EXHIBIT 10.1
SHARE RIGHTS AGREEMENT
DAKOTA GROWERS RESTRUCTURING COMPANY, INC.
AND
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF MARCH 14, 2002
TABLE OF CONTENTS
PAGE
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Section 1. CERTAIN DEFINITIONS...............................................................................1
Section 2. APPOINTMENT OF RIGHTS AGENT.......................................................................3
Section 3. ISSUE OF RIGHT CERTIFICATES.......................................................................3
Section 4. FORM OF RIGHT CERTIFICATES........................................................................5
Section 5. COUNTERSIGNATURE AND REGISTRATION.................................................................5
Section 6. TRANSFER, SPLIT-UP, COMBINATION, AND EXCHANGE OF RIGHT CERTIFICATES; LOST, STOLEN, DESTROYED,
OR MUTILATED RIGHT CERTIFICATES...................................................................5
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.....................................6
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES................................................7
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES..................................................7
Section 10. PREFERRED SHARES RECORD DATE......................................................................8
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES, OR NUMBER OF RIGHTS......................8
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.......................................14
Section 13. CONSOLIDATION, MERGER, STATUTORY SHARE EXCHANGE, OR SALE OR TRANSFER OF ASSETS OR EARNING POWER..14
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES..........................................................16
Section 15. RIGHTS OF ACTION.................................................................................17
Section 16. AGREEMENT OF RIGHT HOLDERS.......................................................................17
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER................................................18
Section 18. CONCERNING THE RIGHTS AGENT......................................................................18
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT........................................18
Section 20. DUTIES OF RIGHTS AGENT...........................................................................19
Section 21. CHANGE OF RIGHTS AGENT...........................................................................20
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES...............................................................21
Section 23. REDEMPTION.......................................................................................21
Section 24. EXCHANGE.........................................................................................21
Section 25. NOTICE OF CERTAIN EVENTS.........................................................................22
Section 26. NOTICES..........................................................................................23
Section 27. SUPPLEMENTS AND AMENDMENTS.......................................................................23
Section 28. SUCCESSORS.......................................................................................24
Section 29. BENEFITS OF THIS AGREEMENT.......................................................................24
Section 30. SEVERABILITY.....................................................................................24
Section 31. GOVERNING LAW....................................................................................24
Section 32. COUNTERPARTS.....................................................................................24
Section 33. DESCRIPTIVE HEADINGS.............................................................................24
Exhibit A Certificate of Designation, Preferences and Rights of Series E Junior
Participating Preferred Shares................................................................A-1
Exhibit B Form of Rights Certificate....................................................................B-1
Exhibit C Summary of Rights to Purchase Preferred Stock.................................................C-1
RIGHTS AGREEMENT
This Agreement, dated as of March 14, 2002 between Dakota Growers
Restrucutring Company, Inc., a Minnesota corporation (the "Company"), and ▇▇▇▇▇
Fargo Bank Minnesota, National Association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (individually a "Right" and
collectively the "Rights") for each Common Share (as hereinafter defined) of the
Company outstanding at the close of Business on the first business day following
the consummation of the merger of Dakota Growers Corporation, a Colorado
corporation, with and into the Company (the "Record Date"), each Right initially
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions set forth
herein, and has further authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of Section 11 hereof) with
respect to each Common Share that shall become outstanding (i) at any time
between the Record Date and the earliest of the Distribution Date, the
Redemption Date, or the Final Expiration Date (as such terms are hereinafter
defined) or (ii) upon the exercise or conversion, prior to the earlier of the
Redemption Date or the Final Expiration Date, of any option or other security
exercisable for or convertible into Common Shares, which option or other such
security is outstanding on the Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding, but
shall not include (i) the Company, (ii) any wholly owned Subsidiary (as
such term is hereinafter defined) of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, or
(iv) any entity holding Common Shares for or pursuant to the terms of
any such plan described in clause (iii) of this sentence.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition of the Common Shares by the
Company which, by reducing the number of Common Shares outstanding,
increases the proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares of the Company then
outstanding; PROVIDED, HOWEVER, that if a Person, together with all
Affiliates or Associates of such Person, shall become the Beneficial
Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share acquisitions by the Company, and if such
Person or such Person's Affiliates or Associates, after such share
acquisitions by the Company, shall become the Beneficial Owner of any
additional Common Shares of the Company, and, immediately after
becoming the Beneficial Owner of such additional Common Shares, such
Person, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding, then such Person (unless such Person
shall be (1) the Company, (2) any wholly owned Subsidiary of the
Company, (3) any employee benefit plan of the Company or of any
Subsidiary of the Company, or (4) any entity holding Common Shares for
or pursuant to the terms of any such plan described in clause (3) of
this sentence) shall be deemed an "Acquiring Person." An entity other
than the Company or any wholly owned Subsidiary of the Company holding
Common Shares for or pursuant to the terms of an employee benefit plan
of the Company or of any Subsidiary of the Company and in addition
being the Beneficial Owner of Common Shares that are not held for or
pursuant to the terms of any such plan shall be deemed to constitute an
Acquiring Person, notwithstanding anything herein stated, if, but only
if, it, together with its Affiliates and Associates, shall be the
Beneficial Owner of 15% or more, exclusive of those Common Shares held
by it for or pursuant to the terms of any such plan, of the Common
Shares then outstanding. Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently (including, without limitation, because (A) such Person
was unaware that it beneficially owned a percentage of the Common
Shares that would otherwise cause
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such Person to be an "Acquiring Person" or (B) such Person was aware of
the extent of its Beneficial Ownership but had no actual knowledge of
the consequences of such Beneficial Ownership under this Agreement),
and without any intention of changing or influencing control of the
Company, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer
be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," or have beneficial ownership of,
any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, including without limitation securities with
respect to which such Person or any of such Person's
Affiliates or Associates has "beneficial ownership" pursuant
to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act;
(ii) which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly, (A) the
right to acquire (whether such right be exercisable
immediately or only after the passage or time) pursuant to any
agreement, arrangement, or understanding, whether or not in
writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, other rights (other than
the Rights), warrants or options, or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own or to have beneficial
ownership of, any securities pursuant to subparagraph (i),
(ii) or (iii) of this paragraph (c) solely because such
securities are 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, or (B) the right to vote or
dispose of (including without limitation pursuant to any
agreement, arrangement, or understanding (whether or not in
writing)); PROVIDED, HOWEVER, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own or have
beneficial ownership of, any security pursuant to subparagraph
(i), (ii) or (iii) of this paragraph (c) solely because of the
right to vote such security pursuant to an agreement,
arrangement, or understanding if the agreement, arrangement,
or understanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person or any of
such Person's Affiliates or Associates in response to a public
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act, and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any
comparable or successor report) as being beneficially owned by
such Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement, or
understanding, whether or not in writing (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the
final proviso to subparagraph (ii) of this paragraph (c)), or
disposing of, any securities of the Company.
Notwithstanding anything in these definitions of
Beneficial Owner, beneficially own, or beneficial ownership to
the contrary, the phrase "then outstanding," when used with
reference to a Person's beneficial ownership of securities of
the Company, shall mean the number of such securities then
issued and outstanding, together with the number of such
securities not then actually issued and outstanding which such
Person would be deemed to beneficially own hereunder.
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(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
or
North Dakota are authorized or obligated by law or executive order
to close.
(e) "Close of Business" on any given day shall mean 5:00 P.M.,
Carrington,
North Dakota time, on such date; PROVIDED, HOWEVER, that if
such date is not a Business Day, it shall mean 5:00 P.M., Carrington,
North Dakota time, on the next succeeding Business Day.
(f) "Common Shares," when used with reference to the Company,
shall mean shares of Common Stock, $0.01 par value (as such par value
may be changed from time to time), of the Company. "Common Shares,"
when used with reference to any Person other than the Company, shall
mean the class or series of capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons that ultimately
control such first mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(i) "Person" shall mean any individual, firm, corporation,
partnership, or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(j) "Preferred Shares" shall mean shares of Series E Junior
Participating Preferred Stock, par value $0.01 per share (as such par
value may be changed from time to time), of the Company, having the
rights and preferences set forth in the form of Certificate of
Designation, Preferences, and Rights attached to this Agreement as
Exhibit A hereto.
(k) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(l) "Section 11(a)(ii) Event" shall mean an event described in
the first sentence of Section 11(a)(ii).
(m) "Section 13 Event" shall mean any event described in
clauses (w), (x), (y), or (z) of Section 13(a).
(n) "Share Acquisition Date" shall mean the first date of
public announcement (which, for purpose of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
of the Exchange Act), by the Company or an Acquiring Person that an
Acquiring Person has become such.
(o) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or other equity interests entitled to vote in the
election of directors (or Persons with comparable responsibilities if
the entity has no directors) is beneficially owned, directly or
indirectly, by such Person or otherwise controlled by such Person.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the 15th
day after the Share Acquisition Date, or (ii) the Close of Business on
the 15th day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person
becomes an Acquiring Person) after
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the date of the commencement by any Person (other than the Company, any
wholly owned Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan) of, or of
the first public announcement of the intention of any Person (other
than the Company, any wholly owned Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the
terms of any such plan) to commence (which intention shall not have
been withdrawn within five business days (as defined in Rule 14d-1 of
the General Rules and Regulations under the Exchange Act) after such
public announcement), a tender or exchange offer the consummation of
which would result in any Person (other than the Company, any wholly
owned Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding
Common Shares for or pursuant to the terms of any such plan) becoming
the Beneficial Owner of 15% or more of the then outstanding Common
Shares (including any such date that is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the entry in the records of the Company and its
transfer agent of Common Shares registered in the names of the holders
thereof (which uncertificated, book entries of ownership shall also be
deemed to be Right Certificates when the context so requires) and not
by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer
of Common Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown
on the records of the Company, one or more Right Certificates, in
substantially the form of Exhibit B hereto (the "Right Certificates"),
evidencing one Right for each Common Share so held, subject to
adjustment pursuant to Section 11(i). In the event that an adjustment
in the number of Rights per Common Share has been made pursuant to
Section 11(i), at the time Right Certificates are distributed, the
Company may, to the extent provided in Section 14(a), make the
necessary and appropriate rounding adjustments (as set forth in Section
14(a)) so that Right Certificates are distributed representing only
whole numbers of Rights and pay cash in lieu of fractional Rights
pursuant to Section 14(a). As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights") by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the
Company. With respect to ownership of Common Shares outstanding as of
the Record Date, until the Distribution Date (or the earlier Redemption
Date or Final Expiration Date), the Rights will be evidenced by such
entries of the records of the Company and its transfer agent registered
in the names of the holders thereof, and the registered holders of the
Common Shares shall also be the registered holders of the associated
Rights. Until the Distribution Date (or the earlier Redemption Date or
Final Expiration Date), the transfer of Common Shares (including
without limitation the transfer of any Common Shares outstanding as of
the Record Date), with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Common Shares that become outstanding after the Record
Date and (i) prior to the earliest of the Distribution Date, the
Redemption Date, or the Final Expiration Date, or (ii) upon the
exercise or conversion, prior to the earlier of the Redemption Date or
the Final Expiration Date, of any option or other security exercisable
for or convertible into Common Shares, which option or other security
is outstanding on the Distribution Date, shall have been distributed
with the following legend:
The associated Common Shares also evidence and
entitle the holder hereof to certain Rights as set forth in a
Rights Agreement between Dakota Growers Restructuring Company,
Inc. (the "Company") and ▇▇▇▇▇ Fargo Bank Minnesota National
Association dated as of March 14, 2002 (the "Rights
Agreement"), the terms of which (including restrictions on the
transfer of such Rights) 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,
as set forth in the Rights
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Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by the Common
Shares. The Company will mail to the holder of those Common
Shares a copy of the Rights Agreement without charge after
receipt of a written request therefor from such holder. Under
certain circumstances, as set forth in the Rights Agreement,
Rights that are or were beneficially owned by an Acquiring
Person or any Associate or Affiliate thereof (as such terms
are defined in the Rights Agreement) may become null and void.
With respect to the Common Shares referenced in any such legend, until the
earliest of the Distribution Date, the Redemption Date, or the Final Expiration
Date, the Rights associated with the Common Shares shall be evidenced by such
entries in the books and records of the Company and its transfer agent, alone,
the registered holders of the Common Shares shall also be the registered holders
of the associated Rights, and the transfer of any such Common Shares shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares that are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be in substantially the form of Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries, or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed,
or to conform to usage or to reflect adjustments to the Rights made pursuant to
this Agreement. Subject to the provisions of Section 11 and Section 22 hereof,
the initial Right Certificates, whenever distributed, shall entitle the holders
thereof to purchase such number of one one-hundredths of a Preferred Share as
shall be set forth therein at the price per one-hundredth of a Preferred Share
set forth therein (the price per one-hundredth of a Preferred Share being herein
called the "Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman, Chief Executive Officer, President, or any
Vice President, and by the Secretary or any Assistant Secretary or the
Treasurer or any Assistant Treasurer of the Company, either manually or
by facsimile signature. The Right Certificates shall be countersigned,
either manually or by facsimile signature, by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed or whose facsimile
signature shall appear on any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased
to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date
of the signing of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or the office or
offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the
Right Certificates, and the date and certificate number of each of the
Right Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION, AND EXCHANGE OF RIGHT
CERTIFICATES; LOST, STOLEN, DESTROYED, OR MUTILATED RIGHT CERTIFICATES.
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(a) Subject to the provisions of Section 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Redemption Date or
the Final Expiration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have become
void pursuant to Section 11(a)(ii) hereof or that have been exchanged
pursuant to Section 24 hereof) may be transferred, split up, combined,
or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine, or exchange any Right Certificate or
Rights Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined, or exchanged at the
office or offices of the Rights Agent designated for such purpose.
Thereupon, the Rights Agent shall, subject to Section 14 hereof,
countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment by the registered holder of a sum
sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer, split-up, combination, or exchange of
Right Certificates. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of
any such surrendered Right Certificate until the registered holder
shall have duly completed and executed the form of assignment on the
reverse side of such Right Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of such Right Certificate or Affiliates or Associates
thereof as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction, or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed, or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 11(a)(ii), the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly completed
and executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment of the
Purchase Price for each one one-hundredth of a Preferred Share as to
which Rights are exercised, at or prior to the earliest of (i) the
Close of Business March 15, 2012 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall initially be
$20.00, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof, and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
completed and executed, accompanied by payment of the Purchase Price
for the shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash, or by
certified check or bank cashiers' check or money order payable to the
order of the Company, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer agent
of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the number of
Preferred Shares to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to
6
comply with all such requests, or (B) if the Company shall have elected
to deposit the total number of Preferred Shares issuable upon exercise
of the Rights under this Agreement with a depositary agent, requisition
from the depositary agent depositary receipts representing such number
of Preferred Shares as are to be purchased (in which case certificates
for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent), and the
Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount
of cash to be paid in lieu of issuance of fractional interests in
shares in accordance with Section 14 hereof, (iii) promptly after
receipt of such certificates or depositary receipts, cause the same to
be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt,
promptly deliver such cash for fractional interests to or upon the
order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to such holder's duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) duly completed and
executed the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company shall reasonably
request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split-up,
combination, or exchange shall, if surrendered to the Company or to 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 Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights.
(b) At such time, if any, as, and so long as, the Preferred
Shares issuable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company will use its best efforts to prepare and file,
as soon as practicable following the Share Acquisition Date, a
registration statement under the Securities Act of 1933, as amended
(the "Act"), with respect to the Rights and the Company's securities
purchasable upon exercise of the Rights on an appropriate form, and use
its best efforts to cause such registration statement to (i) become
effective as soon as practicable after such filing, and (ii) remain
effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are
no longer exercisable for such securities, or (B) the Final Expiration
Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws
of the various states in connection with exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed
90 days after the date the registration statement is filed, the
exercisability of the Rights in order to permit the registration
statement to become effective. Upon any such suspension, the Company
7
shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In
addition, if the Company shall determine that a registration statement
is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as
a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not
be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, or the exercise thereof
is not permitted under applicable law.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the
Purchase Price and any applicable transfer taxes), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of
the Right Certificates or of any Preferred Shares upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer
tax that may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares in a name
other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or deliver any
certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the
time of surrender), or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate as such shall
not be entitled to any rights of a holder of Preferred Shares for which the
Rights shall be exercisable, including without limitation the right to vote, to
receive dividends, or other distributions, or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES, OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right, and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares, or
(D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation, merger,
or statutory share exchange in which the Company is the
continuing surviving or acquiring corporation), except as
otherwise provided in this Section 11(a), the Purchase Price
in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination, or
reclassification, and the number and kind of shares of capital
stock issuable on such date pursuant to the 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 Purchase Price then in effect
(and any applicable transfer taxes), the aggregate number and
kind of shares of capital stock that, if such Right had been
exercised immediately prior to such date and at a time when
the Preferred Shares transfer books of the Company were open,
such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination, or
8
reclassification. If an event occurs that would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the
event any Person shall become an Acquiring Person (other than
pursuant to any Section 13 Event occurring on or after the
Distribution Date or within 15 days prior thereto), proper
provision shall be made so that each holder of a Right,
subject to Section 11(a)(iii), shall thereafter have a right
to receive, upon exercise thereof by payment of the amount
equal to the product of the number of one one-hundredths of a
Preferred Share that would otherwise be issuable upon exercise
of a Right and the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of Preferred Shares,
such number of Common Shares of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share
for which a Right is exercisable immediately prior to the
occurrence of the Section 11(a)(ii) Event, and (y) dividing
that product by 50% of the then current per share market price
of the Company's Common Shares (determined pursuant to Section
11(d) on the date of such occurrence.
From and after the first occurrence of a Section
11(a)(ii) Event or a Section 13 Event, any Rights that are
beneficially owned by any Acquiring Person (or any Associate
or Affiliate thereof) or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) after
the Acquiring Person became an Acquiring Person shall become
null and void without any further action, and no holder of
such Rights shall thereafter have any rights to exercise such
Rights or any other rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or
otherwise. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights that would be void pursuant
to the preceding sentence; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate of such an
Acquiring Person or to any nominee of such Acquiring Person,
Associate, or Affiliate; and any Right Certificate delivered
to the Rights Agent for transfer to an Acquiring Person or any
Associate or Affiliate of such Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be
canceled. The Company shall use all reasonable efforts to
insure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of a
Right Certificate or other Person as a result of its failure
in good faith to make any determinations with respect to an
Acquiring Person or its Affiliates or Associates.
(iii) If, on the date of the occurrence of a Section
11(a)(ii) Event (the "Adjustment Date"), the Company does not
have sufficient authorized, unissued, and unreserved Common
Shares available to permit the exercise in full of all Rights
that are exercisable on the Adjustment Date for the number of
Common Shares per Right provided for in Section 11(a)(ii),
then the Exercise Price (as defined below) and the number of
Common Shares to be delivered by the Company upon exercise of
a Right shall be further adjusted as provided in this
subparagraph (iii).
(1) Definitions:
(A) The "Aggregate Market Value" is the
product of (i) the number of Available Shares, and
(ii) the current per share market price of the Common
Shares on the Adjustment Date, determined as provided
in Section 11(d).
(B) The "Available Shares" are all
unreserved Common Shares that are authorized and
unissued immediately prior to the Adjustment Date.
(C) The "Exercise Price" is the amount of
the payment that must be made by the holder of a
Right in connection with the exercise of one Right
immediately prior to the Adjustment Date.
9
(D) The "Deficiency" is the amount by which
(i) two times the Exercise Price exceeds (ii) the
quotient obtained by dividing the Aggregate Market
Value by the number of Rights remaining outstanding
immediately prior to the Adjustment Date (the
"Remaining Rights") (which number shall not include
the Rights that are beneficially owned by any
Acquiring Person (or any Associate or Affiliate
thereof) or were beneficially owned by any Acquiring
Person (or any Associate or Affiliate thereof) after
the Acquiring Person became an Acquiring Person that
shall have become void pursuant to Section 11(a)(ii)
hereof).
(2) If the Deficiency is less than or equal to the
Exercise Price, then
(A) the number of Common Shares to be
delivered by the Company upon exercise of a Right
shall be adjusted to equal the number of Available
Shares divided by the number of Remaining Rights; and
(B) the amount of cash required to be
delivered by the holder of a Right upon the exercise
thereof shall be adjusted (the "New Exercise Price")
to equal the Exercise Price minus the Deficiency;
PROVIDED, HOWEVER, that in no event will the New
Exercise Price be less than the aggregate par value
of the Common Shares required to be delivered upon
the exercise of one Right pursuant to subparagraph
(2)(A) above.
(3) If the Deficiency is greater than the Exercise
Price, then
(A) the number of Common Shares to be
delivered by the Company upon exercise of a Right
shall be adjusted to equal the quotient obtained by
dividing the Exercise Price by the current per share
market price of the Common Shares on the Adjustment
Date;
(B) the new Exercise Price shall equal the
aggregate par value of the Common Shares required to
be delivered upon the exercise of one Right pursuant
to subparagraph 3(A) above; and
(C) In lieu of issuing Common Shares (in
whole or in part upon the exercise of Rights), the
Company may issue upon the exercise of Rights at the
New Exercise Price, other equity securities of the
Company (including, without limitation, shares, or
units or fractions of shares, of preferred stock,
which may include Preferred Shares) the Board of
Directors of the Company has determined to have
substantially the same value, voting rights, dividend
rights, and other rights as the Common Shares (such
equity securities are herein called "common share
equivalents"). To the extent that such common share
equivalents (or fractions thereof) are substituted
for Common Shares upon exercise of the Rights
following the occurrence of a Section 11(a)(ii)
Event, they shall be substituted on a pro rata basis
with respect to all Rights (other than Rights that
are beneficially owned by any Acquiring Person (or
any Associate or Affiliate thereof) or were
beneficially owned by any Acquiring Person (or any
Associate or Affiliate thereof) after the Acquiring
Person became an Acquiring Person that shall have
become void pursuant to Section 11(a)(ii) hereof).
Such common shares equivalents shall not be included
in Available Shares, and all of the Available Shares
shall be reserved, as of the Adjustment Date, for
issuance, on a pro rata basis, upon exercise of the
Rights, and may not be substituted for with common
share equivalents upon the exercise of any Right
except to the extent that the number of Common Shares
required to be delivered under subparagraph (3)(A)
upon the exercise of such Right exceeds the quotient
of the number of Available Shares divided by the
number of Remaining Rights.
(4) If, at the time any adjustment is required
pursuant to this Section 11(a)(iii), the Common Shares shall
have no par value, then for the purpose of this Section
11(a)(iii), the par value of the Common Shares shall be deemed
to be $.05 per share.
10
(5) In the event that there shall not be sufficient
authorized but unissued and unreserved Common Shares (or
common share equivalents the issuance of which is permitted
under Section 11(a)(iii)(3)(C), to permit the exercise in full
of the Rights in accordance with this subparagraph (iii), the
Company shall use its best efforts to cause the authorization
of sufficient additional Common Shares or common share
equivalents to permit such exercise, and, if the Board of
Directors of the Company shall determine in good faith that it
is likely that sufficient additional Common Shares or common
stock equivalents could be authorized to permit such exercise,
the Company may suspend the exercisability of the Rights for a
period not to exceed 90 days (and not beyond the Final
Expiration Date) in order to seek any authorization of
additional Common Shares or common share equivalents. In the
event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as public announcement at
such time as the suspension is no longer in effect.
(b) In case the Company shall fix a record date for the
issuance of rights, options, or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges, and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred
Shares or equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of Preferred Shares
that the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to
be offered) would purchase, at such current per share market price, and
the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of additional
Preferred Shares and/or equivalent preferred shares 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 consideration part or all of which shall be in a
form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company,
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. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options, or
warrants are not so issued, the Purchase Price shall again be adjusted
to be the Purchase Price that would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation or in a
statutory share exchange) of evidences of indebtedness or cash or
non-cash assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the current per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of
the Company, 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 evidences of
indebtedness or cash or non-cash assets so to be distributed on, or of
such subscription rights or warrants applicable to, one Preferred
Share, and the denominator of which shall be such current per share
market price of the Preferred Shares. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again
be adjusted to be the Purchase Price that would then be in effect if
such record date had not been fixed.
11
(d)(i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; PROVIDED, HOWEVER, that in the event
that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
such Security or securities convertible into such Security (other than
the Rights), or (B) any subdivision, combination, or reclassification
of such Security, and prior to the expiration of 30 Trading Days after
the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination, or reclassification, then, and
in each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if
the Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported on the Nasdaq National Market, the Nasdaq SmallCap
Market, or any similar system then in use, or, if on any such date the
Security is not quoted or reported 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 Security selected by
the Board of Directors of the Company. Except as provided in Section
11(d)(ii) with respect to Preferred Shares, if on any such day no
market maker is making a market in the Security, the fair value of such
Security on such day as determined in good faith by the Board of
Directors of the Company (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) shall be used in lieu of
the closing price for such day. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on
any national securities exchange, a Business day.
(ii) If the Preferred Shares are not publicly held or
listed or traded in a manner described in Section 11(d)(i),
then, notwithstanding anything to the contrary provided in
Section 11(d)(i), the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) multiplied by one
hundred (appropriately adjusted to reflect any stock split,
stock dividend, or similar transaction occurring after the
date hereof). If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, the "current
per share market price" of the Preferred Shares shall mean the
fair market value per share as determined in good faith by the
Board of Directors of the Company, 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.
(e) Anything herein to the contrary notwithstanding, except as
provided in the third sentence of this Section 11(e), no adjustment in
the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made in the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of any other
share or security, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section
11, but for the first sentence of this Section 11(e), shall be made no
later than the earlier of (i) three years from the date of the
transaction that requires such adjustment, or (ii) the Final Expiration
Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such
other shares so receivable upon
12
exercise of any Rights shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in Section 11(a)
through (c) inclusive, and the provisions of Sections 7, 9, 10, 13 and
14 with respect to the Preferred Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share (or other securities) purchasable
from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to such adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of
a Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Right Certificates have
been issued on or after the Distribution Date, this record date shall
be at least 10 days later than the date of the public announcement. If
Right Certificates have been issued on or after the Distribution Date,
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 Right Certificates on such record
date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed, and countersigned in the manner
provided for herein, may bear, at the option of the Company, the
adjusted Purchase Price, and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth of a Preferred Share and the number of one one-hundredths
of a Preferred Share that were expressed in the initial Right
Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable
13
upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver
to such holder a due ▇▇▇▇ or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board of
Directors of the Company in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any of the Preferred
Shares at less than the current per share market price, (iii) issuance
wholly for cash of Preferred Shares or securities that by their terms
are convertible into or exchangeable for Preferred Shares, (iv)
dividends on Preferred Shares payable in Preferred shares, or (v)
issuance of rights, options, or warrants referred to in paragraph (b)
of this Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
(m) Anything in this Agreement or the Rights to the contrary
notwithstanding, in the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares payable in Common
Shares, or (ii) effect a subdivision, combination, or consolidation of
the Common Shares (by reclassification or otherwise) into a greater or
lesser number of Common Shares, then in any such case (x) the number of
one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which
is the number of Common Shares outstanding immediately before such
event, and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (y) each Common Share
outstanding immediately after such event shall have issued with respect
to it that number of Rights that each Common Share outstanding
immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(m) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination, or consolidation is effected. If an event
occurs that would require an adjustment under Section 11(a)(ii) and
this Section 11(m), the adjustments provided for in this Section 11(m)
shall be in addition and prior to any adjustment required pursuant to
Section 11(a)(ii).
(n) If any adjustment in the Purchase Price pursuant to
paragraph (b) or (c) of this Section 11 would not be permitted by law,
under the Company's Articles of Incorporation, or under the Certificate
of Designation, Preferences, and Rights establishing the Preferred
Shares, as amended, no such issuance of securities or distribution of
evidences of indebtedness or other assets or subscription rights or
warrants, as the case may be, that would require such an adjustment but
for the limitations established by law, the Company's Articles of
Incorporation, or such Certificate of Designation, Preferences, and
Rights, as amended, shall be made by the Company.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agents and with each transfer agent for the Common Shares
or the Preferred Shares a copy of such certificate, and (c) if such adjustment
is made after the Distribution Date, mail a brief summary thereof to each holder
of record of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on such certificate and on any
adjustment therein contained.
Section 13. CONSOLIDATION, MERGER, STATUTORY SHARE EXCHANGE, OR SALE OR
TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event, on or after the Distribution Date or within
15 days prior thereto, directly or indirectly,
(w) the Company shall consolidate with, or merge with
and into, any other Person, and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger,
14
(x) any Person shall consolidate with the Company, or
merge with and into the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger,
all or part of the outstanding Common Shares of the Company
shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or money or
any other property (except as a result of the exercise of
statutory dissenters' rights),
(y) the Company shall effect a statutory share
exchange with outstanding Common Shares of the Company being
exchanged for stock or other securities of any other Person,
money, or other property, or
(z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one or a series of related transactions, assets
or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company
or one or more of its wholly owned Subsidiaries),
then, and in each case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof by
payment of the amount equal to the product of the number of one
one-hundredths of a Preferred Share that would otherwise be issuable
upon exercise of a Right and the then current Purchase Price in
accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of validly authorized and issued, fully paid,
nonassessable, and freely tradeable Common Shares of the Principal
Party (as hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal, or adverse claims, as shall be equal to the
result obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right
is, immediately prior to the occurrence of the Section 13 Event,
exercisable, and (y) dividing that product by 50% of the then current
per share market price of the Common shares of such Principal Party
(determined pursuant to Section 11(d)) on the date of consummation of
such Section 13 Event; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such merger, consolidation,
statutory share exchange, sale, or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party;
and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares
to permit the exercise of all outstanding Rights) in connection with
the consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clauses (w), (x), or (y) of the first sentence of Section
13(a), the Person (including, without limitation, the Company
as successor thereto or as the surviving corporation) that is
the issuer of any securities into which Common Shares of the
Company are converted in such merger, consolidation, or
exchange, or if no securities are so issued, the Person that
is the other party to such merger, consolidation, or exchange;
and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common shares of
such Person are not at such time and have not been continuously over
the preceding 12-month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person, the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person, and (2)
in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Shares of two or
15
more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the common Shares
having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of
authorized, unissued, and unreserved Common Shares to permit the
exercise in full of the Rights in accordance with this Section 13, and
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this
Section 13, and further providing that, as soon as practicable after
the date of any Section 13 Event, the Principal Party will:
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights, on an appropriate
form, and use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing, and (B) remain effective (with a prospectus at
all times meeting the requirements of the Act) until the
earlier of (1) the date as of which the Rights are no longer
exercisable for such securities, or (2) the Final Expiration
Date;
(ii) take such action as may be appropriate under, or
to ensure compliance with the securities, or "blue sky" laws
of the various states in connection with the exercisability of
the Rights; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
(d) The Company shall not enter into any transaction of the
kind referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments, or securities outstanding
or any agreements or arrangements that, as a result of the consummation
of such transaction, would eliminate or substantially diminish or
eliminate the benefits intended to be afforded by the Rights.
The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, statutory share exchanges, or sales
or other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there may be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes places
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported on the Nasdaq National Market or the Nasdaq
SmallCap Market or any similar system then in use or, if on any such
date the Rights are not so quoted or reported, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall
be used in lieu of the closing price for such day.
16
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share, or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred
Share, integral multiples of that fraction) upon exercise of the
Rights, or to issue certificates that evidence fractions of Preferred
Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share, or if a Right shall be then
exercisable for a fraction other than one one-hundredth of a Preferred
Share, integral multiples of that fraction). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share
or, if a Right shall then be exercisable for a fraction other than one
one-hundredth of a Preferred Share, integral multiples of that fraction
may, at the election of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges, and preferences to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts.
In lieu of fractional Preferred Shares that are not integral multiples
of one one-hundredth of a Preferred Share, or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred
share, integral multiples of that fraction, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For
purposes of this Section 14(b), the current market value of a Preferred
share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise, or, if the
closing price is not determinable pursuant to the second sentence of
Section 11(d)(i) hereof, the current market value of a Preferred Share
shall be determined pursuant to Section 11(d)(ii).
(c) The holder of a Right by the acceptance of the Rights
expressly waives such holder's right to receive any fractional Rights
or any fractional shares (except as provided above) upon exercise of a
Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Share), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action, or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise the Rights evidenced by such Right
Certificate (or, prior to the Distribution date, the associated Common Shares
certificate) in the manner provided in such Right 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.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office or offices of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of
transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate made by
anyone
17
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) the Company may issue Rights after the Record Date but
prior to the Distribution Date, and in certain instances after the
Distribution Date, as provided in this Agreement; and
(e) notwithstanding anything in this Agreement or the Rights
to the contrary, the Company, the Rights Agent, and the Board of
Directors shall not have any liability to any holder of a Right or
other Person as a result of the inability of the Company or the Rights
Agent 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.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends, or be deemed for any purpose the holder of the Preferred shares or
any other securities of the Company that may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscriptions rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense
(including the costs and expenses of defending against any claim of
liability), incurred without negligence, bad faith, or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement.
(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 Right Certificate or certificate for the Preferred
Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed, and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its
counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the
part of any of the parties hereto; PROVIDED, HOWEVER, that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have
18
been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights Agent
or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
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 Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed
name; and in all such cases, such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates
(or, prior to the Distribution Date, the Common Shares 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
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of the "current per share market
price") be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by any one of the Chairman, the Chief Executive Officer, the
President, or any Vice President 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 it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith, or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method, or amount
thereof) provided for in Sections 3, 11, 13, 23, or 24, or the
ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether
any preferred Shares or Common Shares will, when issued, be validly
authorized and issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge, and deliver or cause to be performed, executed,
acknowledged, and delivered all such further and other acts,
instruments, and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
19
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman, the Chief Executive Officer,
the President, or any Vice President of the Company, and to apply to
such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer
or for delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer,
or employee of the Rights Agent may buy, sell, or deal in any of the
Rights or other securities of the Company or become pecunarily
interested in any transaction in which the Company or its subsidiaries
may be interested, or contract with or lend money to the Company or its
Subsidiaries 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 its
Subsidiaries 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 duties 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, provided reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights or powers if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the form of assignment or
form of election to purchase as the case may be, has either not been
duly completed and executed or indicates an affirmative response to
enumerated clause 1 and/or 2 on the reverse side of the applicable
Right Certificate, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged form its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and,
if such notice is mailed after the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and Preferred Shares by registered or certified mail,
and, if such notice is mailed after the Distribution Date, to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under the
laws of the United States or of any state of the United States that is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
that has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million, or (b) an affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties, and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act, or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and Preferred Shares, and, if such notice is filed after the
20
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (x) such time as a Person becomes
an Acquiring Person, or (y) the Close of Business on the Final
Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend, or
similar transaction occurring after the date of this Agreement (such
redemption price being hereinafter referred to as the "Redemption
Price"). The Redemption Price shall be payable in cash by the Company.
The redemption of the Rights by the Board of Directors of the Company
may be made effective at such time, on such basis, and with such
conditions as the Board of Directors of the Company in its sole
discretion may establish. Except for the obligation of the Company to
pay the Redemption Price, the Board of Directors and the Company shall
not have any liability to any Person as a result of the redemption of
Rights pursuant to the terms of this Section 23.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph
(a) of this Section 23, and without any further action and without any
notice, the right to exercise the Rights will terminate, and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of
the Board of Directors of the Company ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights
agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common
shares; PROVIDED, HOWEVER, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. Any
notice mailed in the manner herein provided shall be deemed given
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. 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 except as specifically set forth in this Section 23
or in Section 24 or other than in connection with the purchase of
Common Shares prior to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option,
at any time after any person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not
include Rights that shall have become void pursuant to the provisions
of Section 11(a)(ii) hereof) for Common Shares with each Right to be
exchanged for such number of Common Shares as shall equal the result
obtained by dividing (x) the Exercise Price (as defined in Section
11(a)(iii)) by (y) the current per share market price of the Common
shares (determined pursuant to Section 11(d)) on the date the Rights
first become exercisable for Common Shares pursuant to Section
11(a)(ii) (such number of shares being hereinafter referred to as the
"Exchange Ratio"). The Exchange Ratio shall be appropriately adjusted
to reflect any stock split, stock dividend, or similar transaction
affecting the Common Shares that occurs after the date the Rights first
become exercisable for Common Shares pursuant to Section 11(a)(ii).
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other
than the Company, any wholly owned subsidiary of the Company, any
employee benefit plan of the Company or any Subsidiary of the Company,
or any entity holding Common
21
Shares for or pursuant to the terms of any such plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph
(a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate, and the only
right thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; PROVIDED, HOWEVER, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice 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 Common Shares
for Rights will be effected and, in the event of any partial exchange,
the number of Rights that will be exchanged. Any partial exchange shall
be effected pro rata based on the number of Rights (other than Rights
that shall have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares authorized, unissued, and unreserved to permit an exchange of
Rights as contemplated in accordance with this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b) hereof, or common
share equivalents, as such term is defined in Section 11(a)(iii)(3)(C)
hereof), for Common Shares exchangeable for Rights, at the initial rate
of one one-hundredth of a Preferred Share (or equivalent preferred
share) or one common share equivalent for each Common Share, as
appropriately adjusted to reflect stock splits, stock dividends, or
similar transactions affecting the Common Shares that occur after the
date of this Agreement.
(d) In the event that there shall not be sufficient Common
Shares, Preferred Shares, equivalent preferred shares, as such term is
defined in Section 11(b), or common share equivalents, as such term is
defined in Section 11(a)(iii)(3)(C), authorized, unissued, and
unreserved to permit the exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action
as may be necessary to authorize additional Common shares or Preferred
Shares, equivalent preferred shares, or common share equivalents for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates that evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Company
may pay to the registered holders of the Right Certificates with regard
to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value
of a whole Common Share. For the purposes of this paragraph (e), the
current market value of a whole Common Share shall be the closing price
of a Common Share (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24. The Board of Directors
and the Company shall not have any liability to any Person as a result
of the exchange of Rights pursuant to the terms of this Section.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), or (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to purchase
any additional Preferred Shares or shares of stock of any class or any
other securities, rights, or options, or (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), or
(iv) to effect any consolidation or merger into or with any other
Person, or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in one
or a series of related transactions, of 50% or more 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
22
and/or any of is wholly owned Subsidiaries), or (v) to effect any
statutory share exchange with outstanding Common Shares of the Company
being exchanged for stock or other securities of any other corporation
or money or other property, or (vi) to effect the liquidation,
dissolution, or winding up of the Company, or (vii) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect
a subdivision, combination, or consolidation of the Common shares (by
reclassification or otherwise), then, in each such case, the Company
shall give to each holder of a Right Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes
of such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, exchange,
sale, transfer, liquidation, dissolution, or winding up is to take
place, and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least 10 days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage-prepaid, or delivered by hand or express courier service or faxed,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Dakota Growers Restructuring Company, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager - Account Management Group
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage-prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may and the Rights
Agent shall, if so directed by the Company, from time to time supplement or
amend this Agreement without the approval of any holders of Common Shares or
Right Certificates in order (i) to extend the Final Expiration Date, (ii) to
cure any ambiguity, or to correct or supplement any provision contained in this
Agreement that may be defective or inconsistent with any other provisions in
this Agreement, (iii) prior to the Distribution Date, to otherwise change or
supplement any provision in this Agreement in any manner the Company may deem
necessary or desirable, or (iv) following the Distribution Date, to otherwise
change or supplement any provision in this Agreement in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Right Certificates (other than Right Certificates
evidencing Rights that shall have become null and void pursuant to Section
11(a)(ii)). Without limiting the foregoing, the Company may at any time prior to
such time as any Person becomes an Acquiring Person amend this Agreement to
lower the thresholds set forth in Section s 1(a) and 3(a) hereto from 15% to not
less than the greater of (i) the sum of .001% and the largest percentage of the
outstanding
23
Common Shares then known by the Company to be beneficially owned by any Person
(other than (1) the Company, or (4) any entity holding Common shares for or
pursuant to the terms of any plan described in clause (3) of this sentence) or
(ii) 10%.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT.
(a) Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent, and the registered
holders of the Right Certificates (and, prior to the Distribution Date,
the registered holders of Common Shares) 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 Right Certificates (and, prior to the
Distribution Date, the registered holders of Common Shares).
(b) 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 of
Directors or the Company or necessary or advisable in the
administration of this Agreement, including without limitation the
right and power to interpret this Agreement and to make all
determinations deemed necessary or advisable for the administration of
this Agreement. All such acts, calculations, interpretations, and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by the
Board of Directors in good faith shall (x) be final, conclusive, and
binding on the Company, the Rights Agent, and the holders of the Rights
and all other parties, and (y) not subject the Board of Directors to
any liability to the holders of the Rights or any other party.
Section 30. SEVERABILITY. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired, or invalidated.
Section 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be contract made under the laws of the State
of
North Dakota 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.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
DAKOTA GROWERS RESTRUCTURING
COMPANY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
--------------------------------------
Its: Chairman
-------------------------------------
▇▇▇▇▇ FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇ Fargo Bank
Minnesota, National Association
--------------------------------------
24
EXHIBIT A
CERTIFICATE OF DESIGNATION
See Exhibit 3.2 to Registration Statement for Exhibit A to Rights Plan.
A-1
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- Rights
---------------------------------------------
NOT EXERCISABLE AFTER MARCH 14, 2012 OR SUCH EARLIER DATE AS THE BOARD
OF DIRECTORS ORDERS REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT (SUBJECT TO
ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
DAKOTA GROWERS RESTRUCTURING COMPANY, INC.
This certifies that _____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provision, and conditions
of the Rights Agreement dated as of March 14, 2002 (the "Rights Agreement")
between Dakota Growers Restructuring Company, Inc., a
North Dakota
corporation (the "Company"), and ▇▇▇▇▇ Fargo Bank Minnesota National
Association (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (Carrington,
North Dakota time) on March 14, 2012 at
the office or offices of the Rights Agent designated for such purpose, or of
its successor as Rights Agent, one one-hundredth of a fully paid,
nonassessable Series E Junior Participating Preferred Share, par value $0.01
(the "Preferred Shares"), of the Company, at a purchase price of $20.00 per
one one-hundredth of a Preferred Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly completed and executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of
a Preferred Share that may be purchased upon exercise thereof) set forth
above, and the Purchase Price set forth above, are, except for adjustments
required pursuant to the Rights Agreement, the number and Purchase Price as
of _______, ____, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a Preferred Share that may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof, and which
contains a full description of the rights, limitations of rights, obligations,
duties, and immunities hereunder of the Rights Agent, the Company, and the
holders of the Rights Certificates (which limitations of rights include the
voiding of the Rights under certain circumstances specified in the Rights
Agreement). Copies of the Rights Agreement are on file with the Secretary at the
principal executive office of the Company and will be mailed without charge by
the Company or the Rights Agent to the holder of this certificate promptly
following receipt by the Company or the Rights Agent of a written request
therefor.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), any Rights evidenced by this Right Certificate
that are beneficially owned by an Acquiring Person or an Associate or Affiliate
of such Acquiring Person (as such terms are defined in the Rights Agreement) or
were beneficially owned by any Acquiring Person or an Associate or Affiliate of
such Acquiring Person after the Acquiring Person becomes an Acquiring Person
shall be null and void from and after the occurrence of such Section 11(a)(ii)
Event.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agents designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths
B-1
of a Preferred Share as the Rights evidenced by the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Right Certificates for the
number of Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may, but are not required to, be redeemed by the Company
at a redemption price of $.001 per Right, subject to adjustment as provided in
the Rights Agreement, payable in cash, and (ii) may, but are not required to, be
exchanged by the Company in whole or in part for Common Shares or other shares
of capital stock of the Company. The Board of Directors of the Company and the
Company shall not have any liability to any person as a result of the redemption
or exchange of the Rights pursuant to the provisions of the Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractional shares that are integral
multiples of one one-hundredth of a Preferred Share or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction, which may, at the election of the Company,
be evidenced by depositary receipts), if in lieu thereof a cash payment is made,
as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder thereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the manual or facsimile signature of the proper officer of the
Company.
Dated:
---------
DAKOTA GROWERS RESTRUCTURING
COMPANY, INC.
By:
--------------------------------------
Its:
-------------------------------------
Countersigned:
-----------------------------------
By:
--------------------------------
Authorized Manual or
Facsimile Signature
B-2
SHARE RIGHTS AGREEMENT
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be Executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________ hereby sells, assigns, and transfers unto
(Please print name and address of transferee) this Right Certificate, together
with all right, title, and interest therein, and does hereby irrevocably
constitute and appoint ___________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
---------------
-------------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States, or by an eligible guarantor institution (bank, stockbroker,
savings and loan association, or credit union with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15 promulgated
under the Securities Exchange Act of 1934, as amended.
B-3
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
/ / are
or
/ / are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as terms are defined in the Rights Agreement); and
(2) the undersigned
/ / did
or
/ / did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
-------------------------------------------
Signature
NOTICE
The signature of the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-4
SHARE RIGHTS AGREEMENT
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
TO: DAKOTA GROWERS RESTRUCTURING COMPANY, INC.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such other securities of the Company or any
other person that may be issuable upon exercise of the Rights) and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Please print name and address)
Dated:
---------------
-------------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States, or by an eligible guarantor institution (bank, stockbroker,
savings and loan association, or credit union with membership in an approved
signature guarantee medallion program), pursuant to Rule 17Ad-15 promulgated
under the Securities Exchange Act of 1934, as amended.
B-5
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
/ / are
or
/ / are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as terms are defined in the Rights Agreement); and
(2) the undersigned
/ / did
or
/ / did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
any time that such Person beneficially owned such Rights, is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
-------------------------------------------
Signature
NOTICE
The signature of the foregoing Election to Exercise and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-6
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES OF
DAKOTA GROWERS RESTRUCTURING COMPANY, INC.
On March 14, 2002 the Board of Directors of Dakota Growers
Restructuring Company, Inc. (the ("Company") declared a dividend of one
preferred share purchase right (a "Right") for each Common Share of the par
value of $0.01 per share (the "Common Shares") of the Company outstanding at the
close of business on the first business day following the consummation of the
merger of Dakota Growers Corporation, a Colorado corporation, with and into
Dakota Growers Restructuring Company, Inc. The dividend is payable on _______,
2002 (the "Record Date") to shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a Series E Junior Participating Preferred Share, $0.01 par
value (the "Preferred Shares"), of the Company at a price of $20.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated as of March 14, 2002 between the
Company and ▇▇▇▇▇ Fargo Bank Minnesota National Association as Rights Agent (the
"Rights Agent").
Initially, the Rights will attach to all Common Shares then
outstanding, and no separate Right Certificates will be distributed. The Rights
will separate from the Common Shares, and a Distribution Date for the Rights
will occur upon the earlier of:
(i) the close of business on the fifteenth day following a
public announcement that a person or group or affiliated or associated
persons has become an "Acquiring Person" (i.e., has become, subject to
certain exceptions, the beneficial owner of 15% or more of the
outstanding Common Shares), or
(ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange
offer, the consummation of which would result in a person or group of
affiliated or associated persons becoming, subject to certain
exceptions, the beneficial owner of 15% or more of the outstanding
Common Shares (or such later date as may be determined by the Board of
Directors of the Company prior to a person or group of affiliated or
associated persons becoming an Acquiring Person).
Until the Distribution Date,
(i) the Rights will be evidenced by the Common Shares and will
be transferred with and only with the Common Shares,
(ii) new Common Shares issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any Common Share, even
without such notation or a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on March 14, 2012, unless extended or
earlier redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution:
C-1
(i) in the event of a stock dividend on, or a subdivision,
combination, or reclassification of, the Preferred Shares,
(ii) upon the grant to holders of the Preferred Shares of
certain rights, options, or warrants to subscribe for or purchase
Preferred Shares or convertible securities at less than the then
current market price of the Preferred Shares, or
(iii) upon the distribution to holders of the Preferred Shares
of evidences of indebtedness or assets (excluding regular periodic cash
dividends or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those described in clause (ii) hereof).
The number of Preferred Shares issuable upon the exercise of a Right is
also subject to adjustment in the event of a dividend on Common Shares payable
in Common Shares, or a subdivision, combination, or consolidation of the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments required an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares that are integral multiples of one one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu thereof a payment in cash is made
based on the closing price (pro-rated for the fraction) of the Preferred Shares
on the last trading date prior to the date of exercise.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring person, proper provision shall be made so that each
holder of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive, upon exercise thereof at the then current exercise price of the
Right, that number of Common Shares having a market value of two times the
exercise price of the Right, subject to certain possible adjustments.
In the event that, on or after the Distribution Date or within 15 days
prior thereof, the Company is acquired in certain mergers or other business
combination transactions, or 50% or more of the assets or earning power of the
Company and its subsidiaries (taken as a whole) are sold on or after the
Distribution Date or within 15 days prior to the Distribution Date in one or a
series of related transactions, each holder of a Right (other than Rights that
have become void under the terms of the Rights Agreement) will thereafter have
the right to receive, upon exercise thereof at the then current exercise price
of the Right, the number of common shares of the acquiring company (or, in
certain cases, on of its affiliates) having a market value of two times the
exercise price of the Right.
In certain events specified in the Rights Agreement, the Company is
permitted to temporarily suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person (subject to certain exceptions), and prior to the
acquisition by a person or group of affiliated or associated persons of 50% or
more of the outstanding Common Shares, the Board of Directors of the Company may
authorize the exchange all or part of the Rights (other than Rights that have
become void under the terms of the Rights Agreement) for Common Shares or
equivalent securities at an exchange ratio per Right equal to the result
obtained by dividing the exercise price of a Right by the current per share
market price of the Common Shares, subject to adjustment.
At any time prior to the time that a person or group of affiliated or
associated persons has become an Acquiring Person, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per
Right, subject to adjustment (the "Redemption Price"), payable in cash. 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 Board of Directors and the Company shall not have any liability
to any person as a result of the redemption or exchange of the Rights pursuant
to the provisions of the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of the
Company, subject to certain limitations after the Distribution Date, without the
consent of the holders of the Rights, including an amendment
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prior to the date of a person or group of affiliated or associated persons
becomes an Acquiring Person to lower the 15% threshold for exercisability of the
Rights to not less than the greater of (i) the sum of .001% and the largest
percentage of the outstanding Common Shares then known by the Company to be
beneficially owned by any person or group of affiliated or associated persons
(subject to certain exceptions), or (ii) 10%.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to Pre-effective Amendment Number 1 to a
Registration Statement on Form S-4 dated March 19, 2002. A copy of the Rights
Agreement is available free of charge from the Company by contacting ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
herein by reference.
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