing such number
of one-hundredths of a Preferred Share or such other securities as are to be
purchased (in which case certificates for the Preferred Shares or such other
securities represented by such receipts shall be deposited by the transfer agent
with such depositary agent), and the Company hereby directs such depositary
agent to comply with such request, (ii) when necessary to comply with this
Agreement, requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional Preferred Shares or such other securities in accordance
with Section 14 hereof, (iii) after receipt of such certificates, depositary
----------
receipts or cash, cause the same to be delivered to or upon the order of the
registered holder, of such Right Certificate, registered in such name or names
as may be designated by such holder, and (iv) when necessary to comply with this
Agreement, after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
---------
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register and qualify the Preferred
Shares and/or Common Shares or other securities to be issued pursuant to the
exercise of the Rights under the Securities Act and any applicable securities
law of any jurisdiction; provided, however, that nothing contained in this
-------- -------
Section 7 shall relieve the Company of its obligations under Section 9(c)
--------- -----------
hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
----------
(i) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
whatsoever with respect to a registered holder of Rights upon the occurrence of
any purported exercise as set forth in this Section 7, unless the certificate
---------
contained in the form of election to purchase set forth on the
11
reverse side of the Rights Certificate surrendered for such exercise shall have
been duly completed and signed by the registered holder thereof and the Company
shall have been provided with such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall request.
(j) Neither the Company nor the Rights Agent shall have any liability to
any holder of Rights or any other Person as a result of the Company's failure to
make any determination under this Section 7 or any other section with respect to
---------
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Section 8. Cancellation and Destruction of Right Certificates. All Right
--------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall (i) if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or (ii) if surrendered to the Rights Agent, shall be canceled by the Rights
Agent, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent promptly shall
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise of such Right Certificate. The Rights
Agent shall deliver all canceled Right Certificates to the Company or shall, at
the written request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Sections 7(e) and 9(f) hereof, the Company shall cause to
------------ ---
be reserved and kept available out of its authorized and unissued equity
securities the number of such equity securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register and qualify such securities under the Securities
Act, the Exchange Act and any other applicable securities laws and to keep such
registration effective until the earlier of the Redemption Date or the Rights
Expiration Date.
(d) The Company shall take all such action as may be necessary to ensure
that all securities delivered upon exercise of the Rights shall, at the time of
delivery of the certificates for such securities (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable securities.
12
(e) The Company shall pay when due and payable any and all taxes and
charges that may be payable in respect of the issuance or delivery of the Right
Certificates or of any securities upon the exercise of Rights. The Company shall
not, however, be required to pay any tax or charge that may be payable in
respect of any transfer or delivery of a Right Certificate to a Person other
than, or the issuance or delivery of a certificate for securities in respect of
a name other than that of, the registered holder of the Right Certificate
representing Rights surrendered for exercise, or to issue or deliver any
certificate for securities upon the exercise of any Right until any such tax or
charge shall have been paid (such tax or charge being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or charge is due.
(f) With respect to the Common Shares and/or other securities issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
---------------- ----
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.
Section 10. Securities Record Date. Each Person in whose name any
----------------------
certificate for securities of the Company is issued upon the exercise of Rights
shall be deemed to have become the holder of record of the securities
represented thereby for all purposes on, and such certificate shall be dated,
the date upon which the Right Certificate representing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable taxes and
governmental charges) was made; provided, however, that if the date of such
-------- -------
surrender and payment is a date upon which the securities transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be dated, the next succeeding
Business Day on which the securities transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable Upon
------------------------------------------------------------
Exercise of Rights or Number of Rights. The Exercise Price, the number and kind
--------------------------------------
of securities that may be purchased upon exercise of a Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
----------
(a)(i) In the event that the Company shall at any time after the Close
of Business on the Record Date and prior to the Close of Business on the
earlier of the Redemption Date or the Rights Expiration Date (A) declare or
pay any dividend on the Preferred Shares payable in Preferred Shares or
Voting Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares
or (D) issue Preferred Shares or other securities of the Company (other
than those issuances for which an adjustment is required under Section
-------
11(b) hereof) in a reclassification of the Preferred Shares (including any
-----
such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) or in a
reorganization of the Company, then, and upon each such event, the number
and kind of Preferred Shares or other securities issuable upon the exercise
of a Right on the date of such event shall be proportionately adjusted so
that the holder of any Right exercised on or after such date shall be
entitled to receive, upon the exercise thereof and payment of the Exercise
Price, the aggregate number and kind of Preferred Shares or other
securities or other property, as the case may be, that, if such Right had
been exercised immediately prior to such date and at a time when such Right
was exercisable
13
and the transfer books of the Company were open, such holder would have
owned upon such exercise and would have 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) hereof, the adjustment provided for in this Section
----------------- -------
11(a)(i) shall be in addition to, and shall be made prior to, any
--------
adjustment required under Section 11(a)(ii) hereof.
-----------------
(ii) In the event that an Acquisition Date shall have occurred and
neither the Redemption Date nor the Expiration Date shall have occurred
prior to the tenth Business Day following such Acquisition Date (a "Section
-------
11(a)(ii) Event"), then, and upon each such Section 11(a)(ii) Event, proper
---------------
provision shall be made so that, except as provided in Section 7(d) hereof,
------------
each holder of a Right shall thereafter have the right to receive, upon the
exercise thereof in accordance with the terms of this Agreement and payment
of the then current Exercise Price, the number of Common Shares of the
Company as equals the result obtained by (A) multiplying the then current
Exercise Price by the then number of one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to such Section
11(a)(ii) Event (or, if the Distribution Date shall not have occurred prior
to the date of such Section 11(a)(ii) Event, the number of one-hundredths
of a Preferred Share for which a Right would have been exercisable if the
Distribution Date had occurred on the Business Day immediately preceding
the date of such Section 11(a)(ii) Event), and (B) dividing that product by
50% of the Current Market Price of a Common Share on the date of occurrence
of the relevant Section 11(a)(ii) Event (such number of shares being
hereinafter referred to as the "Adjustment Shares"). Successive
-----------------
adjustments shall be made pursuant to this paragraph each time a Section
11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii) Event the
aggregate number of Common Shares that are authorized by the Company's
Certificate of Incorporation, as amended from time to time, but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is less than the aggregate number of Adjustment Shares
thereafter issuable upon the exercise in full of the Rights in accordance
with Section 11(a)(ii) hereof (the excess of such number of Adjustment
-----------------
Shares over and above such number of Common Shares being hereinafter
referred to as the "Unavailable Adjustment Shares"), then, and upon each
-----------------------------
such event, the Company shall substitute for the pro rata portion of the
Unavailable Adjustment Shares that would otherwise be issuable thereafter
upon the exercise of each Right and payment of the Exercise Price (A) cash,
(B) other equity securities of the Company (including, without limitation,
shares of preferred stock of the Company or units of such shares having the
same Current Market Price as one Common Share (a "Common Share
------------
Equivalent")), (C) debt securities of the Company, (D) other property or
----------
(E) any combination of the foregoing, in each case having an aggregate
Current Market Price equal to the aggregate Current Market Price of the
Unavailable Adjustment Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action
------------
pursuant to this Section 11(a)(iii), such action shall apply uniformly to
------------------
all outstanding Rights.
14
(b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Rights Expiration Date, fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling such holders (for a period of expiring within 45 Calendar days after
such record date) initially to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the Preferred
Shares ("Preferred Share Equivalents")) or securities convertible into Preferred
---------------------------
Shares or Preferred Share Equivalents, at a price per Preferred Share or
Preferred Share Equivalent (or having a conversion price per share, if a
security convertible into Preferred Shares or Preferred Share Equivalents) less
than the Current Market Price per Preferred Share on such record date, then, and
upon each such event, the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be equal
to the sum of the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares that the aggregate offering price of the
total number of Preferred Shares and/or Preferred Share Equivalents to be so
offered (and/or the aggregate initial conversion price of the convertible
securities to be so offered) would purchase at such Current Market Price, and
the denominator of which shall be equal to the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred Shares
and/or Preferred Share Equivalents to be offered for subscription or purchase
(or into which the convertible securities to be so offered are initially
convertible); provided, however, that in no event shall the consideration to be
-------- -------
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right;
provided, however, that if such rights, options or warrants are not exercisable
-------- -------
immediately upon issuance but become exercisable only upon the occurrence of a
specified event or the passage of a specified period of time, then the
adjustment to the Exercise Price shall be made and become effective only upon
the occurrence of such event or such passage of time, and such adjustment shall
be made as if the record date for the issuance of such rights, options or
warrants had been the Business Day immediately preceding the date upon which
such rights, options or warrants became exercisable. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment to the Exercise Price shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Exercise Price shall be adjusted
to be the Exercise Price that would then be in effect if such record date had
not been fixed.
(c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Rights Expiration Date, fix a record date for the
making of a distribution of assets to all holders of the Preferred Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the surviving corporation, other than a
distribution for which an adjustment is required under Section 11(a)(i) or (b)
---------------- ---
hereof or a regular quarterly cash dividend), then the Exercise Price to be in
effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be equal to the excess of the Current Market Price per
Preferred Share on such record date over and above the fair market value of the
portion of the securities or assets to be so distributed with respect to one
Preferred Share, and the denominator of which shall be equal to such Current
Market Price per Preferred Share; provided, however, that in no event shall the
-------- -------
consideration to be paid upon the exercise of one Right be less than the
aggregate par value
15
of the shares of capital stock of the Company issuable upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed, and in the event that such a distribution is not so made, the Exercise
Price shall be adjusted to be the Exercise Price that would then be in effect if
such record date had not been fixed.
(d) For the purpose of any computation under this Section 11, if the
----------
Preferred Shares are not publicly held or traded, the "Current Market Price" per
--------------------
Preferred Share conclusively shall be deemed to be the Current Market Price per
Common Share multiplied by 100.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the then
current Exercise Price; provided, however, that any adjustments that are not
-------- -------
required to be made by reason of this Section 11(e) shall be cumulated and taken
-------------
into account in any subsequent adjustment. All calculations under this Section
-------
11 shall be made to the nearest cent or to the nearest one-thousandth of a
--
Common Share or other share or one-millionth of a Preferred Share, as the case
may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
-------------
hereof, the holder of any Right shall be entitled to receive any securities of
the Company other than Preferred Shares upon exercise of such Right, and if an
event occurs in respect of such securities that, if it were to occur in respect
of Preferred Shares, would require an adjustment under this Section 11 in
----------
respect of Preferred Shares, then the number of such other securities so
receivable upon exercise of each Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Preferred Shares contained in this Section 11, and
----------
the other provisions of this Agreement with respect to Preferred Shares shall
apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) below, upon each adjustment of the Exercise Price as a result of
-------------
the calculations made in Sections 11(b) and (c) hereof, each Right outstanding
-------------- ---
immediately prior to the making of such adjustment shall thereafter represent
the right to purchase, at the adjusted Exercise Price, that number of one-
hundredths of a Preferred Share (calculated to the nearest one-millionth of a
Preferred Share) obtained by multiplying (i) the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right immediately prior to
such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such adjustment, and dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of the
Exercise Price, to adjust the number of Rights instead of making any adjustment
in the number of Preferred Shares purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that
16
number of Rights (calculated to the nearest one one-thousandth of a Right)
obtained by dividing the Exercise Price in effect immediately prior to the
adjustment of the Exercise Price by the Exercise Price in effect immediately
after such adjustment of the Exercise Price. The Company shall promptly notify
the Rights Agent in writing of any such election and shall make a public
announcement of its election to adjust the number of Rights pursuant to this
Section 11(i), indicating the record date for the adjustment and, if known at
-------------
the time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least ten days
after the date of such public announcement. If separate Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause Right
-------------
Certificates representing the additional Rights to which such holders are
entitled as a result of such adjustment to be distributed, subject to Section 14
----------
hereof, to holders of record of Right Certificates on such record date or, at
the option of the Company, cause new Right Certificates representing all the
Rights to which such holders are entitled after such adjustment to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of such adjustment,
and upon surrender thereof if required by the Company. Right Certificates to be
so distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of one-hundredths of a Preferred Share issuable upon the exercise of one
Right, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(l) In any case in which this Section 11 shall require that an adjustment
----------
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer (with prompt written notice thereof to the
Rights Agent), until the occurrence of such event, the issuance to the holder of
any Right exercised after such record date of the number of one-hundredths of a
Preferred Share and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one-hundredths of a
Preferred Share and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
-------- -------
holder a due ▇▇▇▇ or other appropriate instrument representing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
17
(m) Notwithstanding anything to the contrary in this Section 11, the
----------
Company shall be entitled to make such further adjustments in the number of one-
hundredths of a Preferred Share that may be purchased upon exercise of one
Right, and such further adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that the
----------
Company in its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly
for cash of any Preferred Shares at less than the Current Market Price thereof,
(iii) issuance wholly for cash of Preferred Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares, (iv) dividends
on Preferred Shares payable in Preferred Shares or (v) issuance of rights,
options or warrants referred to in Section 11(b) hereof, hereafter made by the
-------------
Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(n) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earliest
of (i) the date of the first Section 11(a)(ii) Event, (ii) the date of the first
Section 13(a) Event, (iii) the Redemption Date or (iv) the Rights Expiration
Date, either (A) pay any dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of Common Shares or (D) issue Common Shares in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and upon each such event, the Exercise Price to
be in effect after such event shall be determined by multiplying the Exercise
Price in effect immediately prior to such event by a fraction, the numerator of
which shall be the number of Common Shares outstanding immediately prior to such
event and the denominator of which shall be the number of Common Shares
outstanding immediately after such event. Successive adjustments shall be made
pursuant to this Section 11(n) each time such a dividend is paid or such a
-------------
subdivision, combination or reclassification is effected. If an event occurs
that would require an adjustment under both this Section 11(n) and Section
------------- -------
11(a)(ii) hereof, the adjustment provided for in this Section 11(n) shall be in
--------- -------------
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
-----------------
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
----------------------------------------------------------
Issuable Upon Exercise of Rights. Whenever an adjustment is made as provided in
--------------------------------
Section 11 hereof, the Company shall promptly (a) prepare a certificate setting
----------
forth such adjustment and a brief, reasonably detailed, statement of the facts,
methodology and computations giving rise to such adjustment, (b) file with the
Rights Agent and with each transfer agent for the securities issuable upon
exercise of the Rights a copy of such certificate and (c) mail a brief summary
thereof to each holder of Rights in accordance with Section 25 hereof.
----------
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or to give such notice shall not affect the validity or the force
and effect of such adjustment. Any adjustment to be made pursuant to Sections
--------
11 or 13 hereof shall be effective as of the date of the event giving rise to
-- --
such adjustment. The Rights Agent shall be fully authorized and protected in
relying on any such certificate and on any adjustment therein contained, and
shall not be obligated or responsible for calculating any adjustment nor shall
it be deemed to have any duty with respect to or any knowledge of such an
adjustment unless and until it shall have received such certificate.
18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power.
-----
(a) In the event (a "Section 13(a) Event") that, at any time on or after
-------------------
the Acquisition Date and prior to the earlier of the Redemption Date or the
Rights Expiration Date, (1) the Company shall, directly or indirectly,
consolidate with or merge with and into any other Person and the Company shall
not be the continuing or surviving corporation in such consolidation or merger,
(2) any Person shall, directly or indirectly, consolidate with or merge with and
into the Company and the Company shall be the continuing or surviving
corporation in such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any Person or cash or any other property, or (3) the Company
and/or any one or more of its Subsidiaries shall, directly or indirectly, sell
or otherwise transfer, in one or more transactions (other than transactions in
the ordinary course of business), 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 one or more of its
wholly-owned Subsidiaries (such Persons, together with the Persons described in
clauses (1) and (2) above shall be collectively referred to in this Section as
----------- --
the "Surviving Person"), then, and in each such case, proper provision shall be
----------------
made so that:
(i) except as provided in Section 7(d) hereof, each holder of a Right
------------
shall thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement and payment of the then current
Exercise Price, in lieu of the securities or other property otherwise
purchasable upon such exercise, such number of validly authorized and
issued, fully paid and nonassessable Common Shares of the Surviving Person
(and if such Surviving Person has more than one class or series of Common
Shares, such number of validly authorized and issued, fully paid and
nonassessable Common Shares of each series or class) as shall be equal to a
fraction, the numerator of which is:
(A) if a Section 11(a)(ii) Event has not occurred prior to such
Section 13(a) Event, the product of the then current Exercise Price
multiplied by the number of one-hundredths of a Preferred Share
purchasable upon the exercise of one Right immediately prior to the
first Section 13(a) Event (or, if the Distribution Date shall not have
occurred prior to the date of such Section 13(a) Event, the number of
one-hundredths of a Preferred Share that would have been so
purchasable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 13(a) Event), or
(B) if a Section 11(a)(ii) Event has occurred prior to such
Section 13(a) Event, the product of the Exercise Price in effect
immediately prior to such Section 11(a)(ii) Event multiplied by the
number of one-hundredths of a Preferred Share purchasable upon the
exercise of one Right immediately prior to such Section 11(a)(ii)
Event (or, if the Distribution Date shall not have occurred prior to
the date of such Section 11(a)(ii) Event, the number of one-hundredths
of a Preferred Share that would have been so purchasable if the
Distribution Date had occurred on the Business Day immediately
preceding the date of such Section 11(a)(ii) Event),
19
and the denominator of which is 50% of the Current Market Price per Common
Share of the Surviving Person on the date of consummation of such Section
13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to the
Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as
---------
may be necessary to ensure that the provisions hereof shall thereafter be
applicable to its Common Shares thereafter deliverable upon the exercise of
Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the sale
or transfer in one or more transactions of assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), but less than 100% thereof, then each Person acquiring all
or a portion thereof shall assume the obligations of the Company as to a
fraction of each of the Rights equal to the fraction of the assets of the
Company and its Subsidiaries (taken as a whole) acquired by such Person, and the
obligations of the Company as to the remaining fraction of each of the Rights
shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the Surviving Person shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Surviving
Person shall, upon consummation of such Section 13(a) Event, assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
----------
or preemptive rights in respect of the issuance of Common Shares of such
Surviving Person upon exercise of outstanding Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving Person
under this Agreement, and further providing that, as soon as practicable after
the date of consummation of such Section 13(a) Event, such Surviving Person
shall:
(i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing, use its best efforts to cause such registration statement to
remain effective until the Rights Expiration Date (with a prospectus at all
times meeting the requirements of the Securities Act), and similarly comply
with all applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the Common Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to cause the Rights and such Common Shares to meet the eligibility
requirements for quotation on NASDAQ; and
20
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(d) In the event that at any time after the occurrence of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof prior to the date of a Section 13(a) Event, such Rights
----------
shall thereafter be exercisable only in the manner described in Section 13(a)
-------------
hereof. In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
----------
hereof but shall instead be exercisable pursuant to, and only pursuant to, this
Section 13.
----------
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates that represent fractional Rights. If the Company
shall determine not to issue such fractional Rights, the Company shall pay to
the registered holders of the Right Certificates with respect to which such
fractional Rights would otherwise be issuable, at the time such fractional
Rights would otherwise have been issued as provided herein, an amount in cash
equal to the same fraction of the Current Market Price of a whole Right on the
Business Day immediately prior to the date upon which such fractional Rights
would otherwise have been issuable.
(b) The Company shall not be required to issue fractions of Common Shares
or Preferred Shares upon exercise of Rights (other than fractions that are
integral multiples of one one-hundredth of a Preferred Share), or to distribute
certificates that represent fractional Common Shares or Preferred Shares (other
than fractions that are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-
hundredth of a Preferred Share may, at the election of the Company, be
represented by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, however, that any such
-------- -------
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of Preferred Shares. If the Company shall determine not to
issue fractional Common Shares or Preferred Shares (or depositary receipts in
lieu of Preferred Shares), the Company shall promptly notify the Rights Agent in
writing thereof and shall pay to the registered holders of Right Certificates to
whom such fractional Common Shares or Preferred Shares would otherwise be
issuable, at the time such Rights are exercised as provided herein, an amount in
cash equal to the same fraction of the Current Market Price of a whole Common
Share or Preferred Share, as the case may be. For purposes of this Section
-------
14(b), the Current Market Price of a whole Common Share or Preferred Share shall
-----
be the Closing Price per share for the Trading Day immediately prior to the date
of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Common Shares or Preferred Shares upon exercise of such Right, except as
permitted by this Section 14.
----------
21
(d) The Rights Agent shall have no duty or obligation with respect to this
Section 14 unless and until it has received specific instructions (and
----------
sufficient cash, if required) from the Company with respect to its duties and
obligations under such Section.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, except the rights of action given to the Rights Agent under Section
-------
18 and Section 20 hereof, are vested in the respective registered holders of the
-- ----------
Right Certificates and certificates for Common Shares representing Rights, and
any registered holder of any Right Certificate or of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer (with all required certifications
completed) and such further documentation as the Rights Agent may require; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby for all purposes whatsoever (notwithstanding
any notations of ownership or writing on the Right Certificate by anyone other
than the Company or the Rights Agent), and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive
22
order promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however, that
-------- -------
the Company must use commercially reasonable efforts to have any such order,
decree, judgment or ruling lifted, rescinded or otherwise overturned as soon as
possible.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
------------------------------------------------------
Shareholder. No holder, as such, of any Right or Right Certificate shall be
-----------
entitled to vote, receive dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right or Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
----------
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses, its fees and disbursements of counsel
and other disbursements incurred in the preparation, delivery, acceptance,
administration, execution and amendment of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold the Right Agent harmless against, any loss,
liability, damage, judgment, ruling (interlocutory or final), fine, penalty,
claim, demand, settlement, cost or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent (as finally
determined by a court of competent jurisdiction or arbitrational tribunal if any
such matter is submitted to binding arbitration), for any action taken, suffered
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement or the exercise or performance of its duties
hereunder, 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 shall be authorized to conclusively rely upon and
shall be protected and shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with the acceptance and
administration of this Agreement in reliance upon any Right Certificate or
certificate for Preferred Shares or Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice or opinion of its counsel as set forth in Section 20
----------
hereof. The Rights Agent shall not be deemed to have any duty or notice unless
and
23
until the Company has provided the Rights Agent with actual written notice
to the extent required hereunder.
(c) Notwithstanding anything to the contrary in this Agreement, in no
event shall the Rights Agent be liable for special, punitive, indirect
incidental 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 possibility of such loss or damage and regardless of the form of the action.
Any liability of the Rights Agent under this Agreement shall be limited to the
amount of fees paid by the Company to the Rights Agents.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into 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 shall be a party, or any Person succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
-------- -------
successor Rights Agent under the provisions of Section 21 hereof. If any of the
----------
Right Certificates shall have been countersigned but not delivered at the time
such successor Rights Agent succeeds to the agency created by this Agreement,
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and if at
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
and effect provided in such Right Certificate and in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
and effect provided in such Right Certificate and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions (and no implied duties or obligations shall be read into
this Agreement), by all of which terms and conditions the Company and the
holders of Right Certificates, by their acceptance of the Rights, shall be
bound:
(a) Before the Rights Agent acts or refrains from acting, it may consult
with legal counsel (who may be legal counsel for the Company), and the advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent, and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in good faith and in
accordance with such advice or opinion.
24
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting to
take any action hereunder, such fact or matter may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the
Board, the Vice Chairman of the Board, the President, any Vice President, the
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent (unless other evidence in respect thereof is specifically
prescribed herein); and such certificate shall be full authorization and
protection to the Rights Agent, and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted in good faith by it
under the provisions of this Agreement in reliance upon such certificate (unless
other evidence in respect thereof is specifically prescribed herein).
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct
(as finally determined by a court of competent jurisdiction or arbitrational
tribunal if any such matter is submitted to binding arbitration); provided,
however, that the Rights Agent shall not be liable for indirect, special or
consequential damages.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability for, nor be under any
responsibility regarding the validity of this Agreement or the execution and
delivery hereof (except the due authorization, execution and delivery of this
Agreement by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall the Rights
Agent be responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall the Rights
Agent have any liability for, nor be responsible for any change in the
exercisability of the Rights (including any Rights becoming null and void
pursuant to Section 7(d) hereof) or any adjustment in the terms of the Rights
------------
provided for in Sections 7, 11, 13 and 23 hereof (including the manner, method
---------- -- -- --
or amount thereof), or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights represented by Right Certificates after actual notice that such change or
adjustment is required); nor shall the Rights Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares or other securities to be
issued pursuant to this Agreement or any Right Certificate, or as to whether any
Preferred Shares or Common Shares or other securities will be validly authorized
and issued, fully paid and nonassessable when issued.
(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.
25
(g) The Rights Agent is hereby authorized and directed to accept the
advice or instructions regarding the performance of its duties hereunder from
any one of the Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Chief Financial Officer, the Secretary or the Treasurer of the
Company, and to seek advice or instructions from such officers in connection
with its duties under this Agreement, and such advice or instructions shall be
full authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or omitted to
be taken by it in good faith in accordance with such advice or instructions or
for any delay in acting while waiting for such advice or instructions. Any
application by the Rights Agent for written advice or instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken, suffered or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or suffered
or such omission shall be effective. The Rights Agent shall not be liable for
any action taken or suffered 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
such officer shall have consented in writing to an earlier date) unless, prior
to taking or suffering any such action (or the effective date in the case of an
omission), the Rights Agent receives written advice or instructions from the
Company in response to such application to the contrary. The Rights Agent may
conclusively rely on the most recent advice or instructions given by any such
officer.
(h) The Rights Agent and any shareholder, affiliate, 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 take a pecuniary interest in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
(as finally determined by a court of competent jurisdiction or arbitrational
tribunal to which any such action may be submitted for binding arbitration) in
the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not assured to it.
(k) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination under this Agreement (including,
without limitation, any dates or events defined in this Agreement or the
designation of any Person as an Acquiring Person, Affiliate or Associate) unless
and until the Rights Agent is specifically notified by the Company of such fact,
event or determination in writing.
26
(l) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
properly completed, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company; provided, however, that the Rights Agent shall be protected and shall
-------- -------
incur no liability for or in respect of any action taken, suffered or omitted in
connection with any such Rights Certificate surrendered to the Rights Agent for
exercise or transfer, absent gross negligence, bad faith or willful misconduct
(as determined by a court of competent jurisdiction or arbitrational tribunal to
which any such action may be submitted for binding arbitration). The Company
agrees to give the Rights Agent prompt written notice of any event or ownership
of which the Company is aware that would prohibit the exercise or transfer of
the Rights Certificates.
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' written notice mailed to the Company and to each transfer agent of
the Common Shares and Preferred Shares by registered or certified mail, and, at
the expense of the Company to the holders of the Right Certificates by first-
class mail. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' written notice, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and Preferred Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting as such, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the Company shall become the Rights Agent and
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (i)
a Person organized, in good standing, and doing business under the laws of the
United States or of the States of New York or California (or of any other state
of the United States so long as such Person is authorized to do business in the
States of New York or California), with a principal office in New York or
California, that is authorized under such laws to conduct shareholder services
business or exercise stock transfer powers and is subject to supervision or
examination by federal or state authority and that has a combined capital and
surplus of at least $50,000,000 at the time of its appointment as Rights Agent
or (ii) an Affiliate of such Person described in clause (i) of this sentence
----------
that, in the determination of the Board of Directors and its advisors, is
capable of performing and fulfilling all of the rights, obligations,
responsibilities and duties of a Rights Agent hereunder. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; provided, however, that the predecessor Rights Agent shall
-------- -------
deliver and transfer to the successor Rights Agent any property at the time held
by the predecessor Rights Agent hereunder, and shall execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose of this
Agreement
27
and so that the successor Rights Agent may appropriately act as Rights Agent
hereunder. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares, and shall
mail a notice thereof in writing to the registered holders of the Right
Certificates; provided, however, that neither the failure to give any notice
-------- -------
provided for in this Section 21 nor any defect therein shall affect the legality
----------
or validity of the resignation or removal of the predecessor Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Agreement or of the Right Certificates to the contrary,
the Company may, at its option, issue new Right Certificates in such form as may
be approved by the Board of Directors in order to reflect any adjustment or
change in the Exercise Price and the number or kind or class of shares or other
securities or property issuable or purchasable upon exercise of the Rights in
accordance with the provisions of this Agreement.
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of (i) the date of the first Section 11(a)(ii)
Event, (ii) the date of the first Section 13(a) Event or (iii) the Rights
Expiration Date, the Board of Directors of the Company may, at its option,
authorize and direct the redemption of all, but not less than all, of the then
outstanding Rights at a redemption price of $.001 per Right, as such redemption
price shall be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (the "Redemption Price"),
----------------
and the Company shall so redeem the Rights.
(b) Immediately upon the action of the Board of Directors of the Company
authorizing and directing the redemption of the Rights pursuant to clause (a) of
----------
this Section 23, or at such time and date thereafter as the Board of Directors
----------
may specify, and without any further action and without any notice, the right to
exercise Rights shall terminate and the only right of the holders of Rights
thereafter shall be to receive the Redemption Price. Within ten Business Days
after the date of such action, the Company shall promptly notify the Rights
Agent in writing of such redemption and shall give notice of such redemption to
the holders of Rights by mailing written notice to all holders of Rights at
their last addresses as they appear upon the registry books of the Rights Agent
or, if prior to the Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice that is mailed in the manner provided
herein shall be deemed given, whether or not the holder receives such notice;
provided, however, that neither the failure to give any such notice nor any
-------- -------
defect therein shall affect the legality or validity of such redemption. Each
such notice of redemption shall state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may, directly or indirectly, redeem, acquire or purchase for value
any Rights in any manner other than that specifically set forth in Section 24
----------
hereof or in this Section 23, or in connection with the purchase of Common
----------
Shares prior to the earlier of the date of the first Section 11(a)(ii) Event or
the date of the first Section 13(a) Event.
28
(c) The Company may, at its option, pay the Redemption Price in cash,
Common Shares, Preferred Shares, other equity securities of the Company, debt
securities of the Company, other property or any combination of the foregoing,
in each case having an aggregate Current Market Price on the Redemption Date
equal to the Redemption Price.
Section 24. Exchange of Rights.
------------------
(a) At any time during the period of 180 days after a Section 11(a)(ii)
Event, the Board of Directors of the Company may, at its option, authorize and
direct the exchange of all, but not less than all, of the then outstanding
Rights for Common Shares, one one-hundredths of Preferred Shares, debt
securities of the Company, other property, or any combination of the foregoing,
in each case having an aggregate Current Market Price equal to the result
obtained by (i) multiplying the Current Market Price per Common Share on the
record date for such exchange by the number of Common Shares for which a Right
is exercisable on such record date and (ii) subtracting from such product the
Exercise Price on such Record Date (the "Exchange Ratio"), and the Company shall
--------------
so exchange the Rights.
(b) Immediately upon the action of the Board of Directors of the Company
authorizing and directing the exchange of the Rights pursuant to subsection (a)
of this Section 24, or at such time and date thereafter as it may specify, and
----------
without any further action and without any notice, the right to exercise Rights
shall terminate and the only right thereafter of the holders of Rights shall be
to receive the securities described in Section 24(a) in accordance with the
-------------
Exchange Ratio. Within ten Business Days after the date of such action, the
Company shall promptly notify the Rights Agent in writing of such exchange and
give notice of such exchange to the holders of Rights by mailing such notice to
all holders of Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, if prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice that is mailed in
the manner provided herein shall be deemed given, whether or not the holder
receives such notice; provided, however, that neither the failure to give any
-------- -------
such notice nor any defect therein shall affect the legality or validity of such
exchange. Each such notice of exchange shall state the method by which the
Rights will be exchanged.
(c) Notwithstanding the foregoing, in the event that the aggregate
number of Common Shares that are authorized by the Company's Certificate of
Incorporation, as amended from time to time, but not outstanding or reserved for
issuance for purposes other than upon exercise or exchange of the Rights is less
than the aggregate number of Common Shares issuable upon the exchange of the
Rights in accordance with this Section 24 (the excess of such number of
----------
authorized Common Shares over and above such number of issuable Common Shares
being hereinafter referred to as the "Unavailable Exchange Shares"), then the
---------------------------
Company shall substitute for the pro rata portion of the Unavailable Exchange
Shares that would otherwise be issuable upon the exchange of the Rights in
accordance with this Section 24 (i) cash, (ii) other equity securities of the
----------
Company (including, without limitation, Common Share Equivalents), (iii) debt
securities of the Company, (iv) other property or (v) any combination of the
foregoing, in each case having an aggregate Current Market Price equal to the
aggregate Current Market Price of the Unavailable Exchange Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that the
------------
Company takes any action pursuant to this Section 24, such action shall apply
----------
uniformly to all outstanding Rights.
29
Section 25. Notice of Certain Events.
------------------------
(a) In the event that the Company shall propose (i) to declare or pay
any dividend on or make any distribution with respect to its Common Shares or
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Common Shares or Preferred Shares options, rights or
warrants to subscribe for or to purchase any additional shares thereof or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Shares or Preferred Shares (other than
a reclassification involving only the subdivision of outstanding shares), (iv)
to effect any consolidation or merger with or into any other Person, or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer) of more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) in one or more
transactions to any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then and in each such case, the
Company shall give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
----------
action that shall specify the record date for the purpose of such dividend or
distribution, or the date upon 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 record of the Common
Shares or Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
---------- ----
at least 20 days prior to the record date for determining holders of the Common
Shares or Preferred Shares for purposes of such action, and in the case of any
such other action, at least 20 days prior to the earlier of the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares or Preferred Shares; provided, however, that
-------- -------
neither the failure to give the notice required by this Section 25 nor any
----------
defect therein shall affect the legality or validity of the action taken by the
Company or the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each Section
13(a) Event, the Company shall as soon as practicable thereafter give to the
Rights Agent and each holder of a Right Certificate, in accordance with Section
-------
26 hereof, a notice of the occurrence of such event, specifying the event and
--
the consequences of the event to holders of Rights under Sections 11 and 13
----------- --
hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Sizzler International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
----------
by this Agreement to be given or made to or on the Rights Agent (i) by the
Company shall be sufficiently given or made if sent, postage prepaid, by
registered or certified mail, addressed to
30
the office of the Rights Agent designated for such purpose as set forth below
(until another address is filed in writing with the Company) or (ii) by the
holder of any Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to the designated office of the
Rights Agent as set forth below (until another address is filed in writing with
the Company), and shall be deemed given upon actual receipt. The Company hereby
agrees that it shall encourage the holders of the Right Certificates, in any and
all writings to such holders regarding the Rights or this Agreement, to give or
make any notice or demand authorized by this Agreement by registered or
certified mail, addressed to the designated office of the Rights Agent as
follows (until another address is filed in writing with the Company):
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 12-W
Administration Department
New York, New York 10286
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
--------------------------
(a) The Board of Directors of the Company may from time to time
supplement or amend any provision of this Agreement in any manner without the
approval of any holders of Rights, whether or not such supplement or amendment
is adverse to any holder of Rights, and further may direct the Rights Agent to
so supplement or amend such provision, and the Rights Agent shall so supplement
or amend such provision; provided, however, that from and after the earliest of
-------- -------
(i) the date of the first Section 11(a)(ii) Event, (ii) the date of the first
Section 13(a) Event, (iii) the Redemption Date or (iv) the Expiration Date, this
Agreement shall not be supplemented or amended in any manner that would
materially and adversely affect the Rights Agent or any holder of outstanding
Rights other than an Acquiring Person or a Surviving Person.
(b) From and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
Rights Expiration Date, the Company shall not effect any amendment to the
Certificate of Amendment for the Preferred Shares that would materially and
adversely affect the rights, privileges or preferences of the Preferred Shares
without the prior approval of the holders of two-thirds or more of the then
outstanding Rights. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
----------
such supplement or amendment. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment that changes the rights, obligations,
liabilities and duties of the Rights Agent under this Agreement in any manner
adverse to the Rights Agent will be effective against the Rights Agent without
the consent and execution of such supplement or amendment by the Rights Agent.
31
Section 28. Certain Covenants. Subject to Section 27 hereof and the other
----------------- ----------
provisions of this Agreement, from and after the earlier of the date of the
first Section 11(a)(ii) Event or the date of the first Section 13(a) Event and
prior to the earlier of the Redemption Date or the Rights Expiration Date, the
Company shall not (a) issue or sell, or permit any Subsidiary to issue or sell,
to an Acquiring Person or a Surviving Person, or any Affiliate or Associate of
an Acquiring Person or a Surviving Person, or any Person holding Voting Shares
of the Company that are Beneficially Owned by an Acquiring Person or a Surviving
Person, (i) any rights, options, warrants or convertible securities on terms
similar to, or that materially adversely affect the value of, the Rights or (ii)
Preferred Shares, Common Shares or shares of any other class of capital stock,
if such sale is intended to or would materially adversely affect the value of
the Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.
Section 29. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and permitted assigns
hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (other than those representing
Rights that have become null and void) and the certificates for Common Shares
representing Rights (other than those Rights that have become null and void) any
legal or equitable right, remedy or claim under this Agreement, and this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and such registered holders of Right Certificates and certificates for
Common Shares representing Rights.
Section 31. Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state; provided, however, that all provisions
-------- -------
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such state.
Section 33. Counterparts. This Agreement may be executed by facsimile and
------------
in two or more counterparts, each of which shall be deemed to be an original and
all of which when taken together shall constitute one and the same instrument.
32
Section 34. Descriptive Headings. Descriptive headings of the several
--------------------
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 35. Determination and Actions by the Board of Directors. The
---------------------------------------------------
Board of Directors shall have the exclusive power and authority to administer
this Agreement and to exercise the rights and powers specifically granted to the
Board of Directors or to the Company (subject to any express limitations of or
conditions to such power, authority and rights set forth in this Agreement).
All such actions, calculations, interpretations and determinations that are done
or made by the Board of Directors in good faith and pursuant to or permitted by
the terms and provisions of this Agreement shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights, as such,
and all other applicable Persons. The Rights Agent shall always be entitled to
assume that the Board of Directors acted in good faith and shall be fully
protected and incur no liability in reliance thereon.
[signature page follows]
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SIZZLER INTERNATIONAL, INC.
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- ------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- ------------------------
Title: Vice President/Secretary Title: President/CEO
------------------------------ -----------------------
THE BANK OF NEW YORK, as Rights Agent
Attest:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- ------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------- ------------------------
Title: Assistant Vice President Title: Vice President
---------------------------- -----------------------
34
EXHIBIT A
---------
CERTIFICATE OF DETERMINATION OF PREFERENCES
OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
SIZZLER INTERNATIONAL, INC.
The undersigned, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, do hereby certify
that:
1. They are the Chief Executive Officer and President, and the Secretary
of the Corporation, respectively, of Sizzler International, Inc. Corporation, a
Delaware corporation (the "Corporation").
-----------
2. Pursuant to authority given by the Corporation's Certificates of
Incorporation and by General Corporation Law of the state of Delaware, the Board
of Directors of the Corporation, at a meeting of the Board of Directors held on
January 10, 2001, approved and adopted the following resolution:
WHEREAS, the rights and privileges applicable to the Series B Junior
Participating Preferred Stock (the "Series B Preferred Stock") are specified in
the following Certificate of Determination of Preferences of the Series B Junior
Participating Preferred Stock of Sizzler International, Inc. Corporation (the
"Certificate of Determination");
----------------------------
NOW, THEREFORE, BE IT
RESOLVED, that pursuant to the authority presently granted to and vested in
the Board of Directors of this Corporation under the provisions of the
Certificate of Incorporation of the Corporation, as amended, and pursuant to the
provisions of the General Corporation Law of the State of Delaware, this Board
of Directors hereby creates a series of Preferred Stock to consist of 300,000
shares, par value of $.5.00 per share, and hereby fixes the powers, preferences,
relative, participating, voting, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of the Series B Preferred
Stock in accordance with the terms of the Certificate of Determination attached
hereto as Exhibit A-1.
-----------
IN WITNESS WHEREOF, the undersigned officers hereby execute this
Certificate and declare, under penalty of perjury under the laws of the State of
California, that the statements set
A-1
forth in this Certificate are true and correct of their own knowledge.
Effective as of January 10, 2001.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Chief Executive Officer and President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
CERTIFICATE OF DETERMINATION
OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
SIZZLER INTERNATIONAL, INC.
___________________________
PURSUANT TO THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
_____________________________
FIRST: The Certificate of Incorporation of the Corporation, as amended,
authorizes the issuance of up to one million shares of Preferred Stock, $5.00
par value per share (the "Preferred Stock"), and further authorizes the Board of
---------------
Directors of the Corporation to fix by resolution or resolutions the
designations and the powers, preferences and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof, and to fix the number of shares constituting any such series.
SECOND: On January 10, 2001, the Board of Directors of the Corporation
adopted the following resolution authorizing the creation and issuance of a
series of said Preferred Stock to be known as Series B Junior Participating
Preferred Stock (the "Series B Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation in accordance with the provisions of its Certificate of
Incorporation, as amended, a series of Preferred Stock of the Corporation be,
and hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
and restrictions thereof are as set forth in the Corporation's Certificate of
Incorporation, as amended, and in this Certificate of Determination as follows:
1. Designation and Amount. The shares of such series of Preferred Stock
----------------------
shall be designated as "Series B Junior Participating Preferred Stock" (the
"Series B Preferred Stock"), and the number of shares constituting such series
-------------------------
shall be 300,000, par value of $5.00 per share.
2. Dividends and Distributions.
---------------------------
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Series
B Preferred Stock with respect to dividends, the holders of shares of Series B
Preferred Stock, in preference to the holders of shares of Common Stock of the
Corporation, $.01 per share (the "Common Stock"), and of any
------------
A-3
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
---------
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
---------------------
after the first issuance of a share or fraction of a share of Series B Preferred
Stock, in the amount (rounded to the nearest cent) of $.25 per share ($1.00 per
annum); provided, however, that the amount of such dividend shall be reduced by
-------- -------
the amount of any dividend theretofore paid in the same calendar quarter
pursuant to clause (b) below.
----------
(b) The Corporation shall declare a dividend or distribution on the Series
B Preferred Stock per share, subject to the provision for adjustment hereinafter
set forth, equal to 100 times the aggregate per share amount of each cash
dividend, and 100 times the aggregate per share amount (payable in kind) of each
non-cash dividend or other distribution, other than a dividend payable in shares
of Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the first
issuance of any share or fraction of a share of Series B Preferred Stock. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such event the amount to which the holder of each share of Series B Preferred
Stock was entitled immediately prior to such event shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event. Any dividend paid or distribution made with
respect to the Series B Preferred Stock pursuant to this Section 2(b) shall be
------------
paid or made at the same time as the relevant dividend or distribution on the
Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which event dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall cumulate but
shall not bear interest. Dividends paid on the shares of Series B Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series B Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series B Preferred Stock
-------------
shall have the following voting rights:
A-4
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series B Preferred Stock shall entitle the holder thereof to 100 votes
on all matters submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately prior to such event.
(b) Except as otherwise provided herein, in the Corporation's Certificate
of Incorporation, as amended (the "Charter"), in any other certificate of
-------
determination creating a series of Preferred Stock or any similar stock or by
law, the holders of shares of Series B Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law, holders
of Series B Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) to take any corporate action.
4. Certain Restrictions.
--------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
---------
thereafter and until all accrued and unpaid dividends and distributions, whether
or not authorized or declared, on shares of Series B Preferred Stock outstanding
shall have been paid in full, the Corporation shall not, directly or indirectly:
(i) authorize, declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock;
(ii) authorize, declare or pay dividends on, or make any other
distributions with respect to, any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the Series
B Preferred Stock, except dividends paid ratably on the Series B Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock; provided, however,
-------- -------
that the Corporation may at any time redeem,
A-5
purchase or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior to (either as to dividends
or upon liquidation, dissolution or winding up) the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock ranking on a parity
with the Series B Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration, directly or indirectly, any
shares of stock of the Corporation unless the Corporation could, under paragraph
---------
(a) of this Section 4, purchase or otherwise acquire such shares at such time
--- ---------
and in such manner.
5. Reacquired Shares. Any shares of Series B Preferred Stock purchased
-----------------
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Charter, in
any other certificate of determination creating a series of Preferred Stock or
any similar stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
--------------------------------------
dissolution or winding up of the Corporation, no distribution shall be made to:
(i) the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred Stock
unless, prior thereto, the holders of shares of Series B Preferred Stock shall
have received the greater of (A) $100.00 per share ($1.00 per one one-hundredth
of a share), plus an amount equal to accrued and unpaid dividends and
----
distributions thereon, whether or not declared, to the date of such payment, or
(B) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share of Common Stock to holders thereof; or (ii) the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such event the
aggregate amount to which each holder of a share of Series B Preferred Stock was
entitled immediately prior to such event under clause (i) of the preceding
----------
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock outstanding immediately prior to such event.
A-6
7. Consolidation, Merger or Other. In the event the Corporation shall
------------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property or otherwise changed, then in any
such event each share of Series B Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such event the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series B Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event, and the denominator of which is the number of shares of Common Stock
outstanding immediately prior to such event.
8. No Redemption. The shares of Series B Preferred Stock shall not be
-------------
redeemable.
9. Rank. The Series B Preferred Stock shall rank, with respect to the
----
payment of dividends and the distribution of assets, junior to all series or
classes of the Corporation's Preferred Stock, whether issued before or after the
issuance of the Series B Preferred Stock.
10. Amendment. The Charter shall not be amended in any manner that would
---------
materially alter or change the powers, preferences or special rights of the
Series B Preferred Stock, as set forth herein, so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series B Preferred Stock, voting together as a single
series.
A-7
EXHIBIT B
---------
Form of Right Certificate
Certificate No. _____ __________ Rights
NOT EXERCISABLE AFTER THE LATER OF JANUARY 22, 2006 OR THE FIFTH
ANNIVERSARY OF THE DISTRIBUTION DATE (AS THAT TERM IS DEFINED IN
THE RIGHTS AGREEMENT) OR EARLIER IF REDEEMED. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.001 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT AND AS THOSE CIRCUMSTANCES ARE SPECIFIED IN
THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT.]*
Right Certificate
SIZZLER INTERNATIONAL, INC.
(a Delaware 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 January 22, 2001 (the "Rights Agreement") between Sizzler
----------------
International, Inc., a Delaware corporation (the "Company"), and The Bank of New
-------
York, a New York banking corporation (the "Rights Agent"), to purchase from the
------------
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., New York City time, on the later of
January 22, 2006 or the fifth anniversary of the Distribution Date at the office
of the Rights Agent designated for such purpose in a written instrument
delivered to the Company and the
_____________________
* That portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
B-1
holder of this Right Certificate, or at the office of its successors as Rights
Agent, one one-hundredth of a fully paid non-assessable share of Series B
Preferred Stock, $5.00 par value (the "Preferred Shares"), of the Company, at an
exercise price of $10.00 per Right (the "Exercise Price"), upon presentation and
--------------
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of Preferred Shares that may be purchased upon exercise thereof) set
forth above, and the Exercise Price per share set forth above, are the number
and Exercise Price as of January 22, 2001, based on the Preferred Shares as
constituted at such date.
As provided in the Rights Agreement, the Exercise Price and the number of
Preferred Shares that may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events. This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of Sizzler International, Inc. and the above-
mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose as
provided above, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may, but are not required to, be redeemed by the Company at a
redemption price of $.001 per Right.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company that may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
B-2
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _______________.
ATTEST: SIZZLER INTERNATIONAL, INC.
_________________________________ _____________________________________
Secretary President
Countersigned:
THE BANK OF NEW YORK, as Rights Agent
By: __________________________________
Title: __________________________________
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED _______________________________________ hereby sells,
assigns and transfers unto
______________________________________________________________________________
______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ____________________, ____
_____________________________________
Signature
Signature Guaranteed:
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.
------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not Beneficially Owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
------------------------------------------------------------------------------
B-4
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
TO SIZZLER INTERNATIONAL, INC.
The undersigned hereby irrevocably elects to exercise ___________________
Rights represented by this Right Certificate to purchase the Preferred Shares or
other securities issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares or other securities be issued in the
following name:
(please print name, address and social security,
tax identification or other identifying number)
________________________________
________________________________
________________________________
________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
(please print name, address and social security,
tax identification or other identifying number)
________________________________
________________________________
________________________________
________________________________
Dated:________________________
________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
B-5
Form of Reverse Side of Right Certificate -- continued
Signature Guarantee:
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.
--------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not Beneficially Owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate in every particular, without
alteration or enlargement or any change
whatsoever)
--------------------------------------------------------------------------------
NOTICE
------
The signatures in the foregoing Forms of Assignment and Election must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever. In
the event the certification set forth above in the Forms of Assignment and
Election is not completed, the Company will deem the Beneficial Owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an Assignment, will affix a legend to that effect on any Right
Certificates issued in exchange for this Right Certificate.
B-6
EXHIBIT C
---------
EXECUTIVE SUMMARY OF THE RIGHTS PLAN
On January 10, 2001 the Board of Directors of Sizzler International, Inc.
(the "Company") declared a dividend of one preferred share purchase right (each,
a "Right") for each share of common stock, $.01 par value per share, of the
-----
Company (the "Common Shares") to be distributed to shareholders of record at the
-------------
close of business on January 22, 2001 (the "Record Date"). Each Right entitles
-----------
the registered holder to purchase from the Company one Preferred Share (as
defined in paragraph 5(a) below) at an exercise price $10, subject to the
detailed terms and conditions of the rights agreement (the "Rights Plan")
-----------
between the Company and the Bank of New York, a New York banking corporation, as
the Rights Agent (the "Rights Agent").
------------
The following brief description is intended only to provide a general
executive overview and is subject to the detailed terms and conditions of the
Rights Plan which will be filed with the SEC as an exhibit to the Corporation's
filing on Form 8-K and is incorporated by reference herein to the Corporation's
Registration Statement on Form 8-A and this Executive Summary of the Rights
Plan.
1. Common Share Certificates Represent The Rights
Until the Rights are triggered on the Distribution Date (as defined in
Section 2 below), (a) the Rights are not exercisable, (b) the Rights are
---------
attached to and trade only together with the Common Shares and (c) the Company's
regular stock certificates representing Common Shares also represent the Rights
attached to such Common Shares. Common Share certificates issued after the
Record Date and prior to the Distribution Date will contain a notation
incorporating the Rights Plan by reference.
2. Distribution Date
The "Distribution Date" is the earliest of (a) the tenth business day
-----------------
following the date of the first public announcement that any person or group or
entity (other than the Company or certain related entities, and with certain
additional exceptions) has become the beneficial owner of 14% or more of the
then outstanding shares of capital stock entitled to vote in the election of
Directors of the Company (the "Voting Shares") (such person, group or entity is
-------------
an "Acquiring Person" and the date of such public announcement is the
----------------
"Acquisition Date"), (b) the tenth business day (or such later day as shall be
-----------------
designated by the Board of Directors) following the date of the commencement of,
or the announcement of an intention to make, a tender offer or exchange offer,
the consummation of which would cause any person to become an Acquiring Person
or (c) the first date, on or after the Acquisition Date, upon which (i) the
Company is acquired in a merger or other business combination in which the
Company is not the surviving corporation or in which the outstanding Common
Shares are changed into or exchanged for stock or assets of another person, or
upon which (ii) 50% or more of the Company's consolidated assets or earning
power are sold (other than in transactions in the ordinary course of business).
B-1
Upon the close of business on the Distribution Date, the Rights separate
from the Common Shares, Right certificates representing only Rights are issued
and the Rights become exercisable to purchase Preferred Shares as described in
Section 5 below.
---------
No Person who is the Beneficial Owner of 14% or more of the outstanding
Voting Shares as of the date of adoption of the Rights Plan is be deemed an
Acquiring Person for as long as such Person continues to be the Beneficial Owner
of 14% or more of the outstanding Voting Shares unless or until such Person
acquires, without the prior approval of the Board of Directors, Beneficial
Ownership of an amount of additional Voting Shares equal to 1% of the Voting
Shares then outstanding.
3. Issuance of Right Certificates
As soon as practicable following the Distribution Date, separate
certificates representing only Rights are mailed to the holders of record of
Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone thereafter represent the Rights from and after
the Distribution Date.
4. Expiration of Rights
The Rights expire on five years from the date of adoption of the Rights
Plan (the "Expiration Date"), unless earlier redeemed or exchanged, or unless
---------------
the Distribution Date has previously occurred and the Rights have separated from
the Common Shares, in which case the Rights will remain outstanding for five
years from the date they separate.
5. Exercise of Rights
Unless the Rights have expired or been redeemed or exchanged, they may be
exercised, at the option of the holders, pursuant to paragraphs (a), (b) or (c)
-------------- --- ---
below. No Right may be exercised more than once or pursuant to more than one of
such paragraphs. From and after the first event of the type described in
paragraphs (b) or (c) below, each Right that is beneficially owned by an
-------------- ---
Acquiring Person or that was attached to a Common Share that is subject to an
option beneficially owned by an Acquiring Person is void.
(a) Right to Purchase Preferred Shares. From and after the close of
----------------------------------
business on the Distribution Date, each Right (other than a Right that has
become void) is exercisable to purchase one one-hundredth of a share of Series B
Junior Participating Preferred Stock, $5.00 par value per share, of the Company
(the "Preferred Shares"), at an exercise price of $10.00 (the "Exercise Price").
---------------- --------------
The Preferred Shares are nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock, are
subordinate to any other series of the Company's preferred stock whether issued
before or after the issuance of the Preferred Shares. The Preferred Shares may
not be issued except upon exercise of Rights. The holder of a Preferred Share
is entitled to receive when, as and if declared, quarterly dividends payable in
cash on the first day of March, June, September and December in each year,
commencing the first day of the first calendar quarter after the issuance of a
Preferred Share or fraction of a Preferred Share in the amount (rounded to the
nearest cent) of $0.25 per Preferred Share ($1.00 per annum); provided, however,
-------- -------
that the amount of such quarterly dividend will be reduced by the amount of any
dividends paid in the same calendar quarter pursuant to the next
2
sentence. In addition, the holders of Preferred Shares will receive dividends or
distributions for each Preferred Share, subject to certain adjustments, equal to
100 times the cash dividends paid with respect to, and 100 times the aggregate
per share amount of any non-cash dividends or distributions paid or made on, the
Common Shares. In the event of liquidation, the holders of Preferred Shares are
entitled to receive a liquidation payment in an amount equal to the greater of
(i) $100.00 per Preferred Share ($1.00 per one one-hundredth of a Preferred
Share), plus all accrued and unpaid dividends and distributions on the Preferred
----
Shares, or (ii) an amount equal to 100 times the aggregate amount to be
distributed per Common Share. Each Preferred Share has 100 votes per share (one
vote per one one-hundredth of a Preferred Share), voting together with the
Common Shares. In the event of any merger, consolidation or other transaction in
which Common Shares are exchanged, the holder of a Preferred Share is entitled
to receive 100 times the amount of stock, securities, cash and/or any other
property received per Common Share. The rights of the Preferred Shares as to
dividends, voting and liquidation preferences are protected by antidilution
provisions. It is anticipated that the value of one one-hundredth of a Preferred
Share should approximate the value of one Common Share.
(b) Right to Purchase Common Shares of the Company. From and after
----------------------------------------------
the close of business on the tenth business day following the Acquisition Date,
each Right (other than a Right that has become void) will be exercisable to
purchase, at the Exercise Price (initially $10.00), Common Shares with a market
value equal to two times the Exercise Price. If the Company does not have
sufficient Common Shares available for all Rights to be exercised, the Company
is to substitute for all or any portion of the Common Shares that would
otherwise be issuable upon the exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation. If, on
---------------------------------------------------------
or after the Acquisition Date, (i) the Company is acquired in a merger or other
business combination in which the Company is not the surviving corporation, (ii)
the Company is the surviving corporation in a merger or other business
combination in which all or part of the outstanding Common Shares are changed
into or exchanged for stock or assets of another person or (iii) 50% or more of
the Company's consolidated assets or earning power are sold (other than in
transactions in the ordinary course of business), then each Right (other than a
Right that has become void) is thereafter exercisable to purchase, at the
Exercise Price (initially $10.00), shares of common stock of the surviving
corporation or purchaser, respectively (the "Surviving Person"), with an
----------------
aggregate market value equal to two times the Exercise Price.
6. Adjustments to Prevent Dilution
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares or Common Shares issuable upon exercise of the Rights are
subject to adjustment from time to time as set forth in the Rights Plan in order
to prevent dilution. With certain exceptions, no adjustment in the Exercise
Price is required until cumulative adjustments require an adjustment of at least
1%.
3
7. Cash Paid Instead of Issuing Fractional Securities
No fractional securities will be issued upon exercise of a Right (other
than fractions of Preferred Shares that are integral multiples of one one-
hundredth of a Preferred Share and that may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
shall be made based on the market price of such securities on the last trading
date prior to the date of exercise.
8. Redemption
At any time prior to the earlier of (a) the tenth business day following
the Acquisition Date or (b) the first event of the type giving rise to exercise
rights under Section 5(c) above, the Board of Directors may, at its option,
------------
direct the Company to redeem the Rights in whole, but not in part, at a price of
$.001 per Right (the "Redemption Price"), and the Company will thereafter redeem
----------------
the Rights. Immediately upon such action by the Board of Directors (the date of
such action being the "Redemption Date"), the only right of the holders of
---------------
Rights thereafter is to receive the Redemption Price.
9. Exchange
At any time during the period of 180 days after the Acquisition Date, the
Board of Directors of the Company may, at its option, authorize and direct the
exchange of all, but not less than all, of the then outstanding Rights for
Common Shares, one one-hundredths of Preferred Shares, debt securities of the
Company, other property or any combination of the foregoing, which, as of the
date of the Board of Directors' action, has a current market price equal to the
difference between the Exercise Price and the current market price of the shares
that would otherwise be issuable upon exercise of a Right on such date (the
"Exchange Ratio"), and the Company will thereafter so exchange the Rights.
---------------
Immediately upon such action by the Board of Directors, the right to exercise
Rights shall terminate and the only right of the holders of Rights thereafter is
to receive the securities so designated by the Board of Directors in accordance
with the Exchange Ratio.
10. No Stockholder Rights Prior to Exercise
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company (other than rights resulting from such
holder's ownership of Common Shares), including, without limitation, the right
to vote or to receive dividends.
11. Amendment of Rights Plan
The Board of Directors may, from time to time, without the approval of any
holder of Rights, direct the Company and the Rights Agent to supplement or amend
any provision of the Rights Plan in any manner, whether or not such supplement
or amendment is adverse to any holder of Rights, and the Company and the Rights
Agent will thereafter so supplement or amend such provision; provided, however,
-------- -------
that from and after the earliest of (a) the tenth business day following the
Acquisition Date, (b) the first event of the type giving rise to exercise rights
under Section 5(c) above or (c) the Redemption Date, the Rights Plan cannot be
------------
supplemented or
4
amended in any manner that would materially and adversely affect any holder of
outstanding Rights other than an Acquiring Person or a Surviving Person.
5