Exhibit 4.1
RIGHTS AGREEMENT
DATED AS OF JUNE 14, 2000
BETWEEN
FROZEN FOOD EXPRESS INDUSTRIES, INC.
and
FLEET NATIONAL BANK,
RIGHTS AGENT
TABLE OF CONTENTS
Section 1 Certain Definitions 1
Section 2 Appointment of Rights Agent 6
Section 3 Issuance of Rights Certificates 6
Section 4 Form of Rights Certificates 7
Section 5 Countersignature and Registration 8
Section 6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates 8
Section 7 Exercise of Rights; Exercise Price;
Expiration Date of Rights 9
Section 8 Cancellation and Destruction of
Rights Certificates 10
Section 9 Reservation and Availability of
Common Stock 10
Section 10 Common Stock Record Date 11
Section 11 Adjustment of Exercise Price, Number and
Kind of Shares or Number of Rights 12
Section 12 Certificate of Adjusted Exercise
Price or Number of Shares 17
Section 13 Merger, Consolidation or Sale or
Transfer of Assets or Earning Power 17
Section 14 Fractional Rights and Fractional Shares 18
Section 15 Rights of Action 19
Section 16 Agreement of Rights Holders 19
Section 17 Rights Certificate Holder Not Deemed a
Shareholder 19
Section 18 Concerning the Rights Agent 20
Section 19 Merger or Change of Name of Rights Agent 20
Section 20 Duties of Rights Agent 20
Section 21 Change of Rights Agent 22
Section 22 Issuance of New Rights Certificates 22
Section 23 Redemption 23
Section 24 Exchange 24
Section 25 Notice of Certain Events 25
Section 26 Notices 25
Section 27 Supplements and Amendments 26
Section 28 Determinations and Actions by the
Board of Directors, etc. 27
Section 29 Successors 27
Section 30 Benefits of this Agreement 27
Section 31 Severability 27
Section 32 Governing Law 27
Section 33 Counterparts 27
Section 34 Descriptive Headings 27
Section 35 Costs of Enforcement 27
Section 36 Three Year Independent Director
Evaluation Mechanism 28
Exhibit A Form of Rights Certificate
Exhibit B Summary of Rights Agreement
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of the 14th day of June, 2000
(the "Agreement"), between Frozen Food Express Industries, Inc.,
a Texas corporation (the "Company"), and Fleet National Bank, a
national banking association (the "Rights Agent").
WHEREAS, subject to the execution of this Agreement and to
certain other conditions, on June 14, 2000 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company (the
"Board") (a) authorized and declared a distribution of one right
to purchase one share, subject to adjustment (a "Right") for each
share of common stock, $1.50 par value ("Common Stock"), of the
Company outstanding on June 26, 2000 (the "Record Date"), to be
distributed on July 6, 2000 (the "Distribution Date"), (b)
authorized the issuance of one Right to purchase one share for
each share of Common Stock issued or sold by the Company between
the Record Date and the earlier of the Separation Date or the
Expiration Date (as such terms are hereinafter defined), subject
to adjustment, and, to the extent provided in Section 22, each
share of Common Stock issued or sold by the Company after the
Separation Date;
WHEREAS, subject to the terms and conditions hereof, each
Right entitles the holder thereof, after the Separation Date, to
purchase securities or assets of the Company (or, in certain
cases, securities of certain other entities);
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. The following terms
have the meanings indicated:
(a) "Acquiring Person" means any Person which (or which,
together with all its Affiliates and Associates) shall be the
Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding. Notwithstanding the foregoing, (y) the term
"Acquiring Person" shall not include any Person who is the
Beneficial Owner of 15% or more of the outstanding shares of
Common Stock as of June 14, 2000, or the Company, any Subsidiary
of the Company, any employee benefit plan or trust maintained by
the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity; and
(z) no Person shall become an "Acquiring Person" as the result of
(A) the acquisition of Common Stock (or other securities
convertible into Common Stock or other rights with respect to
Common Stock) directly from the Company, or (B) an acquisition of
Common Stock by the Company which, by reducing the number of
shares outstanding, proportionately increases the percentage of
shares beneficially owned by such Person (alone or together with
all Affiliates and Associates) to 15% or more of the shares of
Common Stock then outstanding; provided, however, that if a
Person (together with its Affiliates and Associates) becomes the
Beneficial Owner of 15% or more of the Common Stock then
outstanding as a result of share purchases by the Company, and
such Person (or an Affiliate or Associate) subsequently becomes
the Beneficial Owner of any additional Common Stock (other than
by means of a stock dividend or stock split or by purchase from
the Company), such Person shall then be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be a "Acquiring Person" has become such inadvertently,
without any plan or intention to seek or affect control of the
Company, and such Person promptly enters into an irrevocable
commitment to divest and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect
to such shares) and thereafter promptly divests the sufficient
number of shares of Common Stock so that such Person is no longer
be a "Acquiring Person," then such Person shall not be deemed an
"Acquiring Person" for purposes of this Agreement.
(b) "Acquiring Person Rights" shall have the meaning set
forth in Section 4(b).
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(d) "Affiliate" and "Associate" have the respective
meanings given to such terms in Rule 12b-2 of the Exchange Act,
as such rule is in effect on the date of this Agreement.
(e) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial
owner" under Rules 13d-3 and 13d-5 of the Exchange Act, as
such rules are in effect on the date of this Agreement;
(ii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate of such other Person) with which such Person (or
any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in
subparagraph (i) above) or disposing of such securities
(other than customary agreements with and between
underwriters and selling group members with respect to a
bona fide public offering of securities); or
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the
satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (w) securities
tendered pursuant to a tender 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, (x) solely because such Person or any of
such Person's Affiliates or Associates has or shares the power to
vote or direct the voting (A) pursuant to a revocable proxy given
in response to a proxy or consent solicitation made under the
Exchange Act and the Exchange Act Regulations, and (B) is not
reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report), (y) securities that may
be issued upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (z) securities that may be
issued upon exercise of Rights after the occurrence of a
Triggering Event, which Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior to the
Separation Date or pursuant to Section 3(a) or Section 22 (the
"Original Rights") or pursuant to Section 11(i) as an adjustment
to any Original Rights.
Notwithstanding anything to the contrary, the phrase "then
outstanding", when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number of
securities then issued and outstanding plus the number not then
actually issued and outstanding but which such Person is deemed
to own beneficially hereunder, and any calculation of the
percentage of securities Beneficially Owned by such Person shall
be subject to the first sentence of Section 28.
(f) "Business Day" means any day other than a Saturday, a
Sunday, or a day on which banking institutions in the
Commonwealth of Massachusetts are authorized or obligated by law
or executive order to close.
(g) "Capital Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii)(B).
(h) "Close of Business" for any given day means 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date
is not a Business Day it means such time on the next succeeding
Business Day.
(i) "Closing Price" shall have the meaning set forth in
Section 11(d).
(j) "common stock" of any Person other than the Company
means such Person's capital stock with the greatest voting power,
or, if such Person has no capital stock, the equity securities or
other equity interest having power to control or direct the
management of such Person.
(k) "Common Stock" means the shares of common stock, $1.50
par value, of the Company.
(l) "Current Market Price" shall have the meaning set forth
in Section 11(d).
(m) "Current Value" shall have the meaning set forth in
Section 11(a)(iii)(A).
(n) "Distribution Date" shall have the meaning set forth in
the preambles.
(o) "Equivalent Common Stock" shall have the meaning set
forth in Section 11(b).
(p) "Exchange Act" means the Securities Exchange Act of
1934, as amended, as in effect on the date hereof.
(q) "Exchange Act Regulations" means the regulations
promulgated under the Exchange Act, as in effect on the date
hereof.
(r) "Exchange Ratio" shall have the meaning set forth in
Section 24(a).
(s) "Exercise Price" initially shall be $11.00 subject to
adjustment from time to time as provided in Sections 11 and
13(a).
(t) "Expiration Date" shall mean the earlier of the Close
of Business on the Final Expiration Date, the Redemption Date,
(iii) the time at which the Rights are exchanged as provided in
Section 24, and (iv) immediately prior to the effective time of a
consolidation, merger or share exchange of the Company (A) into
another corporation or (B) with another corporation in which the
Company is the surviving corporation but Common Stock is
converted into cash and/or securities of another corporation, in
each case pursuant to an agreement entered into by the Company
prior to a Stock Acquisition Date.
(u) "Final Expiration Date" shall mean June 13, 2010.
(v) "Flip-in Date" shall mean the tenth Business Day after
any Stock Acquisition Date which is not the result of a Flip-over
Event.
(w) "Flip-in Event" shall mean the event which caused a
Flip-in Date.
(x) "Flip-over Entity" shall mean:
(i) in the case of any transaction in clause (i) of
the definition of a Flip-over, (A) the Person that is the
issuer of any securities into which shares of Common Stock
are converted in such transaction, or, if there is more than
one such issuer, the issuer of common stock that has the
highest aggregate Current Market Price and (B) if no
securities are so issued, the Person that is the other party
to such transaction, or, if there is more than one such
Person, the Person the common stock of which has the highest
aggregate Current Market Price; and
(ii) in the case of any transaction described in
clause (ii) of the definition of a Flip-over, the Person
that receives the largest portion of the assets or operating
income or cash flow being transferred pursuant to such
transaction or, if each Person receives the same portion of
the assets or earning power transferred pursuant to such
transaction or if the Person receiving the largest portion
of the assets or earning power cannot be determined,
whichever Person the common stock of which has the highest
aggregate Current Market Price; provided, however, that in
any such case:
(A) if the common stock of such Person is not at
such time, and has not been continuously over the
preceding 12 month period, Registered Common Stock, or
such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person that
has Registered Common Stock outstanding, "Flip-over
Entity" shall refer to such other Person;
(B) if the common stock of such Person is not
Registered Common Stock or such Person is not a
corporation, and (1) such Person is a direct or
indirect Subsidiary of another Person but is not a
direct or indirect Subsidiary of another Person which
has Registered Common Stock outstanding, "Flip-over
Entity" shall refer to the ultimate parent entity of
such first-mentioned Person; or (2) such Person is
directly or indirectly controlled by more than one
Person, and one or more of such other Persons has
Registered Common Stock outstanding, "Flip-over Entity"
shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the
highest aggregate Current Market Price; or (3) such
Person is directly or indirectly controlled by more
than one Person, and none of such other Persons have
Registered Common Stock outstanding, "Flip-over Entity"
shall refer to whichever ultimate parent entity is the
corporation having the greatest shareholders equity or,
if no such ultimate parent entity is a corporation,
shall refer to whichever ultimate parent entity is the
entity having the greatest net assets.
(y) "Flip-over Event" shall mean any transactions or series
of transactions, following a Flip-in Event, in which:
(i) the Company shall consolidate or merge with, or
participate in a share exchange with any other Person if, at
the time of the consolidation, merger or share exchange or
at the time the Company enters into any agreement with
respect to any such consolidation, merger or share exchange,
the Acquiring Person Controls the Board of Directors of the
Company and either (A) any terms of or arrangement
concerning the treatment of shares of capital stock in such
consolidation, merger or share exchange relating to the
Acquiring Person is not identical to the terms and
arrangements relating to other holders of the Common Stock
or (B) the Person with whom the transaction or series of
transactions occurs is the Acquiring Person or an Affiliate
or Associate of the Acquiring Person, or
(ii) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise
transfer) fifty percent or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole)
to any Person (other than the Company or one or more of its
wholly owned Subsidiaries) or to two or more such Persons
which are Affiliates or Associates or otherwise acting in
concert, if, at the time of the entry by the Company (or any
such Subsidiary) into an agreement with respect to such sale
or transfer or assets, the Acquiring Person Controls the
Board of Directors of the Company. For purposes of the
foregoing description, (x) the term "Acquiring Person" shall
include any Acquiring Person and its Affiliates and
Associates (other than the Company) and (y) an Acquiring
Person shall be deemed to Control the Company's Board of
Directors when, following a Flip-in Event, the persons who
were directors of the Company (or persons nominated and/or
appointed as directors by vote of a majority of such
persons) before the Stock Acquisition Date shall cease to
constitute a majority of the Company's Board of Directors.
(z) "Flip-over Stock" of any Person shall mean the capital
stock (or similar equity interest) with the greatest voting power
in respect of the election of directors (or other persons
similarly responsible for direction of the business and affairs)
of the Flip-Over Entity.
(aa) "Nasdaq National Market" shall have the meaning set
forth in Section 11(d).
(bb) "Person" means any individual, partnership, firm,
corporation, limited liability company, association, trust,
unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act.
(cc) "Redemption Date" shall mean the time at which the
Rights are redeemed as provided in Section 23.
(dd) "Redemption Price" shall have the meaning set forth in
Section 23(b).
(ee) "Registered Common Stock" shall mean stock
registered under Section 12 of the Exchange Act.
(ff) "Registration Date" shall have the meaning set forth
in Section 9(b)(ii).
(gg) "Registration Statement" shall have the meaning set
forth in Section 9(b)(i).
(hh) "Rights Certificate" shall have the meaning set
forth in Section 3(a).
(ii) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii)(B).
(jj) "Securities Act" shall have the meaning set forth
in Section 9(b)(i).
(kk) "Separation Date" shall mean the Close of Business
on the earlier of :
(i) the Flip-in Date; or
(ii) such date as a majority of the Board shall
determine, which date shall follow the commencement of a
tender or exchange offer by any Person (other than by the
Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary for such plan
acting in such capacity) if, upon consummation thereof,
such Person would become an Acquiring Person; provided,
however, that if any such tender offer or exchange offer
is cancelled, terminated or otherwise withdrawn prior to the
Separation Date without the purchase of any shares of Common
Stock pursuant thereto, such offer shall be deemed, for
purposes of this definition, never to have been made).
(ll) "Spread" shall have the meaning set forth in Section
11(a)(iii)(A).
(mm) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company that a Person has become an
Acquiring Person.
(nn) "Subsidiary" means, as to any Person, any corporation
of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is
beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(oo) "Summary of Rights" shall have the meaning set forth in
Section 3(b).
(pp) "TIDE Committee" shall have the meaning set forth in
Section 36.
(qq) "Trading Day" shall have the meaning set forth in
Section 11(d).
(rr) "Transfer" shall have the meaning set forth in Section
6(a).
(ss) "Triggering Event" means any Flip-in Event or any Flip-
over Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
in accordance with this Agreement, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint Co-Rights Agents, upon ten (10) days' prior written
notice to the Rights Agent. The Rights Agent shall have no duty
to supervise, and shall in no event be liable for, the acts or
omissions of any such Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the Close of Business on the Separation Date, the
Rights:
(i) will be evidenced by the certificates for shares
of Common Stock as of and subsequent to the Record Date
(which certificates for shares of Common Stock shall be
deemed also to be Certificates for Rights, whether or not
such certificates bear the legend set forth in this Section
3) and not by separate certificates,
(ii) will be held by the registered holders of the
Common Stock, and
(iii) will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including
a transfer to the Company).
As soon as practicable after the Separation Date, the Company
will prepare and execute, the Rights Agent will countersign, and
the Rights Agent will send by first-class, postage prepaid mail,
to each record holder of shares of Common Stock as of the Close
of Business on the Separation Date, at the address of such holder
shown on the records of the Company, a certificate for Rights,
substantially in the form of Exhibit A (the "Rights
Certificate"), for the Rights to which such holder is entitled.
As of and after the Separation Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) On the Record Date or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
Agreement, in substantially the form of Exhibit B (the "Summary
of Rights"), by first-class, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Record
Date at the address of such holder shown on the records of the
Company. Until the earlier of the Separation Date, the
Expiration Date and the Final Expiration Date (as such terms are
defined in this Section 3 and in Section 7), (i) the Rights will
be evidenced by such certificates for Common Stock registered in
the names of the holders thereof (together with a copy of the
Summary of Rights), and (ii) the surrender for transfer of any
certificate for Common Stock, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock
represented thereby.
(c) In the event the Company shall at any time after the
Record Time and prior to the Separation Time issue or sell any
shares of Common Stock otherwise than in an adjustment
transaction referred to in Sections 11(a)(i), 11(b) or 11(c),
each such share of Common Stock so issued or sold shall
automatically have one new Right associated with it (which Right
shall be evidenced as described in Section 4). To the extent
provided in Section 22, Rights shall be issued by the Company in
respect of shares of Common Stock that are issued or sold by the
Company after the Separation Date.
(d) Rights shall, without any further action, be issued in
respect of all shares of Common Stock which are issued (including
any shares of Common Stock held in treasury) after the Record
Date but prior to the earlier of the Separation Date and the
Expiration Date. Certificates representing Common Stock issued
after the Record Date shall bear substantially the following
legend:
Until the Separation Date (as defined in the Rights
Agreement referred to below), this certificate also
evidences and entitles the holder hereof to certain rights
as set forth in the Rights Agreement between Frozen Food
Express Industries, Inc. (the "Company") and Equiserve
Limited Partnership (the "Rights Agent") dated as of June
14, 2000 (as amended from time to time, the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, such Rights may be redeemed, may become
exercisable for securities or assets of the Company or
securities of another entity, may be exchanged for shares of
Common Stock or other securities or assets of the Company,
may expire, may become void (if they are "Beneficially
Owned" by an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement),
or by any transferee of the foregoing), or may be evidenced
by separate certificates and may no longer be evidenced by
this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after
receipt of a written request therefor.
(e) Every holder of Rights by accepting the same consents
and agrees with the Company and the Rights Agent and with every
other holder of Rights that it is bound by the terms of this
Agreement.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates each shall be substantially in
the form of Exhibit A attached hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement or as may be
required to comply with any applicable law or any rule or
regulation thereunder or with any rule or regulation of any stock
exchange or market on which the Rights may from time to time be
listed, or to conform to usage. Subject to Section 11 and
Section 22, the Rights Certificates, whenever distributed, shall
be dated as of the Record Date and on their face shall entitle
the holders thereof to purchase such number of shares of Common
Stock as shall be set forth therein at the Exercise Price per
share set forth therein.
(b) Any Rights Certificate that represents Rights that are
beneficially owned by:
(i) an Acquiring Person or any Affiliate or Associate
of an Acquiring Person
(ii) a transferee of an Acquiring Person (or of any
such Affiliate or Associate) which becomes a transferee
after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any
such Affiliate or Associate) which becomes a transferee
prior to or concurrently with the Acquiring Person
becoming such and which receives such Rights pursuant
to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such
Affiliate or Associate) to holders of equity interests
therein, or to any Person with whom such Acquiring
Person (or Affiliate or Associate) has any continuing
agreement, arrangement or understanding regarding the
transferred Rights, shares of Common Stock, or the
Company, or (B) a transfer which a majority of the
Board has determined to be part of a plan,
arrangement or understanding which has a primary
purpose or effect the avoidance of Section 7(e)
(the Rights held by Persons identified in (i), (ii)
and (iii) collectively, "Acquiring Person Rights"),
shall, upon the written direction of a majority of the Board,
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in such Agreement.
Section 7(e) shall be operative whether or not the legend is
contained on any Rights Certificate.
Section 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the
Company by any of its Chairman of the Board, Chief Executive
Officer, President, any Vice President, or Treasurer and shall
also be attested by any of its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the
Rights Certificates may be manual or facsimile. The Rights
Certificates shall be countersigned by the Rights Agent, by
manual signature of an authorized signatory, and no Rights
Certificate shall be entitled to any benefit under this Agreement
or be valid for any purpose unless so countersigned. A Rights
Certificate bearing the signatures of individuals who were the
proper officers of the Company at the actual date of execution of
such Rights Certificate shall bind the Company, notwithstanding
that any of them ceased to hold such offices prior to the
countersignature of such Rights Certificate or did not hold such
offices on the date of this Agreement. Such countersignature
shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required
hereunder.
(b) Following the Separation Date, the Rights Agent will
keep at its office designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books
for registration and transfer of the Rights Certificates. Such
books shall show the name and address of each holder, the number
of Rights evidenced thereby, and the certificate number and date
of each Rights Certificate.
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.
(a) Subject to Sections 4(b), 7(e) and 14, at any time
after the Close of Business on the Separation Date, and at or
prior to the Close of Business on the Expiration Date, any Rights
Certificate may be transferred, split up, combined, or exchanged
(collectively, a "Transfer") for Rights Certificates entitling
the registered holder to purchase the number of shares of Common
Stock (or, following a Triggering Event, other securities, cash
or other assets, as the case may be) as the Rights Certificate
surrendered entitle such holder to purchase. Any registered
holder desiring to Transfer any Rights Certificate shall make
such request in writing delivered to the Rights Agent and shall
execute and surrender such Rights Certificate at the office of
the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action to
transfer any such surrendered Rights Certificate until the
registered holder shall have completed and signed the form of
assignment on the Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner or
former Beneficial Owner (or Affiliates or Associates thereof) of
the Rights represented by such Rights Certificate as the Company
shall reasonably request; whereupon the Rights Agent shall,
subject to the provisions of Sections 4(b), 7(e) and 14,
countersign and deliver to the Person entitled thereto the Rights
Certificates so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may
be imposed for any Transfer of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost,
stolen or destroyed, upon request by the registered holder of the
Rights represented thereby, there shall be issued, in exchange
for and upon cancellation of the mutilated Rights Certificate, or
in substitution for the lost, stolen or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form
of and of like tenor and representing the equivalent number of
Rights as the prior Rights Certificate; provided, however, that a
new Rights Certificate shall be issued only upon reimbursement to
the Company and the Rights Agent of all reasonable expenses
incidental thereto, if such reimbursement is requested by the
Company or the Rights Agent; and provided further, that, in the
case of loss, theft or destruction of a Rights Certificate, a new
Rights Certificate shall be issued only upon receipt of evidence
satisfactory to the Company and the Rights Agent of such loss,
theft or destruction and, if requested by the Company or the
Rights Agent, indemnity or security reasonably satisfactory to
the Company or the Rights Agent (as the case may be).
Section 7. Exercise of Rights; Exercise Price;
Expiration Date of Rights.
(a) At any time after the Separation Date and prior to the
Expiration Date, the registered holder of any Rights Certificate
may, subject to the provisions of Section 7(e), exercise the
Rights evidenced thereby in whole or in part upon surrender of
the Rights Certificate, with the form of election to purchase
duly executed, to the Rights Agent at the office of the Rights
Agent designated for such purpose, together with payment of the
aggregate Exercise Price for the number of shares of Common Stock
(or, following a Triggering Event, other securities, cash or
other assets, as the case may be) for which such surrendered
Rights are then exercisable.
(b) The purchase price for each one share of Common Stock
upon exercise of the Rights initially shall be the Exercise
Price.
(c) The payment of the Exercise Price (as such amount may
be reduced pursuant to Section 11(a)(iii)) may be made in cash or
by certified or bank check or bank draft payable to the order of
the Company. Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment in the manner described above of
the Exercise Price for the shares of Common Stock (or, following
a Triggering Event, other securities, cash or other assets, as
the case may be) to be purchased thereby, and of an amount equal
to any applicable transfer tax required to be paid by the holder
under Section 6 or evidence satisfactory to the Company of
payment of such tax), the Rights Agent shall, subject to Section
20(j), promptly:
(i) requisition from the transfer agent for the Common
Stock certificates for such number of shares of Common Stock
as are to be purchased, and the Company will direct the
transfer agent to comply with such request;
(ii) requisition from the Company the amount of cash,
if any, to be paid in lieu of fractional shares under
Section 14;
(iii) cause such Common Stock certificates to be
delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such names designated
by such holder; and
(iv) after receipt thereof of such cash, if any,
deliver the same to or upon the order of the registered
holder of such Rights Certificate.
In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a), the Company will make all
arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights
Agent, if and when appropriate.
(d) In the event of an exercise of the Rights by a holder
as a result of a Flip-in Event, the Rights Agent shall return
such Rights Certificate to the registered holder thereof after
imprinting, stamping, or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii). In addition, in the
event that the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised (and, if
some of the Rights exercised were exercised as a result of a Flip-
in Event, indicating by imprint, stamp or otherwise the number of
Rights remaining which continue to include rights provided by
Section 11(a)(ii)) shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section
14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Flip-in Event,
all Acquiring Person Rights shall be null and void without any
further action, and no holder of such Acquiring Person Rights
shall have any rights whatsoever whether under a Rights
Certificate, this Agreement or otherwise.
(The Company shall use all reasonable efforts to ensure that
Section 7(e) and Section 4(b) are complied with, but shall have
no liability to any holder of Rights or any other Person as a
result of its failure to make any determination under this
Section 7(e) or Section 4(b) with respect to Acquiring Person
Rights.
(f) Notwithstanding anything in this Agreement or any
Rights Certificate to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action upon any
purported exercise by a registered holder unless such registered
holder shall have (i) completed and executed the form of election
to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner or
former Beneficial Owner (or Affiliates or Associates thereof) of
the Rights represented by such Rights Certificate as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for exercise
or Transfer shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Rights Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement.
The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificates acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or, at the written
request of the Company, shall destroy such canceled Rights
Certificates and deliver a certificate of destruction thereof to
the Company.
Section 9. Reservation and Availability of Common Stock.
(a) The Company (i) shall at all times prior to the
Expiration Date cause to be reserved out of its authorized and
unissued shares of Common Stock, or any authorized and issued
shares of Common Stock held in its treasury, the number of shares
of Common Stock that, as provided in this Agreement, including
Section 11(a)(iii), will be sufficient to permit the exchange of
all Rights (it being understood that any of the foregoing shares
or securities may also be reserved for other purposes); and
(ii) at all times following the occurrence of a Flip-in Event,
shall so reserve and keep available a sufficient number of any
other securities that may be required to permit the exercise of
the Rights pursuant to this Agreement.
(b) The Company shall use its best efforts:
(i) as soon as practicable following (A) the
occurrence of a Flip-in Event and a determination by the
Company under Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights or
(B) if so required by law, the Separation Date, to file a
registration statement (the "Registration Statement") on an
appropriate form under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the
securities that may be acquired upon exercise of the Rights;
(ii) to cause the Registration Statement to become
effective as soon as practicable after the date of such
filing (such date being the "Registration Date");
(iii) to cause the Registration Statement to
continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the
Registration Statement, and (B) the Expiration Date; and
(iv) as soon as practicable following the Registration
Date, to take such action as may be required to ensure that
any acquisition of securities upon exercise of the Rights
complies with any applicable state securities or "blue sky"
laws.
The Company may temporarily suspend the exercisability of the
Rights, for a period not to exceed 90 days after the date set
forth in subclause (A) or (B) of clause (i) of the first sentence
of this Section 9(b) to prepare to file such Registration
Statement and permit it to become effective. Upon any such
suspension of exercisability, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended and, upon termination of such
suspension, the Company shall issue a public announcement stating
that the suspension is no longer in effect. In addition, if the
Company shall determine that a Registration Statement is required
following the Separation Date, the Company may temporarily
suspend the exercisability of the Rights until such time as such
Registration Statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted under
applicable law, or a Registration Statement shall not have been
declared effective.
(c) The Company shall take such action as may be necessary
to ensure that all shares of Common Stock (and, following the
occurrence of a Triggering Event, any other securities) that may
be delivered upon exercise of Rights shall be, at the time of
delivery of the certificates for such securities, duly and
validly authorized and issued, and fully paid and nonassessable.
(d) So long as the shares of Common Stock (and, after the
occurrence of a Triggering Event, any other securities) issuable
upon the exercise of the Rights may be listed on any national
securities exchange or market, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed
on such exchange or market upon official notice of issuance upon
such exercise.
(e) The Company may pay or may require the Rights holder to
pay any documentary, stamp or transfer tax imposed for the
issuance or delivery of the Rights Certificates or certificates
for shares of Common Stock (or, following the occurrence of a
Triggering Event, any other securities or other assets) upon the
exercise of Rights. The Company shall not be required to issue
or deliver any certificates for shares of Common Stock (or any
other securities, cash or assets, as the case may be) upon the
exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is
due.
Section 10. Common Stock Record Date. Each Person in
whose name any certificate for shares of Common Stock (or,
following the occurrence of a Triggering Event, other securities)
is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of
Common Stock or other securities represented thereby on, and such
certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and
payment of the Exercise Price (and any applicable transfer taxes)
was made; provided, however, that if such date is one upon which
the Common Stock (or other 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 date as of, the next succeeding Business Day on which
the Common Stock (or other securities) transfer books of the
Company are open. Prior to exercise, the holder of a Rights
Certificate shall not be entitled to any rights of a shareholder
of the Company as to the securities for which the Rights shall be
exercisable, including the right to vote, to receive dividends or
other distributions, or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Exercise Price, Number and Kind
of Shares or Number of Rights. The Exercise Price, the number
and kind of securities covered by each Right, and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event that the Company, at any time
after the date of this Agreement, shall (A) declare a
dividend on the Common Stock payable in shares of Common
Stock, (B) subdivide the outstanding Common Stock,
(C) combine the outstanding Common Stock into a smaller
number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Common Stock (including
any such reclassification in connection with a share
exchange or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and in Section 7(e), the Exercise Price in
effect at the time of the record date of such dividend or of
the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
Common Stock or other capital stock, as the case may be,
issuable upon exercise of the Rights, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon
payment of the Exercise Price then in effect, the aggregate
number and kind of shares of Common Stock or other capital
stock, as the case may be, which, if such Right had been
exercised immediately prior to such date, such holder would
have owned upon such exercise and been entitled to receive
upon such dividend, subdivision, combination or
reclassification; provided, however, that if the record date
for any such dividend, subdivision, combination or
reclassification shall occur prior to the Separation Date,
the Company shall make an appropriate adjustment to the
Exercise Price in lieu of adjusting (as described above) the
number of shares of Common Stock (or other capital stock, as
the case may be) issuable upon exercise of the Rights. If
an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment in
this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment under Section 11(a)(ii).
(ii) In the event that prior to the Expiration Date a
Flip-in Date shall occur, then, promptly following the
occurrence of such a Flip-in Event, each holder of a Right
(except as provided in Section 11(a)(iii) and in
Section 7(e)) shall thereafter have, and proper provision
shall be made so each such holder shall have, the right to
receive, upon proper exercise thereof at a price equal to
the then current Exercise Price, such number of shares of
Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price; except that if
the quotient obtained when the Exercise Price is divided by
the Adjustment Shares is less than the par value of the
Common Stock, the number of Adjustment Shares shall be the
quotient obtained when the Exercise Price is divided by the
par value of the Common Stock (such right to be
appropriately adjusted in the event that on or after the
Stock Acquisition Date events otherwise requiring adjustment
to the Common Stock under this Agreement occur) (such number
of shares, the "Adjustment Shares"). Notwithstanding
anything in this Agreement to the contrary, however, from
and after the Stock Acquisition Date, any Rights that are
beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a
transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after a Flip-in Event
pursuant to either (I) a transfer from the Acquiring Person
to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part
of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this
paragraph, and subsequent transferees of such Persons, shall
be null and void without any further action and any holder
of such Rights shall thereafter have no rights whatsoever
with respect to such Rights under any provision of this
Agreement.
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's
Certificate of Incorporation but are not outstanding and are
not reserved for issuance other than upon exercise of the
Rights are not sufficient to permit the exercise in full of
the Rights in accordance with Section 11(a)(ii), the
Company, by a vote of the majority of the Board, shall:
(A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Exercise Price (such
excess being the "Spread"); and
(B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon
payment of the applicable Exercise Price, (1) cash,
(2) a reduction in the Exercise Price, (3) other equity
securities of the Company, (such other equity
securities being referred to as "Capital Stock
Equivalents"), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been
determined by a majority of the Board after receiving
advice from a nationally recognized investment banking
firm;
provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B)
above within 30 days following the later of (x) the first
occurrence of a Flip-in Event and (y) the date on which the
Company's right of redemption pursuant to Section 23 expires
(the later of (x) or (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Exercise Price,
shares of Common Stock (to the extent available) and then,
if necessary, cash, which shares and/or cash shall have an
aggregate value equal to the Spread. To the extent that the
Company determines that some action need be taken pursuant
to the first sentence of this Section 11(a)(iii), subject to
Section 7(e), such action shall be applied uniformly to all
outstanding Rights. For purposes of this
Section 11(a)(iii), the value of the Common Stock (and of
any Common Stock Equivalent) shall be the Current Market
Price per share of Common Stock on the Section 11(a)(ii)
Trigger Date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common
Stock entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date) Common
Stock (or shares having the same rights, privileges and
preferences as shares of Common Stock ("Equivalent Common
Stock")) or securities convertible into Common Stock or
Equivalent Common Stock at a price per share of Common Stock or
per share of Equivalent Common Stock (or having a conversion
price per share, if a security is convertible into Common Stock
or Equivalent Common Stock) less than the Current Market Price
per share of Common Stock on such record date, 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
the sum of the number of shares of Common Stock outstanding on
such record date plus the number of shares of Common Stock which
the aggregate offering price of the total number of shares of
Common Stock and/or Equivalent Common Stock so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current
Market Price, and the denominator of which shall be the number of
shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock and/or Equivalent
Common Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
form other than cash, the value of such noncash consideration
shall be as determined in good faith by a majority of the Board,
whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Common Stock owned by or held
for the account of the Company or any Subsidiary shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed, and in the event such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise
Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of shares of Common Stock (including
any such distribution made in connection with a share exchange or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of
Common Stock but including any dividend payable in stock other
than Common Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b)), 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
the then Current Market Price per share of Common Stock on such
record date less the fair market value (as determined in good
faith by a majority of the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights) of the
portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable
to a share of Common Stock and the denominator of which shall be
such Current Market Price per share of Common Stock. Such
adjustments shall be made successively, whenever such a record
date is fixed, and in the event that such distribution is not so
made, the Exercise Price shall be adjusted to be the Exercise
Price which would have been in effect if such record date had not
been fixed.
(d) The "Current Market Price" per share of Common Stock
(or, after the occurrence of a Triggering Event, any other
securities) on any date shall be the average of the daily closing
prices per share of such Common Stock (or other securities) for
the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that
if, prior to the expiration of such requisite 30 Trading Day
period, the issuer announces either (A) a dividend or
distribution on such Common Stock (or other securities) payable
in such Common Stock (or other securities) or securities
convertible into such Common Stock (or other securities), other
than the Rights, or (B) any subdivision, combination or
reclassification of such Common Stock (or other securities),
then, following the ex-dividend date for such dividend or the
record date for such subdivision, as the case may be, the
"current market price" shall be properly adjusted to take into
account such event. The "closing price" for each day shall be,
if the shares of Common Stock (or other securities) are listed
and admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting
system for securities listed on the principal national securities
exchange on which such shares are listed or admitted to trading
or, if such shares of Common Stock (or other securities) are not
listed or admitted to trading on any national securities
exchange, the last quoted sales 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 Stock Market's National
Market (the "Nasdaq National Market") or such other system then
in use, or, if on any such date such shares are not traded, the
average of the high bid and low asked price as reported on the
Nasdaq National Market on the last day traded, or if on any such
date such shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of Common
Stock (or other securities) selected by a majority of the Board.
If on any such date no market maker is making a market in such
shares, the fair value of such shares on such date, as determined
in good faith by a majority of the Board, shall be used. The
term "Trading Day" shall mean a Business Day or, if such shares
are listed or admitted to trading on any national securities
exchange or the Nasdaq National Market, a day on which the
principal national securities exchange on which such shares are
listed or admitted to trading or the Nasdaq National Market is
open for the transaction of business.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of
at least one percent in the Exercise Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock (or other
securities). Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the
date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Section 11(a)(i) or 13(a), the holder of any Right shall become
entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Exercise Price thereof shall
be subject to adjustment from time to time in the manner and on
terms as nearly equivalent as practicable to the Common Stock
contained in this Section 11 and the provisions of Sections 7, 9,
10, 12, 13 and 14 for the Common Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Exercise Price hereunder shall
evidence the right to purchase, at the adjusted Exercise Price,
the number of shares of Common Stock (or other securities or
amount of cash or combination thereof) that may be acquired from
time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise
Price made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares of Common Stock or other
securities (calculated to the nearest ten-thousandth of a share)
obtained by
(i) multiplying (x) the number of shares of Common
Stock or other securities covered by a Right immediately
prior to this adjustment by (y) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price;
and
(ii) dividing that product by the Exercise Price in
effect immediately after such adjustment of the Exercise
Price.
(i) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number of Rights,
in lieu of any adjustment in the number of shares of Common Stock
(or other securities) that may be acquired upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of
shares of Common Stock (or other securities) for which a Right
was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Exercise Price in effect immediately prior to
adjustment by the Exercise Price in effect immediately after
adjustment of the Exercise Price. The Company shall make a
public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Exercise Price is
adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten days later than such
announcement date. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights, if any, to
which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment.
(j) Irrespective of any adjustment or change in the
Exercise Price or the number of shares of Common Stock (or other
securities) issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
express the Exercise Price per share and the number of shares of
Common Stock (or other securities) which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below the then par value, if any, of
the Common Stock (or other securities) issuable upon exercise of
the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue such fully paid and
nonassessable number of shares of Common Stock (or other
securities) at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an
adjustment in the Exercise Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance of that number of
shares of Common Stock and shares of other capital stock or
securities of the Company, if any, issuable to any holder of a
Right exercised after such record date that is over and above the
number of shares of Common Stock and shares of 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.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in their good faith judgment a majority of the Board
shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance
wholly for cash of any shares of Common Stock at less than the
Current Market Price, (iii) issuance wholly for cash of shares of
Common Stock or securities which by their terms are convertible
into or exchangeable for shares of Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred
to in this Section 11 hereafter made by the Company to holders of
its Common Stock, shall not be taxable to such holders or shall
reduce the taxes payable by such holders.
(n) The Company shall not, at any time after the Separation
Date:
(i) effect a share exchange with any other Person
(other than a Subsidiary of the Company in a transaction
which complies with Section 11(o));
(ii) merge with or into or consolidate with any other
Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)); or
(iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Persons (other
than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section
11(o));
if
(x) at the time of or immediately after such share
exchange, merger, consolidation or sale, there are any
rights, warrants or other instruments or securities
outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights; or
(y) prior to, simultaneously with, or immediately
after such share exchange, merger, consolidation or sale,
the Person which constitutes, or would constitute, the "Flip-
over Entity" for purposes of Section 13(a) shall have
distributed or otherwise transferred to its shareholders (or
other persons holding an equity interest in such Person)
Rights previously owned by such Person or any of its
Affiliates and Associates;
provided, however, that this Section 11(n) shall not affect the
ability of any Subsidiary of the Company to effect a share
exchange with, merge with or into, consolidate with or sell or
transfer assets or earning power to, any other Subsidiary of the
Company or the Company.
(o) After the Separation Date, the Company shall not,
except as permitted by Section 23, Section 24 or Section 27, take
(or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action
will materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Exercise Price or
Number of Shares. Whenever an adjustment is made as provided in
Section 11 and Section 13, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if
prior to the Separation Date, to each holder of a certificate
representing shares of Common Stock) in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such
certificate.
Section 13. Merger, Consolidation or Sale or Transfer of
Assets or Earning Power.
(a) Prior to the Expiration Time, the Company shall not
enter into any agreement with an Acquiring Person with respect
to, consummate or permit to occur any Flip-over Event unless and
until it shall have entered into a supplemental agreement with
the Flip-over Entity, for the benefit of the holders of the
Rights, providing that, upon consummation or occurrence of the
Flip-over Event: (i) each Right shall thereafter constitute the
right to purchase from the Flip-over Entity, upon exercise
thereof in accordance with the terms hereof, that number of
shares of Flip-over Stock of the Flip-over Entity having an
aggregate Market Price on the date of consummation or occurrence
of such Flip-over Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in order to protect the interests of the
holders of Rights generally in the event that after such date of
consummation or occurrence an event of a type analogous to any of
the events described in Sections 11(a)(i), (b), and (c) shall
have occurred with respect to the Flip-over Stock) and (ii) the
Flip-over Entity shall thereafter be liable for, and shall
assume, by virtue of such Flip-over Event and such supplemental
agreement, all the obligations and duties of the Company pursuant
to this Agreement.
(b) The Company shall not consummate any Flip-over Event
unless the Flip-over Entity shall have a sufficient number of
authorized shares of its common stock which have not been issued
or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13, and unless the
supplemental agreement further provides that the Flip-over Entity
will:
(i) (A) file on an appropriate form, as soon as
practicable following the execution of such agreement, a
registration statement under the Securities Act with respect
to the common stock that may be acquired upon exercise of
the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the
requirement of the Securities Act) until the Expiration
Date, and (C) as soon as practicable following the execution
of such agreement, take such action as may be required to
ensure that any acquisition of such common stock upon the
exercise of the Rights complies with any applicable state
securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical
financial statements for the Flip-over Entity and each of
its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
(c) In case the Flip-over Entity which is to be a party to
a transaction referred to in this Section 13 has a provision in
any of its authorized securities or in its Certificate of
Incorporation or Bylaws or other instrument governing its
corporate affairs, which provision would have the effect of
(iii) causing such Flip-over Entity to issue, in
connection with, or as a consequence of, the consummation of
a transaction referred to in this Section 13, shares of
common stock of such Flip-over Entity at less than the then
Current Market Price per share or securities exercisable
for, or convertible into, common stock of such Flip-over
Entity at less than such then Current Market Price (other
than to holders of Rights under this Section 13); or
(iv) providing for any special payment, tax or similar
provisions for the issuance of the common stock of such Flip-
over Entity pursuant to Section 13;
then, in such event, the Company shall not consummate any such
transactions unless prior thereto the Company and such Flip-over
Entity shall have executed and delivered to the Rights Agent a
supplemental agreement providing that such provision shall have
been canceled, waived or amended, or that the authorized
securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of,
the consummation of the proposed transaction.
(d) This Section 13 shall similarly apply to successive
mergers, consolidations, or share exchanges or sales or other
transfers. In the event that a Flip-over Event shall occur at
any time after the occurrence of a Flip-in Event, the Rights
which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue or
distribute Rights which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid an amount in cash
equal to such fraction of the market value of a whole Right. For
purposes of this Section 14(a), the market value of a whole Right
shall be the closing price (as the term "closing price" is used
in Section 11(d)) of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable.
(b) The Company shall not be required to issue or
distribute fractions of shares of Common Stock (or other
securities) upon exercise of the Rights. In lieu of such
fractional shares of Common Stock (or other securities), the
Company shall pay an amount in cash equal to the same fraction of
the then current market value of one share of Common Stock (or
other securities). For purposes of this Section 14(b), the
current market value of the one share of Common Stock (or other
securities) shall be the closing price (as the term "closing
price" is used in Section 11(d)) of one share of Common Stock (or
other securities) for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right, by the acceptance of the Right,
expressly waives the right to receive any fractional Rights or
any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
Section 15. Rights of Action. Subject to Section 7(e),
all rights of action in respect of this Agreement, other than
rights of action vested in the Rights Agent pursuant to
Section 18 and Section 20 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the
Separation Date, the registered holders of certificates
representing shares of Common Stock); and any registered holder
of a Rights Certificate (or, prior to the Separation Date, of a
certificate representing shares of Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Separation Date, of a certificate
representing shares of Common Stock), may, in his own behalf and
for his own benefit, enforce (and may institute and maintain any
suit, action or proceeding against the Company or any other
Person to enforce) his right to exercise the Rights evidenced by
such Rights Certificate. Without limiting the foregoing or any
remedies available to the holders of Rights, it is acknowledged
that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of
a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Separation Date, the Rights shall be
transferable only in connection with the transfer of Common
Stock;
(b) after the Separation Date, the Rights Certificates are
transferable only 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 and duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Separation
Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Stock Certificate
made by anyone other than the Company or the Rights Agent), and
neither the Company (subject to the last sentence of Section 7(e)
hereof) nor the Rights Agent shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the
Company must use its best efforts to have any such order, decree
or ruling lifted or otherwise overturned as promptly as
practicable.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the shares of Common Stock or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights; nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any manner submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or, except as provided in Section 25 hereof, to receive
notice of meetings or other actions affecting shareholders, or to
receive dividends or subscription rights, or otherwise, until the
Rights evidenced by such Rights Certificate shall have been duly
exercised.
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, including reasonable fees and disbursements
of its counsel, incurred in connection with the execution and
administration of this Agreement and the exercise and performance
of its duties hereunder. The Company shall indemnify the Rights
Agent, its officers, employees, agents and directors for, and
hold each of them harmless against, any losses, expenses, claims,
damages or liabilities incurred without gross negligence, bad
faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent or such other
indemnified party in connection with the acceptance or
administration of this Agreement and performance hereunder,
including the costs and expenses of defending against any claim
of liability therefrom, directly or indirectly, and will promptly
reimburse the Rights Agent for legal and other expenses
reasonably incurred in defending any such claim.
(b) The Rights Agent shall incur no liability for any
action taken, suffered or omitted by it in connection with its
administration of this Agreement or the performance of its duties
hereunder in reliance upon any Rights Certificate or certificate
for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it
to be genuine and to have been signed, executed and, where
necessary, verified or acknowledged by the proper Person.
Section 19. Merger or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or consolidated or with
which it may effect a share exchange, or any corporation
resulting from any merger, consolidation or share exchange to
which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate trust or
shareholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
document or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case, at the time such
successor Rights Agent becomes Rights Agent, any of the Rights
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificate either in
the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificate shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificate either
in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations expressly imposed by this
Agreement (and no implied duties or obligations shall be read
into this Agreement against the Rights Agent) upon the following
terms and conditions:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established
by a certificate signed by any person reasonably believed by the
Rights Agent to be any of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights
Agent and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by
the Rights Agent in reliance upon such certificate.
(c) The Rights Agent shall not be liable for any of the
statements of fact or recitals contained in this Agreement or in
the Rights Certificate or be required to verify the same (except
as to its countersignature on such Rights Certificates).
(d) The Rights Agent is serving as an administrative agent
and, accordingly, shall not have any responsibility for the
validity or legality of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or for the validity, legality or execution of any Rights
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach of the Company of any covenant or
failure by the Company to satisfy conditions contained in this
Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under Section 11 or
Section 13 or for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except after receipt by the
Rights Agent of the certificate describing any such adjustment
contemplated by Section 12); nor shall it be deemed to make any
representation or warranty as to the authorization or reservation
of any shares of Common Stock or any other securities to be
issued pursuant to this Agreement or any Rights Certificate or as
to whether any shares of Common Stock or any other securities
will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(e) The Company shall perform, execute, acknowledge and
deliver all such further acts, instruments and assurance as may
reasonably be required for the performance by the Rights Agent of
its duties under this Agreement.
(f) The Rights Agent is hereby authorized and directed to
accept instructions for the performance of its duties hereunder
from any person reasonably believed by the Rights Agent to be the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions
in connection with its duties; and it shall not be liable to the
Company, the holder of any Rights Certificate or any other Person
for any action taken or suffered to be taken by it in good faith
in accordance with such instructions or for any delay in acting
while awaiting instructions.
(g) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or offer securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(h) 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 if reasonable care was
exercised in the selection of such attorneys and agents and
continued employment thereof.
(i) The Rights Agent shall not be required to expend or
risk its own funds or otherwise incur any financial liability in
the performance of any of its duties or in the exercise of its
rights hereunder if the Rights Agent shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.
(j) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, either has not been completed, has
not been signed, or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further
action on such requested exercise or transfer without first
consulting the Company. If such certificate has been completed
and signed, the Rights Agent may assume without further inquiry
that the Rights Certificate is not owned by a person described in
Section 4(b) or Section 7(e).
(k) 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.
Section 21. Change of Rights Agent. The Rights Agent may
resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified
mail, and to the holders of Rights Certificates by first-class
mail. The Company may remove the Rights Agent upon 30 days'
notice in writing mailed to the Rights Agent and to each transfer
agent of the Common Stock by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such
appointment within 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice,
submit its Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States of any
state of the United States, in good standing, and may be the
Company or a Subsidiary of the Company. After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if had been originally
named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
hereunder, and shall execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by a majority of the Board to reflect any change made in
accordance with this Agreement in the Exercise Price or the
number or kind or class of shares or other securities or property
that may be acquired under the Rights Certificates. In addition,
in connection with the issuance or sale of shares of Common Stock
following the Separation Date and prior to the Expiration Date,
the Company:
(a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or
appropriate by the Board,
issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that no such Rights Certificate shall be issued if, and
to the extent, that (x) the Company shall be advised by counsel
that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom
such Rights Certificate would be issued, (y) appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof, and (z) the Company shall have no obligation to
distribute Rights Certificates to any Acquiring Person or
Affiliate or Associate of any Acquiring Person or any transferee
of any of the foregoing.
Section 23. Redemption.
(a) The rights may be redeemed by action of the Board
pursuant to this Section 23 and Section 31 and shall not be
redeemed in any other manner. Notwithstanding anything contained
or implied in this Agreement to the contrary, the Rights shall
not be exercised after the occurrence of a Flip-in Event until
the Company's right of redemption has expired.
(b) The Board may, at its option, at any time prior to the
Close of Business on the Flip-in Date, redeem all, but not less
than all, of the then outstanding Rights at a redemption price of
$.001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to
as the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. The Redemption Price shall be payable, at the option
of the Company, in cash, shares of Common Stock, or such other
form of consideration as the Board of Directors shall determine;
provided that if the Company elects to pay the Redemption Price
in shares of Common Stock, the Company shall not be required to
issue fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay an
amount of cash equal to the same fraction of the Current Market
Price of a share of Common Stock.
(c) Immediately upon the action of the Board ordering the
redemption of the Rights (or, if the resolution of the Board of
Directors electing to redeem the Rights states that the
redemption will not be effective until the occurrence of a
specified future time or event, upon the occurrence of such
future time or event), without any notice or further action, the
right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after the Board
ordering the redemption of the Rights, the Company shall mail a
notice of redemption to the Rights Agent and to all the holders
of the then outstanding Rights by mailing such notices in
accordance with Section 26. Each such notice of redemption will
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23 or in Section 24 hereof and other than in
connection with the purchase of shares of Common Stock prior to
the Separation Date.
Section 24. Exchange.
(a) The Board may, at its option, at any time after the
Flip-in Date, elect to exchange all or any part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 7(e) or Section 11(a)(ii)) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
an Acquiring Person shall have become the Beneficial Owner of
shares of Common Stock aggregating 50% or more of the shares of
Common Stock then outstanding. From and after the occurrence of
a Flip-over Event, any Rights that theretofore have not been
exchanged pursuant to this Section 24(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 24(a). The exchange of the
Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the effectiveness of the action of the
Board ordering the exchange of any Rights, and without any notice
or further action, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such
Rights (other than holders of Rights that have become void
pursuant to the provisions of Section 7(c) or Section 11(a)(ii))
shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall promptly mail a
notice of any such exchange to all of the holders of such Rights
at their addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) or Section 11(a)(ii)) held by each
holder of Rights.
(c) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but
unissued to permit the exchange of Rights, the Company shall take
all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue or
distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock,
the Company may pay an amount in cash equal to the same fraction
of the Current Market Price of a share of Common Stock. For the
purposes of this paragraph (d),the current market price of a
share of Common Stock shall be the closing price of a share of
Common Stock (as the term "closing price" is used in
Section 11(d)) for the Trading Day immediately prior to the date
of exchange.
(e) The Company may at its option substitute for each share
of Common Stock that would otherwise be issuable upon exchange of
a Right, a number of Equivalent Common Shares (as such term is
defined in Section 11(b)) having an aggregate current per share
market price (determined pursuant to Section 11(d) hereof) equal
to the current per share market price of one share of Common
stock (determined pursuant to Section 11(d) hereof) as of the
date of such exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after
the Separation Date, and prior to the Expiration Date,
(i) to pay any dividend payable in stock of any class
or to make other distribution to the holders of Common Stock
(other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company);
(ii) to offer to the holders of Common Stock rights or
warrants to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any class or
any other securities, rights or options;
(iii) to effect any reclassification of its Common
Stock (other than a reclassification involving only the
subdivision of outstanding shares of Common Stock);
(iv) to effect any share exchange, consolidation or
merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(o)), or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of
more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which
complies with Section 11(o)); or
(v) to effect the liquidation, dissolution or winding
up of the Company;
then, in each such case, the Company shall give to each holder of
a Rights Certificate, to the extent feasible and in accordance
with Section 26, a notice of such proposed action (which shall
specify the record date for the purposes of such stock dividend
or distribution of rights or warrants, or the date on which such
reclassification, share exchange, merger, consolidation, sale,
transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the
shares of Common Stock, if any such date is to be fixed), and
such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the shares of Common Stock for
purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of the shares of Common Stock, whichever shall be the
earlier; provided, however, that no such notice shall be required
if any Subsidiary of the Company effects a share exchange,
consolidation or merger with or into, or effects a sale or other
transfer of assets or earning power to, any other Subsidiary of
the Company.
(b) In case a Flip-in Event shall occur, the Company shall
as soon as practicable give to each holder of a Rights
Certificate, to the extent feasible and in accordance with
Section 26, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii).
Section 26. Notices. All notices and other
communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including by facsimile, electronic
mail, telex, telegram or cable) and be mailed or sent or
delivered, if to the Company, at the following address (until
another address is filed in writing by the Company):
Frozen Food Express Industries, Inc.
ββββ ββββββ βββββββ βββββ
ββββββ, βββββ βββββ-ββββ
Attention: President
and, if to the Rights Agent, at the following address (until
another address is filed in writing by the Rights Agent):
Fleet National Bank
c/o Equiserve Limited Partnership
βββ ββββββ ββββββ
ββββββ, ββ βββββ
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Separation Date, to the
holder of certificates representing shares of Common Stock) shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.
Section 27. Supplements and Amendments. Prior to the
Separation Date and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of certificates representing shares
of Common Stock. From and after the Separation Date and subject
to the penultimate sentence of this Section 27, the Company and
the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of
Rights Certificates in order:
(i) to cure any ambiguity;
(ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provision herein;
(iii) to shorten or lengthen any time period
hereunder; or
(iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or
desirable and which shall be consistent with, and for the
purpose of fulfilling, the objectives of the Board in
adopting this Agreement, including any change in the number
or class of shares of capital stock of the Company for which
the Rights are potentially exercisable prior to a Triggering
Event;
provided, however, that from and after such time as a Flip-in
Event occurs, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of
Rights; and provided, further, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of
this sentence (A), subject to Section 31, a time period relating
to when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of
Rights. Without limiting the foregoing, the Company may at any
time prior to a Flip-in Event, amend this Agreement to change the
Exercise Price hereunder. Upon the delivery of a certificate
from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person, from the majority of the Board,
which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agents
shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no
supplement or amendment which changes the rights and duties of
the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent, and no supplement or amendment
shall be made which changes the Redemption Price, the Exercise
Price, the Expiration Date or the number of shares of Common
Stock (or other securities) for which a Right is exercisable
without the approval of a majority of the Board. Prior to the
Separation Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common
Stock.
Section 28. Determinations and Actions by the Board of
Directors, etc. Any calculations of the number of shares of
Common Stock or other securities outstanding at any particular
time, including for purposes of determining the particular
percentage of outstanding shares of Common Stock of which any
Person is deemed the Beneficial Owner pursuant to this Agreement,
shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the Exchange Act Regulations as in effect on the
date hereof; provided, however, that any references in such
regulation to a holding period for Beneficial Ownership shall not
apply to this Agreement. Except as otherwise specifically
provided herein, the Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board, or to the Company,
or as may be necessary or advisable in the administration of this
Agreement, including the right and power (i) to interpret the
provisions of this Agreement, and (ii) to make all determinations
deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made
by the Board or by a majority of the Board in good faith (x)
shall be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and
(y) shall not subject the Board or any member thereof to any
liability to the holders 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 assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give any Person other than the
Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Separation Date,
registered holders of shares of Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Separation Date,
registered holders of shares of Common Stock).
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if (i) any such term, provision,
covenant or restriction is held by such court or authority to be
invalid, void or unenforceable, and a majority of the Board
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose
of effect of this Agreement; and (ii) at the time of such holding
by such court or authority, the Rights are not redeemable, then
the right of redemption set forth in Section 23 shall be
reinstated and shall not expire until the Close of Business on
the tenth day following the date of such determination by a
majority of the Board as described above.
Section 32. Governing Law. This Agreement, each Right
and each Rights Certificate issued hereunder shall be governed
by, and construed in accordance with, the laws of the State of
Texas.
Section 33. Counterparts. This Agreement may be executed
in one or more counterparts, each of which when executed shall be
deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
Section 34. Descriptive Headings. The headings contained
in this Agreement are for descriptive purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
Section 35. Costs of Enforcement. The Company agrees
that if the Company or any other Person the securities of which
are purchasable upon exercise of Rights fails to fulfill any of
its obligations pursuant to this Agreement, then the Company or
such Person will reimburse the holder of any Rights for the costs
and expenses (including legal fees) incurred by such holder in
actions to enforce such holder's rights pursuant to any Rights or
this Agreement.
Section 36. Three Year Independent Director Evaluation
Mechanism. The Company intends to establish a committee of the
Board of Directors of the Company that shall be comprised of no
less than two members of the Board of Directors who shall not be
either officers, employees or affiliates (the "TIDE Committee").
The TIDE Committee shall meet not less than every three years
during the term of this Agreement for the purpose of reviewing
the terms and conditions of this Agreement. If a majority of
such TIDE Committee shall conclude that termination or
modification of this Agreement is appropriate, such Committee
shall make recommendations to the Board of Directors for their
consideration.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the date first above
written.
FROZEN FOOD EXPRESS INDUSTRIES, INC.
By: /s/ ββββββ β. ββββββ, ββ.
-------------------------
Name: ββββββ β. ββββββ, ββ.
Title: President
FLEET NATIONAL BANK
By: /s/ βββββββββ ββββββββ
-------------------------
Name: βββββββββ ββββββββ
Title: Managing Director
EXHIBIT A
[Form of Rights Certificate]
Certificate No.
----------
Rights
------------
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE
RIGHTS AGREEMENT). THE RIGHTS ARE SUBJECT TO REDEMPTION OR
MANDATORY EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SUCH AGREEMENT.]1
Rights Certificate
FROZEN FOOD EXPRESS INDUSTRIES, INC.
This certifies that ___________________, or registered
assigns, is the registered holder of the number of Rights set
forth above, each of which entitles the registered holder
thereof, subject to the terms and conditions of the Rights
Agreement dated as of June 14, 2000 (the "Rights Agreement")
between FROZEN FOOD EXPRESS INDUSTRIES, INC., a Texas corporation
(the "Company"), and FLEET NATIONAL BANK, as Rights Agent (the
"Rights Agent", which term shall include any successor Rights
Agent under the Rights Agreement), to purchase from the Company
at any time after the Separation Date (as such term is defined in
the Rights Agreement) and prior to the Expiration Date (as such
term is defined in the Rights Agreement) at the office of the
Rights Agent or its successor designated for such purpose, one
fully paid, nonassessable share of Common Stock, $1.50 par value,
of the Company (the "Common Stock") at the Exercise Price
initially of $11.00 per one share of Common Stock, upon
presentation and surrender of this Rights Certificate with the
Election of Purchase duly executed. The number of rights
evidence by this Rights Certificate (and the number of shares of
Common Stock which may be purchased upon exercise thereof) set
forth above and the Purchase Price per shares set forth above
shall be subject to adjustment in certain events as provided in
the Rights Agreement.
Upon the occurrence of a Flip-in Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement) or, under certain
circumstances described in the Rights Agreement, a transferee of
any such Acquiring Person, Associate or Affiliate, such Rights
shall become null and void and no holder shall have any right
with respect to such Rights from and after the occurrence of such
Flip-in Event.
In certain circumstances describe in the Rights Agreement,
the rights evidenced hereby may entitle the registered holder
thereof to purchase shares of capital stock of an entity other
than the Company or to receive cash or other assets, all as
provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and
conditions of the Rights Agreement, which terms and conditions
are hereby incorporated by reference and made a part hereof and
to which Rights Agreement reference is hereby made for a full
description of the 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 office of the Rights Agent and are available
from the Company upon written request.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate of like tenor and date evidencing an aggregate number
of Rights equal to the aggregate number of rights evidenced by
the Rights Certificates surrendered. If this Rights Certificate
shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights
Certificate for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be (i) redeemed by the
Company under certain circumstances at its option at a redemption
of $.001 per Right payable at the Company's option in cash, in
Common Stock, or other consideration, or (ii) exchanged by the
Company under certain circumstances at its option for one share
of Common Stock, or other consideration, in each case subject to
adjustment in certain events as provided in the Rights Agreement.
No fractional shares of Common Stock will be issued upon the
exercise of any Rights evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of Common Stock or of any other securities
which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, 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 Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
Witness the signature of the proper officers of the Company.
Dated as of , .
------------- ------
ATTEST: FROZEN FOOD EXPRESS INDUSTRIES, INC.
By:
------------------------- -------------------------------
Title: Title:
------------------- ----------------------------
Countersigned:
, Rights Agent
---------------------------
By
------------------------
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED _______________________ hereby sells, assigns
and transfers unto_______________________________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint____________________________________________ Attorney, to
transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ____________________, ________
_________________________
Signature
Signature Guarantee
__________________________________________________________________
Certificate
The undersigned hereby certificates by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, ____ ____________________________
Signature
Signature Guaranteed:
__________________________________________________________________
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
The signature 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.
In the event the certification set forth above is not
completed, the Company will deem the Acquiring Person of the
Rights evidenced by this Rights 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 Rights Certificates issued in
exchange for this Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if the register holder
desires to exercise Rights represented
by the Rights Certificate)
To: FROZEN FOOD EXPRESS INDUSTRIES, INC.
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Rights Certificate to
purchase the shares of Common Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Please insert social security
or other identifying number: ____________________________________
If such number of Rights shall not be all the rights
evidence by this Rights Certificate, a new Rights Certificate for
the balance of such Rights shall be registered in the name of and
delivered to:
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Please insert social security
or other identifying number:_____________________________________
Dated: ______________, _______
____________________________________
Signature
Signature Guaranteed:
___________________________________________________________________
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not beneficially owned by an Acquiring Person or an
Affiliate or an Associate thereof (as defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof.
Dated:______________, ______ ______________________________
Signature
Signature Guaranteed:
__________________________________________________________________
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must conform to the name as written upon the face of
this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.
The signature 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.
In the event the certification set forth above is not completed,
the Company will deem the Acquiring Person of the Right evidenced
by this Rights Certificate to be a Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement) and will not issue the shares of Common Stock issuable
upon the exercise of the Rights (or such other securities of the
Company or of any other Person which may be issuable upon the
exercise of the Rights).
EXHIBIT B
SUMMARY OF RIGHTS AGREEMENT
Each holder of shares of FROZEN FOOD EXPRESS INDUSTRIES,
INC. Common Stock as of June 26, 2000 (the "Record Date") will
receive a distribution on July 6, 2000 (the "Distribution Date")
of a right to purchase one share (a "Right") per share of Common
Stock in accordance with and pursuant to a Rights Agreement
between the Company and Fleet National Bank dated as of June 14,
2000. A Right will also accompany each share of Common Stock
issued following the Record Date. Each Right, if it first
becomes exercisable, entitles the holder to purchase from Frozen
Food Express Industries, Inc. one share of Common Stock at an
initial exercise price of $11.00 per share (the "Exercise
Price"), subject to adjustment.
Exercisability of Rights. Initially, the Rights will not be
exercisable or transferable apart from the shares of Common Stock
with respect to which they were distributed, and will be
evidenced only by the certificates representing such shares. The
Rights will become exercisable and transferable apart from the
Common Stock on a date (the "Separation Date") that is the
earlier of (i) the close of business on the tenth business day
after the Stock Acquisition Date, defined as the first date of a
public announcement by the Company that a person or group of
affiliated or associated persons has become an Acquiring Person
(as described below) or (ii) the close of business on such date
as a majority of the Board of Directors shall determine, which
date shall follow the commencement of a tender or exchange offer
that, if consummated, would result in a person or group becoming
an Acquiring Person. The Rights will be exercisable from the
Separation Date until the Expiration Date, which is the earlier
of (i) the close of business on the ten-year anniversary of the
date of the Rights Agreement (the "Final Expiration Date"), (ii)
the date the Rights are redeemed by the Company, (iii) the date
the Rights are exchanged by the Company, or (iv) immediately
prior to the effective time of a consolidation, merger or share
exchange of the Company (A) into another corporation or (B) with
another corporation in which the Company is the surviving
corporation but Common Stock is converted into cash and/or
securities of another corporation, in each case pursuant to an
agreement entered into by the Company prior to a Stock
Acquisition Date, at which time the Rights will expire.
A person or group becomes an Acquiring Person when such
person or group, obtains the right to acquire beneficial
ownership of 15% or more of the then outstanding shares of Common
Stock, with certain exceptions described in the Rights Agreement
(including exceptions for shares owned by the Company or a
subsidiary or employee benefit plan of the Company, and for
shares owned by any person who the Board of Directors determines
inadvertently reached such 15% beneficial ownership level and who
promptly divests sufficient shares such that 15% or greater
beneficial ownership ceases).
Transferability of Rights. Prior to the Separation Date,
the Rights will not be transferable apart from the shares of
Common Stock to which they are attached. Thus, the surrender or
transfer of any Common Stock certificate prior to that date will
also constitute the transfer of the Rights associated with the
shares represented by such certificate. Until the Separation
Date (or earlier redemption, exchange or expiration of the
Rights), new Common Stock certificates issued after the Record
Date, upon transfer or new issuance of shares of Common Stock,
will contain a notation incorporating the Rights Agreement by
reference. Until the Separation Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer
of any certificates for shares of Common Stock, outstanding as of
the Record Date, even without such notation or a copy of a
Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the shares of Common
Stock represented by such certificate. As soon as practicable
after the Separation Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to each record
holder of shares of Common Stock as of the close of business on
the Separation Date and, in certain circumstances, holders of
certain shares issued after the Separation Date. Until
exercised, the holders will not have any rights of holders of
Common Stock, including any rights to vote or receive dividends
on the Common Stock.
Flip-In Rights. Upon the tender for or the acquisition of
15% of the Common Stock by an Acquiring Person (a "Flip-In
Event"), each holder of a Right will thereafter have the right
(the "Flip-In Right") to receive, upon exercise and payment of
the Exercise Price, the number of shares having a market value
immediately prior to the Flip-In Event equal to two times the
then current Exercise Price of the Right (the "Adjustment
Shares"); provided, however, that if the quotient obtained when
the Exercise Price is divided by the Adjustment Shares is less
than the par value of the Common Stock, the number of Adjustment
Shares shall be the quotient obtained when the Exercise Price is
divided by the par value of the Common Stock. Any Right that is
(or, in certain circumstances specified in the Rights Agreement,
was) beneficially owned by an Acquiring Person (or any of its
affiliates or associates, as defined) will become null and void
upon the occurrence of the Flip-In Event. Cash will be paid in
lieu of fractional shares.
For example, at the Exercise Price of $11 per Right, if any
person becomes the Acquiring Person of 15% or more of the
outstanding Common Stock of the Company, thereafter each Right
(other than Rights owned by such 15% Acquiring Person or any of
its affiliates or associates, which will have become void) would
entitle its holder to purchase $22 worth of Common Stock for $11.
Assuming that the Common Stock had a per share value of $5.50 at
such time, each Right would effectively entitle its holder to
purchase four shares of Common Stock for $11.
Flip-Over Rights. If, at any time following a Flip-in
Event, either (A) the Company is acquired in a merger or other
business combination transaction, the Acquiring Person controls
the Board of Directors of the Company and either (i) the
investment of the shares owned by those other than the Acquiring
Person are not identified to the shares owned by the Acquiring
Person or (ii) the transaction is with the Acquiring Person or a
related party; or (B) the Company sells or otherwise transfers
more than 50% of its aggregate assets or earning power to a
related party if approved by Company after Acquiring Person
Controls the Board of Directors of the Company, each holder of a
Right (except Rights previously voided as described above) will
thereafter have the right (the "Flip-Over Right") to receive,
upon exercise, shares of common stock of the Acquiring Person
having a value equal to twice the Exercise Price of the Right.
The Flip-Over Right will be exercisable apart from, and
regardless of the exercise or surrender of, the Flip-In Right.
Redemption of the Rights. At any time prior to the close of
business on the tenth business day following a public
announcement that a party is an Acquiring Person, the Board of
Directors may redeem the Rights in whole but not in part at a
Redemption Price of $.001 per Right. Immediately upon any
redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Exchange of the Rights. At any time after a Flip-in Event,
the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person or any of its
affiliates or associates which have become void), in whole or in
part, for Common Stock at an exchange ratio of one share of
Common Stock per Right.
Adjustments. The Exercise Price payable, and the number of
shares of Common Stock or other securities or property issuable,
upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of the
Common Stock, (ii) upon the grant to holders of the Common Stock
of certain rights, options or warrants to subscribe for or
purchase Common Stock at a price, or securities convertible into
Common Stock with a conversion price, less than the then current
market price of the Common Stock or (iii) upon the distribution
to holders of the Common Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in shares of
Common Stock) or of subscription rights or warrants (other than
those referred to above).
Reserved Shares/Substitution of Assets. The Rights
Agreement contemplates that the Company will reserve a sufficient
number of authorized but unissued shares of Common Stock to
permit the exercise of the right to exchange the Rights should
the Rights become exercisable. The Board of Directors may (and
under certain circumstances is obligated to) issue other equity
securities or assets upon the exercise of the Rights if
sufficient shares of Common Stock are not available for issuance
should the Rights become exercisable. The Board of Directors may
make adequate provision to substitute for the shares of Common
Stock which are not available for issuance upon exercise of such
Rights either cash, other equity securities of the Company
(including, without limitation, shares of Preferred Stock of the
Company), debt securities of the Company, other assets, or a
combination of the foregoing, having an aggregate value (as
determined by a majority of the Board of Directors after
receiving advice from a nationally recognized investment banking
firm) equal to the value of the shares of Common Stock
unavailable for issuance upon exercise of the Rights. In
addition, the Board of Directors, subject to certain limitations,
may amend the Rights to change the Exercise Price and therefore
the number of shares of Common Stock issuable upon exercise of
the Rights. If the Company does not take such action within 30
days following the later of a Flip-In Event or the date on which
the Company's right of redemption with respect to the Rights
expires, then the Company will be required to deliver cash as the
substitute for the unavailable authorized shares of Common Stock.
Amendment of the Rights Agreement. At any time prior to the
Separation Date, the Board of Directors may amend any provision
of the Rights Agreement in any manner, including to change the
Exercise Price, without the approval of the holders of the Common
Stock. Thereafter, subject to certain limitations, the Board of
Directors may amend the Rights Agreement without the approval of
the holders of the Common Stock so long as the interests of the
holders of the Rights are not adversely affected, including
generally (i) to shorten or lengthen any time period under the
Rights Agreement or (ii) in any manner that the Board deems
necessary or desirable, so long as such amendment is consistent
with and for the purpose of fulfilling the objectives of the
Board of Directors in originally adopting the Rights Agreement.
Independent Director Review. The Rights Agreement final
expiration date is ten years from the Record Date. However, a
committee of the Company's Directors who are neither officers,
employees or affiliates of the Company will review the Rights
Plan at least every three years and, if a majority of these
Directors deems it appropriate, may recommend a modification or
termination of the Rights Agreement.
_______________________________
1 The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.