1
EXHIBIT 1
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RIGHTS AGREEMENT
DATED AS OF FEBRUARY 16, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ DELI, INC.
AND
AMERICAN STOCK TRANSFER
AND TRUST COMPANY,
AS RIGHTS AGENT
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TABLE OF CONTENTS
PAGE
1. CERTAIN DEFINITIONS.....................................................................................-1-
2. APPOINTMENT OF RIGHTS AGENT.............................................................................-5-
3. ISSUE OF RIGHTS CERTIFICATES............................................................................-5-
4. FORM OF RIGHTS CERTIFICATES.............................................................................-7-
5. COUNTERSIGNATURE AND REGISTRATION.......................................................................-8-
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE
OF RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST
OR STOLEN RIGHTS CERTIFICATES...........................................................................-8-
7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS...........................................................-9-
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES....................................................-11-
9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK..........................................................-11-
10. COMPANY COMMON STOCK RECORD DATE.......................................................................-12-
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND
OF SHARES OR NUMBER OF RIGHTS..........................................................................-13-
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES.................................................................................................-21-
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.......................................................................................-21-
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES................................................................-24-
15. RIGHTS OF ACTION.......................................................................................-25-
16. AGREEMENT OF RIGHTS HOLDERS............................................................................-25-
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.....................................................-26-
18. CONCERNING THE RIGHTS AGENT............................................................................-26-
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT..................................................................................................-26-
20. DUTIES OF RIGHTS AGENT.................................................................................-27-
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21. CHANGE OF RIGHTS AGENT.................................................................................-29-
22. ISSUANCE OF NEW RIGHTS CERTIFICATES....................................................................-30-
23. REDEMPTION AND TERMINATION.............................................................................-31-
24. EXCHANGE...............................................................................................-31-
25. NOTICE OF CERTAIN EVENTS...............................................................................-33-
26. NOTICES................................................................................................-34-
27. SUPPLEMENTS AND AMENDMENTS.............................................................................-34-
28. SUCCESSORS.............................................................................................-35-
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC..............................................-35-
30. BENEFITS OF THIS AGREEMENT.............................................................................-35-
31. SEVERABILITY...........................................................................................-36-
32. GOVERNING LAW..........................................................................................-36-
33. COUNTERPARTS...........................................................................................-36-
34. DESCRIPTIVE HEADINGS...................................................................................-36-
EXHIBIT A - Form of Rights Certificate
EXHIBIT B - Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 16 , 2000 (the "Agreement"),
between WALL STREET DELI, INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER AND TRUST COMPANY, a New York corporation (the "Rights
Agent").
WHEREAS, effective February 16, 2000 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board") authorized and
declared a dividend distribution of one Right (as hereinafter defined) for each
share of Company Common Stock (as hereinafter defined) outstanding at the Close
of Business (as hereinafter defined) on March 1, 2000 (the "Record Date"), and
authorized the issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions hereof) for each share of Company Common Stock issued
between the Record Date (whether originally issued or delivered from the
Company's treasury), and (except as otherwise provided in Section 22) the
Distribution Date (as hereinafter defined), each Right initially representing
the right to purchase upon the terms and subject to the conditions hereinafter
set forth one one-hundredth of a share of Company Common Stock (individually, a
"Right," and collectively, the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean: (i) any Person (as hereinafter defined)
who or which, together with all Affiliates and Associates (as hereinafter
defined) of such Person, shall be the Beneficial Owner (as hereinafter defined)
of 15% or more of the Company Common Stock then outstanding; provided, however,
that the term "Acquiring Person" shall not include (A) the Company, (B) any
Subsidiary of the Company, (C) any employee benefit plan maintained by the
Company, any of its Subsidiaries or any trustee or fiduciary with respect to
such plans acting in such capacity or (D) any member of the Existing Control
Group (as hereinafter defined), except as set forth under clause (ii) below; and
(ii) any member of the Existing Control Group who or which, together with all
Affiliates and Associates of such Person, shall increase by 15 % or more his or
its Beneficial Ownership of the shares of Company Common Stock then outstanding
from the number of shares of Company Common Stock Beneficially Owned by such
Person on the date hereof. Notwithstanding the foregoing, (x) if the Board
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph, has
become such inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Company Common Stock so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this paragraph, then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement unless and until such Person shall
again become an "Acquiring Person" and (y) any such Person who becomes the
Beneficial Owner of 15% or more of the shares of Company Common Stock then
outstanding as a result of a reduction in the number of shares of Company Common
Stock then outstanding due to the repurchase of Company Common Stock by the
Company shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement unless and until such Person, after becoming aware that such Person
has become the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding, acquires beneficial ownership of any additional shares
of Company Common Stock representing one percent (1%) or more of the shares of
Company Common Stock then outstanding. The term "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 issued and outstanding which such Person
would be deemed to Beneficially Own hereunder.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the Exchange Act Regulations (as hereinafter
defined), as in effect on the date of this Agreement.
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A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own," any securities:
(i) of which such Person or any of such Person's Affiliates
or Associates is considered to be a "beneficial owner" under Rule 13d-3
of the Exchange Act Regulations as in effect on the date hereof;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any securities under this
subdefinition (i) as a result of an agreement, arrangement or
understanding to vote such securities if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy given in
response to a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Exchange Act (as
hereinafter defined) and the Exchange Act Regulations, and (B) is not
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate of such other Person)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (i) of this definition) or disposing of such securities;
or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, other rights, warrants
or options, or otherwise; provided, however, that under this definition
a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made in accordance with Exchange Act Regulations by such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time prior
to the occurrence of a Triggering Event, or (C) securities that may be
issued upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(c) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights.
"Board" has the meaning set forth in the recital hereto.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York or Birmingham, Alabama
are authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M., New York,
New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York, New York time, on the next
succeeding Business Day.
"Common Stock" of any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or, if such Person
shall have no capital stock, the equity securities or other equity interest
having power to control or direct the management of such Person.
"Common Stock Equivalents" has the meaning set forth in Section
11(a)(iii).
"Company Common Stock" means the Common Stock, par value $0.05, of the
Company.
"Current Market Price" has the meaning set forth in Section 11(d).
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"Current Value" has the meaning set forth in Section 11(a)(iii).
"Depositary Agent" has the meaning set forth in Section 7(c).
"Distribution Date" has the meaning set forth in Section 3(a).
"Equivalent Company Common Stock" has the meaning set forth in Section
11(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Act Regulations" means the General Rules and Regulations
under the Exchange Act.
"Existing Control Group" shall mean ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and their respective Affiliates and Associates.
"Expiration Date" has the meaning set forth in Section 7(a).
"Final Expiration Date" has the meaning set forth in Section 7(a).
"Nasdaq" has the meaning set forth in Section 11(d).
"Person" shall mean any individual, partnership, limited partnership,
limited liability company, firm, corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or group deemed to be a
person under Section 14(d)(2) of the Exchange Act.
"Principal Party" has the meaning set forth in Section 13(b).
"Purchase Price" has the meaning set forth in Section 7(b).
"Record Date" has the meaning set forth in the recital hereto.
"Redemption Price" has the meaning set forth in Section 23.
"Registered Common Stock" has the meaning set forth in Section 13(b).
"Registration Date" has the meaning set forth in Section 9(c).
"Registration Statement" has the meaning set forth in Section 9(c).
"Right" has the meaning set forth in the recital hereto.
"Rights Certificate" has the meaning set forth in Section 3(a).
"Rights Dividend Declaration Date" has the meaning set forth in the
recital hereto.
"Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A) or (B).
"Section 11(a)(iii) Trigger Date" has the meaning set forth in Section
11(a)(iii).
"Section 13 Event" shall mean any event described in clause (x), (y),
or (z) of Section 13(a).
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"Securities Act" means the Securities Act of 1933, as amended.
"Spread" has the meaning set forth in Section 11(a)(iii).
"Stock Acquisition Date" shall mean the later of (i) the first date of
a public announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) or Section 14(d) of the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such or (ii) the
first date on which an executive officer of the Company has actual knowledge
that an Acquiring Person has become such.
"Subsidiary" shall mean, with reference to any Person, any other Person
of which an amount of voting securities or equity interests sufficient to elect
at least a majority of the directors or equivalent governing body of such other
Person is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such first-mentioned Person.
"Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
"Summary of Rights" has the meaning set forth in Section 3(b).
"Trading Day" has the meaning set forth in Section 11(d).
"Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
"Unit" has the meaning set forth in Section 7(b).
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 in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable, upon ten (10) days'
prior written notice to the Rights Agent.
3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth (10th)
Business Day after the Stock Acquisition Date, and (ii) the Close of Business on
the tenth (10th) Business Day (or such later date as may be determined by the
Board to such time and of which the Company will give the Rights Agent prompt
written notice) after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company, any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity, or any member of
the Existing Control Group) is first published or sent or given within the
meaning of Rule 14d-4(a) of the Exchange Act Regulations or any successor rule,
if upon consummation thereof such Person would be the Beneficial Owner of 15% or
more of the shares of Company Common Stock then outstanding (the earlier of (i)
and (ii) above being the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for shares of Company Common Stock registered in the names of the
holders of shares of Company Common Stock as of and subsequent to the Record
Date (which certificates for shares of Company Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock (including a transfer to the Company)
and not separately. As promptly as reasonably practicable after the Distribution
Date, the Rights Agent will send by first-class, insured, postage prepaid mail,
to each record holder of shares of Company Common Stock 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 rights certificates, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right for
each share of Company Common Stock so held, subject to adjustment as
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provided herein. In the event that an adjustment in the number of Rights per
share of Company Common Stock has been made pursuant to Section 11(o) hereof, at
the time of distribution of the Rights Certificates, the Company may make the
necessary and appropriate rounding adjustments in accordance with Section 14(a)
hereof, so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as reasonably practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Acquire Company Common
Stock in a form which may be appended to certificates that represent shares of
Company Common Stock, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights"), by first-class, postage prepaid mail, to each record
holder of shares of Company Common Stock as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for the Company Common Stock outstanding as of the
close of business on the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for the Company Common Stock and the
registered holders of the Company Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the Distribution Date or
the Expiration Date the transfer of any certificates representing shares of
Company Common Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such shares of Company
Common Stock.
(c) Rights shall be issued (i) in respect of all shares of Company
Common Stock that are issued (either as an original issuance or from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date and (ii) in connection with the
issuance or sale of Company Common Stock following the Distribution Date and
prior to the Expiration Date upon the exercise of stock options, or upon the
exercise, conversion or exchange of securities, granted or issued by the Company
prior to the Distribution Date. Certificates, representing such shares of
Company Common Stock, issued after the Record Date shall bear the following
legend:
"THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER
HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT
BETWEEN WALL STREET DELI, INC. (THE "COMPANY") AND AMERICAN
STOCK TRANSFER AND TRUST COMPANY (THE "RIGHTS AGENT") DATED AS
OF FEBRUARY 16, 2000 (THE "RIGHTS AGREEMENT"), THE TERMS OF
WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE STOCK
TRANSFER ADMINISTRATION OFFICE OF THE RIGHTS AGENT. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND
WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY
WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE
RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT
CHARGE AS PROMPTLY AS REASONABLY PRACTICABLE AFTER RECEIPT OF
A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY,
ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF
OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL
AND VOID."
With respect to certificates representing shares of Company Common
Stock (whether or not such certificates include the foregoing legend or have
appended to them the Summary of Rights), until the earlier of the Distribution
Date or the Expiration Date, the Rights associated with the shares of Company
Common Stock represented by such certificates shall be evidenced by such
certificates alone and registered holders of the shares of Company Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the shares of Company Common Stock represented by such
certificates. In the event that the Company purchases or acquires any shares of
Company Common Stock after the Record Date but prior to the Distribution Date,
any Rights associated with such shares of Company Common Stock
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shall be deemed canceled and retired so that the Company shall not be entitled
to exercise any Rights associated with the shares of Company Common Stock which
are no longer outstanding; provided, however, that upon the reissuance of such
shares from the Company's treasury, Rights shall be issued with respect thereto
in accordance with the first sentence of this paragraph.
4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase,
assignment and certificate to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A 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 any rule or regulation thereunder or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated
as of the Record Date and on their face shall entitle the holders thereof to
acquire such number of Units of Company Common Stock as shall be set forth
therein at the price set forth therein, but the amount and type of securities,
cash or other assets that may be acquired upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which
the Board has determined to be part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e) hereof
shall, upon the written direction of the Board, contain (to the extent feasible)
the following legend:
"THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
7(E) OF SUCH AGREEMENT."
5. COUNTERSIGNATURE AND REGISTRATION.
(a) Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of the individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at the
date of such Rights Certificates. No Rights Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose unless there appears on
such Rights Certificate a countersignature duly executed by the Rights Agent by
manual signature of an authorized signatory, and such countersignature upon any
Rights Certificate shall be conclusive evidence, and the only evidence, that
such Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for
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surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the name and address of each holder of the Rights Certificates,
the number of Rights evidenced on its face by each Rights Certificate and the
date of each Rights Certificate.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 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 Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing Rights that have
become void pursuant to Section 7(e) hereof or that have been exchanged pursuant
to Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of Units of Company Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and executed the certificate set
forth in the form of assignment on the reverse side of such Rights Certificate
and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of the Rights represented by such
Rights Certificate or Affiliates or Associates thereof as the Company shall
reasonably request; whereupon the Rights Agent shall, subject to the provisions
of Section 4(b), Section 7(e) and Section 14 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, upon request by the registered holder of the Rights represented
thereby and upon payment to the Company and the Rights Agent of all reasonable
expenses incident thereto, there shall be issued, in exchange for and upon
cancellation of the mutilated Rights Certificate, or in substitution for the
lost, stolen or destroyed Rights Certificate, a new Rights Certificate, in
substantially the form of the prior Rights Certificate, of like tenor and
representing the equivalent number of Rights, but, in the case of loss, theft or
destruction, only upon receipt of evidence satisfactory to the Company and the
Rights Agent of such loss, theft or destruction of such Rights Certificate and,
if requested by the Company or the Rights Agent, indemnity also satisfactory to
it.
7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS.
(a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date"), and (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and
(ii) being the "Expiration Date"), the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof,
exercise the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to exercise and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together (if applicable) with payment of the aggregate Purchase
Price (as hereinafter defined) for the number of Units of Company Common Stock
(or, following a Triggering Event, other securities, cash or other assets, as
the case may be) for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-hundredth of a share (each such
one one-hundredth of a share being a "Unit") of Company Common Stock upon
exercise of Rights shall be $1.50, subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall
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be payable in accordance with paragraph (c) below.
(c) As promptly as reasonably practicable following the occurrence of
the Distribution Date, the Company shall deposit with a corporation in good
standing organized under the laws of the United States or any State of the
United States, which 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 (such institution being the "Depositary Agent"), certificates
representing the shares of Company Common Stock that may be acquired upon
exercise of the Rights and shall cause such Depositary Agent to enter into an
agreement pursuant to which the Depositary Agent shall issue receipts
representing interests in the shares of Company Common Stock so deposited. Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to exercise and the certificate duly executed, accompanied (if
applicable) by payment, with respect to each Right so exercised, of the Purchase
Price for the Units of Company Common Stock (or, following a Triggering Event,
other securities, cash or other assets, as the case may be) to be purchased
thereby as set forth below and an amount equal to any applicable transfer tax or
evidence satisfactory to the Company of payment of such tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) requisition from
the Depositary Agent depositary receipts representing such number of Units of
Company Common Stock as are to be acquired and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue Company Common Stock, other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such Company Common Stock, other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. The
payment (if applicable) of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified or
bank check or money order payable to the order of the Company.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of a Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer which the Board has
determined to be part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall be null and
void without any further action, and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights or any other
Person as a result of its failure to make any determination under this Section
7(e) or such Section 4(b) with respect to an Acquiring Person or its Affiliates,
Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
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occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to exercise set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificates acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy such canceled
Rights Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Subject to the provisions of Section 11(f) hereof, the Company
shall at all times prior to the Expiration Date cause to be reserved and kept
available, out of its authorized and unissued shares of Company Common Stock,
the number of shares of Company Common Stock that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all outstanding
Rights. Upon the occurrence of any events resulting in an increase in the
aggregate number of shares of Company Common Stock (or other equity securities
of the Company) issuable upon exercise of all outstanding Rights above the
number then reserved, the Company shall make appropriate increases in the number
of shares so reserved.
(b) If the shares of Company Common Stock to be issued and delivered
upon the exercise of the Rights may be listed on any national securities
exchange or automated quotation system, the Company shall during the period from
the Distribution Date through the Expiration Date use its best efforts to cause
all securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) hereof of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as reasonably practicable following the Distribution Date (the date on
which such registration statement is filed being the "Registration Date"), to
file a registration statement on an appropriate form under the Securities Act,
with respect to the securities that may be acquired upon exercise of the Rights
(the "Registration Statement"), (ii) to cause the Registration Statement to
become effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities
covered by the Registration Statement and (B) the Expiration Date and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws. The
Company may temporarily suspend, for a period of time not to exceed ninety (90)
days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company 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.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite registration
or qualification in such jurisdiction shall have been effected or obtained.
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13
(d) The Company shall take such action as may be necessary to ensure
that all shares of Company Common Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) issued upon exercise of the Rights shall be, at the time of delivery of
the certificates or depositary receipts for such securities, duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company shall pay any documentary, stamp or transfer tax or
charges imposed in connection with the issuance or delivery of the Rights
Certificates or upon the exercise of Rights; provided, however, the Company
shall not be required to pay any such tax imposed in connection with the
issuance or delivery of Units of Company Common Stock, or any certificates or
depositary receipts for such Units of Company Common Stock (or, following the
occurrence of a Triggering Event, any other securities, cash or assets, as the
case may be) to any person other than the registered holder of the Rights
Certificates evidencing the Rights surrendered for exercise. The Company shall
not be required to issue or deliver any certificates or depositary receipts for
Units of Company Common Stock (or, following the occurrence of a Triggering
Event, any other securities, cash or assets, as the case may be) to, or in a
name other than that of, the registered holder upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
10. COMPANY COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for Units of Company Common
Stock (or, following the occurrence of a Triggering Event, other securities) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Units of Company Common Stock (or, following
the occurrence of a Triggering Event, other securities) represented thereby on,
and such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(if applicable) and any applicable transfer taxes was made; provided, however,
that if the date of such surrender and payment is a date upon which the Company
Common Stock (or, following the occurrence of a Triggering Event, other
securities) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
Company Common Stock (or, following the occurrence of a Triggering Event, other
securities) transfer books of the Company are open and, further provided,
however, that if delivery of Units of Company Common Stock is delayed pursuant
to Section 9(c) hereof, such Persons shall be deemed to have become the record
holders of such Units of Company Common Stock only when such Units first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to securities 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.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF
RIGHTS.
The Purchase Price, the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
1. (i) In the event the Company shall at any time after the date
of this Agreement:
(A) declare a dividend on the Company Common Stock
payable in shares of Company Common Stock,
(B) subdivide the outstanding Company Common Stock,
(C) combine the outstanding Company Common Stock into
a smaller
Page 20 of 47
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number of shares, or
(D) issue any shares of its capital stock in a
reclassification of the Company Common Stock (including any
such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation),
except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, 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 Company
Common Stock or capital stock, as the case may be, issuable on such
date upon exercise of the Rights, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive, upon payment (if applicable) of the Purchase Price
then in effect, the aggregate number and kind of shares of Company
Common Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date, such holder would
have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person, alone or together with its Affiliates
or Associates, shall become an Acquiring Person, other than
pursuant to any transaction set forth in Section 13(a) hereof;
or
(B) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company,
or any merger, consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or into
or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person;
then, immediately upon the date of the occurrence of an event described
in Section 11(a)(ii)(A)-(B) hereof (a "Section 11(a)(ii) Event"),
proper provision shall be made so that each holder of a Right (except
as provided below and in Section 7(e) hereof) shall thereafter have the
right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of any
Units, such number of shares of Company Common Stock as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of Units for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event and dividing
that product by (y) 50% of the Current Market Price per share of Common
Stock (determined pursuant to Section 11(d) hereof) on the earlier of
(x) the date on which any Person becomes an Acquiring Person and (y)
the date on which a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan
maintained by the Company, any of its Subsidiaries or any trustee or
fiduciary with respect to such plans acting in such capacity, or the
trust maintained by the Company's employee stock ownership plan) is
first published or sent or given within the meaning of Rule 14d-4(a) of
the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15%
or more of the shares of Company
Page 21 of 47
15
Common Stock then outstanding.
(iii) In the event that the number of shares of Company Common
Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Board shall:
(A) determine the excess of (1) the value of the
shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess being the
"Spread"), and
(B) with respect to each Right, make adequate
provision to substitute for the shares of Common Stock so
issuable, upon payment of the Purchase Price, (1) cash, (2)
other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock
(such other shares being "Common Stock Equivalents")), (3)
debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been
determined by the Board after receiving advice from a
nationally recognized investment banking firm; provided,
however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(iii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for
exercise of a Right, shares of Company Common Stock (to the
extent available) and then, if necessary, cash, which shares
and/or cash shall have an aggregate value equal to the Spread.
To the extent that the Company determines that some action
need be taken pursuant to the first sentence of this Section
11(a)(iii), the Company shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all
outstanding Rights. If the Board shall determine in good faith
that it is likely that sufficient additional shares of Company
Common Stock could be authorized for issuance upon exercise in
full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(iii) Trigger Date, in
order that the Company may seek stockholder approval for the
authorization of such additional shares (such period, as it
may be extended, the "Substitution Period"). To the extent
that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value
thereof. 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 a public announcement at such time as the
suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of a share of Company Common
Stock shall be the Current Market Price (as determined
pursuant to Section 11(d) hereof) per share of Company Common
Stock on the Section 11(a)(iii) Trigger Date and the value of
any Common Stock Equivalent shall be deemed to have the same
value as the Company Common
Page 22 of 47
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Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Company Common Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five (45)
days after such record date) shares of Company Common Stock (or shares having
substantially the same rights, privileges and preferences as shares of Company
Common Stock ("Equivalent Company Common Stock")) or securities convertible into
Company Common Stock or Equivalent Company Common Stock at a price per share of
Company Common Stock or per share of Equivalent Company Common Stock (or having
a conversion price per share, if a security convertible into Company Common
Stock or Equivalent Company Common Stock) less than the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Company Common Stock
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 sum
of the number of shares of Company Common Stock outstanding on such record date
plus the number of shares of Company Common Stock which the aggregate offering
price of the total number of shares of Company Common Stock and/or Equivalent
Company Common Stock so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase at such
current market price, and the denominator of which shall be the number of shares
of Company Common Stock outstanding on such record date plus the number of
additional shares of Company Common Stock and/or Equivalent Company Common Stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Company Common Stock owned by or held
for the account of the Company or any Subsidiary shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of shares of Company Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Company Common
Stock, but including any dividend payable in shares other than Company Common
Stock) 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 market price (as determined pursuant to Section 11(d) hereof) per share
of Company Common Stock on such record date less the fair market value (as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holder of the Rights) of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants distributable in
respect of a share of Company Common Stock, and the denominator of which shall
be such current market price (as determined pursuant to Section 11(d) hereof)
per share of Company Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "Current Market
Price" per share of Company Common Stock or Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such shares
for the thirty (30) consecutive Trading Days (as hereinafter defined)
immediately prior to such date; provided, however, if prior to the expiration of
such requisite Trading Day period the issuer announces either (A) a dividend or
distribution on such shares payable in such shares or securities convertible
into such shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such shares, then, following the ex-dividend date for such
dividend or the record date for such subdivision, as the case may be, the
"current market price" shall be properly
Page 23 of 47
17
adjusted to take into account such event. The closing price for each day shall
be, if the shares are listed and admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such shares are listed or admitted to trading or, if such shares are
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or such other
system then in use, or, if on any such date such shares are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in such shares selected by the
Board. If on any such date no market maker is making a market in such shares,
the fair value of such shares on such date as determined in good faith by the
Board shall be used. If such shares are not publicly held or not so listed or
traded, "current market price" per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. The term "Trading Day" shall mean, if such shares are listed or
admitted to trading on any national securities exchange, a day on which the
principal national securities exchange on which such shares are listed or
admitted to trading is open for the transaction of business or, if such shares
are not so listed or admitted, a Business Day.
(e) Anything herein to the contrary notwithstanding, 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 to the nearest
cent or to the nearest one-ten thousandth of a Unit or share, as the case may
be, of Company Common Stock or other share. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Company Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof 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 Company Common Stock contained in Sections 11(a),
(b), (c), (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Company Common Stock
shall apply on like terms to any such other shares; provided, however, that the
Company shall not be liable for its inability to reserve and keep available for
issuance upon exercise of the Rights pursuant to Section 11(a)(ii) a number of
shares of Company Common Stock greater than the number then authorized by the
Company's Certificate of Incorporation but not outstanding or reserved for other
purposes.
(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 Units or shares, as the
case may be, of Company Common Stock (or other securities or amount of cash or
combination thereof) that may be acquired from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Units or shares, as the
case may be, of Company Common Stock (calculated to the nearest one
tenthousandth of a Unit or share, as the case may be) obtained by (i)
multiplying (x) the number of Units or shares, as the case may be, of Company
Common Stock covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
Page 24 of 47
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(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of Units or shares, as the case may be, of Company Common Stock that may
be acquired upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the number of
Units or shares, as the case may be, of Company Common Stock 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 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 Rights Certificates have been issued, shall be at least ten (10) days
later than the date of such public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
to be so distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units or shares, as the case may be, of Company Common Stock
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per Unit and
the number of Units of Company Common Stock which were expressed in the Initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units or shares, as
the case may be, of Company Common Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
such fully paid and nonassessable number of Units or shares, as the case may be,
of Company Common Stock at such adjusted Purchase Price.
(l) 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 issuance to the holder of any Right exercised after such record date
of that number of Units or shares, as the case may be, of Company Common Stock
and shares of other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of Units or shares, as the case may
be, of Company Common Stock and shares of other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due ▇▇▇▇ or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company 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 in their good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Company
Common Stock, (ii) issuance wholly for cash of any shares of Company Common
Stock at less than the current market price, (iii) issuance wholly for cash of
shares of Company Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Company Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Company Common
Stock, shall not be taxable to such holders or shall reduce the taxes payable by
such holders.
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(n) After the Distribution Date, the Company shall not, except as
permitted by Section 23, 24 or 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights. The Company covenants and
agrees that it shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Company Common Stock payable in shares of Company Common
Stock, (ii) subdivide the outstanding shares of Company Common Stock, (iii)
combine the outstanding shares of Company Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a reclassification of
Company Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), the number of Rights associated with each share of Company Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Company Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Company Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Company Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of shares of
Company Common Stock outstanding immediately following the occurrence of such
event.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 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 Agent, and with each transfer agent for the
Company Common Stock, a copy of such certificate, and (c) if Right Certificates
have been issued, mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Company Common Stock) in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be deemed
to have knowledge of any such adjustment unless and until it shall have received
such certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, either (x) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(n) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n) hereof) shall consolidate with, or merge with or 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 shares of Company Common Stock shall be
converted into or exchanged for shares
Page 26 of 47
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or other securities of any other Person or cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer) to any Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(n) hereof), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) (any such event being a "Section
13 Event"), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with this Agreement, such number of validly
authorized and issued, fully paid and nonassessable shares of Common Stock of
the Principal Party (as hereinafter defined), which shares shall not be subject
to any liens, encumbrances, rights of first refusal, transfer restrictions or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of Units of Company
Common Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event and (2) dividing that product by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per share of
the Common Stock of such Principal Party 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 Section 13 Event, 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, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to ensure that
the provisions of this Agreement shall thereafter be applicable to its shares of
Common Stock thereafter deliverable upon the exchange of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no further effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of Common Stock that has the highest
aggregate current market price (determined pursuant to Section 11(d)
hereof) and (B) if no securities are so issued, the Person that is the
other party to such merger or consolidation, or, if there is more than
one such Person, the Person the Common Stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d)
hereof); 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 largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the Common Stock of which has the highest aggregate current
market price (determined pursuant to Section 11(d) hereof);
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act ("Registered
Common Stock"), or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other Person; (2) if the
Common Stock of such Person is not Registered Common Stock or such Person is not
a corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which has
Registered Common Stock outstanding, "Principal Party" shall refer to the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and one or more of such other Persons has Registered Common Stock
outstanding, "Principal Party" shall refer to whichever of such other Persons is
the issuer
Page 27 of 47
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of the Registered Common Stock having the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and (4) if the Common Stock of
such Person is not Registered Common Stock or such Person is not a corporation,
and such Person is directly or indirectly controlled by more than one Person,
and none of such other Persons have Registered Common Stock outstanding,
"Principal Party" shall refer to whichever ultimate parent entity is the
corporation having the greatest stockholders equity or, if no such ultimate
parent entity is a corporation, shall refer to whichever ultimate parent entity
is the entity having the greatest net assets.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless 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 the Principal Party will:
(i) (A) prepare and file on an appropriate form, as soon as
practicable following the execution of such agreement, a registration
statement under the Securities Act with respect to the Common Stock
that may be acquired upon exercise of the Rights, (B) cause such
registration statement to remain effective (and to include a prospectus
complying with the requirements of the Securities Act) until the
Expiration Date, and (C) as soon as practicable following the execution
of such agreement, take such action as may be required to ensure that
any acquisition of such Common Stock upon the exercise of the Rights
complies with any applicable state security or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation or bylaws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of this Section 13; then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the Persons to which such
fractional Rights would otherwise be issuable, an amount in cash equal to such
fraction of the market value of a whole Right. For purposes of this Section
14(a), the market value of a whole Right shall be the closing price of the
Rights for the Trading
Page 28 of 47
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Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be,
if the Rights are listed or admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
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
shall be used and such determination shall be described in a statement filed
with the Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Company Common Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Company Common Stock) upon exercise of the Rights or
to distribute certificates which evidence such fractional shares of Company
Common Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Company Common Stock). In lieu of such fractional
shares of Company Common Stock that are not integral multiples of one
one-hundredth of a share, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the then current market price of a
share of Company Common Stock on the day of exercise, determined in accordance
with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, other than rights of
action expressly vested in the Rights Agent pursuant to Section 18 hereof, are
vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of certificates
representing shares of Company Common Stock); and any registered holder of a
Rights Certificate (or, prior to the Distribution Date, of a certificate
representing shares of Company Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates duly executed;
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(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Company Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as promptly as practicable.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of
shares of Company Common Stock or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, except as provided in Section
25 hereof, to receive notice of meetings or other actions affecting
stockholders, or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses, including reasonable
fees and disbursements of its counsel, incurred in connection with the execution
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company shall indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability hereunder.
(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 Rights
Certificate or certificate for Company Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to have
been signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stockholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto;
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provided, however, that such Person 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 Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
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 Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written 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 "current 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 specified herein) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; provided, however, that so long as any Person is an
Acquiring Person hereunder, such certificate shall be signed and delivered by a
majority of the Board in accordance with the Company's Bylaws; 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 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 Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility for the validity
of this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or for the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or failure by the Company to
satisfy conditions contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt by the
Page 31 of 47
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Rights Agent of the certificate describing any such adjustment contemplated by
Section 12); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Company Common Stock or any other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Company
Common Stock or any other securities will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the performance by the Rights Agent of its duties under this
Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer;
provided, however, that so long as any Person is an Acquiring Person hereunder,
the Rights Agent shall accept such instructions and advice only from a majority
of the Board in accordance with the Company's Bylaws and shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
such instructions of the Board. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Rights Agreement and the date on and/or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any such officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent 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, however, 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 or in the exercise of its rights hereunder if
the Rights Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to exercise, as the case may be, has either not
been completed, not signed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company. If such certificate has been completed and signed and shows a negative
response to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on the Rights
Agent additional ministerial responsibilities, but no discretionary
responsibilities), the Rights Agent may assume without
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further inquiry that the Rights Certificate is not owned by a person described
in Section 4(b) or Section 7(e) hereof and shall not be charged with any
knowledge to the contrary.
21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon ninety (90) days' prior
notice in writing mailed to the Company, and to each transfer agent of the
Company Common Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' prior notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign of 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 thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or any state of the United
States in good standing, shall be authorized to do business as a banking
institution in the state of New York, shall be authorized under such laws to
exercise corporate trust or share transfer powers, shall be subject to
supervision or examination by federal or state authorities and shall have at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an Affiliate of a corporation described in clause (a).
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 Company Common
Stock, and mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in 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.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or the Rights
to the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Page 33 of 47
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23. REDEMPTION AND TERMINATION.
(a) Subject to Section 31 hereof, the Company may, at its option, by
action of the Board at any time prior to the earlier of (i) the Close of
Business on the tenth (10th) Business Day following the Stock Acquisition Date
or (ii) the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.001 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being the
"Redemption Price"), and the Company may, at its option, by action of the Board,
pay the Redemption Price either in shares of Company Common Stock (based on the
"current market price," as defined in Section 11(d) hereof, of the shares of
Company Common Stock at the time of redemption) or cash.
(b) Immediately upon the action of the Board ordering the redemption of
the Rights, evidence of which shall be filed with the Rights Agent, and without
any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the action
of the Board 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 each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for
Company Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.
(c) In the event of a redemption of the Rights in accordance with this
Agreement, the Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent of
the Common Shares, and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by the Company.
24. EXCHANGE.
(a) Subject to applicable laws, rules, and regulations, and subject to
subsection (c) below, the Company may, at its option, by majority vote of the
Board 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 have become void pursuant to the provisions of Section 7(e) hereof)
for Company Common Stock at an exchange ratio of one share of Company Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend, or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Ratio of Exchange"). Notwithstanding
the foregoing, the Board shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company, any Subsidiary of the Company, or any
trustee or fiduciary with respect to such plans), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Company Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Company Common Stock equal to the number of such Rights
held by such holder multiplied by the Ratio of Exchange. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall mail a notice of any such exchange to all of
the holders of such Rights in accordance with Section 26 hereof. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Company Common Stock 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
Page 34 of 47
28
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Company
Common Stock issued but not outstanding, or authorized but unissued, to permit
any exchange of Rights as contemplated in accordance with Section 24(a), the
Company shall either take such action as may be necessary to authorize
additional Company Common Stock for issuance upon exchange of the Rights or
alternatively, at the option of the Board, with respect to each Right (i) pay
cash in an amount equal to the Current Value (as hereinafter defined), in lieu
of issuing Company Common Stock in exchange therefor, or (ii) issue debt or
equity securities or a combination thereof, having a value equal to the Current
Value, in lieu of issuing Company Common Stock in exchange for each such Right,
where the value of such securities shall be determined by a nationally
recognized investment banking firm selected by the Board, or (iii) deliver any
combination of cash, property, Company Common Stock, and/or other securities
having a value equal to the Current Value in exchange for each Right. For
purposes of this Section 24(c) only, the Current Value shall mean the product of
the current per share market price of Company Common Stock (determined pursuant
to Section 11(d) on the date of the occurrence of the event described above in
subparagraph (a)) multiplied by the number of shares of Company Common Stock for
which the Right otherwise would be exchangeable if there were sufficient shares
available. To the extent that the Company determines that some action need be
taken pursuant to clauses (i), (ii), or (iii) of this Section 24(c), the Board
may temporarily suspend the exercisability of the Rights for a period of up to
ninety (90) days following the date on which the event described in Section
24(a) shall have occurred, in order to seek any authorization of additional
shares of Company Common Stock and/or to decide the appropriate form of
distribution to be made pursuant to the above provision and to determine the
value thereof. 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.
(d) The Company shall not be required to issue fractions of shares of
Company Common Stock or to distribute certificates which evidence fractional
shares of Company Common Stock. In lieu of such fractional shares of Company
Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Company Common Stock
would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value per share of a whole share of Company Common Stock (as
determined pursuant to the second sentence of Section 11(d) hereof).
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 shares of any class to the
holders of Company Common Stock or to make any other distribution to the holders
of Company Common Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), (ii) to offer to the holders of
Company Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Company Common Stock or shares of any class or any other
securities, rights or options (but not including rights or options granted or to
be granted pursuant to the Company's Employee Stock Purchase Plan, Incentive
Award Plan, Stock Option Plan for Non-Employee Directors or any similar plan),
(iii) to effect any reclassification of its Company Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of Company
Common Stock), (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of more than 50% of the assets or of the Company and
its Subsidiaries (taken as a whole) to any other Person or earning power Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(n) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Company Common Stock, if any such date
is to be fixed, and such notice shall
Page 35 of 47
29
be so given in the case of any action covered by clause (i) or (ii) above at
least twenty (20) days prior to the record date for determining holders of the
shares of Company Common Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
the shares of Company Common Stock whichever shall be the earlier; provided,
however, no such notice shall be required pursuant to this Section 25, if any
Subsidiary of the Company effects a consolidation or merger with or into, or
effects a sale or other transfer of assets or earnings power to, any other
Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as reasonably
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and 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.
26. NOTICES.
All notices and other communications provided for hereunder shall,
unless stated herein, be in writing (including by telex, telegram or cable) and
mailed or sent or delivered, if to the Company, at its address at:
Wall Street Deli, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
and if to the Rights Agent, at its address at:
American Stock Transfer and Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such older as shown on the registry books of the Company.
27. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 27, the Company may, and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Company Common
Stock. From and after the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or
Page 36 of 47
30
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) subject to Section 31 hereof, a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person hereunder, from the majority of the
Board which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything contained in this Agreement to
the contrary, no supplement or amendment shall be made which changes the
Redemption Price, the Purchase Price, the Expiration Date or the number of Units
of Company Common Stock for which a Right is exercisable without the approval of
the Board. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Company
Common Stock.
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.
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
Except as otherwise specifically provided herein, the Board shall have
the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board or to the Company, or as
may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power (i) to interpret the
provisions of this Agreement, and (ii) to make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board or any member thereof to any
liability to the holders of the Rights.
30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
shares of Company Common Stock) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
shares of Company Common Stock).
31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement and the Rights shall not then be
redeemable, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth (10th)
Business Day following the date of such determination by the Board.
Page 37 of 47
31
32. GOVERNING LAW.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely in
such State.
33. COUNTERPARTS.
This Agreement may be executed (including by facsimile) in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same instrument.
34. DESCRIPTIVE HEADINGS.
The headings contained in this Agreement are for descriptive purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
[Corporate Seal]
WALL STREET DELI, INC.
Attest:
By By
---------------------------------- ----------------------------------
Name Name
Title Title
AMERICAN STOCK TRANSFER AND TRUST
COMPANY
Attest:
By By
---------------------------------- ----------------------------------
Name Name
Title Title
Page 38 of 47
32
EXHIBIT A
[Form of Rights Certificate]
Certificate No.______ _____Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF THE RIGHTS AGREEMENT.] 1
RIGHTS CERTIFICATE
WALL STREET DELI, INC.
This certifies that______________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of February 16, 2000 (the "Rights Agreement";
terms defined therein are used herein with the same meaning unless otherwise
defined herein) between Wall Street Deli, Inc., a Delaware corporation (the
"Company"), and American Stock Transfer and Trust Company, as Rights Agent
(which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the Company at any time after the Distribution Date
and prior to the Expiration Date at the office of the Rights Agent, one
one-hundredth of a fully paid and nonassessable share of common stock, par value
$0.05 per share (the "Company Common Stock"), of the Company at the Purchase
Price initially of $1.50 per one one-hundredth share (each such one
one-hundredth of a share being a "Unit") of Company Common Stock, upon
presentation and surrender of this Rights Certificate with the Election to
Exercise and related certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of Units which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per Unit set forth
above shall be subject to adjustment in certain events as provided in the Rights
Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person or, under
certain circumstances described in the Rights Agreement, a transferee of any
such Acquiring Person, Associate or Affiliate, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.
-----------------------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
Page 39 of 47
33
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to receive, upon
exercise of such Rights, Company Common Stock or cash or other assets, all as
provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to receive, upon
exercise of such Rights, capital stock of an entity other than the Company or
cash or other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $0.001 per Right, payable at the
Company's option in cash or in Company Common Stock, subject to adjustment in
certain events as provided in the Rights Agreement.
No fractional shares of Company Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Company Common Stock), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Company
Common Stock or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
Page 40 of 47
34
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of___________ __, 200_.
[Corporate Seal]
WALL STREET DELI, INC.
Attest:
By By
-------------------------- -----------------------------------
Name Name
Title Title
AMERICAN STOCK TRANSFER AND TRUST
COMPANY
Attest:
By By
-------------------------- -----------------------------------
Name Name
Title Title
Page 41 of 47
35
[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 Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: __________________ __, ____ _______________________________
Signature
SIGNATURE GUARANTEED:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned,
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement); and
(2) after due diligence and to the best of the knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
SIGNATURE GUARANTEED:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
__________________________________
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever. In
the event the certification set forth above is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Rights Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.
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FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO EXERCISE
RIGHTS REPRESENTED BY THE RIGHT CERTIFICATE.)
To: WALL STREET DELI, INC.
The undersigned hereby irrevocably elects to exercise_______ Rights
represented by this Rights Certificate to acquire in exchange for the surrender
of such Rights the Units of Company Common Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any other person or
other property which may be issuable upon the exercise of the Rights) and
requests that certificates for such Units be issued in the name of and delivered
to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Social Security or Other Tax Payer Identification Number:______________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Social Security or Other Tax Payer Identification Number:______________________
Dated: ___________________ __, ________________________________
Signature
SIGNATURE GUARANTEED:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
___________________________________
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: _____________ __, ____
_____________________________
Signature
SIGNATURE GUARANTEED:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
_____________________________
NOTICE
The signature in the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever. In
the event the certification set forth above is not completed, the Company will
deem the beneficial owner of the Rights evidenced by this Rights Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.
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EXHIBIT B
SUMMARY OF RIGHTS TO ACQUIRE
COMMON STOCK
Introduction
Effective February 16, 2000, the Board of Directors of Wall Street
Deli, Inc. (the "Company") declared a distribution of one Right for each
outstanding share of common stock, par value $0.05 per share (the "Company
Common Stock"), to stockholders of record at the close of business on March 1,
2000 (the "Record Date") and for each share of Company Common Stock issued
(including shares distributed from treasury) by the Company thereafter and prior
to the Distribution Date. Each Right entitles the registered holder, subject to
the terms of the Rights Agreement (as defined below), to purchase from the
Company one one-hundredth of a share (a "Unit") of Company Common Stock, at a
purchase price of $1.50 per Unit, subject to adjustment (the "Purchase Price").
The Purchase Price is payable in cash or by certified or bank check or money
order payable to the order of the Company. The description and terms of the
Rights are set forth in a Rights Agreement dated as of February 16, 2000,
between the Company and American Stock Transfer and Trust Company, as Rights
Agent (the "Rights Agreement").
The Rights Agreement has been filed with the Securities and Exchange
Commission as an exhibit to a Registration Statement on Form 8-A dated March 1,
2000 (the "Form 8-A"). Copies of the Rights Agreement are available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to all the
provisions of the Rights Agreement, including the definitions therein of certain
terms, which Rights Agreement is incorporated herein by reference. Capitalized
terms used but not defined herein have the meanings set forth in the Rights
Agreement.
The Rights Agreement
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any Subsidiary of the Company, any employee benefit
plan maintained by the Company, any of its subsidiaries or any trustee or
fiduciary with respect to such plans acting in such capacity or any member of
the Existing Control Group) (an "Acquiring Person") has acquired, obtained the
right to acquire, or otherwise obtained beneficial ownership of 15% or more of
the then outstanding shares of Company Common Stock, and (ii) 10 business days
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of the Company Common Stock from time
to time outstanding. The Existing Control Group, which includes ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and their Affiliates and Associates, will not be
considered Acquiring Persons unless any member of the Existing Control Group,
together with all Affiliates and Associates of such Person, shall increase by 15
% or more his or its Beneficial Ownership of the shares of Company Common Stock
then outstanding from the number of shares of Company Common Stock Beneficially
Owned by such Person on the date of the Rights Agreement.
Until the Distribution Date, (i) the Rights will be evidenced by
Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from treasury) will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates representing
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outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) an Acquiring Person becomes the beneficial owner
of 15% or more of the then outstanding shares of Company Common Stock, or (ii)
during such time as there is an Acquiring Person, an event occurs which results
in such Acquiring Person's ownership interest being increased by more than 1%
(e.g., by means of a reverse stock split or recapitalization), then, in each
such case, each holder of a Right will thereafter have the right to acquire,
upon exercise of such Right, that number of shares of Company Common Stock (or,
in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right. The exercise
price is the Purchase Price multiplied by the number of Units of Company Common
Stock issuable upon exercise of a Right prior to the events described in this
paragraph. Notwithstanding any of the foregoing, following the occurrence of any
of the events set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates or
merges with the Company and all or part of the Company Common Stock is converted
or exchanged for securities, cash or property of any other Person or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as described
above) shall thereafter have the right to acquire, upon exercise of such Right,
common stock of the Acquiring Person having a value equal to two times the
exercise price of the Right.
The Purchase Price and the number of Units or shares, as the case may
be, of the Company Common Stock issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or subdivision, combination or reclassification of, the Company
Common Stock, (ii) if holders of the Company Common Stock are granted certain
rights or warrants to subscribe for Company Common Stock or convertible
securities at less than the current market price of the Company Common Stock, or
(iii) upon the distribution to the holders of the Company Common Stock of
evidences of indebtedness, cash or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units or shares of the
Company Common Stock. In lieu thereof, an adjustment in cash may be made based
on the market price of the Company Common Stock prior to the date of exercise or
exchange.
At any time until ten business days following the Stock Acquisition
Date, the Board may redeem the Rights in whole, but not in part, at a price of
$0.001 per Right (subject to adjustment in certain events) (the "Redemption
Price"), payable, at the election of the Board in cash or shares of Company
Common Stock. Immediately upon the action of the Board ordering the redemption
of the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised or exchanged, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the Rights will not be taxable to a stockholder or to the Company, stockholders
may, depending upon the circumstances, recognize
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taxable income in the event that the Rights become exercisable or exchangeable
for Units or shares of Company Common Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
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