SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 29, 1997
Farm Family Holdings, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11941 14-1789227
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State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
344 Route 9W, Glenmont, NY 12077-2910
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (518) 431-5000
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
On July 29, 1997, the Board of Directors of Farm Family Holdings, Inc. (the
"Company") authorized and declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.01 per
share (the "Common Shares") of the Company. The dividend is payable on July 29,
1997 to the shareholders of record on July 29, 1997 (the "Record Date"). Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Cumulative Preferred Stock, par
value $.01 per share ("Preferred Shares") of the Company at a Purchase Price
(the "Purchase Price") of $90, subject to adjustment in certain circumstances
(as defined below). The description and terms of the Rights are set forth in the
Rights Agreement (the "Rights Agreement") dated as of July 29, 1997 between the
Company and The Bank of New York, as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Share certificates
representing shares then outstanding, and no separate certificates representing
the Rights ("Right Certificates") will be distributed. The Rights will separate
from the Common Shares and a "Distribution Date" will occur upon the earlier of
(i) ten business days following a public announcement (the "Shares Acquisition
Date") that a person or group of affiliated or associated persons has acquired,
or obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares (an "Acquiring Person"), or (ii) ten business days (or
such specified or unspecified date as may be determined by action of the Board
of Directors of the Company) following the commencement or announcement of the
intent to commence a tender offer or exchange offer that would result in a
person or group of affiliated or associated persons beneficially owning 20% or
more of the outstanding Common Shares. Notwithstanding the foregoing, an
Acquiring Person does not include (A) the Company or any subsidiary of the
Company, (B) any employee benefit plan (including, but not limited to, any
employee stock ownership plan) of the Company or any subsidiary of the Company
or any person organized, appointed or established by the Company or such
subsidiary as a fiduciary for or pursuant to the terms of any such employee
benefit plan, or (C) any person who would otherwise be an Acquiring Person but
for the good faith determination by the Board of Directors of the Company that
such person has become an Acquiring Person inadvertently, provided that such
person together with its affiliates and associates divest themselves as promptly
as practicable of beneficial ownership of a sufficient number of Common Shares
so that such person together with its affiliates and associates beneficially own
less than 20% of the Common Shares.
The Rights Agreement provides that, until the Distribution Date, (i) the
Rights will be transferred with and only with the Common Shares, (ii) new Common
Share certificates issued after the Record Date but prior to the
<PAGE>
Distribution Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any of the Common Shares will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Right Certificates will
be mailed to holders of record of Common Shares as of the close of business on
the Distribution Date, and thereafter the Rights will be evidenced solely by
such Right Certificates.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on July 29, 2007 (the "Final Expiration Date"), unless the Rights are
earlier redeemed or exchanged by the Company as described below.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than rights beneficially owned by the Acquiring Person (which
will thereupon become void), will thereafter have a right to receive, upon
exercise thereof at the then current exercise price of the Right, that number of
Common Shares having a market value of two times the exercise price of the Right
("Flip-In" Events). From and after the time a person becomes an Acquiring Person
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person (or an affiliate,
associate or transferee thereof) will be null and void.
At any time after any person becomes an Acquiring Person, the Board of
Directors of the Company may, at its option, exchange all or part of the then
outstanding and exercisable Rights (excluding Rights of an Acquiring Person that
have become void) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Acquiring Person, together with all affiliates and associates of
such Acquiring Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Right shall be to
receive the number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. In connection with this exchange
provision, the Company shall not be required to issue fractions of Common Shares
or certificates evidencing fractional Common Shares and, in lieu thereof, an
adjustment will be made based on the market price of the Preferred Shares on the
last trading day prior to the date of exercise.
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In the event that, after the Shares Acquisition Date, (a) the Company shall
consolidate with, or merge with or into, any other person or persons (other than
a subsidiary of the Company) and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (b) any other person or
persons (other than a subsidiary of the Company) shall consolidate, 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 common stock shall be changed into
or exchanged for stock or other securities of any other person or persons or
cash or any other property, or (c) the Company shall sell or otherwise transfer
(or one or more of its subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets, cash flow or earning power aggregating more than 50%
of its assets, cash flow or earning power to any other person or persons (other
than the pro rata distribution by the Company of assets (including securities)
of the Company or any of its subsidiaries to all holders of the Company's common
stock), the Rights Agreement provides that each holder of a Right (other than
Rights owned by an Acquiring Person which will have become void) shall be
entitled to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the acquiring
company which at the time of such transaction would have a market value (as
defined in the Rights Agreement) equal to twice the exercise price of the Right
("Flip-Over" Events).
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of Preferred Shares, or (iii) in case the Company
shall fix a record date to distribute to all holders of the Preferred Shares
evidences of indebtedness or assets (other than a regular periodic cash dividend
or dividends payable in Preferred Shares) or subscription rights or warrants
(other than those referred to above). The number of Rights and number of
Preferred Shares issuable upon the exercise of each Right are also subject to
adjustment in the event of a stock split, combination or stock dividend on the
Common Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% of
such Purchase Price. No fractional Preferred Shares will be issued and in lieu
thereof, an adjustment will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
<PAGE>
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (the "Redemption Price"),
payable in cash, Common Shares or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights may be
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon redemption of
the Rights, the Rights will terminate and the only privilege of the Rights
holders will be to receive the $.001 redemption price. The date on which Rights
are redeemed is referred to herein as the "Redemption Date".
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, other than rights resulting from such
holder's ownership of Common Shares, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Shares (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
The Rights and the Rights Agreement may be amended in any respect
whatsoever (including, without limitation, any extension of the period in which
the Rights may be redeemed) at any time prior to such time any person becomes an
Acquiring Person, without the approval of the holders of the Rights. After such
time, amendments may only be made to (i) cure any ambiguity, (ii) to correct or
supplement any provision contained in the Rights Agreement which may be
defective or inconsistent with any other provision in the Rights Agreement, or
(iii) make any amendments or supplements which the Company and the Rights Agent
may deem necessary or desirable which do not adversely affect the interests of
the holders of the Rights (other than the Acquiring Person or an affiliate or
associate thereof).
A copy of the Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights is filed as an exhibit to this Form 8-K/A. A
copy of the Rights Agreement is 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 the Rights Agreement.
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
4.1 Rights Agreement, dated as of July 29, 1997, between the Company and
The Bank of New York.
99.1 Press release of Farm Family Holdings, Inc. dated July 29, 1997
(incorporated by reference to Exhibit 99.1 to the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on July 30, 1997).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
FARM FAMILY HOLDINGS, INC.
By:/s/ Philip P. Weber
----------------------
Philip P. Weber
President & Chief Executive Officer
Dated June 14, 1999
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
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4.1 Rights Agreement, dated as of July 29, 1997, between the Company and
The Bank of New York.
99.1 Press release of Farm Family Holdings, Inc. dated July 29, 1997
(incorporated by reference to Exhibit 99.1 to the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
on July 30, 1997).
<PAGE>
Exhibit 4.1
FARM FAMILY HOLDINGS, INC.
and
THE BANK OF NEW YORK,
Rights Agent
RIGHTS AGREEMENT
Dated as of July 29, 1997
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions..........................................2
Section 2. Appointment of Rights Agent.................................10
Section 3. Issue of Right Certificates.................................10
Section 4. Form of Right Certificates..................................14
Section 5. Countersignature and Registration...........................16
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates...........................17
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights...................................19
Section 8. Cancellation and Destruction of Right
Certificates................................................23
Section 9. Reservation and Availability of Capital
Stock.......................................................24
Section 10. Preferred Shares Record Date................................27
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights..........................28
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares............................................47
Section 13. Consolidation, Merger or Sale or Transfer
of Assets, Cash Flow or Earning Power.......................48
Section 14. Fractional Rights and Fractional Shares.....................53
Section 15. Rights of Action............................................56
Section 16. Agreement of Right Holders..................................57
Section 17. Right Certificate Holder Not Deemed a
Shareholder.................................................58
Section 18. Concerning the Rights Agent.................................59
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.............................................60
Section 20. Duties of Rights Agent......................................61
Section 21. Change of Rights Agent......................................66
<PAGE>
Section 22. Issuance of New Right Certificates..........................68
Section 23. Redemption..................................................69
Section 24. Exchange....................................................70
Section 25. Notice of Certain Events....................................73
Section 26. Notices.....................................................74
Section 27. Supplements and Amendments..................................75
Section 28. Successors..................................................76
Section 29. Determinations and Actions by the Board
of Directors, etc...........................................77
Section 30. Benefits of this Agreement..................................78
Section 31. Severability................................................78
Section 32. Governing Law...............................................78
Section 33. Counterparts................................................79
Section 34. Descriptive Headings........................................79
Signatures....................................................................80
Exhibit A - Resolutions Setting Forth Rights and
Preferences of Preferred Shares
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of July 29, 1997 (this "Agreement"), between
Farm Family Holdings, Inc., a Delaware corporation (the "Company"), and The Bank
of New York, as rights agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one purchase right (a "Right") for each share of common stock, par
value $.01 per share, of the Company ("Common Share") outstanding at the Close
of Business (as hereinafter defined) on July 29, 1997 (the "Record Date"), each
Right initially representing the right to purchase (subject to the limitations
set forth in Sections 7 and 14(b) hereof) one one-hundredth (1/100th) of a share
of Junior Participating Cumulative Preferred Stock, par value $.01 per share, of
the Company having the rights and preferences set forth in the resolutions
adopted by the Board of Directors of the Company, a copy of which is attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights"), and has further authorized the issuance of one Right
(subject to adjustment) with respect to each Common Share that shall become
outstanding between the Record Date (whether originally issued or delivered from
the Company's treasury) and the earlier of the Distribution Date, the Expiration
Date and the Final Expiration Date (as such terms are defined in Section 7(a)
hereof) and, to the extent provided in Section 22 hereof, with respect to each
such share issued after the Distribution Date and prior to the earlier of the
Expiration Date and the Final Expiration Date.
<PAGE>
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes
of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more
of the Common Shares then outstanding, but shall not include (i) the
Company or any Subsidiary (as such term is hereinafter defined) of the
Company, (ii) any employee benefit plan (including, but not limited to, any
employee stock ownership plan) of the Company or any Subsidiary of the
Company or any Person organized, appointed or established by the Company or
such Subsidiary as a fiduciary for or pursuant to the terms of any such
employee benefit plan or (iii) any Person who would otherwise be an
"Acquiring Person" but for the good faith determination by the Board of
Directors of the Company that such Person has become an "Acquiring Person"
inadvertently, provided that such Person together with its Affiliates and
Associates divest themselves as promptly as practicable of beneficial
ownership of a sufficient number of Common Shares so that such Person
together with its Affiliates and Associates beneficially own less than 20%
of the Common Shares.
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(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the Record Date.
(e) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, has directly or indirectly, the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement,
arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding (whether or not in
writing) to vote such security (A) arises solely from a revocable
proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act
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<PAGE>
and (B) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, the right to acquire
(whether such right is exercisable immediately or only after the
passage of time or upon the occurrence of an event) pursuant to
any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, (A) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities
which such Person has a right to acquire upon the exercise of
Rights at any time prior to the time a Person becomes an
Acquiring Person or (C) securities issuable upon exercise of
Rights from and after the time a Person becomes an Acquiring
Person if such 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(a) 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; or
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<PAGE>
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in subparagraph (i) of this paragraph (e)) or disposing
of any securities of the Company. Notwithstanding the foregoing,
nothing contained in this paragraph (e) shall cause a Person
ordinarily engaged in business as an underwriter of securities to
be the Beneficial Owner of, or to beneficially own, any
securities acquired through such person's participation in good
faith in a firm commitment underwriting until the expiration of
40 days after the date of such acquisition.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., New York City time, on
the next succeeding Business Day.
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<PAGE>
(h) "Common Shares" when used with reference to the Company shall
mean the shares of common stock, par value $.01 per share, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock with the greatest voting
power, or the equity securities or other equity interest having power
to control or direct the management, of such Person, or, if such
Person is a Subsidiary of another Person, the capital stock with the
greatest voting power of the Person which ultimately controls such
first-mentioned Person. "Common Shares" when used with reference to
any Person which is not organized in corporate form shall mean units
of beneficial interest which (i) shall represent the right to
participate generally in the profits and losses of such Person
(including, without limitation, any flow-through tax benefits
resulting from an ownership interest in such Person) and (ii) shall be
entitled to exercise the greatest voting power of such Person or, in
the case of a limited partnership, shall have the power to remove the
general partner or partners.
(i) "Common Share Equivalents" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(j) "Company" shall have the meaning set forth in the first
paragraph of this Agreement.
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<PAGE>
(k) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(l) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(n) "Equivalent Preference Shares" shall have the meaning set
forth in Section 11(b) hereof.
(o) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(p) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(q) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(r) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "NASDAQ" shall have the meaning set forth in Section 11(d)
hereof.
(t) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity, and shall include any successor
(by merger or otherwise) of such entity.
(u) "Preferred Shares" shall mean shares of Junior Participating
Cumulative Preferred Stock, par value $.01 per share, of the Company,
having the rights, preferences and limitations set forth in the
resolutions adopted by the Board of Directors of the Company, a copy
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<PAGE>
of which is attached hereto as Exhibit A, and, to the extent there are
not a sufficient number of shares of Junior Participating Cumulative
Preferred Stock authorized to permit the full exercise of the then
outstanding Rights, any other series of preferred shares of the
Company designated for such purpose by the Board of Directors of the
Company containing terms substantially similar to the terms of the
Junior Participating Cumulative Preferred Stock.
(v) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(w) "Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
(x) "Record Date" shall have the meaning set forth in the second
paragraph of this Agreement.
(y) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(z) "Right" shall have the meaning set forth in the second
paragraph of this Agreement.
(aa) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(bb) "Rights Agent" shall have the meaning set forth in the first
paragraph of this Agreement.
(cc) "Section 11(a)(ii) Event" shall have the meaning set forth
in Section 11(a)(ii) hereof.
(dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
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<PAGE>
(ee) "Section 13 Event" shall have the meaning set forth in
Section 13(a) hereof.
(ff) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, includes
a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become
such.
(gg) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(hh) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient, in the absence of
contingencies, to elect a majority of the board of directors or other
persons performing similar functions are at the time beneficially
owned, directly or indirectly, by such Person, or otherwise controlled
by such person.
(ii) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(jj) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(kk) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
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<PAGE>
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of the Close
of Business on (i) the tenth Business Day after the Shares Acquisition Date or
(ii) the tenth Business Day, or such specified or unspecified later date as may
be determined by action of the Board of Directors of the Company, after the date
of the commencement of (as determined by reference to Rule 14d-2(a), as now in
effect under the Exchange Act), or first public announcement of the intent of
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan, including, but not limited to, an employee stock ownership plan,
of the Company or of any Subsidiary of the Company, or any Person organized,
appointed or established by the Company or such Subsidiary as a fiduciary
pursuant to the terms of any such employee benefit plan) to commence (which
intention to commence remains in effect for five Business Days after such
announcement), a tender or exchange offer for an amount of Common Shares of the
Company which, together with the Common Shares already beneficially owned by
such Person, constitutes 20% or more of the outstanding Common Shares (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates described in clauses (i) and
(ii) being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the
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provisions of paragraph (b) of this Section 3) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates for
Common Shares shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the rights to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Rights Agent will send, by any
class of U.S. mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common
Share so held, subject to adjustment as provided herein and to the provisions of
Section 14(a) hereof. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by any class of U.S. mail, to each record holder of Common Shares as of the
Close of Business on the Record Date at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the earlier of the Distribution Date,
the Expiration Date and the Final Expiration Date (as such terms are defined in
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<PAGE>
this Section 3 and in Section 7 hereof), the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders thereof
(together with a copy of the Summary of Rights). Until the earlier of the
Distribution Date, the Expiration Date and the Final Expiration Date, the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Certificates for Common Shares issued after the Record Date but prior
to the earlier of the Distribution Date, the Expiration Date and the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Farm Family
Holdings, Inc. and The Bank of New York dated as of July 29, 1997 (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of Farm Family Holdings, Inc. 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. Farm Family Holdings, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances,
Rights issued to Acquiring Persons or any Affiliates or Associates
thereof (as defined in the Rights Agreement) may become null and void.
The Rights shall not be exercisable, and shall be void so long as
held, by a holder in any jurisdiction as long as the requisite
qualification for the issuance to such holder, or the exercise by such
holder of the Rights in such jurisdiction, shall not have been
obtained.
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After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended. Until
the Distribution Date, the Rights associated with the Common Shares represented
by certificates containing the foregoing legend shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificates
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding. The failure to print the
foregoing legend on any such certificate for Common Shares or any other defect
therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates
(a) The Right Certificates (and the forms of election to purchase shares,
certificate and assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
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<PAGE>
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 7,
11, 14(b) and 22 hereof, the Right Certificates, whenever issued, shall be dated
as of the Record Date, and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price per one one-hundredth of a Preferred Share set forth
therein (the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Affiliate or Associate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
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<PAGE>
continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding (whether or not in writing) which has as a primary purpose or
effect the avoidance of the provisions of Section 7(e), Section 11(a)(ii) or
Section 13 hereof with respect to the limitation of the Rights beneficially
owned by an Acquiring Person (or any Affiliate or Associate thereof), and any
Right Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend modified as necessary to apply to such Person:
The Rights represented by this Certificate are or were
beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement).
Accordingly, this Certificate and the Rights represented
hereby may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) hereof shall be operative whether
or not the foregoing legend is contained on any such Right Certificate.
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Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by (i) its Chairman of
the Board or President or any Vice President and its Secretary or any Assistant
Secretary or Treasurer or any Assistant Treasurer or (ii) any two officers of
the Company so authorized to sign by a resolution of the Board of Directors of
the Company, either manually or by facsimile signature, and have affixed thereto
the Company's seal or a facsimile thereof which shall be attested by the
Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer. In case any authorized signatory of the Rights
Agent who shall have countersigned any of the Right Certificates shall cease to
be such a signatory before delivery by the Company, such Right Certificates,
nevertheless, may be issued and delivered by the Company with the same force and
effect as though the person who countersigned such Right Certificates had not
ceased to be such a signatory; and any Right Certificates
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<PAGE>
may be countersigned on behalf of the Rights Agent by any person who, at the
actual date of the countersignature of such Right Certificate, shall be a proper
signatory of the Rights Agent to countersign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not such
a signatory.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its office designated as the appropriate place for surrender of
Right Certificates upon exercise or transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and
the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right 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 earlier of the Expiration Date and the Final Expiration
Date, any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share (or other shares, securities, cash or assets, as the case
may be)
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<PAGE>
as the Right Certificate or Right Certificates surrendered then entitled such
holder, or in the case of a transfer, such former holder, to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office 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 Right Certificate or Right Certificates until
the registered holder shall have completed and signed the form of assignment and
the certificate contained in the form of assignment on the reverse side of such
Right Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e) and 14 hereof,
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
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security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date,
for the purchase of Preferred Shares (if, pursuant to Section 14(b), such
exercise is for the purchase of whole Preferred Shares and not fractional
Preferred Shares) or, pursuant to Section 14(b), for the purchase price payable
by the Company for Rights to purchase fractional Preferred Shares, upon
surrender of the Right Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each Preferred Share as to which
the Rights are exercised, at or prior to the earliest of (i) the Close of
Business on July 29, 2007 (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof and (iii) the time at
which the Rights are exchanged as provided in Section 24 (such earliest time
being herein referred to as the "Expiration Date").
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<PAGE>
(b) The Purchase Price for each Preferred Share issued pursuant to the
exercise of Rights shall initially be $90 per one one-hundredth of a Preferred
Share, shall be subject to adjustment from time to time as provided in Sections
11, 13 and 14 hereof and shall be payable in lawful money of the United States
of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for each Preferred Share (or other shares, securities, cash
or other assets, as the case may be) to be purchased and an amount equal to any
applicable transfer tax in cash, or by certified check or bank draft payable to
the order of the Company, the Rights Agent shall, subject to Section 20(k)
hereof, thereupon promptly (i)(A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of Preferred Shares as are to be purchased, in which
case certificates for the Preferred Shares represented by such receipts shall be
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<PAGE>
deposited by the transfer agent with the depositary agent, and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of consideration to be paid
in lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and, (iv) when
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate. In the event that the Company
is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the time a Person becomes an Acquiring Person, any Rights beneficially
owned by (i) an Acquiring Person or any Affiliate or Associate of an Acquiring
Person, (ii) a transferee of any such Acquiring Person
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(or of any such Affiliate or Associate) who becomes a transferee after such
Acquiring Person becomes such, or (iii) a transferee of any such Acquiring
Person (or of any such Affiliate or Associate) who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
such Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding (whether or not
in writing) which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become 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
and the Board of Directors 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 Right Certificates or any other Person
as a result of having made or having failed to make any determinations with
respect to an Acquiring Person or any of its Affiliates, Associates or
transferees hereunder.
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<PAGE>
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of any Right Certificate upon the occurrence of
any purported transfer or exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate following
the form of assignment or election to purchase set forth on the reverse side of
the Right Certificate surrendered for such assignment or exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Capital Stock. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares (and, following the occurrence of a
Section 11(a)(ii) Event or a Section 13 Event, out of its authorized and issued
Common Shares or other securities or out of its authorized and issued shares
held in its treasury), the number of Preferred Shares (and, following the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event, Common Shares of
the Company or other securities) that, as provided herein, will be sufficient to
permit the exercise in full of all outstanding Rights (it being understood that
any of the foregoing shares or securities may also be reserved for other
purposes) or will take such other steps as are appropriate to assure that the
number of such shares or securities (or their equivalents) sufficient to permit
the exercise in full of all outstanding Rights will be available upon such
exercise.
(b) So long as the Preferred Shares (and, following the occurrence of a
Section 11(a)(ii) Event or a Section 13 Event, Common Shares of the Company or
other securities) issuable and deliverable upon the exercise of the Rights may
be listed or traded on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely that the Rights
will be exercised), all shares reserved for such issuance to be listed or
admitted to trading on such exchange upon official notice of issuance upon such
exercise.
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(c) The Company covenants and agrees that it will take all such actions as
may be necessary to ensure that all Preferred Shares (and, following the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event, Common Shares of
the Company or other securities) delivered upon exercise of the Rights shall, at
the time of delivery of the certificates for such shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(d) The Company further covenants and agrees that, except as set forth in
Section 6(a) hereof, it will pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any Preferred Shares (or Common
Shares of the Company or other securities, as the case may be) upon the exercise
of the Rights. The Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for a number of Preferred Shares (or Common Shares of the
Company or other securities, as the case may be) in the name other than that of,
the registered holder of the Right Certificate evidencing the Rights surrendered
for exercise or to issue or deliver any certificates for Preferred Shares (or
Common Shares of the Company or other securities, as the case may be) or
depositary receipts for Preferred Shares upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
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(e) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may, acting by resolution of its Board
of Directors, temporarily suspend, for a period of time not to exceed 90 days
after the date set forth in clause (i) of the first sentence of this Section
9(e), 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
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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 qualifications
in such jurisdiction shall have been obtained, the exercise thereof shall be
permitted under applicable law and a registration statement shall have been
declared effective.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for a number of the Preferred Shares (or Common Shares of the
Company or other securities, as the case may be) is issued upon the exercise of
the Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Shares (or Common Shares of the Company or other securities, as
the case may be) represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares (or Common Shares of the
Company or other securities, as the case may be) transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares (or Common Shares of the Company or other
securities, as the case may be) transfer books of the Company
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are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any meetings or other proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares, or
fractions thereof, covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller
number of shares or (D) issue any shares of its other capital stock in
a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in Section 7(e) and this Section 11(a), the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
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reclassification, and the number and kind of Preferred Shares or
shares of other capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and
kind of Preferred Shares or shares of other capital stock, as the case
may be, which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Shares or other capital
stock, as the case may be, transfer books of the Company were open,
the 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 Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event (a
"Section 11(a)(ii) Event") that any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then
proper provision shall be made so that each holder of a Right, except
as provided below and in Section 7(e), shall, subject to Section
14(c), thereafter have a right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths of a Preferred
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Share, such number of Common Shares of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-hundredths of a Preferred Share of the
Company for which a Right was exercisable immediately prior to the
first occurrence of such Section 11(a)(ii) Event, whether or not such
Right was then exercisable, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to as
the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of the Common
Shares of the Company (determined pursuant to Section 11(d)) on the
date of the occurrence of such Section 11(a)(ii) Event (such number of
shares being hereinafter referred to as the "Adjustment Shares"). The
Company shall notify the Rights Agent in writing as to any Persons who
are deemed by the Company to be Acquiring Persons or Affiliates,
Associates or transferees (as described in subparagraphs (ii) and
(iii) of Section 7(e) hereof) of such Persons and shall identify any
Rights pertaining thereto.
(iii) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company, acting by
resolution of its Board of Directors, may, and, in the event that the
number of Common Shares which are authorized by the Company's
certificate of incorporation but not outstanding or reserved for
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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 Section 11(a)(ii) hereof, shall, (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), over (2) the Purchase Price attributable
to each Right (such excess, the "Spread") and (B) with respect to each
Right (subject to Section 7(e) hereof), make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company (including,
without limitation, shares, or units of shares issuable only if
aggregated as whole shares, of preferred stock which the Board of
Directors of the Company has deemed to have substantially the same
value as Common Shares of the Company (such shares or units of
preferred stock hereinafter called "Common Share Equivalents")), (4)
debt securities of the Company, (5) other assets or (6) any
combination of the foregoing having an aggregate value equal to the
Current Value, where such aggregate value has been determined by
action of the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the
Board of Directors of the Company which has theretofore performed no
services for the Company or any Subsidiary of the Company in the past
five years; provided, however, if the Company shall not have made
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adequate provision to deliver value pursuant to clause (B) above
within 30 days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the first date on which the Company's
rights of redemption pursuant to Section 23 hereof, as such date may
be amended pursuant to Section 27 hereof, shall expire (the later of
(x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, Common Shares of the Company (to the extent available)
and then, if necessary, cash, which shares or cash have an aggregate
value equal to the Spread. If, after the occurrence of a Section
11(a)(ii) Event, the number of Common Shares that 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 Section 11(a)(ii) hereof and the Company, acting by
resolution of its Board of Directors shall determine in good faith
that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the 30
day period set forth above may be extended to the extent necessary,
but not more than 90 days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be
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extended, the "Substitution Period"). To the extent that the Company
determines that some action is to be taken pursuant to the terms of
this Section 11(a)(iii), the Company (x) shall provide, subject to
Sections 7(a) and 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 such shareholder approval for the authorization of additional
shares and/or to decide the appropriate form of distribution to be
made pursuant to the first sentence of this Section 11(a)(iii) 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 the
Common Shares of the Company shall be the Current Market Price (as
defined in Section 11(d)) per share of the Common Shares of the
Company on the date of the first occurrence of the Section 11(a)(ii)
Event, and the per share or per unit value of any Common Share
Equivalents shall be deemed to equal the Current Market Price per
share of the Common Shares of the Company on such date.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
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after such record date) to subscribe for or purchase Preferred
Shares (or shares having the same rights, privileges and preferences
as the Preferred Shares ("Equivalent Preference Shares")) or
securities convertible into Preferred Shares or Equivalent Preference
Shares at a price per Preferred Share or Equivalent Preference Shares
(or having a conversion price per share, if a security convertible
into shares of Preferred Shares or Equivalent Preference Shares) less
than the Current Market Price per share of the Preferred Shares or
Equivalent Preference Shares 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, of which the numerator shall be the number
of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares or Equivalent Preference Shares which the
aggregate subscription or purchase price of the total number of
Preferred or Equivalent Preference Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such Current Market Price and the
denominator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of additional
Preferred or Equivalent Preference Shares to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible).
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In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the
holders of the Rights. Common Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights 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 the making of
a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular periodic
cash dividend or a dividend payable in Preferred Shares, but including
any dividends payable in stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in
Section 11(b)), 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
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per share of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement
filed with the Rights Agent which shall be binding on the holders of
the Rights) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share, and the denominator of which shall
be such Current Market Price per share of the Preferred Shares. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the "Current
Market Price" per share of the Common Shares on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Shares for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event that the Current Market Price per share of
the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (i) a dividend or
distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares or (ii) any
subdivision, combination or
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reclassification of such Common Shares, and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market
Price" shall be appropriately adjusted to take into account the
ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in the case no such sale takes place on
such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common 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
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other system then in use, or, if on any such date the Common Shares
are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Board of
Directors of the Company. If on any such date no market maker is
making a market in the Common Shares, the fair value of such shares on
such date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Common
Shares are listed or admitted to trading is open for the transaction
of business or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the
State of New York are not authorized or obligated by law or executive
order to close. If the Common Shares are not publicly held or not so
listed or traded, Current Market Price shall mean the fair value per
share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(d)(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Shares shall be determined in the
same manner as set forth for the Common Shares of the Company in
Section 11(d)(i) hereof (other than the last sentence thereof). If the
current Market Price per Preferred Share cannot be determined in the
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manner provided above or if the Preferred Shares are not publicly held
or listed or traded in a manner described in Section 11(d)(i) hereof,
the Current Market Price per Preferred Share shall be conclusively
deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Shares of
the Company occurring after the date of this Agreement) multiplied by
the then Current Market Price per Common Share of the Company. If
neither the Common Shares of the Company nor the Preferred Shares are
publicly held or so listed or traded, the Current Market Price per
Preferred Share shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of one one-hundredth of a
Preferred Share shall be equal to the Current Market Price of one
Preferred Share divided by 100.
(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 such
price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a Common Share or other share or the nearest
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one-millionth of a Preferred Share, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which
requires such adjustment and (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m) inclusive, and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Shares shall apply
on like terms to any such other shares; provided, however, that the
Company shall not be liable for its inability or failure to reserve
and keep available for issuance upon exercise of the Rights pursuant
to Section 11(a)(ii) a number of its Common Shares greater than the
number then authorized by the Certificate of Incorporation of the
Company but not outstanding or reserved for any other purpose.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
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right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share (subject to Sections 7(a) and
14(b)) purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and 11(c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one-millionth of a Preferred Share and
subject to Sections 7(a) and 14(b)) obtained by (i) multiplying (x)
the number of one one-hundredths of a share 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.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a Preferred
Share purchasable upon the exercise of a Right. Each of the
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Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of
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adjustment, and upon surrender thereof, if required by the Company,
new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (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 Right Certificates on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Shares issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
one one-hundredths of a Preferred Share issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the
opinion of counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Preferred Shares 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
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occurrence of such event the issuing to the holder of any Right
exercised after such record date the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares and other capital stock
or securities of the Company, if any, issuable 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
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company, acting by resolution of its Board of Directors, 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 it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the Preferred
Shares, the issuance wholly for cash of any of the Preferred Shares at
less than the Current Market Price, the issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, stock dividends or the
issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
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(n) 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
does not violate Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction
which does not violate 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, cash flow or earning power
aggregating more than 50% of the assets, cash flow 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 does not
violate 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 shareholders 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.
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(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 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 eliminate the benefits intended
to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary,
in the event the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare or pay any
dividend on its Common Shares payable in Common Shares of the Company
or (ii) subdivide its outstanding Common Shares into a greater number
of shares (by reclassification or otherwise than by payment of
dividends in Common Shares) or (iii) combine or consolidate its
outstanding Common Shares into a smaller number of shares, then in any
such case, (x) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right
(without giving effect to Section 7(a) or 14(b)) shall be determined
by multiplying the number of one one-hundredths of a Preferred Share
so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares of the Company
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outstanding immediately before such event and the denominator of which
is the number of such Common Shares outstanding immediately after such
event and (y) action shall be taken such that each Common Share of the
Company outstanding immediately after such event shall have issued
with respect to it that number of Rights which each Common Share of
the Company outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
If an event occurs which would require an adjustment under Section
11(a)(ii) and this Section 11(p), the adjustments provided for in this
Section 11(p) shall be in addition and prior to any adjustment
required pursuant to Section 11(a)(ii).
Section 12 Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares
and Preferred Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
make such certificates or give such notice shall not affect the validity or the
force or effect of the requirement for such adjustment. The Rights Agent shall
be fully
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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. Any adjustment to be
made pursuant to Sections 11 and 13 shall be effective as of the date of the
event giving rise to such adjustment.
Section 13 Consolidation, Merger or Sale or Transfer of Assets, Cash Flow
or Earning Power. (a) In the event (a "Section 13 Event") that, following the
Shares Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with or into, any other Person or Persons and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any other Person or Persons shall consolidate,
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 common stock shall be changed
into or exchanged for stock or other securities of any other Person or Persons
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),
in one or more transactions, assets, cash flow or earning power aggregating more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole and calculated on the basis of the Company's most
recent regularly prepared financial statement) to any other Person or Persons in
one or more transactions (each of which does not violate Section 11(o) hereof),
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provided, however, that this clause (z) of Section 13(a) shall not apply to the
pro rata distribution by the Company of assets (including securities) of the
Company or any of its Subsidiaries to all holders of the Company's common stock;
then, and in each such case, proper provisions 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 the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and freely tradable
Common Shares of the Principal Party (as hereinafter defined), not subject to
any liens, encumbrances, rights of call, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and (2)
dividing that product (which following the first occurrence of a Section 13
Event shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price per share of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)
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hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (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 its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing.
(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) hereof,
the Person that is the issuer of any securities into which
Common Shares of the Company are converted in such merger or
consolidation, and if no securities are so issued, the
Person that is the other party to such merger or
consolidation; and
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(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a) hereof, the
Person that is the party receiving the greatest portion of
the assets, cash flow or earning power transferred pursuant
to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at any time and have not been continuously over the preceding 12
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person, the Common Shares of which
are and have been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized Common
Shares 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 the Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement containing the provisions
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set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event, the
Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; 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.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. 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) hereof.
(d) The Company covenants and agrees that it will not, after
the Shares Acquisition Date, engage in any Section 13 Event if at the time of or
after such event there are any charter or by-law provisions or any rights,
warrants or other instruments outstanding or any other action taken which would
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
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Section 14 Fractional Rights and Fractional Shares. (a) The Company shall
not issue fractions of Rights or distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, the Company shall pay to
the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount, which the Company may,
at its option, pay in cash, Common Shares or other equity securities of the
Company, debt securities of the Company, or any other form of consideration or
combination of the foregoing deemed appropriate by the Board of Directors of the
Company, equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on
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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 of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not issue fractions of Preferred Shares upon exercise
of the Rights or distribute certificates which evidence fractional Preferred
Shares. Preferred Shares shall be issued only upon the exercise of Rights to
purchase integral multiples of 100 one-hundredths of a Preferred Share. In lieu
of fractional Preferred Shares, the Company shall pay to the registered holders
of Right Certificates at the time such Right Certificates are exercised as
provided in Section 7 an amount, which the Company may, at its option, pay in
cash, Common Shares or other equity securities of the Company, debt securities
of the Company, or any other form of consideration or combination of the
foregoing deemed appropriate by the Board of Directors of the Company, equal to
the same fraction of the current market value of one Preferred Share. For
purposes of this Section 14(b), the current market value of a
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Preferred Share shall be the closing price of a Preferred Share (as determined
pursuant to Section 11(d)(i) hereof), for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of a Section 11(a)(ii) Event or a Section 13
Event, the Company shall not issue fractions of its Common Shares upon exercise
of the Rights or distribute certificates which evidence fractional Common
Shares. In lieu of fractional Common Shares, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount, which the Company may, at its option, pay in cash,
other equity securities of the Company, debt securities of the Company, or any
other form of consideration or combination of the foregoing deemed appropriate
by the Board of Directors of the Company, equal to the same fraction of the
current market value of one Common Share. For purposes of this Section 14(c),
the current market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) 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.
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Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16 Agreement of Right Holders. Every holder of a Right by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
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(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly completed and fully executed;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, the
Company, its Board of Directors and the Rights Agent shall not have any
liability to any holder of a Right or other Person as a result of any
inability to perform any of their 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
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obligation; provided, however, the Company and its Board of Directors must
use their best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17 Right Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of one one-hundredths of a
Preferred Share 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 Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 24 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and
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the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted 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 arising under this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or Persons or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may be
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merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the shareholder
services business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. The purchase of all or
substantially all of the Rights Agent's assets employed in the performance of
transfer agent activities shall be deemed a merger or consolidation for purposes
of this Section 19. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
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case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20 Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of an
Acquiring Person and the determination of the Current Market Price per
Preferred Share and Common Share) be proved or established by the
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Company prior to taking or suffering any action hereunder, such fact
or matter (including the Rights becoming void pursuant to Section 7(e)
hereof) (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person reasonably believed by
the Rights Agent to be any one of the Chairman of the Board, the
President, a Vice President, or the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or
suffered in good faith by 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 Right Certificates (except as to its countersignature thereof)
or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition contained in
this Agreement or in any Right Certificate; nor shall it be
responsible for
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any adjustment required under the provisions of Section 11 or 13
hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after receipt of a certificate
describing such adjustment, delivered pursuant to 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 Preferred
Shares or Common Shares or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred
Shares or Common Shares or other securities will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out
or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any one of the persons reasonably believed by the Rights Agent to
be the Chairman of the Board, the President, a Vice President, the
Treasurer or the Secretary 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 a person
reasonably
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believed by the Rights Agent to be any such officer. Any application
by the Rights Agent for written instructions from the Company may, at
the option of the Rights Agent, set forth in writing (i) any action
proposed to be taken or omitted by the Rights Agent with respect to
its duties and obligations under this Agreement and (ii) the date on
and/or after which such action shall be taken or omitted, which date
shall not be less than five business days after the date the Company
actually receives such application, unless the Company shall consent
in writing to an earlier date. If the application contains in writing
the matters described in items (i) and (ii) then the Rights Agent
shall not be liable for any action taken or omitted in accordance with
a proposal described in any such application on or after the date
specified therein unless, prior to taking or omitting any such action,
the Rights Agent has received written instructions in response to such
application specifying what action shall 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
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in any other capacity for the Company or for any other legal entity,
except it may not act for an Acquiring Person in an investment banking
capacity, or otherwise assist an Acquiring Person in ways hostile to
the Company, without the consent of the Company.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either by
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, that reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may
be, has either not been completed 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 the Company.
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Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Preferred Shares and Common Shares by registered, certified or express
mail, and to the holders of the Right Certificates by any class of U.S. mail.
The Company may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent of the Preferred Shares and
Common Shares by registered, certified or express mail, and to the holders of
the Right Certificates by any class of mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the Company shall become the temporary Rights Agent and the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing
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business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust powers or provide shareholder services and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100 million. 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 Preferred Shares and Common Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by resolution of its Board of Directors to reflect any
adjustment or change in
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the Purchase Price per share and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (i) shall, with
respect to Common Shares 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 (ii)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (x) no such Right Certificates 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 Right Certificates would be issued, and (y) no such Right
Certificates shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption. (a) The Board of Directors of the Company may, by
resolution, at its option, at any time prior to such time as any Person becomes
an Acquiring Person, redeem all but not less than all of the then outstanding
Rights at a redemption price of 1/10th of $.01
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per Right, as appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"). To the extent that a
holder of Rights holds a number of Rights not evenly divisible by ten, the total
price at which such Rights shall be redeemed shall be rounded to the nearest
whole cent. To the extent that a holder of Rights holds fewer than ten Rights,
such Rights shall be redeemed at a total price of $.01. The Board of Directors
may, in its discretion, at any time prior to such time as any Person becomes an
Acquiring Person, extend the time within which to redeem the then outstanding
Rights prior to their exercise. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the Current Market Price of the Common Shares at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been 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 the Rights shall be to receive the Redemption Price. Within 10
days after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to
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the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. 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.
Section 24. Exchange. (a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any wholly owned Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Shares as a fiduciary for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
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(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section
24, evidence of which shall have been filed with the Rights Agent, and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company shall promptly mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice 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 Common Shares for the Rights will be effected and, in the event of any
partial exchange, the number of the Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of the Rights (other
than the Rights which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of the Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights.
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(d) The Company shall not issue fractions of Common Shares or distribute
certificates which evidence fractional Common Shares. In lieu of such fractional
shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares would otherwise be
issuable an amount, which the Company may, at its option, pay in cash, other
equity securities of the Company, debt securities of the Company, or any other
form of consideration or combination of the foregoing deemed appropriate by the
Board of Directors of the Company, equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this paragraph (d),
the current market value of a whole Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 11(d)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall propose
(1) to pay any dividend payable in stock of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (other than a regular periodic cash dividend at a rate not in excess of
125% of the rate of the last regular periodic cash dividend theretofore paid) or
(ii) to offer to the holders of Preferred Shares rights or warrants to subscribe
for or to purchase any
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additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), or (iv) to effect any merger, consolidation or
other combination into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of more than 50% of the assets or earning power or
assets representing 50% or more of the cash flow of the Company and its
Subsidiaries (taken as a whole) to, any other Person, 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 Right, 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 Preferred Shares or
Common Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at least
20 days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares or Common Shares
whichever shall be earlier. The failure to give notice required by this Section
25 or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
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(b) In case any Section 11(a)(ii) Event or Section 13 Event shall occur,
then, in any such case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
or Section 13(a) hereof, and (ii) all references in Section 25(a) hereof to
Preferred Shares shall be deemed thereafter to refer also to Common Shares or
other securities issuable in respect of the Rights.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) to the following mailing address (or to the
street address in cases in which the carrier cannot deliver to a P.O. Box):
Mailing Address: Farm Family Holdings, Inc.
P.O. Box 656
Albany, New York 12201-0656
Attention: General Counsel
Street Address: Farm Family Holdings, Inc.
344 Route 9W
Glenmont, New York 12077
Attention: General Counsel
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Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
The Bank of New York
101 Barclay Street, Floor 12 West
New York, NY 10286
Attention: Stock Transfer Administrator
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by any class of U.S. mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may, by resolution of
its Board of Directors, and the Rights Agent shall, if the Company so directs,
from time to time supplement
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or amend this Agreement in any respect whatsoever (including without limitation
any extension of the period in which the Rights may be redeemed) at any time
prior to such time as any Person becomes an Acquiring Person, without the
approval of any holders of certificates representing Common Shares or, after the
Distribution Date, of Right Certificates. From and after such time as any Person
becomes an Acquiring Person, the Company may, by resolution of its Board of
Directors, and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of certificates
representing Common Shares or of Right 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, or (iii) to
change or supplant or make any other provisions in regard to matters or
questions arising hereunder which the Company and the Rights Agent may deem
necessary or desirable, which shall not adversely affect the interests of the
holders of Right Certificates and, prior to the Distribution Date, the Common
Shares (other than an Acquiring Person or an Affiliate or Associate of any such
Person). Upon the delivery of a certificate from an officer of the Company
referred to in Section 20(b) hereof 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. Prior to the Distribution Date, the
interests of the holders of Right Certificates shall be deemed coincident with
the interests of the holders of Common Shares.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
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Section 29. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to such Board of Directors, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend 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 of Directors of
the Company or the Company in good faith, (x) shall be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Right Certificates
and all other parties and (y) shall not subject the Board of Directors of the
Company to any liability to the holders of the Rights and Right Certificates.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, registered holders of the
Common Shares).
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<PAGE>
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Without limiting the foregoing, if any provision of this Agreement requiring
that a determination be made by the Board of Directors is held by a court of
competent jurisdiction or other authority to be invalid, void, or unenforceable,
such determination shall then be made by the Board of Directors in accordance
with applicable law and the Company's certificate of incorporation and by-laws.
Section 32. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
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<PAGE>
Section 34. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: FARM FAMILY HOLDINGS, INC.
By: /s/ Victoria M. Stanton By: /s/ Philip P. Weber
----------------------- -----------------------
Name: Victoria M. Stanton Name: Philip P. Weber
Title: Exec. V.P., Gen. Counsel Title: President & C.E.O.
& Secretary
ATTEST: THE BANK OF NEW YORK
By: /s/ John I. Silverstein By: /s/ Raymond Romanski
----------------------- -------------------------
Name: John I. Silverstein Name: Raymond Romanski
Title: Vice President Title: Vice President
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<PAGE>
EXHIBIT A
Form of
Certificate of Designation, Preferences and
Rights of Junior Participating Cumulative Preferred Stock
of
Farm Family Holdings, Inc.
(pursuant to ss. 151 of the Delaware
General Corporation Law)
Farm Family Holdings, Inc., a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation and in accordance with Section 151 of the General Corporation Law
of the State of Delaware, its Board of Directors (the "Board of Directors") has
adopted the following resolution creating a series of its Preferred Stock, $.01
par value, designated as Junior Participating Cumulative Preferred Stock:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Company in accordance with the provisions of
the Certificate of Incorporation, the Board of Directors hereby
creates a series of Junior Participating Cumulative Preferred Stock,
with a par value of $.01 per share of the Company and hereby states
the designation and number of shares, and fixes the relative rights,
preferences and limitations thereof (in addition to the provisions in
the Certificate of Incorporation that are applicable to the Preferred
Stock of all series as follows:
Junior Participating Cumulative Preferred Stock
Section 1. Designation and Amount. The shares of such series shall be
designated as Junior Participating Cumulative Preferred Stock, with a par value
of $.01 per share (the "Junior Preferred Shares"), and the number of shares
constituting such series shall be 70,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Junior Preferred Shares to a
number less than the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Junior Preferred
Shares.
<PAGE>
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the Junior
Preferred Shares with respect to dividends, the holders of Junior Preferred
Shares, in preference to the holders of shares of the Company's common stock,
$.01 par value per share (the "Common Shares"), and of any other junior stock
which may be outstanding, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of January, April, July and
October in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a Junior Preferred Share, in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $25.00 per share
($100.00 per annum), and (ii) subject to the provision for adjustment
hereinafter set forth, the sum of 100 times the aggregate per share amount of
all cash dividends and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any Junior
Preferred Shares. In the event the Company shall at any time declare or pay any
dividend on Common Shares payable in Common Shares, or effect a subdivision or
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
amount to which holders of Junior Preferred Shares were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Junior
Preferred Shares as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares); provided, however, that in the event no
dividend or distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $25.00 per share ($100.00 per
annum) on the Junior Preferred Shares shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
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<PAGE>
(C) Dividends shall begin to accrue and be cumulative on outstanding Junior
Preferred Shares from the Quarterly Dividend Payment Date next preceding the
date of issue of such Junior Preferred Shares, unless (i) the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or (ii) the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of Junior Preferred Shares entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall accumulate but shall not bear interest.
Dividends paid on the Junior Preferred Shares in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of Junior Preferred Shares entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be not more than 30
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights.
The holders of Junior Preferred Shares shall have the following voting
rights:
(A) Subject to the provisions for adjustment as hereinafter set
forth, each Junior Preferred Share shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders of
the Company. In the event the Company shall at any time declare or pay
any dividend on Common Shares payable in Common Shares or effect a
subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend
in Common Shares) into a greater or lesser number of Common Shares,
then in each such case the number of votes per share to which holders
of Junior Preferred Shares were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, as from time to time amended, and/or in any other
resolutions adopted by the Board of Directors creating a series of
preferred stock or any similar stock, or by law, the holders of Junior
Preferred Shares and the holders of Common Shares and any other
capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of
shareholders of the Company.
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<PAGE>
(C) If at any time the Company shall not have declared and paid
all accrued and unpaid dividends on the Junior Preferred Shares as
provided in Section 2 hereof for four consecutive quarterly dividend
payment dates, then, in addition to any voting rights provided for in
paragraphs (A) and (B), the holders of the Junior Preferred Shares
shall have the exclusive right, voting separately as a class, to elect
two directors to the Board of Directors of the Company (such
directors, the "Preferred Directors"). The right of the holders of the
Junior Preferred Shares to elect the Preferred Directors shall
continue until all such accrued and unpaid dividends shall have been
paid. At such time, the terms of any of the Preferred Directors shall
terminate. At any time when the holders of the Junior Preferred Shares
shall have thus become entitled to elect Preferred Directors, a
special meeting of the holders of the Junior Preferred Shares shall be
called for the purpose of electing such Preferred Directors, to be
held within 30 days after the right of the holders of the Junior
Preferred Shares to elect such Preferred Directors shall arise, upon
notice given in the manner provided by law or the by-laws of the
Company for giving notice of a special meeting of shareholders;
provided, however, that such a special meeting shall not be called if
the annual meeting of shareholders is to convene within such 30-day
period. At any such special meeting or at any annual meeting at which
the holders of the Junior Preferred Shares shall be entitled to elect
Preferred Directors, the holders of a majority of the then outstanding
Junior Preferred Shares present in person or by proxy shall be
sufficient to constitute a quorum for the election of such directors.
The persons elected by the holders of the Junior Preferred Shares at
any meeting in accordance with the terms of the preceding sentence
shall become directors on the date of such election.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on Junior Preferred Shares outstanding shall have been paid in
full, the Company shall not:
(i) declare or pay dividends or make any other distributions on
any shares or stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding-up) to the Junior Preferred
Shares;
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<PAGE>
(ii) declare or pay dividends or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding-up) with the Junior Preferred
Shares except dividends paid ratably on the Junior Preferred Shares
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding-up) with or junior to the
Junior Preferred Shares; provided, however, that the Company may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Company
ranking junior (either as to dividends or upon dissolution,
liquidation or winding-up) to the Junior Preferred Shares; or
(iv) purchase or otherwise acquire for consideration any Junior
Preferred Shares, or any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding-up) with
the Junior Preferred Shares, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series or classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company unless
the Company could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Junior Preferred Shares purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired
promptly after the acquisition thereof. All such shares shall upon their
retirement become authorized but unissued shares of preferred stock, without
designation as to series, and may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein, in the Certificate of Incorporation, in any other resolution of the
Board of Directors creating a series of preferred stock or any similar stock or
as otherwise required by law.
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<PAGE>
Section 6. Liquidation, Dissolution or Winding-Up. Upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, no
distribution shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding-up) to the
Junior Preferred Shares unless prior thereto, the holders of Junior Preferred
Shares shall have received the greater of (i)$100.00 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, and (ii) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Shares, or (b) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding-up) with the Junior
Preferred Shares, except distributions made ratably on the Junior Preferred
Shares and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding-up. In the event the Company shall at any time declare or
pay any dividend on Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Junior Preferred Shares are entitled
immediately prior to such event under the provisions in clause (a) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter into
any consolidation, merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other stock or securities, cash and/or
any other property, or otherwise changed, then in any such case each Junior
Preferred Share shall at the same time be similarly exchanged for or changed
into an amount per share (subject to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each Common Share is changed or exchanged. In the event the Company
shall at any time declare or pay any dividend on Common Shares payable in Common
Shares, or effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise than by payment of a
dividend in Common Shares) into a greater or lesser number of Common Shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of Junior Preferred Shares shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
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<PAGE>
Section 8. No Redemption. The Junior Preferred Shares shall not be
redeemable.
Section 9. Rank. Unless otherwise provided in the Certificate of
Incorporation, as it may be from time to time amended, or in resolutions by the
Board of Directors relating to a subsequent series of preferred stock of the
Company, the Junior Preferred Shares shall rank junior to all other series of
the Company's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding-up, and senior to
the Common Shares.
Section 10. Amendment. The Certificate of Incorporation of the Company
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Shares so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding Junior Preferred Shares, voting together as a
single series.
Section 11. Fractional Shares. Junior Preferred Shares shall not be issued
in fractions of a share.
RESOLVED, that the proper officers of the company be, and each of
them hereby is, authorized to execute a Certificate of
Designation with respect to the Junior Preferred Stock pursuant
to Section 151 of the General Corporation Law of the State of
Delaware and to take all appropriate action to cause such
Certificate to become effective, including, but not limited to,
the filing and recording of such Certificate with and/or by the
Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, I have executed and subscribed to this
Certificate and to affirm the foregoing as true under penalty of
perjury this __ day of _________, 1997.
-----------------------------------
Name:
Title:
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<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER JULY 29, 2007 OR EARLIER IF THE BOARD OF DIRECTORS ORDERS
THE REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT 1/10TH OF $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS
HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. [THE RIGHTS
REPRESENTED BY THIS 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
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1
Right Certificate
Farm Family Holdings, Inc.
This certifies that _________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of July 29, 1997 (the "Rights Agreement"), between Farm Family
Holdings, Inc., a Delaware corporation (the "Company"), and The Bank of New York
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M. (New York time)
- ---------------
1 The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
on July 29, 2007, at the office of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-hundredth of a fully
paid nonassessable share of Junior Participating Cumulative Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company, at a purchase
price of $90 per one one-hundredth of a Preferred Share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase and the Certificate contained therein duly executed,
provided that only whole Preferred Shares shall be issued upon the exercise of
Rights (i.e., upon the exercise of Rights to purchase 100 one-hundredths of a
Preferred Share and integral multiples thereof) and that Rights exercised for
the purchase of fractional Preferred Shares shall be purchased by the Company
pursuant to the Rights Agreement at a purchase price equal to an equivalent
fraction of the current market value of one Preferred Share at the time of
exercise. The number of Rights evidenced by this Right Certificate (and the
number of one-hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price per one-hundredths of a
Preferred Share set forth above, are the number and Purchase Price as of July
29, 1997, based on the Preferred Shares as constituted at such date.
From and after the first occurrence of a Section 11(a)(ii) Event (as
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
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<PAGE>
Associate thereof (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person (or of any Associate or Affiliate
thereof) who becomes a transferee after such Acquiring Person (or any Associate
or Affiliate thereof) becomes such or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of such Acquiring Person (or of
any Associate or Affiliate thereof) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such, 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.
The Rights evidenced by this Right Certificate shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification for the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Preferred Share or the number and kind of other
securities which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events, including Section 11(a)(ii) Events and Section 13
Events (as defined in the Rights Agreement).
-3-
<PAGE>
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and 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 Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent and are also
available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, with
the Form of Assignment and Certificate set forth on the reverse side duly
executed, may be exchanged for another Right Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
-4-
<PAGE>
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate may be redeemed by the Company at a redemption price of
$.001 per Right (payable, at the Company's option, in cash, Common Shares or any
other form of consideration deemed appropriate by the Board of Directors) at any
time prior to the time a person becomes an Acquiring Person (as defined in the
Rights Agreement). Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be exchanged in whole or part for Common
Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a payment of consideration
will be made, as provided in the Rights Agreement.
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company in any respect up until the time a person becomes an
Acquiring Person and thereafter in certain respects which do not adversely
affect the interests of holders of Right Certificates or Common Shares, as the
case may be (other than an Acquiring Person or the Affiliates or Associates
thereof).
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company 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 shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
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<PAGE>
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of [ ], 1997
ATTEST: Farm Family Holdings, Inc.
______________________ By:______________________
Secretary Title:
Countersigned:
The Bank of New York,
as Rights Agent
By:____________________
Authorized Signature
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<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED__________________________________
hereby sells, assigns and transfers unto_______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ........ Attorney, to transfer
the within Right Certificate on the books of the within named Company, with full
power of substitution.
Dated: _____________
____________________
Signature
Signature Guaranteed:
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate thereof.
Dated: _____________
__________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to the
name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by the Right Certificate.)
To Farm Family Holdings, Inc.:
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such other securities of the Company or of
any other Person which may be issuable upon the exercise of the Rights), or to
receive the cash purchase price for Rights to purchase a fractional Preferred
Share, and requests, if applicable, that certificates for such
Preferred Shares or other securities be issued in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
if such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social
security or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _____________
_________________________
Signature
(Signature must conform in all
respect to name of holder as
specified on the face of this Right
Certificate.)
Signature Guaranteed:
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became in Acquiring Person or
an Affiliate or Associate thereof.
Dated: ____________
__________________
Signature
Signature Guaranteed:
NOTICE
In the event the certification set forth above in the Form of
Assignment or Election is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Right Certificate to
be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment,
will affix a legend to that effect on any Right Certificates issued in
exchange for this Right Certificate.
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<PAGE>
EXHIBIT C
Farm Family Holdings, Inc.
Summary of Shareholder Rights Plan
On July 29, 1997, the Board of Directors of Farm Family Holdings, Inc. (the
"Company") authorized and declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.01 per
share (the "Common Shares") of the Company. The dividend is payable on July 29,
1997 to the shareholders of record on July 29, 1997 (the "Record Date"). Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Cumulative Preferred Stock, par
value $.01 per share ("Preferred Shares") of the Company at a Purchase Price
(the "Purchase Price") of $90, subject to adjustment in certain circumstances
(as defined below). The description and terms of the Rights are set forth in the
Rights Agreement (the "Rights Agreement") dated as of July 29, 1997 between the
Company and The Bank of New York, as Rights Agent (the "Rights Agent").
Distribution Date; Transfer of Rights
Initially, the Rights will be attached to all Common Share certificates
representing shares then outstanding, and no separate certificates representing
the Rights ("Right Certificates") will be distributed. The Rights will separate
from the Common Shares and a "Distribution Date" will occur upon the earlier of
(i) ten business days following a public announcement (the "Shares Acquisition
Date") that a person or group of affiliated or associated persons has acquired,
or obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares (an "Acquiring Person"), or (ii) ten business days (or
such specified or unspecified date as may be determined by action of the Board
of Directors of the Company) following the commencement or announcement of the
intent to commence a tender offer or exchange offer that would result in a
person or group of affiliated or associated persons beneficially owning 20% or
more of the outstanding Common Shares. Notwithstanding the foregoing, an
Acquiring Person does not include (A) the Company or any subsidiary of the
Company, (B) any employee benefit plan (including, but not limited to, any
employee stock ownership plan) of the Company or any subsidiary of the Company
or any person organized, appointed or established by the Company or such
subsidiary as a fiduciary for or pursuant to the terms of any such employee
benefit plan, or (C) any person who would otherwise be an Acquiring Person but
for the good faith determination by the Board of Directors of the Company that
such person has become an Acquiring Person inadvertently, provided that such
person together with its affiliates and associates divest themselves as promptly
as practicable of beneficial ownership of a sufficient number of Common Shares
so that such person together with its affiliates and associates beneficially own
less than 20% of the Common Shares.
<PAGE>
The Rights Agreement provides that, until the Distribution Date, (i) the
Rights will be transferred with and only with the Common Shares, (ii) new Common
Share certificates issued after the Record Date but prior to the Distribution
Date will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any of the Common Shares will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Right Certificates will
be mailed to holders of record of Common Shares as of the close of business on
the Distribution Date, and thereafter the Rights will be evidenced solely by
such Right Certificates.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on July 29, 2007 (the "Final Expiration Date"), unless the Rights are
earlier redeemed or exchanged by the Company as described below.
Exercise of Rights for Common Stock of the Company
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than rights beneficially owned by the Acquiring Person (which
will thereupon become void), will thereafter have a right to receive, upon
exercise thereof at the then current exercise price of the Right, that number of
Common Shares having a market value of two times the exercise price of the Right
("Flip-In" Events). From and after the time a person becomes an Acquiring Person
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person (or an affiliate,
associate or transferee thereof) will be null and void.
At any time after any person becomes an Acquiring Person, the Board of
Directors of the Company may, at its option, exchange all or part of the then
outstanding and exercisable Rights (excluding Rights of an Acquiring Person that
have become void) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Acquiring Person, together with all affiliates and associates of
such Acquiring Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
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<PAGE>
Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Right shall be to
receive the number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. In connection with this exchange
provision, the Company shall not be required to issue fractions of Common Shares
or certificates evidencing fractional Common Shares and, in lieu thereof, an
adjustment will be made based on the market price of the Preferred Shares on the
last trading day prior to the date of exercise.
Exercise of Rights for Shares of the Acquiring Company
In the event that, after the Shares Acquisition Date, (a) the Company shall
consolidate with, or merge with or into, any other person or persons (other than
a subsidiary of the Company) and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (b) any other person or
persons (other than a subsidiary of the Company) shall consolidate, 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 common stock shall be changed into
or exchanged for stock or other securities of any other person or persons or
cash or any other property, or (c) the Company shall sell or otherwise transfer
(or one or more of its subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets, cash flow or earning power to any other person or
persons (other than the pro rata distribution by the Company of assets
(including securities) of the Company of any or its subsidiaries to all holders
of the Company's common stock), the Rights Agreement provides that each holder
of a Right (other than Rights owned by an Acquiring Person which will have
become void) shall be entitled to receive, upon the exercise thereof at the then
current exercise price of the Right, that the number of shares of common stock
of the acquiring company which at the time of such transactions would have a
market value (as defined in the Rights Agreement) equal to twice the exercise
price of the Right ("Flip-Over" Events).
Adjustments to Purchase Price
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<PAGE>
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of Preferred Shares, or (iii) in case the Company
shall fix a record date to distribute to all holders of the Preferred Shares
evidences of indebtedness or assets (other than a regular periodic cash dividend
or dividends payable in Preferred Shares) or subscription rights or warrants
(other than those referred to above). The number of Rights and number of
Preferred Shares issuable upon the exercise of each Right are also subject to
adjustment in the event of a stock split, combination or stock dividend on the
Common Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% of
such Purchase Price. No fractional Preferred Shares will be issued and in lieu
thereof, an adjustment will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
Redemption of Rights
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (the "Redemption Price"),
payable in cash, Common Shares or any other form of consideration deemed
appropriate by the Board of Directors. The redemption of the Rights may be
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon redemption of
the Rights, the Rights will terminate and the only privilege of the Rights
holders will be to receive the $.001 redemption price. The date on which Rights
are redeemed is referred to herein as the "Redemption Date".
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, other than rights resulting from such
holder's ownership of Common Shares, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Shares (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Amendments to Terms of the Rights
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<PAGE>
The Rights and the Rights Agreement may be amended in any respect
whatsoever (including, without limitation, any extension of the period in which
the Rights may be redeemed) at any time prior to such time any person becomes an
Acquiring Person, without the approval of the holders of the Rights. After such
time, amendments may only be made to (i) cure any ambiguity, (ii) to correct or
supplement any provision contained in the Rights Agreement which may be
defective or inconsistent with any other provision in the Rights Agreement, or
(iii) make any amendments or supplements which the Company and the Rights Agent
may deem necessary or desirable which do not adversely affect the interests of
the holders of the Rights (other than the Acquiring Person or an affiliate or
associate thereof).
A copy of the Rights Agreement will be filed shortly with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of
the Rights Agreement is 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 the Rights Agreement, which is hereby incorporated
by reference.
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