SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): October 26, 1998
BUTLER NATIONAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Delaware
(State or Other Jurisdiction of Incorporation)
0-1678
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(Commission File Number)
41-0834293
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(I.R.S. Employer Identification Number)
19920 West 161st Street, Olathe, Kansas 66062-2700
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(816) 780-9595
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Item 5. Other Events.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit thereto the form
of Right Certificate, is attached hereto as Exhibit 4 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the form of Rights
Agreement (and the exhibits thereto) attached hereto.
On October 27, 1998, the Board of Directors of Butler National Corporation
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par value $0.01 per share,
of the Company (the "Common Stock"). The dividend distribution is payable on
October 27, 1998 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one-two
hundredth of a share of Series C Participating Preferred Stock, par value $5.00
per share (the "Preferred Stock") of the Company at a price of $10.00 per
one-two hundredth of a share of Preferred Stock (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of October 26, 1998, as the same may be amended from time to
time (the "Rights Agreement"), between the Company and Norwest Bank Minnesota,
N.A., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the tenth
business day following the date of public announcement or the date on which the
Company first has notice or determines that a person or group of affiliated or
associated persons (other than the Company, any subsidiary of the Company or any
employee benefit plan of the Company) (an "Acquiring Person") has acquired, or
obtained the right to acquire, 15% or more of the outstanding shares of voting
stock of the Company without the prior express written consent of the Company
executed on behalf of the Company by a duly authorized officer of the Company
following express approval by action of at least a majority of the members of
the Board of Directors then in office (the "Stock Acquisition Date") or (ii) the
close of business on the tenth business day (or such later date as may be
determined by action of the Board of Directors but not later than the Stock
Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or an employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 15%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Company's Common Stock. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuances of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
the surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
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as of the close of business on the Distribution Date and such separate
certificates alone will then evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire, if not previously exercised, on the date which is 10 years from the
Record Date (the "Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one-two hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable or convertible to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential dividend in an amount equal to 200
times any dividend declared on each share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will receive a preferred
liquidation payment of equal to the greater of $200 or 200 times the payment
made per share of Common Stock. Each share of Preferred Stock will have 200
votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to receive 200
times the amount and type of consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends, liquidation and voting, and
in the event of mergers and consolidations, are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one-two hundredth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) acquires 15% or more of the
Company's outstanding voting stock without the prior written consent of the
Board of Directors, each Right, except those held by such persons, would entitle
each holder of a Right to acquire such number of shares of the Company's Common
Stock as shall equal the result obtained by multiplying the then current
Purchase Price by the number of one-two hundredths of a share of Preferred Stock
for which a Right is then exercisable and dividing that product by 50% of the
then current per-share market price of Company Common Stock.
If any person or group (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) acquires more than 15% but
less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
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persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business combination
transaction where the Company is not the surviving corporation or where Company
Common Stock is exchanged or changed or 50% or more of the Company's assets or
earnings power is sold in one or several transactions without the prior written
consent of the Board of Directors, each Right would entitle the holders thereof
(except for the Acquiring Person) to receive such number of shares of the
acquiring company's common stock as shall be equal to the result obtained by
multiplying the then current Purchase Price by the number one-two hundredths of
a share of Preferred Stock for which a Right is then exercisable and dividing
that product by 50% of the then current market price per share of the common
stock of the acquiring company on the date of such merger or other business
combination transaction.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one-two hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.0025 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including, but not
limited to, an amendment to lower certain thresholds described above to not less
than the greater of (i) any percentage greater than the largest percentage of
the voting power of all securities of the Company then known to the Company to
be beneficially owned by any person or group of affiliated or associated persons
(other than an excepted person) and (ii) 10%, except that from and after such
time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit No. Description of Exhibit
4 Rights Agreement, dated as of October 26, 1998 between Butler
National Corporation and Norwest Bank Minnesota, N.A., as Rights
Agent, which includes the form of Certificate of Designations,
setting forth the terms of the Series C Participating Preferred
Stock, par value $5.00 per share, as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Preferred Stock
Purchase Rights as Exhibit C. Pursuant to the Rights Agreement,
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printed Right Certificates will not be mailed until as soon as
practicable after the earlier of the tenth day after public
announcement that a person or group (except for certain exempted
persons or groups) has acquired beneficial ownership of 15% or
more of the outstanding shares of Common Stock or the tenth
business day (or such later date as may be determined by action
of the Board of Directors) after a person commences, or announces
its intention to commence, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person or group of 15% or more of the outstanding shares of
Common Stock.
99 Press release dated October 26, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Butler National Corporation
(Registrant)
Date: December 2, 1998 By: /s/ Clark D. Stewart
---------------------------------
Clark D. Stewart, President
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
4 Rights Agreement, dated as of October 26, 1998 between Butler
National Corporation and Norwest Bank Minnesota, N.A., as Rights
Agent, which includes the form of Certificate of Designations,
setting forth the terms of the Series C Participating Preferred
Stock, par value $5.00 per share, as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Preferred Stock
Purchase Rights as Exhibit C. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed until as soon as
practicable after the earlier of the tenth day after public
announcement that a person or group (except for certain exempted
persons or groups) has acquired beneficial ownership of 15% or
more of the outstanding shares of Common Stock or the tenth
business day (or such later date as may be determined by action
of the Board of Directors) after a person commences, or announces
its intention to commence, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person or group of 15% or more of the outstanding shares of
Common Stock.
99 Press release dated October 26, 1998.
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Exhibit 4
RIGHTS AGREEMENT
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Butler National Corporation
and
Norwest Bank Minnesota, N.A.
Rights Agent
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Dated as of October 26, 1998
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INDEX
Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................4
Section 3. Issue of Right Certificates........................................4
Section 4. Form of Right Certificates.........................................6
Section 5. Countersignature and Registration..................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates, Mutilated, Destroyed, Lost or Stolen Right
Certificates.......................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights......8
Section 8. Cancellation and Destruction of Right Certificates................10
Section 9. Reservation and Availability of Shares of Preferred Stock.........10
Section 10. Preferred Stock Record Date......................................11
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights..................................11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................18
Section 14. Fractional Rights and Fractional Shares..........................21
Section 15. Rights of Action.................................................22
Section 16. Agreement of Right Holders.......................................22
Section 17. Right Certificate Holder Not Deemed a Stockholder................23
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Section 18. Concerning the Rights Agent......................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent........24
Section 20. Duties of Rights Agent...........................................24
Section 21. Change of Rights Agent...........................................26
Section 23. Redemption and Termination.......................................27
Section 23. Redemption and Termination.......................................28
Section 24. Exchange.........................................................28
Section 23. Redemption and Termination.......................................30
Section 26. Notices..........................................................30
Section 27. Supplements and Amendments.......................................31
Section 28. Successors.......................................................32
Section 29. Benefits of This Agreement.......................................32
Section 30. Severability.....................................................32
Section 31. Governing Law....................................................32
Section 32. Counterparts.....................................................32
Section 33. Descriptive Headings.............................................32
Exhibit A - Form of Certificate of Designations for
Series C Participating Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Preferred Stock Purchase Rights
ii
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RIGHTS AGREEMENT
This Rights Agreement, dated as of October 26, 1998 is entered into between
Butler National Corporation, a Delaware corporation (the "Company") and Norwest
Bank Minnesota, N.A., a Minnesota corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on October 26, 1998 the Board of Directors of the Company
authorized and declared a dividend distribution of one right (hereinafter
referred to as a "Right") for each share of Common Stock, par value $.01 per
share, of the Company outstanding at the close of business on October 26, 1998
(the "Record Date"), (other than shares of such Common Stock held in the
Company's treasury on such date) and has authorized the issuance of one Right in
respect of each share of Common Stock of the Company issued between the Record
Date (whether originally issued or issued from the Company's treasury) and the
Distribution Date (as such term is defined in Section 3 hereof), each Right
representing the right to purchase one-two hundredth of a share of Series C
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designations attached hereto
as Exhibit A, upon the terms and subject to the conditions hereinafter set forth
(the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to act as provided
herein, and the Rights Agent is willing to so act.
NOW, THEREFORE, 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 Rights Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined) who
or which, together with all Affiliates (as hereinafter defined) and Associates
(as hereinafter defined) of such Person, without the Prior Written Approval of
the Company (as hereinafter defined), shall be the Beneficial Owner (as
hereinafter defined) of securities of the Company constituting 15% or more of
the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 15% or more of
the Voting Power of the Company, but shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement or (ii) any Person who or
which, together with all Affiliates and Associates of such Person, inadvertently
may become the Beneficial Owner of securities of the Company representing 15% or
more of the Voting Power of the Company or otherwise becomes such a Beneficial
Owner without a plan or intention to acquire control of the Company, so long as
such Person, individually or together with the Affiliates and Associates of such
Person, promptly enters into, and delivers to the Company, an irrevocable
commitment promptly to divest, and thereafter promptly divests (without
exercising or retaining any power, including voting, with respect to such
securities), sufficient securities of the Company so that such Person, together
with all Affiliates and Associates of such Person, ceases to be the Beneficial
Owner of 15% or more of the Voting Power of the Company. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
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acquisition of voting securities of the Company by the Company which, by
reducing the amount of such securities outstanding, increases the proportionate
voting power of such securities beneficially owned by such Person to 15% or more
of the Voting Power of the Company; provided, however, that if a Person becomes
the Beneficial Owner of securities constituting 15% or more of the Voting Power
of the Company by reason of purchases by the Company and shall, after such
purchases by the Company, become the Beneficial Owner of any additional voting
securities of the Company without the Prior Written Approval of the Company,
then such Person shall be deemed to be an Acquiring Person.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect
on the date hereof.
(c) 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
beneficially owns, directly or indirectly as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise, provided, however, that a Person shall not be deemed the
"Beneficial Owner" of 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
payment or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding, provided, however, that a Person shall not be
deemed the "Beneficial Owner" of any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) is not also
then reportable by such person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy
or consent as described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
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(d) "Board of Directors" shall mean the Board of Directors of the Company
as constituted from time to time.
(e) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of Kansas are authorized or
obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M., Olathe,
Kansas time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Olathe, Kansas time, on the next
succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value $0.01 per share,
of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock with the greatest
Voting Power of such Person 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 (as hereinafter defined) of another Person, of the Person
which ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(j) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(k) "Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of any
such entity.
(l) "Preferred Stock" shall mean the Series C Participating Preferred
Stock, par value $5.00 per share, of the Company.
(m) "Prior Written Approval of the Company" shall mean prior express
written consent of the Company to the actions in question, executed on behalf of
the Company by a duly authorized officer of the Company following express
approval by action of at least a majority of the members of the Board of
Directors then in office.
(n) "Purchase Price" shall have the meaning set forth in Section 4 hereof.
(o) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(p) "Section 11(b) Event" shall have the meaning set forth in Section 11(b)
hereof.
(q) "Section 13 Event" shall mean an event described in clauses (x), (y) or
(z) of Section 13(a) hereof.
(r) "Stock Acquisition Date" shall mean the earlier of (i) the first date
of public announcement by the Company or a Person that an Acquiring Person has
become an Acquiring Person, or (ii) the date on which the Company first has
notice, direct or indirect, or otherwise determines that a Person has become an
Acquiring Person.
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(s) "Subsidiary" shall mean, with respect to any Person, any other Person
of which securities or other ownership interests having ordinary Voting Power,
in the absence of contingencies, to elect a majority of the board of directors
(or other persons performing similar functions) of such other Person are at the
time directly or indirectly owned by such Person or one or more of such Person's
Subsidiaries, except that "Subsidiary" when used with reference to the Company
shall mean any Person of which either a majority of the Voting Power of the
voting equity securities or a majority of the equity interests is owned,
directly or indirectly, by the Company.
(t) "Voting Power" shall mean the voting power of all securities of a
Person then outstanding generally entitled to vote for the election of directors
of the Person (or, where appropriate, for the election of persons performing
similar functions).
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 Stock) 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. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth Business
Day after the Stock Acquisition Date or (ii) the close of business on the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors but in no event later than the tenth Business Day after such time as
any Person becomes an Acquiring Person) after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan or compensation arrangement of the Company or of any
Subsidiary of the Company, or any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any Subsidiary
of the Company for or pursuant to the terms of any such employee benefit plan or
compensation arrangement) is first published or sent or given within the meaning
of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act,
without the Prior Written Approval of the Company, which tender or exchange
offer would result in any Person becoming the Beneficial Owner of Voting Power
aggregating 15% or more of the outstanding Voting Power (including any such date
which is after the date of this Rights Agreement and prior to the issuance of
the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (y) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be Right Certificates) and
not by separate Right Certificates, as more fully set forth below, and (z) the
Rights (and the right to receive certificates therefor) will be transferable
only in connection with the transfer of the underlying shares of Common Stock,
as more fully set forth below. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the
Company shall prepare and execute, and the Rights Agent shall countersign and
send, by first-class, insured, postage prepaid mail, to each record holder of
the Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a right certificate,
in substantially the form of Exhibit B hereto (the "Right Certificate"),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
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(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 Stock, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the close of business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date (or the earlier
redemption, expiration or termination of the Rights), the Rights will be
evidenced by such certificates for the Common Stock registered in the names of
the holders of the Common Stock and the registered holders of the Common Stock
shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates for the Common
Stock outstanding in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Certificates for the Common Stock issued after the Record Date but
prior to the earlier of the Distribution Date or the redemption, expiration or
termination of the Rights shall be deemed also to be certificates for Rights and
shall have impressed, printed or written on, or otherwise affixed to them a
legend substantially to the following effect:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement dated as of October 26, 1998
between Butler National Corporation (the "Company") and Norwest Bank
Minnesota, N.A. (the "Rights Agent"), as it may from time to time be
supplemented or amended, the terms of which are incorporated herein by
reference and a copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may expire or may be redeemed, exchanged or be
evidenced by separate certificates and no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a copy
of the Rights Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances, Rights issued to or held by
Acquiring Persons or their Affiliates or Associates (as defined in the
Rights Agreement) and any subsequent holder of such Rights may become null
and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates.
In the event that the Company purchases or acquires any Common Stock after
the Record Date but prior to the Distribution Date, any Rights associated with
such Common Stock shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with shares of Common Stock
which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Rights Agreement, or as may be required to comply
with any applicable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
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conform to customary usage. Subject to the provisions of Section 11 and Section
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-two hundredths of a share of Preferred Stock as shall be set
forth therein at the price per one-two hundredth of a share as set forth therein
(the "Purchase Price"), but the number and identity of such shares and the
Purchase Price shall be and remain subject to adjustment as provided in Sections
11, 13 and 22 hereof.
(b) Any Right Certificate issued pursuant hereto that represents Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding either the transferred Rights,
shares of Company Common Stock or the Company or (B) a transfer which a majority
of the Board of Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e), and any Right Certificate issued pursuant to Section 6 hereof, Section 11
hereof or Section 22 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:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
an Associate of an Acquiring Person. Accordingly, this Right Certificate
and the Rights represented hereby are void in the circumstances specified
in Section 7(e) of the Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or
any defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned manually or by facsimile signature by the Rights Agent or the
registrar or co-registrar for the Common Stock (the "Registrar") and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company whose manual or facsimile signature is affixed to the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent or the Registrar and issuance and delivery by the Company, such
Right Certificates, nevertheless, may be countersigned by the Rights Agent or
the Registrar, issued and delivered 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. 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
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the date of the execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its stockholder services office or such other office designated for
such purpose, 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, the certificate number of 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 Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to the close of
business on the Expiration Date (as such term is defined in Section 7(a)
hereof), 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 shares of Preferred
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate 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
stockholder services office of the Rights Agent or such office designated for
such purpose. Thereupon, the Rights Agent shall 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
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the stockholder services office of the Rights Agent or
such office designated for such purpose, together with payment of the Purchase
Price for each one-two hundredth of a share of Preferred Stock as to which the
Rights are exercised, at or prior to the close of business on the Expiration
Date. The "Expiration Date", as used in this Rights Agreement, shall be the
earliest of (i) the Final Expiration Date (as defined below), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof, or (iii) the
time at which the Rights are exchanged as provided in Section 24 hereof. The
"Final Expiration Date", as used in this Rights Agreement, shall be the date
which is 10 years from the Record Date.
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(b) The Purchase Price for each one-two hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $10.00, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for each
one-two hundredth of a share of Preferred Stock to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of the
Rights pursuant hereto in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company or the Rights
Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) either (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) if the Company, in its sole discretion, shall have elected
to deposit the shares of Preferred Stock issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent depositary
receipts representing such number of one-two hundredths of a share of Preferred
Stock as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs such depositary
agent to comply with all such requests, (ii) promptly after receipt of such
certificates or depositary receipts cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iv) after receipt of
any such cash, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate, (v) when appropriate, requisition from the
Company the amount of cash or securities issuable upon exercise of a Right
pursuant to the adjustment provisions of Section 11 or the exchange provisions
of Section 24, and (vi) after receipt of any such cash or securities, promptly
deliver such cash or securities to or upon the order of the registered holder of
such Right Certificate, of any such cash or securities.
(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 to the registered holder of such Right Certificate or to such
holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Rights Agreement to the contrary, upon
the first occurrence of a Section 11(b) Event or a Section 13 Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer which a majority of the
Board of Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
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<PAGE>
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any determination
under this Section 7(e) or Section 4(b) with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless the certificate contained in the
appropriate form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise shall have been properly
completed and duly executed by the registered holder thereof and the Company
shall have been provided with 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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company approximately one and one half
years after the cancellation date.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
its authorized and issued shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the occurrence of a
Section 11(b) Event or a Section 13 Event, shall so reserve and keep available a
sufficient number of shares of Preferred Stock, Common Stock and/or other
securities which may be required to permit the exercise in full of the Rights
pursuant to this Rights Agreement.
(b) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock and/or other
securities delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which would establish the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Securities 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 Securities Act) until the
Expiration Date. The Company will also take such action as may be appropriate
under the "blue sky laws" of the various states.
(d) The Company further covenants and agrees that 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
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any shares of Preferred Stock and/or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates or depositary receipts for shares of Preferred Stock and/or
other securities upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person (other than the
Company) in whose name any certificate for shares of Preferred Stock (or other
securities) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or other
securities) 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 Stock (or other securities) 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 Stock (or other securities)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a stockholder 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 proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and identity of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) In the event the Company shall at any time after the date of this
Rights Agreement (i) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (ii) subdivide the outstanding Preferred Stock, (iii)
combine the outstanding Preferred Stock into a smaller number of shares or (iv)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11, the Purchase Price in effect at the
time of the record date for such dividend or the time of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock, including Preferred Stock, issuable upon exercise of a
Right, shall be proportionately adjusted so that the holder of any Right
exercised after such time, upon payment of the aggregate consideration such
holder would have had to pay to exercise such Right prior to such time, shall be
entitled to receive the aggregate number and kind of shares of capital stock,
including Preferred Stock, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
(b) In the event any Person becomes an Acquiring Person ("Section 11(b)
Event"), then proper provision shall be made so that each holder of a Right,
subject to Section 7(e) and Section 24 hereof and except as provided below,
shall after the later of the occurrence of such event and the effective date of
an appropriate registration statement pursuant to Section 9 hereof, have a right
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<PAGE>
to receive, upon exercise thereof at the then current Purchase Price, multiplied
by the then number of one-two hundredths of a share of Preferred Stock for which
a Right is then exercisable, in accordance with the terms of this Rights
Agreement, in lieu of shares of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (y) multiplying the
then current Purchase Price by the then number of one-two hundredths of a share
of Preferred Stock for which a Right is then exercisable and dividing that
product by (z) 50% of the current market price per one share of Common Stock
(determined pursuant to Section 11(f) hereof on the date of the occurrence of
the Section 11(b) Event) (such number of shares being referred to as the "number
of Adjustment Shares").
(c) In the event that there shall not be sufficient Treasury shares or
authorized but unissued shares of Common Stock to permit the exercise in full of
the Rights in accordance with the foregoing Section 11(b), and the Rights become
so exercisable, notwithstanding any other provision of this Rights Agreement, to
the extent necessary and permitted by applicable law and any agreements in
effect on the date hereof to which the Company is a party, each Right shall
thereafter represent the right to receive, upon exercise thereof at the then
current Purchase Price, multiplied by the then number of one-two hundredths of a
share of Preferred Stock for which a Right is then exercisable, in accordance
with the terms of this Rights Agreement, a number of shares, or units of shares,
of (y) Common Stock, and (z) preferred stock (or other equity securities) of the
Company, including, but not limited to Preferred Stock, equal in the aggregate
to the number of Adjustment Shares where the Board of Directors shall have in
good faith deemed such shares or units, other than the shares of Common Stock,
to have at least the same value and voting rights as the Common Stock (a "common
stock equivalent"); provided, however, if there are unavailable sufficient
shares (or fractions of shares) of Common Stock and/or common stock equivalents,
then the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or common stock equivalents for issuance upon
exercise of the Rights, including the calling of a meeting of stockholders; and
provided, further, that if the Company is unable to cause sufficient shares of
Common Stock and/or common stock equivalents to be available for issuance upon
exercise in full of the Rights, then the Company, to the extent necessary and
permitted by applicable law and any agreements or instruments in effect on the
date thereof to which it is a party, shall make provision to pay an amount in
cash equal to twice the Purchase Price (as adjusted pursuant to this Section
11), in lieu of issuing shares of Common Stock and/or common stock equivalents.
To the extent that the Company determines that some action needs to be taken
pursuant to this Section 11(c), the Board of Directors by action of at least a
majority of its members then in office may suspend the exercisability of the
Rights for a period of up to sixty (60) days following the date on which the
Section 11(b) Event shall have occurred, in order to decide the appropriate form
of distribution to be made pursuant to this Section 11(c) 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. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Stock and common
stock equivalents upon exercise of the Rights among holders of Rights, which
such allocation may be, but is not required to be, pro-rata.
(d) If the Company shall fix a record date for the issuance of rights or
warrants to all holders of Preferred Stock entitling them (for a period expiring
within 90 calendar days after such record date) to subscribe for or purchase
Preferred Stock (or securities having the same or more favorable rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock, at a price per share of Preferred Stock or per share of equivalent
preferred stock or having a conversion or exercise price per share, as the case
may be, less than the current market price per share of Preferred Stock (as
defined in Section 11(f) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
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Price in effect immediately prior to such date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock or equivalent
preferred stock to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a 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 a majority
of the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock 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.
(e) If the Company shall fix a record date for the making of a distribution
to all holders of Preferred Stock (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, cash (other than a
regular periodic cash dividend out of earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such current
market price for one share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder, the "current market
price" of any security (a "Security" for purposes of this Section 11(f)(i)) on
any date shall be deemed to be the average of the daily closing prices per share
of such Security for the 30 consecutive Trading Days (as hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current market price per share of such Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into shares of such Security or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the "current market price" shall be appropriately adjusted to reflect
the current market price per share equivalent of such Security. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
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prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") National Market System, or if the Security is not listed or admitted
to trading on any national securities exchange or included in the Nasdaq
National Market System, 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 Security is 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 Security selected by a majority of the Board
of Directors. If on any such date no market maker is making a market in the
Security, the fair value of such Security on such date as determined in good
faith by a majority of the Board of Directors shall be used. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on any
national securities exchange a day on which the Nasdaq National Market System is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange or included in the
Nasdaq National Market System, a Business Day. If the Security is not publicly
held or not so listed or traded, "current market price" shall mean the fair
value as determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current market
price" per share (or one-two hundredth of a share) of Preferred Stock shall
be determined in the same manner as set forth above for the Common Stock in
clause (i) of this Section 11(f) (other than the last sentence thereof). If
the current market price per share (or one-two hundredth of a share) of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(f), the "current market price"
per share of Preferred Stock 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 Stock occurring after the date of this Rights Agreement) multiplied
by the current market price per share of the Common Stock and the "current
market price" per one-two hundredth of a share of Preferred Stock shall be
equal to the current market price per share of the Common Stock (as
appropriately adjusted). If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, "current market price" per
share shall mean the fair value per share as determined in good faith by
the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(g) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share,
as the case may be. Notwithstanding the first sentence of this Section 11(g),
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any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of Preferred Stock, 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 shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Sections 7, 9, 10, 13
and 14 hereof with respect to the shares of Preferred Stock shall apply on like
terms to any such other shares.
(i) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-two hundredths of a
share of Preferred Stock or other capital stock of the Company purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election as provided in
Section 11(k) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(d) and (e) hereof, 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-two
hundredths of a share of Preferred Stock (calculated to the nearest
ten-thousandth) obtained by (i) multiplying (A) the number of one-two hundredths
of a share of Preferred Stock covered by a Right immediately prior to the
adjustment by (B) 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.
(k) 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 shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of one-two hundredths of a
share of Preferred Stock for which such 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(k), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
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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.
(l) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of shares which were expressed in the initial
Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
or other securities and below one-two hundredth of the then par value, if any,
of the Preferred Stock, issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Preferred Stock, Common Stock or other securities
at such adjusted Purchase Price. If upon any exercise of the Rights, a holder is
to receive a combination of Common Stock and common stock equivalents, a portion
of the consideration paid upon such exercise, equal to at least the then par
value of a share of Common Stock of the Company, shall be allocated as the
payment for each share of Common Stock of the Company so received.
(n) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the shares
of Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the shares of Preferred Stock 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.
(o) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any
Preferred Stock at less than the then current market price, (iii) issuance
wholly for cash of Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred Stock,
shall not be taxable to such stockholders.
(p) In the event that at any time after the date of this Rights Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Stock payable in shares of Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case (y) the number of one-two hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one-two hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (z) each
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share of Common Stock outstanding immediately after such event shall have issued
with respect to it that number of Rights which each share of Common Stock
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.
(q) The Company covenants and agrees that it shall not, at any time after
the Distribution Date and so long as the Rights have not been redeemed pursuant
to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i) consolidate
with, (ii) merge with or into, or (iii) sell or transfer, in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, if 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.
(r) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Sections 23 and 24 hereof, take any
action the purpose or effect of which is to diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 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 Preferred Stock
and the Common Stock a copy of such certificate and (c) include a brief summary
thereof in a mailing to each holder of a Right Certificate in accordance with
Section 26 hereof, or prior to the Distribution Date, disclose a brief summary
in a filing under the Exchange Act. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustments therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, directly or indirectly, at any time after a Person
has become an Acquiring Person, (x) the Company shall consolidate with, or merge
with and into, any other Person, (y) any Person shall consolidate with or merge
with and into the Company, and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) 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 or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than to the Company or one or more of its wholly-owned Subsidiaries, then, and
in each such case, proper provision shall be made so that (i) each holder of a
Right, subject to Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price multiplied
by the then number of one-two hundredths of a share of Preferred Stock for which
a Right is then exercisable (or if a Section 11(b) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such
one-two hundredths of a share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(b) Event by the Purchase Price in
effect immediately prior to such first occurrence) in accordance with the terms
of this Rights Agreement, in lieu of Preferred Stock, such number of shares of
freely tradable Common Stock of the Principal Party (as hereinafter defined),
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free and clear of liens, rights of call or first refusal, encumbrances or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one-two hundredths of a share of
Preferred Stock for which a Right is then exercisable (or if a Section 11(b)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one-two hundredths of a share for which a Right
was exercisable immediately prior to the first occurrence of a Section 11(b)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product by (B) 50% of the current market price
per share of the Common Stock of such Principal Party (determined in the manner
described in Section 11(f) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Rights 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, except for the provisions of 11(b), shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the authorization and reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) 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 the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
(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 shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person, including the Company, that is the other party to the
merger or consolidation; and
(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 or earning power transferred
pursuant to such transaction or transactions; provided, however, that in
any case described in clause (i) or (ii) in this Section 13(b), (x) if the
Common Stock of such Person is not at such time and has 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 or
Affiliate of another Person, "Principal Party" shall refer to such other
Person; (y) in case such Person is a Subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Stocks of all of which are
and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest
aggregate market value, and (z) in case such Person is, or is owned
directly or indirectly by, a partnership or joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (x) and (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the obligations set forth
in this Section 13 in the same ratio as their direct or indirect interests
in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of shares
of its authorized Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and each Principal Party and
each other Person who may become a Principal Party as a result of such
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consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Securities Act
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, will use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the "blue sky
laws" of such jurisdictions as may be necessary or appropriate; and
(iii) will 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
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section 11(b)
Event, the Rights which have not theretofore been exercised shall thereafter
also become exercisable in the manner described in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes 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 or admitted to trading on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, as reported by the Nasdaq National Market System or, if the
Rights are not listed or admitted to trading on any national securities exchange
or included in the Nasdaq National Market System, 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 a majority of the Board
of Directors. 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
a majority of the Board of Directors shall be used.
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(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one-two
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one-two hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral
multiples of one-two hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one-two hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one-two hundredths of a
share of Preferred Stock. For purposes of this Section 14(b), the current market
value of one-two hundredth of a share of Preferred Stock shall be one-two
hundredth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(f)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or events specified
in Section 11 hereof giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such common stock equivalent or other
securities. For purposes of this Section 14(c), the current market value shall
be determined in the manner set forth in Section 11(f) hereof for the Trading
Day immediately prior to the date of such exercise and, if such common stock
equivalent is not traded, each such common stock equivalent shall have the value
of one-two hundredth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14, the holder
of a Right by the acceptance of the Right expressly waives such holder's right
to receive any fractional Rights or any fractional share upon exercise of
Rights.
Section 15. Rights of Action. All rights of action in respect of this
Rights Agreement, except for rights of action given to the Rights Agent under
Section 18 or Section 20 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of Common Stock); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock), 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 Stock), may, in such holder's own behalf
and for such holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
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 Rights 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 Rights Agreement. Holders of Rights shall be entitled
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to recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this Rights
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 Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the stockholder
services office of the Rights Agent or such office designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and
(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 Stock Certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificate or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
(d) notwithstanding anything in this Rights Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Rights Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must, subject to
the good faith determination of its Board of Directors, use its 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 Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock, Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 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 Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
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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
Rights Agreement, including the costs and expenses of defending against any
claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Rights Agreement in reliance upon any Right Certificate
or certificate for Preferred Stock, Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust powers or business or the stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights 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. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights 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 Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Rights 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 Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
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herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, President, Chief Financial Officer or any Executive Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
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 Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights 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 Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 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 actual notice to the Rights Agent of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock or other securities to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or other securities will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, President, Chief Financial
Officer, any Executive Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer, employee,
agent or representative 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
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
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(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Rights 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 Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.
(l) No provision of this Rights Agreement shall require the Rights Agent to
independently determine whether any Right Certificate issued pursuant to this
Rights Agreement is required pursuant to Section 3(c) to contain the legend
specified in Section 3(c) and the Rights Agent shall have no liability to any
holder of Rights Certificates or other Person as a result of the failure of any
Right Certificate to contain such legend other than a Right Certificate issued
to a Person identified in a written certificate from the Company as an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail or, prior to the Distribution Date, through any
filing made by the Company pursuant to the Exchange Act. 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 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
(which holder shall, with such notice, submit such holder's Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation or other entity organized
and doing business under the laws of the United States or of any state, in good
standing, having an office in the States of New York or Kansas, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority or
(b) an affiliate of a corporation or other entity described in clause (a) of
this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
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further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates or, prior to the Distribution
Date, through any filing made by the Company pursuant to the Securities Exchange
Act of 1934, as amended. Failure to give any notice provided for 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.
(a) Notwithstanding any of the provisions of this Rights 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 a majority of
the Board of Directors then in office to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares of stock or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Rights Agreement.
(b) In addition, in connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the redemption, exchange or
expiration of the Rights, the Company (a) shall with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee benefit plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) 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 (ii) no Right Certificate 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 and Termination.
(a) A majority of the Board of Directors then in office may, at its option,
at any time prior to the earlier of (i) the close of business on the tenth
Business Day following the Stock Acquisition Date or (ii) the close of business
on the Final Expiration Date, elect to redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.0025 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"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(b) Event until such time as the
Company's right of redemption hereunder has expired. 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.
(b) Immediately upon the action of a majority of the Board of Directors
then in office electing to redeem the Rights, evidence of which shall be
promptly filed with the Rights Agent, or, when appropriate, immediately upon the
time or satisfaction of such conditions as the Board of Directors may have
established, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
24
<PAGE>
give public disclosure of any such redemption; provided, however, that the
failure to give, or any defect in, any such disclosure shall not affect the
validity of such redemption. 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 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 Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
(c) Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23, Section 24 hereof and other than
in connection with the purchase of Common Stock prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors 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 Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect adjustments in the number of Rights pursuant to Section 11 of this
Rights Agreement (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 Subsidiary of the Company, any employee benefit plan or
compensation arrangement of the Company or any such Subsidiary, or any entity
holding securities of the Company to the extent organized, appointed or
established by the Company or any such Subsidiary for or pursuant to the terms
of any such employee benefit plan or compensation arrangement), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the Voting Power of the Company.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company
promptly shall give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice 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 Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred stock, as such
term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one-two hundredth of a share of Preferred Stock
(or equivalent preferred stock) for each share of Common Stock, as appropriately
25
<PAGE>
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock (or equivalent preferred stock) 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 shares of Common Stock or Preferred Stock
(or equivalent preferred stock) for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common Stock or
to distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(f)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Proposed Actions.
(a) In case the Company shall propose at any time after the Distribution
Date (a) to pay any dividend payable in stock of any class to the holders of the
Preferred Stock or to make any other distribution to the holders of the
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), (b) to offer to the holders of the Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any other class or any other
securities, rights or options, (c) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), (d) to effect any consolidation or
merger into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sales or other transfer), in one or
more transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person, (e) to effect the
liquidation, dissolution or winding up of the Company, or (f) to declare or pay
any dividend on the Common Stock payable in Common Stock or to effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right, 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 Common Stock and/or
Preferred Stock, if any such date is to be fixed. Such notice shall be so given
in the case of any action covered by clauses (a) or (b) above at least ten days
prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least ten
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Preferred Stock, whichever shall be the
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.
(b) In case a Section 11(b) Event shall occur, then the Company shall as
soon as practicable thereafter give to each holder of a Right Certificate, in
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<PAGE>
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(b) hereof.
Section 26. Notices. Notices or demands authorized by this Rights 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) as follows:
Butler National Corporation
19920 West 161st Street
Olathe, Kansas 66062
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights 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:
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
South St. Paul, MN 55075-0738
Attention: Shareholder Services
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Rights Agreement without the approval of any holders of
Right Certificates in order (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (c) to shorten or lengthen any time period
hereunder (including without limitation to extend the Final Expiration Date),
(d) increase or decrease the Purchase Price, or (e) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Rights Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights;
provided further that this Rights Agreement may not be supplemented or amended
to lengthen pursuant to clause (c) of this sentence, (A) the time period
relating to the when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of the Rights; provided further that the Company shall
have the right to make unilaterally any changes necessary to facilitate the
appointment of a successor Rights Agent, which such changes shall be set forth
in a writing by the Company or by the Company and such successor Rights Agent.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Rights Agreement to lower
the thresholds set forth in Sections 1(a) and 3(a) hereof from 15% to not less
than the greater of (i) any percentage greater than the largest percentage of
the Voting Power of the Company then known by the Company to be beneficially
owned by any Person (other than the Company, any Subsidiary of the Company, or
any employee benefit plan or compensation arrangement of the Company or any
27
<PAGE>
Subsidiary of the Company, and any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement) together with all Affiliates and Associates of such
Person and (ii) 10%. Upon the delivery of a certificate from an appropriate
officer of the Company 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.
Section 28. Successors. All the covenants and provisions of this Rights
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of This Agreement. Nothing in this Rights 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 Stock) any legal or equitable right, remedy or
claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Stock).
Section 30. Severability. If any term, provision, covenant or restriction
of this Rights 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 Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
It is the intent of the parties hereto to enforce the remainder of the terms,
provisions, covenants and restrictions of this Rights Agreement to the maximum
extent permitted by law.
Section 31. Governing Law. This Rights 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 32. Counterparts. This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed, all as of the day and year first above written.
Attest: Butler National Corporation
By: /s/ William A. Griffith By: /s/ Clark D. Stewart
----------------------- -----------------------------
Name: William A. Griffith Name: Clark D. Stewart
Title: Secretary Title: President
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Attest: Norwest Bank Minnesota, N.A.
By: /s/ Suzanne M. Swits By: /s/ Beverly A. Robinson
----------------------- --------------------------
Name: Suzanne M. Swits Name: Beverly A. Robinson
Title: Assistant Vice President Title: Account Manager
29
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Exhibit A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES C PARTICIPATING PREFERRED STOCK
OF
BUTLER NATIONAL CORPORATION
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
I, Clark D. Stewart, President of Butler National Corporation, a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 151 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of the Company, the said Board of
Directors adopted the following resolution:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its
Certificate of Incorporation, as amended, a series of Preferred Stock of
the Company be and it hereby is created, and that the designation and
amount thereof and the powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
There shall be a series of the Preferred Stock which shall be designated as
the "Series C Participating Preferred Stock," par value $5.00 per share, and the
number of shares constituting such series shall be 100,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series C
Participating Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
preferred stock of the Company ranking prior and superior to the Series C
Participating Preferred Stock with respect to dividends, the holders of shares
of Series C Participating Preferred Stock, in preference to the holders of
shares of Common Stock, par value $.01 per share of the Company (the "Common
Stock"), and of any other junior stock, 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 any regular quarterly dividend
payment date as shall be established by the Board of Directors (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 share or
fraction of a share of Series C Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, 200 times the
aggregate per share amount of all cash dividends, and 200 times the aggregate
<PAGE>
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series C Participating Preferred Stock. In the event the Company shall at any
time after October 26, 1998 (the "Rights Declaration Date") declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares of Series C
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Company shall declare a dividend or distribution on the Series C
Participating Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series C Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series C Participating Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless 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 unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series C Participating Preferred Stock 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
not bear interest. Dividends paid on the shares of Series C Participating
Preferred Stock 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, in accordance with applicable law, fix a record date for the
determination of holders of shares of Series C Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than such number of days prior to the date
fixed for the payment thereof as may be allowed by applicable law.
Section 3. Voting Rights.
The holders of shares of Series C Participating Preferred Stock shall have
the following voting rights:
(A) Each share of Series C Participating Preferred Stock shall entitle the
holder thereof to 200 votes on all matters submitted to a vote of the
stockholders of the Company. In the event the Company shall at any time after
the Rights Declaration Date declare or pay any dividend on the Common Stock
2
<PAGE>
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes to which holders of shares of Series C Participating Preferred
Stock were entitled immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Company's Certificate of
Incorporation or by law, the holders of shares of Series C Participating
Preferred Stock, the holders of shares of Common Stock, and the holders of
shares of 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
stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's Certificate of
Incorporation, and except as otherwise provided by law, holders of Series C
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series C
Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series C Participating Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Participating Preferred Stock;
(ii) declare or pay dividends on 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 Series C Participating
Preferred Stock, except dividends paid ratably on the Series C
Participating Preferred Stock 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) except as permitted in Section 4(A)(iv) below, 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 the Series C Participating Preferred Stock, provided 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 Series C Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any shares of
Series C Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series C Participating Preferred Stock, 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
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annual dividend rates and other relative rights and preferences of the
respective series and 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 shares of Series C Participating Preferred Stock purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. The Company shall cause all such shares
upon their cancellation to be authorized but unissued shares of Preferred Stock
which may be reissued as part of a new series of Preferred Stock, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock of the Company ranking prior and superior to the Series C
Participating Preferred Stock with respect to liquidation, upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Company, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series C Participating Preferred Stock unless, prior thereto, the holders of
shares of Series C Participating Preferred Stock shall have received $200.00 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "Series C
Liquidation Preference"). Following the payment of the full amount of the Series
C Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series C Participating Preferred Stock, unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series C Liquidation Preference by (ii) 200 (as appropriately adjusted as
set forth in subparagraph C below to reflect such events as stock dividends, and
subdivisions, combinations and consolidations with respect to the Common Stock)
(such number in clause (ii) being referred to as the "Adjustment Number").
Following the payment of the full amount of the Series C Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series C
Participating Preferred Stock and Common Stock, respectively, holders of Series
C Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Series C Participating Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series C Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series C Participating Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event there are
not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Company shall at any time after the Rights Declaration
Date declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
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payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock 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 shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series C Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 200 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 share of Common Stock
is changed or exchanged. In the event the Company shall at any time after the
Rights Declaration Date declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series C Participating Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that are outstanding immediately prior to
such event.
Section 8. Redemption.
The shares of Series C Participating Preferred Stock shall not be
redeemable.
Section 9. Ranking.
The Series C Participating Preferred Stock shall rank junior to all other
series of the Company's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
Section 10. Fractional Shares.
Series C Participating Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series C
Participating Preferred Stock.
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<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this ____ day of
November, 1998.
By: /s/ Clark D. Stewart
-------------------------
Name: Clark D. Stewart
Title: President
Attest
By: /s/ William A. Griffith
--------------------------
Name: William A. Griffith
Title: Secretary
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Exhibit B
[Form of Right Certificate]
Certificate No. R-___________ ____ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE OPTION OF THE COMPANY, THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.0025 PER RIGHT OR EXCHANGE FOR COMMON
STOCK, UNDER THE CIRCUMSTANCES AND ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRINGPERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING
PERSON AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.
Right Certificate
Butler National Corporation
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 October 26, 1998 (the "Rights Agreement") between Butler National
Corporation, a Delaware corporation (the "Company"), and Norwest Bank Minnesota,
N.A., a Minnesota corporation (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.Olathe, Kansas time on the Expiration Date, as
that term is defined in the Rights Agreement, at the stockholder services office
(or such office designated for such purpose) of the Rights Agent, or its
successor as Rights Agent, one-two hundredth of a fully paid, nonassessable
share of the Series C Participating Preferred Stock, par value $5.00 per share
("Preferred Stock"), of the Company, at a purchase price of $10.00 per one
one-two hundredth of a share (the "Purchase Price") upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise of each Right) and the
Purchase Price set forth above, are the number and Purchase Price as of based on
the shares of Preferred Stock of the Company as constituted at such date.
The Purchase Price and the number of shares of Preferred Stock which may be
purchased upon the exercise of each of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events as provided in the Rights Agreement.
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. Copies of
the Rights Agreement are on file at the Company and the above-mentioned office
of the Rights Agent and are also available upon written request to the Company.
<PAGE>
This Right Certificate, with or without other Right Certificates, upon
surrender at the stockholder services office (or such office designated for such
purpose) of the Rights Agent, 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 shares of Preferred Stock 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.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $0.0025 per Right on or prior to the Stock Acquisition Date (as defined
in the Rights Agreement). In addition, subject to the provisions of the Rights
Agreement, each Right evidenced by this Certificate may be exchanged by the
Company at its option for one share of Common Stock following the Stock
Acquisition Date and prior to the time an Acquiring Person, as that term is
defined in the Rights Agreement, owns 50% or more of the Voting Power, as that
term is defined in the Rights Agreement, of the Company.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Rights evidenced hereby (other than fractions which are integral multiples
of one-two hundredth of a share of Preferred Stock, which may, at the election
of the Company, be evidenced by depositary receipts). In lieu of fractions of a
share, a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
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 stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Rights evidenced by this Right Certificate shall have been exercised
as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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<PAGE>
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ________________.
Attest: Butler National Corporation
By_______________________ By_________________________
Name:____________________ Name:______________________
Title:___________________ Title:_____________________
Countersigned:
Norwest Bank Minnesota, N.A.
By:________________________
Authorized signature
3
<PAGE>
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 must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
4
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(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 of an Acquiring Person.
Dated:__________________ --------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Butler National Corp.:
The undersigned hereby irrevocably elects to exercise Rights represented by
this Right Certificate to purchase the shares of Preferred Stock issuable upon
the exercise of such Rights and requests that certificates for such shares be
issued in the name of:
Name:____________________
Address:_________________
_________________
Social security
or taxpayer identification
number:__________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name:____________________
Address:_________________
_________________
Social security
or taxpayer identification
number:___________________
Dated:__________________ _______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
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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 of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(3) 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 became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated:__________________ --------------------------------------
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the form of Assignment or
the form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent 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 such Assignment or
Election to Purchase will not be honored as described in Section 7(e) of the
Rights Agreement.
7
<PAGE>
Exhibit C
Butler National Corporation
Summary of Preferred Stock
Purchase Rights
On October 27, 1998, the Board of Directors of Butler National Corporation
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of Common Stock, par value $0.01 per share,
of the Company (the "Common Stock"). The dividend distribution is payable on
October 27, 1998 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one-two
hundredth of a share of Series C Participating Preferred Stock, par value $5.00
per share (the "Preferred Stock") of the Company at a price of $10.00 per
one-two hundredth of a share of Preferred Stock (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of October 26, 1998, as the same may be amended from time to
time (the "Rights Agreement"), between the Company and Norwest Bank Minnesota,
N.A., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the close of business on the tenth
business day following the date of public announcement or the date on which the
Company first has notice or determines that a person or group of affiliated or
associated persons (other than the Company, any subsidiary of the Company or any
employee benefit plan of the Company) (an "Acquiring Person") has acquired, or
obtained the right to acquire, 15% or more of the outstanding shares of voting
stock of the Company without the prior express written consent of the Company
executed on behalf of the Company by a duly authorized officer of the Company
following express approval by action of at least a majority of the members of
the Board of Directors then in office (the "Stock Acquisition Date") or (ii) the
close of business on the tenth business day (or such later date as may be
determined by action of the Board of Directors but not later than the Stock
Acquisition Date) following the commencement of a tender offer or exchange
offer, without the prior written consent of the Company, by a person (other than
the Company, any subsidiary of the Company or an employee benefit plan of the
Company) which, upon consummation, would result in such party's control of 15%
or more of the Company's voting stock (the earlier of the dates in clause (i) or
(ii) above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Company's Common Stock. Until the Distribution Date (or earlier
redemption, exchange or expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuances of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
the surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate
certificates alone will then evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire, if not previously exercised, on the date which is 10 years from the
Record Date (the "Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged by the Company.
<PAGE>
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights
or warrants to subscribe for or purchase Preferred Stock at a price, or
securities convertible into Preferred Stock with a conversion price, less than
the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one-two hundredths of a
share of Preferred Stock issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Stock or a stock
dividend on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable or convertible to any other series of preferred stock the Company
may issue (unless otherwise provided in the terms of such stock). Each share of
Preferred Stock will have a preferential dividend in an amount equal to 200
times any dividend declared on each share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will receive a preferred
liquidation payment of equal to the greater of $200 and 200 times the payment
made per share of Common Stock. Each share of Preferred Stock will have 200
votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to receive 200
times the amount and type of consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends, liquidation and voting, and
in the event of mergers and consolidations, are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one-two hundredth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) acquires 15% or more of the
Company's outstanding voting stock without the prior written consent of the
Board of Directors, each Right, except those held by such persons, would entitle
each holder of a Right to acquire such number of shares of the Company's Common
Stock as shall equal the result obtained by multiplying the then current
Purchase Price by the number of one-two hundredths of a share of Preferred Stock
for which a Right is then exercisable and dividing that product by 50% of the
then current per-share market price of Company Common Stock.
If any person or group (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company) acquires more than 15% but
less than 50% of the outstanding Company Common Stock without prior written
consent of the Board of Directors, each Right, except those held by such
persons, may be exchanged by the Board of Directors for one share of Company
Common Stock.
If the Company were acquired in a merger or other business combination
transaction where the Company is not the surviving corporation or where Company
Common Stock is exchanged or changed or 50% or more of the Company's assets or
earnings power is sold in one or several transactions without the prior written
consent of the Board of Directors, each Right would entitle the holders thereof
(except for the Acquiring Person) to receive such number of shares of the
acquiring company's common stock as shall be equal to the result obtained by
2
<PAGE>
multiplying the then current Purchase Price by the number one-two hundredths of
a share of Preferred Stock for which a Right is then exercisable and dividing
that product by 50% of the then current market price per share of the common
stock of the acquiring company on the date of such merger or other business
combination transaction.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one-two hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $.0025 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including, but not
limited to, an amendment to lower certain thresholds described above to not less
than the greater of (i) any percentage greater than the largest percentage of
the voting power of all securities of the Company then known to the Company to
be beneficially owned by any person or group of affiliated or associated persons
(other than an excepted person) and (ii) 10%, except that from and after such
time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
_________. 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, as the
same may be amended from time to time, which is hereby incorporated herein by
reference.
3
Exhibit 99
FOR IMMEDIATE RELEASE
Butler National Corporation DECLARES DIVIDEND DISTRIBUTION OF
PREFERRED STOCK PURCHASE RIGHTS
[OLATHE, KANSAS], October 26, 1998 - On October 26, 1998, the Board of
Directors of Butler National Corporation (Nasdaq: BUKS) approved the adoption of
a Shareholder Rights Plan designed to discourage takeovers that involve abusive
tactics or do not provide fair value to shareholders. Similar plans have been
adopted by many other publicly traded companies.
Clark D. Stewart, President of the Company stated, "The Board of Directors
determined that adopting the Shareholder Rights Plan is an effective and
reasonable method to safeguard the interests of our shareholders. We are
particularly concerned that the future benefits of current programs and
initiatives could be denied to shareholders by an opportunistic, undervalued
acquisition of the Company. The plan is designed to assure that shareholders are
not deprived of their rights to share in the full measure of the Company's
long-term potential, while not preventing a fully valued bid for the Company."
The Shareholder Rights Plan provides for a dividend distribution of one
Preferred Stock Purchase Right for each outstanding share of Butler National
Corporation common stock. The dividend distribution will be made to shareholders
of record on October 27, 1998. Each shareholder is automatically entitled to the
Rights and no physical distribution of new certificates will be made at this
time. The Rights distribution is not taxable to shareholders.
The Rights will be exercisable only if a person or group (except for
certain exempted persons or groups) acquires 15% or more of Butler National
Corporation's common stock or announces a tender offer which would result in
ownership of 15% or more of the common stock. The Rights entitle the holder to
purchase one two-hundredth of a share of Series C Participating Preferred Stock
at an exercise price of $10.00 and will expire ten years from issuance.
Following the acquisition of 15% or more of Butler National Corporation's
common stock by a person or group, the holders of the Rights (other than the
acquiring person) will be entitled to purchase shares of common stock at
one-half the then current market price, and, in the event of a subsequent merger
or other acquisition of the Company, to buy shares of common stock of the
acquiring entity at one-half of the market price of those shares.
Butler National Corporation will be able to redeem the Rights at $0.0025
per Right at any time until a person or group acquires 15% or more of the
Company's shares.
A letter outlining the Shareholder Rights Plan in more detail will be sent
to the Company's shareholders following the record date.
The common stock of Butler National Corporation is traded on the NASDAQ
under the symbol " BUKS."
