=============================================================================
SHONEY'S, INC.
and
REGISTRAR AND TRANSFER COMPANY
Rights Agent
------------------
Amended and Restated Rights Agreement
Dated as of December 4, 2000
Effective as of August 8, 2001
============================================================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I CERTAIN DEFINITIONS...............................................3
ARTICLE II THE RIGHTS.......................................................9
2.1 Summary of Rights.....................................................9
2.2 Legend on Common Stock Certificates...................................9
2.3 Exercise of Rights; Separation of Rights.............................10
2.4 Adjustments to Purchase Price; Number of Rights......................12
2.5 Date on Which Exercise is Effective..................................14
2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates.........................................................14
2.7 Registration, Registration of Transfer and Exchange..................15
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates............16
2.9 Persons Deemed Owners................................................17
2.10 Delivery and Cancellation of Certificates............................17
2.11 Agreement of Rights Holders..........................................18
ARTICLE III ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN
TRANSACTIONS...............................................................19
3.1 Flip-in..............................................................19
3.2 Flip-over............................................................21
ARTICLE IV THE RIGHTS AGENT................................................22
4.1 General..............................................................22
4.2 Merger or Consolidation or Change of Name of Rights Agent............23
4.3 Duties of Rights Agent...............................................24
4.4 Change of Rights Agent...............................................26
ARTICLE V MISCELLANEOUS....................................................27
5.1 Redemption...........................................................27
5.2 Expiration...........................................................28
5.3 Issuance of New Rights Certificates..................................28
5.4 Supplements and Amendments...........................................29
5.5 Fractional Shares....................................................30
5.6 Rights of Action.....................................................30
5.7 Holder of Rights Not Deemed a Stockholder............................30
5.8 Notice of Proposed Actions...........................................31
5.9 Notices..............................................................31
5.10 Suspension of Exercisability.........................................32
5.11 Costs of Enforcement.................................................32
5.12 Successors...........................................................33
5.13 Benefits of this Agreement...........................................33
5.14 Determination and Actions by the Board of Directors, etc.............33
5.15 Descriptive Headings.................................................33
5.16 Governing Law........................................................33
5.17 Counterparts.........................................................34
5.18 Severability.........................................................34
AMENDED AND RESTATED RIGHTS AGREEMENT
-------------------------------------
This Amended and Restated Rights Agreement (as amended from time to
time, this "Agreement"), dated as of December 4, 2000 and effective as of
August 8, 2001, between Shoney's, Inc., a Tennessee corporation (the
"Company"), and Registrar and Transfer Company, a New Jersey corporation, as
Rights Agent (the "Rights Agent", which term shall include any successor
Rights Agent hereunder).
WITNESSETH:
----------
WHEREAS, the Company and Citizens and Southern Trust Company (Georgia),
National Association, a national banking association ("C&S"), entered into
that certain Rights Agreement dated as of March 7, 1988 (hereinafter referred
to as the "Original Rights Agreement") respecting a dividend distribu-tion of
one right for each four outstanding shares of Common Stock of the Company,
par value $1.00 per share (the "Common Stock"), each right representing the
right to purchase one share of Common Stock in accordance with the terms of
the Original Rights Agreement at the price of $60.00 per share (hereinafter
referred to as the "Rights"); and
WHEREAS, C&S subsequently resigned as Rights Agent and the Company
appointed ▇▇▇▇▇▇ Trust and Savings Bank, an Illinois banking corporation
("▇▇▇▇▇▇ Trust"), as Rights Agent under the Original Rights Agreement; and
WHEREAS, the Company and ▇▇▇▇▇▇ Trust, entered into that certain Amended
and Restated Rights Agreement dated as of May 25, 1994 (hereinafter referred
to as the "1994 Rights Agreement"); and
WHEREAS, the Company and ▇▇▇▇▇▇ Trust entered into an Amendment No. 1 to
Rights Agreement ("First Amendment") dated as of April 18, 1995 that set
forth, subject to certain conditions, a procedure to consider the possible
redemption of the Rights in the event the Company receives a "Qualified
Offer" (as that term is defined in the First Amendment); and
WHEREAS, the Company and ▇▇▇▇▇▇ Trust entered into an Amendment No. 2 to
Rights Agreement ("Second Amendment") dated as of June 14, 1996 that amended
the definition of "Acquiring Person"; and
WHEREAS, the Company and ▇▇▇▇▇▇ Trust entered into an Amendment No. 3 to
Rights Agreement ("Third Amendment" and, collectively with the First
Amendment and the Second Amendment, the "Amendments")) dated as of April 20,
1998 that increased the beneficial ownership required to qualify as an
Acquiring Person from 10% to 20% or more of the outstanding shares of the
Company's Common Stock and to exclude from the definition of the Acquiring
Person the Company, any wholly-owned Subsidiary of the Company and any
employee stock ownership or other employee benefit plan of the Company or any
wholly-owned Subsidiary of the Company; and
WHEREAS, ▇▇▇▇▇▇ Trust subsequently resigned as Rights Agent and the
Company appointed Registrar and Transfer Company as Rights Agent; and
WHEREAS, the 1994 Rights Agreement provides that the Company and the
Rights Agent may amend the 1994 Rights Agreement without the consent of the
holders of the Right Certificates with respect to matters which shall not
adversely affect the interests of such holders; and
WHEREAS, the Company and the Rights Agent wish to amend and restate the
1994 Rights Agreement in its entirety as follows to formalize the appointment
of Registrar and Transfer Company as Rights Agent and consolidate the
Amendments to the 1994 Rights Agreement:
NOW, THEREFORE, for and in consideration of the premises, the parties
hereby agree as follows:
2
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of
20% or more of the outstanding shares of Common Stock; provided, however,
that the term "Acquiring Person" shall not include (i) any Person who is the
Beneficial Owner of 20% or more of the outstanding shares of Common Stock on
the date of the 1994 Rights Agreement or who shall become the Beneficial
Owner of 20% or more of the outstanding shares of Common Stock solely as a
result of an acquisition by the Company of shares of Common Stock, until such
time hereafter or thereafter as such Person shall become the Beneficial Owner
(other than by means of a stock dividend or stock split) of any additional
shares of Common Stock, (ii) any Person who is the Beneficial Owner of 20% or
more of the outstanding shares of Common Stock but who acquired Beneficial
Ownership of shares of Common Stock without any plan or intention to seek or
affect control of the Company, if such Person promptly enters into an
irrevocable commit-ment promptly to divest, and thereafter promptly divests
(without exercising or retaining any power, including voting, with respect to
such shares), sufficient shares of Common Stock (or securities convertible
into, exchangeable into or exercisable for Common Stock) so that such Person
ceases to be the Beneficial Owner of 20% or more of the outstanding shares of
Common Stock, or (iii) any Person who Beneficially Owns shares of the Common
Stock consisting solely of one or more of (A) shares of Common Stock
Beneficially Owned pursuant to the grant or exercise of an option granted to
such Person by the Company in connection with an agreement to merge with, or
acquire, the Company at a time at which there is no Acquiring Person, (B)
shares of Common Stock (or securities convertible into, exchangeable into or
exercisable for Common Stock), Beneficially Owned by such Person or its
Affiliates or Associates at the time of grant of such option or (C) shares of
Common Stock (or securities convertible into, exchangeable
3
into or exercisable for Common Stock) acquired by Affiliates or Associates of
such Person after the time of such grant which, in the aggregate, amount to
less than 1% of the outstanding shares of Common Stock. In addition, the
Company, any wholly-owned Subsidiary of the Company and any employee stock
ownership or other employee benefit plan of the Company or a wholly-owned
Subsidiary of the Company shall not be an Acquiring Person.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as
such Rule is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have "Beneficial
Ownership" of, and to "Beneficially Own", any securities as to which such
Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner of pursuant to Rules 13d-3 and 13d-5 under the
Securities Exchange Act, as such Rules are in effect on the date of this
Agreement as well as any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the passage of
time or the occurrence of conditions) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner", or to have
"Beneficial Ownership" of, or to "Beneficially Own", any security (i) solely
because such security has been tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates
until such tendered security is accepted for payment or exchange or (ii)
solely because such Person or any of such Person's Affiliates or Associates
has or shares the power to vote or direct the voting of such security
pursuant to a revocable proxy given in response to a public proxy or consent
solicitation made to more than ten holders of shares of a class of stock of
the Company registered under Section 12 of the Securities Exchange Act of
1934 and pursuant to, and in accordance with, the applicable rules and
regulations
4
under the Securities Exchange Act of 1934, except if such power (or the
arrangements relating thereto) is then reportable under Item 6 of Schedule
13D under the Securities Exchange Act of 1934 (or any similar provision of a
comparable or successor report). For purposes of this Agreement, in
determining the percentage of the outstanding shares of Common Stock with
respect to which a Person is the Beneficial Owner, all shares as to which
such Person is deemed the Beneficial Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 p.m., New York
City time on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"Common Stock" shall have the meaning assigned to it in the recital.
"Distribution Date" shall mean the close of business on the earlier of
(i) the tenth business day (or such later date as the Board of Directors of
the Company may from time to time fix by resolution adopted prior to the
Distribution Date that would otherwise have occurred) after the date on which
any Person (other than the Company or any employee benefit plan of the
Company) commences a tender or exchange offer which, if consummated, would
result in such Person's Beneficially Owning 30% or more of the outstanding
Common Stock and (ii) the Flip-in Date; provided, that if any tender or
exchange offer referred to in clause (i) of this paragraph is cancelled,
terminated or otherwise withdrawn prior to the Distribution Date without the
purchase of any shares of Common Stock pursuant thereto, such offer shall be
deemed, for purposes of this paragraph, never to have been made.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
5
"Expiration Time" shall mean the earliest of (i) the Exchange Time, (ii)
the Redemption Time, (iii) May 25, 2004 and (iv) upon the merger of the
Company into another corporation pursuant to an agreement entered into when
there is no Acquiring Person.
"Flip-in Date" shall mean the tenth business day after any Stock
Acquisition Date which is not the result of a Flip-over Transaction or Event
or such earlier or later date as the Board of Directors of the Company may
from time to time fix by resolution adopted prior to the Flip-in Date that
would otherwise have occurred.
"Flip-over Entity," for purposes of Section 3.2, shall mean (i) in the
case of a Flip-over Transaction or Event described in clause (i) of the
definition thereof, the Person issuing any securities into which shares of
Common Stock are being converted or exchanged and, if no such securities are
being issued, the other party to such Flip-over Transaction or Event and (ii)
in the case of a Flip-over Transaction or Event referred to in clause (ii) of
the definition thereof, the Person receiving the greatest portion of the
assets or earning power being transferred in such Flip-over Transaction or
Event, provided in all cases if such Person is a subsidiary of a corporation,
the parent corporation shall be the Flip-Over Entity.
"Flip-over Stock" 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.
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions, after the time when an Acquiring Person has become such and
controls the Board of Directors of the Company, in which, directly or
indirectly, (i) the Company shall consolidate or merge or participate in a
share exchange with any other Person if any term 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 (ii) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or
6
otherwise transfer) assets (A) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (B) generating more
than 50% of the operating income or cash flow, 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.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined
as described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in
Section 2.4 hereof shall have caused the closing prices used to determine the
Market Price on any Trading Days during such period of 20 Trading Days not to
be fully comparable with the closing price on such date, each such closing
price so used shall be appropriately adjusted in order to make it fully
comparable with the closing price on such date. The closing price per share
of any securities on any date shall be the last reported sale price, regular
way, or, in case no such sale takes place or is quoted on such date, the
average of the closing bid and asked prices, regular way, for each share of
such securities, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange, Inc. or, if the securities are not
listed or admitted to trading on the New York Stock Exchange, Inc., as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the securities are listed or admitted to trading or, if the securities
are not listed or admitted to trading on any national securities exchange, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or such other system then in use, or, if on any such date
the securities are not listed or admitted to trading on any national
securities exchange or 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 securities selected
7
by the Board of Directors of the Company; provided, however, that if on any
such date the securities are not listed or admitted to trading on a national
securities exchange or traded in the over-the-counter market, the closing
price per share of such securities on such date shall mean the fair value per
share of securities on such date as determined in good faith by the Board of
Directors of the Company, after consultation with a nationally recognized
investment banking firm, and set forth in a certificate delivered to the
Rights Agent.
"Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Securities Exchange Act
of 1934, as such Rule is in effect on the date of this Agreement),
corporation or other entity.
"Purchase Price" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof, the Purchase Price
shall equal $60.00.
"Redemption Price" shall mean an amount equal to one cent, $0.01.
"Redemption Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 5.1 hereof.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) that an Acquiring Person has
become such.
"Subsidiary" of any specified Person shall mean any corporation or other
entity of which a majority of the voting power of the equity securities or a
majority of the equity interest is Beneficially Owned, directly or
indirectly, by such Person.
"Trading Day," when used with respect to any securities, shall mean a
day on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the
New York Stock Exchange, Inc., a day on which the principal national
securities exchange on which such securities are listed or admitted to
trading is open for the
8
transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Business Day.
ARTICLE II
THE RIGHTS
2.1 Summary of Rights. As soon as practicable after the date hereof,
the Company will mail a letter summarizing the amended terms of the Rights to
each holder of record of Common Stock as of the date hereof, at such holder's
address as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the Common
Stock issued after the date hereof but prior to the Distribution Date shall
evidence one Right for each four shares of Common Stock represented thereby
and shall have impressed on, printed on, written on or otherwise affixed to
them the following legend:
This certificate also entitles the holder hereof to certain Rights
as set forth in an Amended and Restated Rights Agreement, dated as
of December 4, 2000 between Shoney's, Inc. and Registrar and Transfer
Company, as the same shall be 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 Shoney's, Inc. Under certain circum-stances, as set forth
in the Rights Agreement, such Rights may be redeemed, may be
exchanged for shares of Common Stock, may expire, may become void (if
they are "Beneficially Owned" by an "Acquiring Person" or an
Affiliate or Associate thereof, as such terms are defined in the
Rights Agreement, or by any transferee of any of the foregoing) or
may be evidenced by separate certificates and may no longer be
evidenced by this certificate. Shoney's, Inc. will mail, without
charge, to the holder of this certificate a copy of the Rights
Agreement, together with any amendments thereto, that is then in
effect within five days after the receipt of a written request.
Certificates representing shares of Common Stock that were issued and
outstanding at the time of the dividend of the Rights shall evidence one
Right for each four shares of Common Stock evidenced thereby notwithstanding
the absence of the foregoing legend and certificates representing shares of
Common Stock issued after such time but prior to the date hereof bearing an
earlier form of this legend shall evidence one Right for each four shares of
Common Stock on the terms set forth in this Agreement.
9
2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections
3.1, 5.1 and 5.10 and subject to adjustment as herein set forth, each Right
will entitle the holder thereof, after the Distribution Date and prior to the
Expiration Time, to purchase, for the Purchase Price, one share of Common
Stock.
(b) Until the Distribution Date, (i) no Right may be exercised and
(ii) each Right will be evidenced by the certificate for the associated share
of Common Stock (together, in the case of certificates issued prior to the
dividend of the Rights, with the letter mailed to the record holder thereof
pursuant to Section 3(b) of the Original Rights Agreement) and will be
transferable only together with, and will be transferred by a transfer
(whether with or without such letter) of, such associated share.
(c) Subject to the terms hereof, after the Distribution Date and
prior to the Expiration Time, the Rights (i) may be exercised and (ii) may be
transferred independent of shares of Common Stock. Promptly following the
Distribution Date, the Rights Agent will mail to each holder of record of
Common Stock as of the Distribution Date (other than any Person whose Rights
have become void pursuant to Section 3.1(b)), at such holder's address as
shown by the records of the Company (the Company hereby agreeing to furnish
copies of such records to the Rights Agent for this purpose), (x) a
certificate (a "Rights Certificate") in substantially the form of Exhibit A
hereto appropriately completed, representing the number of Rights held by
such holder at the Distribution Date and having such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any national securities exchange or quotation system on which
the Rights may from time to time be listed or traded, or to conform to usage,
and (y) a disclosure statement describing the Rights; provided, however, that
the Company
10
shall have no obligation to distribute Rights Certificates to any Acquiring
Person or Affiliate or Associate of an Acquiring Person or any transferee of
any of the foregoing.
(d) Subject to the terms hereof, Rights may be exercised on any
Business Day after the Distribution Date and prior to the Expiration Time by
submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Exercise (an "Election to Exercise") substantially in the
form attached to the Rights Certificate duly completed, accompanied by
payment in cash, or by certified or official bank check or money order
payable to the order of the Company, of a sum equal to the Purchase Price
multiplied by the number of Rights being exercised and a sum sufficient to
cover any transfer tax or charge which may be payable in respect of any
transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares or depositary receipts (or
both) in a name other than that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to
Exercise accompanied by payment as set forth in Section 2.3(d), and subject
to the terms hereof, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent stock certificates evidencing such number
of shares or other securities to be purchased (the Company hereby irrevocably
authorizing its transfer agents to comply with all such requisitions) and (B)
if the Company elects pursuant to Section 5.5 not to issue certificates
representing fractional shares, requisition from the depositary selected by
the Company depositary receipts representing the fractional shares to be
purchased or requisition from the Company the amount of cash to be paid in
lieu of fractional shares in accordance with Section 5.5 and (ii) after
receipt of such certificates, depositary receipts and/or cash, deliver the
same to or upon the order of the registered holder of such Rights
Certificate, registered (in the case of certificates or depositary receipts)
in such name or names as may be designated by such holder.
11
(f) In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all
such action as may be necessary to ensure that all shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized, executed, issued and delivered and fully paid and nonassessable;
(ii) take all such action as may be necessary to comply with any applicable
requirements of the Securities Act of 1933 or the Securities Exchange Act of
1934, and the rules and regulations thereunder, and any other applicable law,
rule or regulation, in connection with the issuance of any shares upon
exercise of Rights; and (iii) pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in respect of the
original issuance or delivery of the Rights Certificates or of any shares
issued upon the exercise of Rights, provided that the Company shall not be
required to pay any transfer tax or charge which may be payable in respect of
any transfer involved in the transfer or delivery of Rights Certificates or
the issuance or delivery of certificates for shares in a name other than that
of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Purchase Price; Number of Rights. (a) In the event
the Company shall at any time after the date hereof and prior to the
Distribution Date (i) declare or pay a dividend on Common Stock payable in
Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine
the outstanding Common Stock into a smaller number of shares of Common Stock,
(x) the Purchase Price in effect after such adjustment will be equal to the
Purchase Price in effect immediately prior to such adjustment divided by the
number of shares of Common Stock (the "Expansion Factor") that a holder of
one share of Common Stock immediately prior to such dividend, subdivision or
combination would hold thereafter as a result thereof and (y) each Right
12
held prior to such adjustment will become that number of Rights equal to the
Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the
original Rights were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision or combination, so that each
four shares of Common Stock will have exactly one Right associated with it.
Each adjustment made pursuant to this paragraph shall be made as of the
payment or effective date for the applicable dividend, subdivision or
combination.
In the event the Company shall at any time prior to the Distribution
Date issue any shares of Common Stock otherwise than in a transaction
referred to in the preceding paragraph, every four shares of Common Stock so
issued shall automatically have one new Right associated with it, which Right
shall be evidenced by the certificate representing such shares. To the
extent provided in Section 5.3, Rights shall be issued by the Company in
respect of shares of Common Stock that are issued or sold by the Company
after the Distribution Date.
(b) In the event the Company shall at any time prior to the
Distribution Date issue or distribute any securities or assets in respect of,
in lieu of or in exchange for Common Stock (other than pursuant to a regular
periodic cash dividend or a dividend paid solely in Common Stock) whether by
dividend, in a reclassification or recapitalization (including any such
transaction involving a merger, consolidation or share exchange), or
otherwise, the Company shall make such adjustments, if any, in the Purchase
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to
provide for such adjustments.
(c) Each adjustment to the Purchase Price made pursuant to this
Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment
to the Purchase Price is made pursuant to
13
this Section 2.4, the Company shall (i) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (ii) promptly file with the Rights Agent and with each
transfer agent for the Common Stock a copy of such certificate and (iii) mail
a brief summary thereof to each holder of Rights.
(d) Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the securities so purchasable
which were expressed in the initial Rights Certificates issued hereunder.
2.5 Date on Which Exercise is Effective. Each person in whose name any
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surren-dered and
payment of the Purchase Price for such Rights (and any applicable taxes and
other governmental charges payable by the exercis-ing holder hereunder) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the stock transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on
which the stock transfer books of the Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights
Certificates. (a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such
14
individuals or any of them have ceased to hold such offices prior to the
countersignature and delivery of such Rights Certificates.
Promptly after the Company learns of the Distribution Date, the Company
will notify the Rights Agent of such Distribution Date and will deliver
Rights Certificates executed by the Company to the Rights Agent for counter-
signature, and, subject to Section 3.1(b), the Rights Agent shall manually
countersign and deliver such Rights Certificates to the holders of the Rights
pursuant to Section 2.3(c) hereof. No Rights Certificate shall be valid for
any purpose unless manually counter-signed by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of
countersignature thereof.
2.7 Registration, Registration of Transfer and Exchange. (a) After
the Distribution Date, the Company will cause to be kept a register (the
"Rights Register") in which, subject to such reasonable regulations as it may
prescribe, the Company will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed "Rights Registrar" for the
purpose of maintaining the Rights Register for the Company and registering
Rights and transfers of Rights after the Distribution Date as herein
provided. In the event that the Rights Agent shall cease to be the Rights
Registrar, the Rights Agent will have the right to examine the Rights
Register at all reasonable times after the Distribution Date.
After the Distribution Date and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights Certificate,
and subject to the provisions of Section 2.7(c) and (d), the Company will
execute, and the Rights Agent will countersign and deliver, in the name of
the holder or the designated transferee or transferees, as required pursuant
to the holder's instructions, one or more new Rights Certificates evidencing
the same aggregate number of Rights as did the Rights Certificate so
surrendered.
(b) Except as otherwise provided in Section 3.1(b), all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the
15
Company, and such Rights shall be entitled to the same benefits under this
Agreement as the Rights surrendered upon such registration of transfer or
exchange.
(c) Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company or the Rights
Agent, as the case may be, duly executed by the holder thereof or such
holder's attorney duly authorized in writing. As a condition to the issuance
of any new Rights Certificate under this Section 2.7, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto.
(d) The Company shall not be required to register the transfer or
exchange of any Rights after such Rights have become void under Section
3.1(b), been exchanged under Section 3.1(c) or been redeemed or terminated
under Section 5.1.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If
any mutilated Rights Certificate is surrendered to the Rights Agent prior to
the Expiration Time, then, subject to Sections 3.1(b) and 5.1, the Company
shall execute and the Rights Agent shall countersign and deliver in exchange
therefor a new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights
Agent prior to the Expiration Time (i) evidence to their satisfaction of the
destruction, loss or theft of any Rights Certificate and (ii) such security
or indemnity as may be required by them to save each of them and any of their
agents harmless, then, subject to Sections 3.1(b) and 5.1 and in the absence
of notice to the Company or the Rights Agent that such Rights Certificate has
been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Rights Agent shall countersign and deliver, in lieu of any
such destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
destroyed, lost or stolen.
16
(c) As a condition to the issuance of any new Rights Certificate
under this Section 2.8, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses
of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section
2.8 in lieu of any destroyed, lost or stolen Rights Certificate shall
evidence an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Rights Certificate shall be at
any time enforceable by anyone, and shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Rights duly
issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) for registration of transfer, the Company, the Rights Agent and
any agent of the Company or the Rights Agent may deem and treat the person in
whose name such Rights Certificate (or, prior to the Distribution Date, such
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby for all purposes whatsoever, including the
payment of the Redemption Price and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary. As used in this Agreement,
unless the context otherwise requires, the term "holder" of any Rights shall
mean the registered holder of such Rights (or, prior to the Distribution
Date, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights
Certificates surrendered upon exercise or for registration of transfer or
exchange shall, if surrendered to any person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly cancelled
by the Rights Agent. The Company may at any time deliver to the Rights Agent
for cancellation any Rights Certificates previously counter-signed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Rights Certificates so delivered shall be promptly
cancelled by the Rights Agent. No Rights Certificates shall be countersigned
in lieu of or in
17
exchange for any Rights Certificates cancelled as provided in this Section
2.10, except as expressly permitted by this Agreement. The Rights Agent
shall destroy all cancelled Rights Certificates and deliver a certificate of
destruction to the Company.
2.11 Agreement of Rights Holders. 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:
(a) prior to the Distribution Date, each Right will be
transferable only together with, and will be transferred by a
transfer of, the associated shares of Common Stock;
(b) after the Distribution Date, the Rights Certificates will
be transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior
to the Distribution Date, the associated Common Stock certificate)
for registration of transfer, the Company, the Rights Agent and any
agent of the Company or the Rights Agent may deem and treat the
person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will, under
the circumstances set forth in Section 3.1(b), become void; and
(e) this Agreement may be supplemented or amended from time to
time pursuant to Section 2.4(b) or 5.4 hereof.
18
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN
THE EVENT OF CERTAIN TRANSACTIONS
3.1 Flip-in. (a) In the event that prior to the Expiration Time a
Flip-in Date shall occur, then, to the extent applicable law permits Rights
owned by certain Persons referred to in Section 3.1(b) to become void
pursuant to the provisions thereof, the Company shall take such action as
shall be necessary to ensure and provide that, except as provided in this
Section 3.1, each Right shall constitute the right to purchase from the
Company, upon exercise thereof in accordance with the terms hereof (but
subject to Section 5.10), that number of shares of Common Stock having an
aggregate Market Price on the Stock Acquisition Date equal to twice the
Purchase Price for an amount in cash equal to the Purchase Price (such right
to be appropriately adjusted in order to protect the interests of the holders
of Rights generally in the event that on or after such Stock Acquisition Date
an event of a type analogous to any of the events described in Section 2.4(a)
or (b) shall have occurred with respect to the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were
Beneficially Owned on or after the Stock Acquisition Date by an Acquiring
Person or an Affiliate or Associate thereof or by any transferee, direct or
indirect, of any of the foregoing shall become void and any holder of such
Rights (including transferees) shall thereafter have no right to exercise or
transfer such Rights under any provision of this Agreement. If any Rights
Certificate is presented for assignment or exercise and the Person presenting
the same will not complete the certification set forth at the end of the form
of assignment or notice of election to exercise and provide such additional
evidence of the identity of the Beneficial Owner and its Affiliates and
Associates (or former Beneficial Owners and their Affiliates and Associates)
as the Company shall reasonably request, then the Company shall be entitled
conclusively to deem the Beneficial Owner thereof to be an Acquiring Person
or an
19
Affiliate or Associate thereof or a transferee of any of the foregoing and
accordingly will deem the Rights evidenced thereby to be void and not
transferable or exercisable.
(c) To the extent not prohibited by applicable law, at any time
after a Flip-in Date, the Board of Directors of the Company may elect, at its
option, to exchange all (but not less than all) the then outstanding Rights,
and if there shall be insufficient authorized but unissued shares of Common
Stock to permit the exercise in full of the Rights, each Right shall
automatically be exchanged, (excluding in either case Rights that have become
void pursuant to the provisions of Section 3.1(b)) for shares of Common Stock
at an exchange ratio of four shares of Common Stock per Right, or such lesser
number of shares of Common Stock as is available to be issued in exchange for
all non-void Rights, appropriately adjusted in order to protect the interests
of holders of Rights generally in the event that after the Distribution Date
an event of a type analogous to any of the events described in Section 2.4(a)
or (b) shall have occurred with respect to the Common Stock (such exchange
ratio, as adjusted from time to time, being hereinafter referred to as the
"Exchange Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights or upon the automatic exchange of the Rights
if there is insufficient Common Stock to permit the exercise in full of the
Rights, without any further action and without any notice, the right to
exercise the Rights will terminate and each Right (other than Rights that
have become void pursuant to Section 3.1(b)) will thereafter represent only
the right to receive a number of shares of Common Stock equal to the Exchange
Ratio. Promptly after such event, the Company shall give notice thereof
(specifying the steps to be taken to receive shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the Rights (other
than Rights that have become void pursuant to Section 3.1(b)) outstanding
immediately prior thereto by mailing such notice in accordance with Section
5.9.
Each Person in whose name any certificate for shares is issued upon the
exchange of Rights pursuant to this Section 3.1(c) shall for all purposes be
deemed to have become the holder of record
20
of the shares 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 any applicable taxes and other governmental
charges payable by the holder was made; provided, however, that if the date
of such surrender and payment is a date upon which the stock transfer books
of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the stock transfer books of the Company
are open.
3.2 Flip-over. (a) After the Distribution Date and prior to the
Expiration Time, the Company shall not enter into any agreement with an
Acquiring Person (or any of its Affiliates or Associates) with respect to,
consummate or permit to occur any Flip-over Transaction or 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 Transaction or 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 Transaction or Event equal to twice the Purchase Price for an
amount in cash equal to the Purchase 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 Section 2.4(a) or (b)
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 Transaction or Event and such supplemental agreement, all the
obligations and duties of the Company pursuant to this Agreement. The
provisions of this Section 3.2 shall apply to successive Flip-over
Transactions or Events.
21
(b) Prior to the Expiration Time, unless the Rights will be
redeemed pursuant to Section 5.1 hereof in connection therewith, the Company
shall not enter into any agreement with respect to, consummate or permit to
occur any Flip-over Transaction or Event if at the time thereof there are any
rights, warrants or securities outstanding or any other arrangements,
agreements or instruments that would eliminate or otherwise diminish in any
material respect the benefits intended to be afforded by this Rights
Agreement to the holders of Rights upon consummation of such transaction.
ARTICLE IV
THE RIGHTS AGENT
4.1 General. (a) The Company hereby appoints the Rights Agent to act
as agent for the Company in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
admin-istration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted to be done by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
certificate for securities purchasable upon exercise of Rights, Rights
Certificate, certificate for other securities of the Company, instrument of
assignment or transfer,
22
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent is a party, or any corporation succeeding to the shareholder
services business of the Rights Agent or any successor Rights Agent, will be
the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as
a successor Rights Agent under the provisions of Section 4.4 hereof. In case
at the time such successor Rights Agent succeeds to the agency created by
this Agreement any of the Rights Certificates have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates 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 counter-sign such Rights Certificates either in its
prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Agreement.
23
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent
to be the Chairman of the Board, the President or any Vice President and by
the Treasurer or any Assistant Treasurer or the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate will be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and will be deemed to have
been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization,
24
execution and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any certificate for securities purchasable upon
exercise of Rights or Rights Certificate (except its counter-signature
thereof); nor will it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any change in the exercisability
of the Rights (including the Rights becoming void pursuant to Section 3.1(b)
hereof) or any adjustment required under the provisions of Section 2.4, 3.1
or 3.2 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights after
receipt of the certificate contemplated by Section 2.4 describing any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
securities purchasable upon exercise of Rights or any Rights or as to whether
any securities purchasable upon exercise of Rights will, when issued, be duly
and validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary
or the Treasurer or any Assistant Treasurer of the Company, and to apply to
such persons for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such person.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Stock, Rights or
other securities of the Company or
25
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.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 days' notice (or such
lesser notice as is acceptable to the Company) in writing mailed to the
Company and to each transfer agent of Common Stock by registered or certified
mail, and to the holders of the Rights in accordance with Section 5.9. 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 in accordance
with Section 5.9. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Company will appoint a successor to
the Rights Agent. If the Company fails to make such appointment within a
period of 30 days after 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 any Rights (which holder shall, with such notice,
submit such holder's Rights Certificate for inspection by the Company), then
the holder of any Rights 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 or
association organized and doing business under the laws of the United States
or of any state of the United States,
26
in good standing, which is authorized under such laws to exercise the powers
of the Rights Agent contemplated by this Agreement and is subject to
supervision or examination by federal or state authority. After appointment,
the successor Rights Agent will be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company will 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 holders of the
Rights. Failure to give any notice provided for in this Section 4.4,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
ARTICLE V
MISCELLANEOUS
5.1 Redemption. (a) The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the Flip-in Date, elect
to redeem all (but not less than all) the then outstanding Rights at the
Redemption Price and the Company, at its option, may pay the Redemption Price
either in cash or shares of Common Stock or other securities of the Company
deemed by the Board of Directors, in the exercise of its sole discretion, to
be at least equivalent in value to the Redemption Price.
(b) In the event the Company shall receive a Qualified Offer (as
hereinafter defined), the Board of Directors of the Company shall either (i)
within 60 days of receipt of the Qualified Offer either redeem the Rights or
approve an alternative transaction which the Board of Directors of the
Company has determined to be financially superior for the holders of
27
shares of Common Stock other than the Person making the Qualified Offer and
its Affiliates or (ii) call a special meeting of shareholders at which the
shareholders shall vote on whether to redeem the Rights, which the Board of
Directors of the Company shall do if a majority of the outstanding shares not
Beneficially Owned by the Person making the Qualified Offer votes
affirmatively to request the Board to redeem the Rights. A "Qualified Offer"
is a tender offer (i) made in accordance with applicable law, (ii) for all
outstanding shares at the same price per share, (iii) for cash on a fully-
financed basis or for non-cash consideration consisting solely of New York
Stock Exchange listed securities offered on a basis that will afford holders
of shares tax-deferred treatment, (iv) not subject to financing, funding or
due diligence conditions and (v) as to which a nationally recognized
investment banking firm selected by the Company has not opined is inadequate.
(c) Immediately upon the action of the Board of Directors of the
Company electing to redeem 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 further action and
without any notice, the right to exercise the Rights will terminate and each
Right will thereafter represent only the right to receive the Redemption
Price in cash or securities, as determined by the Board of Directors.
Promptly after the Rights are redeemed, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights
by mailing such notice in accordance with Section 5.9.
5.2 Expiration. The Rights and this Agreement shall expire at the
Expiration Time and no Person shall have any rights pursuant to this
Agreement or any Right after the Expiration Time, except, if the Rights are
exchanged or redeemed, as provided in Section 3.1(c), 3.2 or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect
28
any adjustment or change in the number or kind or class of shares of stock
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock by the Company following the Distribution Date and
prior to the Redemption Time or Expiration Time pursuant to the terms of
securities convertible or redeemable into shares of Common Stock or to
options, in each case issued or granted prior to, and outstanding at, the
Distribution Date, the Company shall issue to the holders of such shares of
Common Stock, Rights Certificates representing the appropriate number of
Rights in connection with the issuance or sale of such shares of Common
Stock; provided, however, in each case, (i) no such Rights Certificate shall
be issued, if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
adverse tax consequences to the Company or to the Person to whom such Rights
Certificates would be issued, (ii) no such Rights Certificates shall be
issued if, and to the extent that, appropriate adjustment shall have
otherwise been made in lieu of the issuance thereof, and (iii) the Company
shall have no obligation to distribute Rights Certificates to any Acquiring
Person or Affiliate or Associate of an Acquiring Person or any transferee of
any of the foregoing.
5.4 Supplements and Amendments. The Company and the Rights Agent may
from time to time supplement or amend this Agreement without the approval of
any holders of Rights Certificates in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the
Company and the Rights Agent may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights Certificates.
The Company may at its sole option and at any time elect to change the
Expiration Date, provided, however, that in no event may the duration of the
Rights be shortened without the written consent of the registered holders
thereof (other than by a redemption of the Rights pursuant to Section 5.1).
29
5.5 Fractional Shares. If the Company elects not to issue certificates
representing fractional shares upon exercise or redemption of Rights, the
Company shall, in lieu thereof, in the sole discretion of the Board of
Directors, either (a) evidence such fractional shares by depositary receipts
issued pursuant to an appropriate agreement between the Company and a
depositary selected by it, providing that each holder of a depositary receipt
shall have all of the rights, privileges and preferences to which such holder
would be entitled as a beneficial owner of such fractional share, or (b) sell
such shares on behalf of the holders of Right and pay to the registered
holder of such Rights the appropriate fraction of price per share received
upon such sale.
5.6 Rights of Action. Subject to the terms of this Agreement
(including Section 3.1(b)), rights of action in respect of this Agreement,
other than rights of action vested solely in the Rights Agent, are vested in
the respective holders of the Rights; and any holder of any Rights, without
the consent of the Rights Agent or of the holder of any other Rights, may, on
such holder's own behalf and for such holder's own benefit and the benefit of
other holders of Rights, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise such holder's Rights in the
manner provided in such holder's Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any
Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Stockholder. No holder, as such, of
any Rights shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of shares or any other securities which may at any time be
issuable on the exercise of such Rights, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of
30
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription
rights, or otherwise, until such Rights shall have been exercised or
exchanged in accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose
after the Distribution Date and prior to the Expiration Time (i) to effect or
permit (in cases where the Company's permission is required) occurrence of
any Flip-in Date or Flip-over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right, in accordance with
Section 5.9 hereof, a notice of such proposed action, which shall specify the
Flip-in Date or the date on which such Flip-over Transaction or Event,
liquidation, dissolution, or winding up is to take place, and such notice
shall be so given at least 20 Business Days prior to the date of the taking
of such proposed action.
5.9 Notices. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights to or on the Company shall be sufficiently given or made if delivered
or sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Shoney's, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
31
Registrar and Transfer Company
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Shoney's, Inc. Administrator
Notices or demands authorized or required by this Agreement to be given or
made by the Company or the Rights Agent to or on the holder of any Rights
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action will or need be taken pursuant to
Section 3.1(a) or (b) or to comply with federal or state securities laws, the
Company may suspend the exercisability of the Rights for a period of up to
ninety (90) days following the date of the occurrence of the Distribution
Date or the Flip-in Date in order to take such action or comply with such
laws. In the event of any such suspension, the Company shall issue as
promptly as practicable a public announcement stating that the exercisability
or exchangeability of the Rights has been temporarily suspended. Notice
thereof pursuant to Section 5.9 shall not be required.
Failure to give a notice pursuant to the provisions of this Agreement
shall not affect the validity of any action taken hereunder.
5.11 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.
32
5.12 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.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the holders of the Rights 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 holders of the Rights.
5.14 Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Company 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, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement. 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 in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties,
and (y) not subject the Board of Directors of the Company to any liability to
the holders of the Rights.
5.15 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
5.16 Governing Law. THIS AGREEMENT AND EACH RIGHT ISSUED HEREUNDER
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
TENNESSEE AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS TO BE MADE AND
PERFORMED ENTIRELY WITHIN SUCH STATE.
33
5.17 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but
one and the same instrument.
5.18 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to
such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or
unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SHONEY'S, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Secretary, Treasurer and General Counsel
REGISTRAR AND TRANSFER COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. Tatler
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Tatler
Title: Vice President
34
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No. W- _________ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR
MANDATORY EXCHANGE, ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING
WILL BE VOID.
Rights Certificate
SHONEY'S, 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, provisions and
conditions of the Amended and Restated Rights Agreement, dated as of December
4, 2000 and effective as of August 8, 2001 (as amended from time to time, the
"Rights Agreement"), between Shoney's, Inc., a Tennessee corporation (the
"Company"), and Registrar and Transfer Company, a New Jersey corporation, 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 Distribution Date (as such term is defined in the Rights
Agreement) and prior to the close of business on May 25, 2004, one fully paid
share of Common Stock, par value $1.00 per share (the "Common Stock"), of the
Company (subject to adjustment as provided in the Rights Agreement) at the
Purchase Price referred to in the Rights Agreement, upon presentation and
surrender of this Rights Certificate with the Form of Election to Exercise
duly executed at the principal office of the Rights Agent in Cranford, New
Jersey.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company, all as provided in the Rights
Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal office of the
Company and are available without cost 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 or Rights Certificates of the
tenor evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or 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 or Rights Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, each Right evidenced
by this Certificate may be (a) redeemed by the Company under certain
circumstances, at its option, at a redemption price of $0.01 per Right or (b)
exchanged by the Company under certain circumstances for four shares of
Common Stock per Right, subject in each case to adjustment in certain events
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 any
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, as such, any of the rights of a stockholder of
the Company or any right
2
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights evidenced by
this Rights Certificate shall have been exercised or exchanged as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Date:
-------------------------------
ATTEST: SHONEY'S, INC.
By
------------------------------------ --------------------------------
Secretary
Countersigned:
REGISTRAR AND TRANSFER COMPANY
By
----------------------------------
Authorized Signature
3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this 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 Guaranteed: ------------------------------------
Signature
(Signature must correspond to name
as written upon the face of this
Rights Certificate in every
particular, without alteration or
enlargement or any change
whatsoever)
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
-----------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights
and shares of Common Stock, that the Rights evidenced by this Rights
Certificate are not, and, to the knowledge of the undersigned, have never
been, Beneficially Owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
-----------------------------------------------------------------------------
NOTICE
------
In the event the certification set forth above is not completed in
connection with a purported assignment, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) or a transferee of any of the foregoing and accordingly
will deem the Rights evidenced by such Rights Certificate to be void and not
transferable or exercisable.
2
[To be attached to each Rights Certificate]
FORM OF ELECTION TO EXERCISE
----------------------------
(To be executed if holder desires to
exercise the Rights Certificate)
TO: SHONEY'S, INC.
The undersigned hereby irrevocably elects to exercise ________ whole
Rights represented by the attached Rights Certificate to purchase the shares
of Common Stock issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
-------------------------------------------------------
Address:
-------------------------------------------------------
Social Security or Other Taxpayer
Identification Number:
-------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
-------------------------------------------------------
Address:
-------------------------------------------------------
Social Security or Other Taxpayer
Identification Number:
-------------------------------------------------------
Dated:
-------------------------------
Signature Guaranteed: --------------------------------------
Signature
(Signature must correspond to name as
written upon the face of the attached
Rights Certificate in every
particular, without alteration or
enlargement or any change whatsoever)
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Associate of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
-----------------------------------------------------------------------------
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of
Rights and shares of Common Stock, that the Rights evidenced by the attached
Rights Certificate are not, and, to the knowledge of the undersigned, have
never been, Beneficially Owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
--------------------------------------
Signature
-----------------------------------------------------------------------------
NOTICE
------
In the event the certification set forth above is not completed in
connection with a purported exercise, the Company will deem the Beneficial
Owner of the Rights evidenced by the attached Rights Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) or a transferee of any of the foregoing and accordingly
will deem the Rights evidenced by such Rights Certificate to be void and not
transferable or exercisable.
2