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: June 26, 1996
ENVIRODYNE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-5485 95-2677354
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
701 Harger Road,
Suite 190
Oak Brook, Illinois
(Address of Principal Executive Offices)
60521
(Zip Code)
________________
ITEM 5. OTHER EVENTS.
On June 26, 1996, the Board of Directors of
Envirodyne Industries, Inc. (the "Company") adopted a stock-
holder rights plan which contemplates the issuance of common
stock purchase rights to the Company's common stockholders
of record as of June 26, 1996, as set forth in the Rights
Agreement attached hereto as Exhibit 4.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits:
4.1 Rights Agreement, dated as of June 26, 1996, be-
tween Envirodyne Industries, Inc. and Harris Trust
& Savings Bank, as Rights Agent, which includes as
Exhibit A thereto the Form of Rights Certificate.
20.1 Press Release dated June 26, 1996.
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 hereun-
to duly authorized.
ENVIRODYNE INDUSTRIES, INC.
By: /s/ Stephen M. Schuster
Name: Stephen M. Schuster
Title: Vice President
Date: June 27, 1996
EXHIBIT INDEX
Exhibit Description
4.1 Rights Agreement, dated as of June
26, 1996 between Envirodyne Indus-
tries, Inc. and Harris Trust &
Savings Bank, as Rights Agent,
which includes as Exhibit A there-
to the Form of Rights Certificate.
20.1 Press Release dated June 26, 1996.
ENVIRODYNE INDUSTRIES, INC.
and
HARRIS TRUST & SAVINGS BANK
Rights Agent
Rights Agreement
Dated as of June 26, 1996
Table of Contents
Section Page
Section 1. Certain Definitions . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . 5
Section 3. Issue of Rights Certificates . . . . . . 5
Section 4. Form of Rights Certificates . . . . . . 8
Section 5. Countersignature and Registration . . . 9
Section 6. Transfer, Split Up, Combination
and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost
or Stolen Rights Certificates . . . . . 10
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . 11
Section 8. Cancellation and Destruction of
Rights Certificates . . . . . . . . . . 14
Section 9. Reservation and Availability of
Common Stock . . . . . . . . . . . . . . 15
Section 10. Common Stock Record Date . . . . . . . . 17
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of
Rights . . . . . . . . . . . . . . . . . 17
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . . 29
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power . . 30
Section 14. Fractional Rights and Fractional
Shares . . . . . . . . . . . . . . . . . 33
Section 15. Rights of Action . . . . . . . . . . . . 35
Section 16. Agreement of Rights Holders . . . . . . 36
Section 17. Rights Certificate Holder Not Deemed
a Stockholder . . . . . . . . . . . . . 36
Section 18. Concerning the Rights Agent . . . . . . 37
Section 19. Merger or Consolidation or
Change of Name of Rights Agent . . . . . 38
Section 20. Duties of Rights Agent . . . . . . . . . 39
Section 21. Change of Rights Agent . . . . . . . . . 41
Section 22. Issuance of New Rights Certificates . . 43
Section 23. Redemption and Termination . . . . . . . 43
Section 24. Exchange . . . . . . . . . . . . . . . . 44
Section 25. Notice of Certain Events . . . . . . . . 46
Section 26. Notices . . . . . . . . . . . . . . . . 47
Section 27. Supplements and Amendments . . . . . . . 48
Section 28. Successors . . . . . . . . . . . . . . . 49
Section 29. Determinations and Actions
by the Board of Directors, etc. . . . . 49
Section 30. Benefits of This Agreement . . . . . . . 50
Section 31. Severability . . . . . . . . . . . . . . 50
Section 32. Governing Law . . . . . . . . . . . . . 51
Section 33. Counterparts . . . . . . . . . . . . . . 51
Section 34. Descriptive Headings . . . . . . . . . . 51
Exhibit A Form of Rights Certificate
Exhibit B Summary of Rights to Purchase Common
Stock
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 26, 1996
(the "Agreement"), between ENVIRODYNE INDUSTRIES, INC., a
Delaware corporation (the "Company"), and HARRIS TRUST &
SAVINGS BANK, an Illinois banking corporation (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, on June 26, 1996 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one
Right for each share of common stock, par value $.01 per
share, of the Company (the "Common Stock") outstanding at
the close of business on June 26, 1996 (the "Record
Date"), and has authorized the issuance of one Right (as
such number may be hereinafter adjusted pursuant to
Section 11(i) hereof) for each share of Common Stock of
the Company issued between the Record Date (whether
originally issued or delivered from the Company's trea-
sury) and the Distribution Date (as defined in Section 3
hereof) and, in certain circumstances, provided in Sec-
tion 22 hereof, after the Distribution Date, each Right
initially representing the right to purchase one share of
Common Stock upon the terms and subject to the conditions
hereinafter set forth (the "Rights").
NOW, THEREFORE, in consideration of the premis-
es and the mutual agreements herein set forth, the par-
ties hereby agree as follows:
Section 1. Certain Definitions. For purposes
of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner
of 41% or more of the shares of Common Stock then out-
standing, but shall not include the Company, any Subsid-
iary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person
organized, appointed or established by the Company for or
pursuant to the terms of any such plan. Notwithstanding
the foregoing, no Person shall become an "Acquiring
Person" solely as the result of an acquisition of Common
Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of
shares beneficially owned by a Person to 41% or more of
the Common Stock of the Company then outstanding as
determined above; provided, however, that if a Person
becomes the Beneficial Owner of 41% or more of the Common
Stock of the Company then outstanding (as determined
above) solely by reason of purchases of Common Stock by
the Company and shall, after such purchases by the Compa-
ny, become the Beneficial Owner of any additional shares
of Common Stock by any means whatsoever, 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 and in effect
on the date of this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Benefi-
cial Owner" of, and shall be deemed to "beneficially
own," any securities:
(i) which such Person or any of
such Person's Affiliates or Associates, direct-
ly or indirectly, has the right to acquire
(whether such right is exercisable immediately
or only after the passage of time) pursuant to
any agreement, arrangement or understanding
(whether or not in writing) or upon the exer-
cise of conversion rights, exchange rights,
other rights, warrants or options, or other-
wise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates
or Associates until such tendered securities
are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at
any time prior to the occurrence of a Trigger-
ing Event, or (C) securities issuable upon
exercise of Rights from and after the occur-
rence of a Triggering Event which Rights were
acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribu-
tion Date or pursuant to Section 3(a) hereof or
Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of
such Person's Affiliates or Associates, direct-
ly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the Gener-
al Rules and Regulations under the Exchange
Act), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such secu-
rity if such agreement, arrangement or under-
standing: (A) arises solely from a revocable
proxy given in response to a public proxy or
consent solicitation made pursuant to, and in
accordance with, the applicable provisions of
the General Rules and Regulations under the
Exchange Act, and (B) is not also then report-
able 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 (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's
Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in
writing), for the purpose of acquiring, hold-
ing, voting (except pursuant to a revocable
proxy as described in the proviso to subpara-
graph (ii) of this paragraph (c)) or disposing
of any voting securities of the Company;
provided, however, that nothing in this paragraph (c)
shall cause a person engaged in business as an underwrit-
er of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the
date of such acquisition.
(d) "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the City of Chicago, Illinois are autho-
rized or obligated by law or executive order to close.
(e) "Close of business" on any given date
shall mean 5:00 P.M., Chicago, Illinois time, on such
date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Chicago, Illinois
time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common
stock, par value $.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 of such Person with the greatest voting power, or
the equity securities or other equity interest having
power to control or direct the management, of such Per-
son.
(g) "Continuing Director" shall mean (i)
any member of the Board of Directors of the Company,
while such person is a member of the Board, who is not an
Acquiring Person or a Person who or which, together with
all Affiliates and Associates of such Person, is the
Beneficial Owner of 35% or more of the shares of Common
Stock then outstanding (a "35% Stockholder"), or an
Affiliate or Associate of an Acquiring Person or 35%
Stockholder, or a representative of an Acquiring Person
or 35% Stockholder or of any such Affiliate or Associate,
and was a member of the Board prior to the date of this
Agreement, or (ii) any Person who subsequently becomes a
member of the Board, while such Person is a member of the
Board, who is not an Acquiring Person or 35% Stockholder,
or an Affiliate or Associate of an Acquiring Person or
35% Stockholder, or a representative of an Acquiring
Person or 35% Stockholder or of any such Affiliate or
Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a
majority of the Continuing Directors.
(h) "Current Market Price" shall have the
meaning ascribed to such term in Section 11(d) hereof.
(i) "Person" shall mean any individual,
firm, corporation, partnership or other entity.
(j) "Section 11 Event" shall mean any
event described in Section 11(a)(ii).
(k) "Section 13 Event" shall mean any
event described in clause (x), (y) or (z) of Section
13(a) hereof.
(l) "Stock Acquisition Date" shall mean
the first date of public announcement (which, for purpos-
es of this definition, shall include, without limitation,
a report filed pursuant to Section 13(d) under the Ex-
change Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(m) "Subsidiary" shall mean, with refer-
ence to any Person, any corporation of which an amount of
voting securities sufficient to elect at least a majority
of the directors of such corporation is beneficially
owned, directly or indirectly, by such Person, or other-
wise controlled by such Person.
(n) "Triggering Event" shall mean any
Section 11 Event or any Section 13 Event.
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 here-
of, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of
business on the tenth day after the Stock Acquisition
Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business
on the Record Date) or (ii) the close of business on the
tenth Business Day (or such later date as the Board of
Directors shall determine) 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
of the Company or of any Subsidiary of the Company or any
Person organized, appointed or established by the Company
for or pursuant to the terms of any such plan) 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, if upon consummation thereof, such Person
would be the Beneficial Owner of 41% or more of the
shares of Common Stock then outstanding (the earlier of
(i) and (ii) being herein referred to as the "Distribu-
tion Date"), (x) 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 certificates
for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (in-
cluding a transfer to the Company). As soon as practica-
ble after the Distribution Date, the Rights Agent will
send by first-class, 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, one or more rights
certificates, in substantially the form of Exhibit A
hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held, subject to ad-
justment as provided herein. In the event that an ad-
justment in the number of Rights per share of Common
Stock has been made pursuant to Section 11(i) hereof, at
the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following
the Record Date, the Company will send a copy of a Summa-
ry of Rights, in substantially the form attached hereto
as Exhibit B (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 Dis-
tribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of
the Distribution Date or the Expiration Date (as such
term is defined in Section 7 hereof), the transfer of any
certificates representing shares of Common Stock in
respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with
such shares of Common Stock.
(c) Rights shall be issued in respect of
all shares of Common Stock which are issued (whether
originally issued or delivered from the Company's trea-
sury) after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date or, in
certain circumstances provided in Section 22 hereof,
after the Distribution Date. Certificates representing
such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall bear the following
legend or such similar legend as the Company may deem
appropriate and as is not inconsistent with the provi-
sions of this Agreement, or as may be required to comply
with any applicable law, with any rule or regulation made
pursuant thereto or with any rule or regulation of any
stock exchange or the Nasdaq Stock Market on which the
Rights may from time to time be listed or included:
This certificate also evidences and
entitles the holder hereof to certain Rights
as set forth in the Rights Agreement be-
tween Envirodyne Industries, Inc. and Harris
Trust & Savings Bank, dated as of June 26,
1996, as from time to time amended (the
"Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a
copy of which is on file at the principal
executive offices of Envirodyne Industries,
Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights
will be evidenced by separate certificates
and will no longer be evidenced by this cer-
tificate. Envirodyne Industries, Inc. will
mail to the holder of this certificate a copy
of the Rights Agreement without charge
promptly upon receipt of a written request
therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued
to or held by any Person who is, was or be-
comes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined
in the Rights Agreement), whether then held
by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the forego-
ing legend, until the earlier of (i) the Distribution
Date or (ii) the Expiration Date, the Rights associated
with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and regis-
tered holders of Common Stock shall also be the regis-
tered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the
forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substan-
tially in the form set forth in Exhibit A hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule
or regulation of any stock exchange or the Nasdaq Stock
Market on which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated
as of the Record Date and on their face shall entitle the
holders thereof to purchase such number of shares of
Common Stock as shall be set forth therein at the price
per share set forth therein (the "Purchase Price"), but
the number of shares purchasable upon the exercise of
each Right and the Purchase Price thereof shall be sub-
ject to adjustment as provided herein.
(b) Any Rights Certificate issued pursu-
ant to Section 3(a) or Section 22 hereof 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 Associ-
ate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affili-
ate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any
Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible)
the following legend:
The Rights represented by this Rights Certifi-
cate are or were beneficially owned by a Person
who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agree-
ment). Accordingly, this Rights Certificate
and the Rights represented hereby may become
null and void in the circumstances specified in
Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the
Board, its Vice Chairman, its President or any Vice
President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a fac-
simile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually
or by facsimile signature. The Rights Certificates shall
be countersigned by the Rights Agent either manually or
by facsimile signature and shall not be valid for any
purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Compa-
ny before countersignature by the Rights Agent and issu-
ance and delivery by the Company, such Rights Certifi-
cates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the
same force and effect as though the person who signed
such Rights Certificates had not ceased to be such offi-
cer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution
of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its prin-
cipal office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of
the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the
date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section
4(b), Section 7(e) and 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, any Rights Certificate or Certificates (other than
Rights Certificates representing Rights that have become
void pursuant to Section 7(e) hereof) may be transferred,
split up, combined or exchanged for another Rights Cer-
tificate or Certificates, entitling the registered holder
to purchase a like number of shares of Common Stock (or,
following a Triggering Event, Common Stock, other securi-
ties, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Cer-
tificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surren-
der the Rights Certificate or Certificates to be trans-
ferred, split up, combined or exchanged at the principal
office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obli-
gated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate or
Certificates until the registered holder shall have
completed and signed the certificate contained in the
form of assignment set forth on the reverse side of such
Rights Certificate and shall have provided such addition-
al evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. There-
upon the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certifi-
cate or Certificates, as the case may be, as so request-
ed. 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, combi-
nation or exchange of Rights 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 Rights
Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them,
and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in
lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provid-
ed herein including, without limitation, the restrictions
on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the principal
office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price
with respect to the total number of shares of Common
Stock (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the close
of business on June 26, 2006 (the "Final Expiration
Date") or (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the earlier of (i) and
(ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of
Common Stock pursuant to the exercise of a Right shall
initially be $20 and shall be subject to adjustment from
time to time as provided in Sections 11 and 13(a) hereof
and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of elec-
tion to purchase and the certificate on the reverse side
thereof duly executed, accompanied by payment, with
respect to each Right so exercised, of the Purchase Price
per share of Common Stock (or other securities, cash or
other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable trans-
fer tax, the Rights Agent shall, subject to Section 20(m)
hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Common Stock (or make
available, if the Rights Agent is the transfer agent for
the Common Stock) certificates for the total number of
shares of Common Stock to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of shares
of Common Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such
number of shares of Common Stock as are to be purchased
(in which case certificates for the shares of Common
Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with
such request, (ii) requisition from the Company the
amount of cash, if any, to be paid in lieu of fractional
shares of Common Stock in accordance with Section 14
hereof, (iii) 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 Rights
Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt there-
of, deliver such cash, if any, to or upon the order of
the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be
made in cash or by certified bank check or bank draft
payable to the order of the Company. In the event that
the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursu-
ant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities,
cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evi-
dencing the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order
of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
occurrence of a Section 11 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)
who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who be-
comes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any
Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action,
and no holder of such Rights shall have any rights what-
soever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof
are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result
of its failure to make any determinations with respect to
an Acquiring Person or any of their respective Affili-
ates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed
and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of
Rights Certificates. All Rights Certificates surrendered
for the purpose of exercise, transfer, split up, combina-
tion or exchange shall, if surrendered to the Company or
any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of
Common 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 Common Stock (and,
following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or
other securities) or out of any authorized and issued
shares held in its treasury, the number of shares of
Common Stock (and, following the occurrence of a Trigger-
ing Event, shares of Common Stock and/or other securi-
ties) that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock
(and, following the occurrence of a Triggering Event,
shares of Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be
listed on any national securities exchange or quoted on
the Nasdaq Stock Market, the Company shall use its best
efforts to cause, from and after such time as the Rights
become exercisable (but only to the extent that it is
reasonably likely that the Rights will be exercised), all
shares reserved for such issuance to be listed on such
exchange or the Nasdaq Stock Market upon official notice
of issuance upon such exercise.
(c) The Company shall use its best ef-
forts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section 11
Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined
pursuant to this agreement (including in accordance with
Section 11(a)(iii) hereof), or as soon as is required by
law following the Distribution Date, as the case may be,
a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to
the Common Stock or other 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 pro-
spectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such
shares of Common Stock or other securities, and (B) the
Expiration Date. The Company will also take such action
as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety (90) days after the
date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension,
the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporari-
ly suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addi-
tion, if the Company shall determine that a registration
statement is required following the Distribution Date,
the Company may temporarily suspend the exercisability of
the Rights until such time as a registration statement
has been declared effective. Notwithstanding any provi-
sion of this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been
obtained or the exercise thereof shall not be permitted
under applicable law or a registration statement shall
not have been declared effective.
(d) The Company covenants and agrees that
it will take all such action as may be necessary to
ensure that all shares of Common Stock (and, following
the occurrence of a Triggering Event, shares of Common
Stock and/or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and
agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for shares of
Common Stock (or Common Stock and/or other securities, as
the case may be) upon the exercise of Rights. The Compa-
ny shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than,
or the issuance or delivery of shares of Common Stock (or
Common Stock and/or other securities, as the case may be)
in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any
certificates for shares of Common Stock (or Common Stock
and/or other securities, as the case may be) in a name
other than that of the registered holder upon the exer-
cise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights
Certificates at the time of surrender) or until it has
been established to the Company's satisfaction that no
such tax is due.
Section 10. Common Stock Record Date. Each
person in whose name any certificate for shares of Common
Stock (or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares
of Common Stock (or other securities, as the case may be)
represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evi-
dencing such Rights was duly surrendered and payment of
the Purchase Price (and all applicable transfer taxes)
was made; provided, however, that if the date of such
surrender and payment is a date upon which the Common
Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the
Common Stock (or Common Stock and/or other securities, as
the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled
to any rights of a stockholder of the Company with re-
spect to shares for which the Rights shall be exercis-
able, including, without limitation, the right to vote,
to receive dividends or other distributions or to exer-
cise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The
Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company
shall at any time after the date of this Agree-
ment (A) declare a dividend on the Common Stock
payable in shares of Common Stock, (B) subdi-
vide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller
number of shares, or (D) issue any shares of
its capital stock in a reclassification of the
Common Stock (including any such reclassifica-
tion in connection with a consolidation or
merger in which the Company is the continuing
or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the
time of the record date for such dividend or of
the effective date of such subdivision, combi-
nation or reclassification, and the number and
kind of shares of Common Stock or capital
stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that
the holder of any Right exercised after such
time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the ag-
gregate number and kind of shares of Common
Stock or capital stock, as the case may be,
which, if such Right had been exercised immedi-
ately prior to such date and at a time when the
Common Stock transfer books of the Company were
open, he would have owned upon such exercise
and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassi-
fication; provided, however, that if the record
date for any such dividend, subdivision, combi-
nation or reclassification shall occur prior to
the Distribution Date, the Company shall make
an appropriate adjustment to the Purchase Price
(taking into account any additional Rights
which may be issued as a result of such divi-
dend, subdivision, combination or reclassifica-
tion), in lieu of adjusting (as described
above) the number of shares of Common Stock (or
other capital stock, as the case may be) issu-
able upon exercise of the Rights and Section
11(i) hereof shall not be applicable. If an
event occurs which would require an adjustment
under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for
in this Section 11(a)(i) shall be in addition
to, and shall be made prior to any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person, at
any time after the Rights Dividend Declaration
Date, shall become an Acquiring Person, unless
the event causing such Person to become an
Acquiring Person is a transaction set forth in
Section 13(a) hereof, or is an acquisition of
shares of Common Stock pursuant to a tender
offer or exchange offer for all outstanding
shares of Common Stock at a price and on terms
determined by at least a majority of the mem-
bers of the Board of Directors who are not
officers of the Company and who are not repre-
sentatives, nominees, Affiliates or Associates
of an Acquiring Person or the Person or Persons
making the tender offer or exchange offer,
after receiving advice from one or more invest-
ment banking firms, to be (A) at a price which
is fair to stockholders (taking into account
all factors which such members of the Board
deem relevant, including, without limitation,
prices which could reasonably be achieved if
the Company or its assets were sold on an or-
derly basis designed to realize maximum value)
and (B) otherwise in the best interests of the
Company and its stockholders, then, promptly
following the occurrence of any such event,
proper provision shall be made so that each
holder of a Right (except as provided below and
in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof at
the then current Purchase Price in accordance
with the terms of this Agreement, such number
of shares of Common Stock of the Company as
shall equal the result obtained by
(x) multiplying the then current Purchase Price
by the then number of shares of Common Stock
for which a Right was exercisable immediately
prior to the first occurrence of a Section 11
Event, and (y) dividing that product (such
product, following such first occurrence, shall
be referred to as the "Purchase Price" with
respect to each Right for all purposes of this
Agreement) by 50% of the Current Market Price
per share of Common Stock on the date of such
first occurrence (such number of shares is
herein called the "Adjustment Shares"); provid-
ed that the Purchase Price and the number of
Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any event
occurring after the date of such first occur-
rence.
(iii) In the event that the num-
ber of shares of Common Stock which is autho-
rized by the Company's certificate of incorpo-
ration but not outstanding or reserved for
issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance
with Section 11(a)(ii), the Company shall: (A)
determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of
a Right (the "Current Value") over (2) the
Purchase Price (such excess is herein called
the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute
for the Adjustment Shares, upon exercise of the
Rights, (1) cash, (2) a reduction in the Pur-
chase Price, (3) Common Stock or other equity
securities of the Company (including, without
limitation, shares, or units of shares, of
preferred stock which the Board of Directors of
the Company has deemed to have the same value
as shares of Common Stock (such shares or units
of shares of preferred stock are referred to
herein as "common stock equivalents")), (4)
debt securities of the Company, (5) other as-
sets, or (6) any combination of the foregoing,
having an aggregate value equal to the Current
Value, where such aggregate value has been
determined by the Board of Directors of the
Company based upon the advice of a nationally
recognized investment banking firm selected by
the Board of Directors of the Company; provid-
ed, however, if the Company shall not have made
adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days fol-
lowing the later of (x) the first occurrence of
a Section 11 Event and (y) the date on which
the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surren-
der for exercise of a Right and without requir-
ing payment of the Purchase Price, shares of
Common Stock (to the extent available) and
then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the
Spread. If the Board of Directors of the Com-
pany shall determine in good faith that it is
likely that sufficient additional shares of
Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended
to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may
seek stockholder approval for the authorization
of such additional shares (such period, as it
may be extended, the "Substitution Period").
To the extent that the Company determines that
some action should be taken pursuant to the
first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such ac-
tion shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability
of the Rights until the expiration of the Sub-
stitution Period in order to seek any authori-
zation of additional securities and/or to de-
cide the appropriate form of distribution to be
made pursuant to such first sentence and to
determine the value thereof. In the event of
any such suspension, the Company shall issue a
public announcement stating that the
exercisability of the Rights has been tempo-
rarily suspended, as well as a public announce-
ment at such time as the suspension is no lon-
ger in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall
be the Current Market Price per share of the
Common Stock on the Section 11(a)(ii) Trigger
Date and the value of any "common stock equiva-
lent" shall be deemed to have the same value as
the Common Stock on such date.
(b) In case the Company shall fix a
record date for the issuance of rights (other than the
Rights), options or warrants to holders of Common Stock
entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such
record date) Common Stock (or shares having the same
rights, privileges and preferences as the Common Stock
("equivalent common stock")) or securities convertible
into Common Stock or equivalent common stock at a price
per share of Common Stock or per share of equivalent
common stock (or having a conversion price per share, if
a security convertible into Common Stock or equivalent
common stock) less than the Current Market Price per
share of Common Stock on such record date, the Purchase
Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of
Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common
Stock and/or equivalent common stock so to be offered
(and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of
which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of
additional shares of Common Stock and/or equivalent
common stock to be offered for subscription or purchase
(or into which the convertible securities so to be of-
fered are initially convertible). In case such subscrip-
tion price may be paid by delivery of consideration part
or all of which may be in a form other than cash, the
value of such consideration shall be as determined in
good faith by the Board of Directors of the Company,
whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of
Common 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.
(c) In case the Company shall fix a
record date for a distribution to all holders of Common
Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is
the continuing corporation) of evidences of indebtedness,
cash (other than a regular quarterly cash dividend out of
the earnings or retained earnings of the Company), assets
(other than a dividend payable in Common Stock, but
including any dividend payable in stock other than Common
Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per
share of Common Stock on such record date, less the fair
market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of
the Rights) of the portion of the cash, assets or evi-
dences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of
Common Stock and the denominator of which shall be such
Current Market Price per share of Common Stock. Such
adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distri-
bution is not so made, the Purchase Price shall be ad-
justed to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) For the purpose of any computation
hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the "Current Market Price" per
share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such
Common Stock for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of the Common Stock on any date
shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer
of the Common Stock of (i) any dividend or distribution
on such Common Stock, payable in shares of such Common
Stock or securities convertible into shares of such
Common Stock (other than the Rights), or (ii) any subdi-
vision, combination or reclassification of such Common
Stock, and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification shall not have occurred
prior to the expiration of the requisite thirty (30)
Trading Day period or ten (10) Trading Day period, as set
forth above, then, and in each such case, the "Current
Market Price" shall be properly adjusted to take into
account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transac-
tion reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system
with respect to securities listed on the principal na-
tional securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares
of Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported
on the Nasdaq Stock Market or, if on any such date the
shares of Common Stock are not quoted on the Nasdaq Stock
Market, the average of the closing bid and asked prices
as furnished by a professional market maker making a
market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good
faith by the Board of Directors of the Company shall be
used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares
of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or
traded, "Current Market Price" per share shall mean the
fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock, as
the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other
than Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect
to the shares of Common Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Common Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of shares of
Common Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment
as provided herein.
(h) Unless the Company shall have exer-
cised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to pur-
chase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest ten-
thousandth) obtained by (i) multiplying (x) the number of
shares covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immedi-
ately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the
number of shares of Common Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be
exercisable for the number of shares of Common Stock for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-
thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make
a public announcement of its election to adjust the
number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day there-
after, but, if the Rights Certificates have been issued,
shall be at least ten (10) days later than the date of
the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidenc-
ing all the Rights to which such holders shall be enti-
tled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of shares of
Common Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued
may continue to express the Purchase Price per share and
the number of shares which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below the
then par value, if any, of the shares of Common Stock
issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exer-
cised after such record date the shares of Common Stock
and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the
shares of Common Stock and other capital stock or securi-
ties 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 appro-
priate instrument evidencing such holder's right to
receive such additional shares of Common Stock and other
capital stock or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in addi-
tion to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i) consoli-
dation or subdivision of the Common Stock, (ii) issuance
wholly for cash of any shares of Common Stock at less
than the Current Market Price, (iii) issuance wholly for
cash of shares of Common Stock or securities which by
their terms are convertible into or exchangeable for
shares of Common Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders
of its Common Stock shall not be taxable to such stock-
holders.
(n) The Company covenants and agrees that
it shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(p) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(p) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of
which complies with Section 11(p) hereof), if (x) at the
time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instru-
ments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Princi-
pal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned
by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees
that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date consolidate with,
or merge with or into, any other Person for the primary
purpose of a change of domicile of the Company, and, in
connection with such consolidation or merger, all of the
outstanding shares of Common Stock shall be changed into
or exchanged for shares of Common Stock of the surviving
corporation of such consolidation or merger (the "Surviv-
ing Corporation"), then proper provision shall be made so
that Rights shall be associated with each share of Common
Stock of the Surviving Corporation, except as provided in
Section 7(e) hereof, such that the number of Rights
associated with each share of Common Stock of the Surviv-
ing Corporation following any such event shall equal the
result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which
shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total
number of shares of Common Stock of the Surviving Corpo-
ration which the shares of Common Stock were changed into
or exchanged for pursuant to the consolidation or merger.
Following such a consolidation or merger, this Agreement
shall remain in effect and all references to the Company
shall be deemed to be references to the Surviving Corpo-
ration.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 and Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts
and methodology accounting for such adjustment, (b)
promptly file with the Rights Agent, and with each trans-
fer agent for the Common Stock, a copy of such certifi-
cate, and (c) mail a brief summary thereof to each holder
of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares
of Common Stock) in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein con-
tained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such a
certificate.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(p) here-
of), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(p) hereof)
shall consolidate with, or merge with or into, the Compa-
ny, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part
of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise trans-
fer), in one transaction or a series of related transac-
tions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Sub-
sidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with
Section 11(p) hereof), then, and in each such case (ex-
cept as may be contemplated by Section 13(d) hereof),
proper provision shall be made so that (i) each holder of
a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly
authorized and issued, fully paid, non-assessable and
freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject
to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase
Price by the number of shares of Common Stock for which a
Right was exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11
Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the Purchase Price in
effect immediately prior to the first occurrence of a
Section 11 Event by the number of shares of Common Stock
for which a Right was exercisable immediately prior to
such first occurrence of a Section 11 Event) and (2)
dividing that product (such product following the first
occurrence of a Section 13 Event shall be referred to as
the "Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the Current Market Price per
share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specif-
ically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; (iv) such Princi-
pal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the con-
summation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transac-
tion described in clause (x) or (y) of the
first sentence of Section 13(a), the Person
that is the issuer of any securities for or
into which shares of Common Stock of the Compa-
ny are converted in such merger or consolida-
tion, and if no securities are so issued, the
Person that is the other party to such merger
or consolidation; and
(ii) in the case of any transac-
tion described in clause (z) of the first sen-
tence of Section 13(a), the Person that is the
party receiving the greatest portion of the
assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsid-
iary, directly or indirectly, of more than one Person,
the Common Stock of two or more of which are and have
been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any
Section 13 Event unless the Principal Party shall have a
sufficient number of authorized shares of its Common
Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accor-
dance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as
soon as practicable after the date of any such Section 13
Event, the Principal Party will
(i) prepare and file a regis-
tration statement under the Securities Act,
with respect to the Rights and the securities
purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts
to cause such registration statement to (A)
become effective as soon as practicable after
such filing and (B) remain effective (with a
prospectus at all times meeting the require-
ments of the Securities Act) until the Expira-
tion Date;
(ii) use its best efforts to
qualify or register the Rights and the securi-
ties purchasable upon exercise of the Rights
under blue sky laws of such jurisdiction, 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 require-
ments 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 first occurrence of a Section
11 Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be appli-
cable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consum-
mated with a Person or Persons who acquired shares of
Common Stock pursuant to a tender offer or exchange offer
for all outstanding shares of Common Stock which complies
with the provisions of Section 11(a)(ii) hereof (or a
wholly-owned Subsidiary of any such Person or Persons),
(ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender
offer or exchange offer, and (iii) the form of consider-
ation being offered to the remaining holders of shares of
Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender
offer or exchange offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the Distribu-
tion Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Rights Certifi-
cates 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 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 of the Rights 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 transac-
tion reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the Rights are listed or admitted to
trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter
market, as reported on the Nasdaq Stock Market or, if on
any such date the Rights are not quoted on the Nasdaq
Stock Market, the average of the closing bid and asked
prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker
is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the
Board of Directors of the Company shall be used.
(b) The Company shall not be required to
issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evi-
dence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to
the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market
value of one share of Common Stock. For purposes of this
Section 14(b), the current market value of one share of
Common Stock shall be the closing price per share of
Common Stock (determined pursuant to Section 11(d) here-
of) on the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the accep-
tance of the Rights expressly waives his right to receive
any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this
Section 14.
(d) Whenever a payment for fractional
rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver
to the Rights Agent a certificate setting forth the facts
related to such payment and the prices and/or formulas
utilized in calculating such payments, and (ii) provide
sufficient monies to the Rights Agent in the form of
fully collected funds to make such payments. The Rights
Agent shall be fully protected in relying upon such a
certificate and shall have no duty with respect to this
Section 14 unless and until it shall have received such a
certificate and sufficient monies.
Section 15. Rights of Action. All rights of
action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder
of any Rights 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 Rights Certif-
icate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or other-
wise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner pro-
vided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall
be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threat-
ened violations of the obligations hereunder of any
Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal
office of the Rights Agent designated for such purposes,
duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates
fully executed;
(c) the Company and the Rights Agent may
deem and treat the person in whose name a Rights Certifi-
cate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (not-
withstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock cer-
tificate 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 required to be
affected by any notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of compe-
tent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enact-
ed by any governmental authority, prohibiting or other-
wise restraining performance of such obligation; provid-
ed, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the shares of
Common Stock or any other securities of the Company which
may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon
the holder of any Rights Certificate, as such, any of the
rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or 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 other-
wise, until the Right or Rights evidenced by such Rights
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 disbursements and other disbursements
incurred in the administration and execution of this
Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred in the absence of
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 admin-
istration of this Agreement, including the costs and
expenses of defending against any claim of liability in
the premises.
(b) The Rights Agent shall be protected
and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorse-
ment, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document be-
lieved 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 result-
ing 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 busi-
ness of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligi-
ble for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of
a predecessor Rights Agent and deliver such Rights Cer-
tificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been counter-
signed, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor
or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersigna-
ture under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates
either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations im-
posed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and com-
plete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (in-
cluding, without limitation, the identity of any Acquir-
ing Person and the determination of "Current Market
Price") be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate
signed by the Chief Executive Officer, the President, any
Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such cer-
tificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as
to its countersignature on such Rights Certificates), but
all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Cer-
tificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for
any adjustment or change in the exercisability of the
Rights (including the Rights becoming void) required
under any of the provisions of this Agreement, including
Section 11, Section 13 or Section 24 hereof or responsi-
ble for the manner, method or amount of any such adjust-
ment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates
after actual notice 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 Common Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or other securi-
ties will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carry-
ing out or performing by the Rights Agent of the provi-
sions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from any one of the
Chief Executive Officer, the President, any Vice Presi-
dent, the Secretary, any Assistant Secretary, the Trea-
surer or any Assistant Treasurer of the Company or any
designee of any of the foregoing, 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.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may
buy, sell or deal in any of the Rights or other securi-
ties 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 other-
wise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall pre-
clude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds
or otherwise incur any financial liability in the perfor-
mance 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 indem-
nification against such risk or liability is not reason-
ably assured to it.
(k) If, with respect to any Rights Cer-
tificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assign-
ment or the form of election to purchase, as the case may
be, has either not been completed or indicates an affir-
mative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to
such requested exercise or transfer without first con-
sulting with the Company.
Section 21. Change of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon
thirty (30) days' notice in writing mailed to the Compa-
ny, and to each transfer agent of the Common Stock, by
registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' 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, by
registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has
been notified in writing of such resignation or incapaci-
ty by the resigning or incapacitated Rights Agent or by
any registered holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of
a Rights Certificate or the Rights Agent may apply to any
court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws
of the United States or of the State of New York or the
State of Illinois (or of any other state of the United
States so long as such corporation is authorized to do
business as a banking institution in the State of New
York or the State of Illinois), in good standing, having
a principal office in the State of New York or the State
of Illinois which is authorized under such laws to exer-
cise corporate trust powers and is subject to supervision
or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000.
After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsi-
bilities 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 hereun-
der, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the
Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure
to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the
legality or validity of the Rights, Rights Agreement or
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 Rights Certifi-
cates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evi-
dencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under
the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemp-
tion 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 plan or arrangement, granted or awarded as of
the Distribution Date, or upon the exercise, conversion
or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed neces-
sary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such
issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to
whom such Rights Certificate would be issued, and (ii) no
such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of
(i) the close of business on the tenth day following the
Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date),
or (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption
price of $.001 per Right, as such amount may be appropri-
ately 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"); provided, however, if the Board
of Directors of the Company authorizes redemption of the
Rights then there must be Continuing Directors then in
office and such authorization shall require the concur-
rence of a majority of such Continuing Directors. Not-
withstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11 Event until such time as
the Company's right of redemption set forth in the first
sentence of this Section 23(a) has expired. The Company
may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Market Price
of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the
Board of Directors.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the redemption
of the Rights, written evidence of which shall have been
filed with the Rights Agent and without any further
action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action
of the Board of Directors ordering the redemption of the
Rights, the Company shall give written notice of such
redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears
upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the
Transfer Agent for 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.
Section 24. Exchange.
(a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being herein-
after referred to as the "Exchange Ratio"). Notwith-
standing 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 of the Company or any
such Subsidiary, or any entity holding Common Stock for
or pursuant to the terms of any such plan), together with
all Affiliates and Associates of such Person, becomes the
Beneficial Owner of fifty percent (50%) or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be
to receive that number of shares of Common Stock equal to
the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last ad-
dresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common
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 the event that there shall not be
sufficient shares of Common Stock issued but not out-
standing or authorized but unissued to permit any ex-
change 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 for issuance upon exchange of the Rights.
(d) The Company shall not be required to
issue fractions of shares of Common Stock or to distrib-
ute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered
holders of the Right Certificates with regard to which
such fractional share 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 subsection (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(d)(i) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of
Common Stock or to make any other distribution to the
holders of Common Stock (other than a regular quarterly
cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Common Stock
rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Common Stock
(other than a reclassification involving only the subdi-
vision of outstanding shares of Common Stock), or (iv) to
effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(p) hereof), or
to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(p)
hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the
Company shall give to each holder of a Rights Certifi-
cate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of
such stock dividend, distribution of rights or warrants,
or the date on which such reclassification, consolida-
tion, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participa-
tion therein by the holders of the shares of Common
Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior
to the record date for determining holders of the shares
of Common Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action
or the date of participation therein by the holders of
the shares of Common Stock, whichever shall be the earli-
er.
(b) In case any Section 11 Event shall
occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accor-
dance with Section 26 hereof, a notice of the occurrence
of such event, which shall specify the event and the
consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Common Stock shall be deemed
thereafter to refer to Common Stock and/or other securi-
ties, if appropriate.
Section 26. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made
if sent by registered or certified mail, postage prepaid,
addressed (until another address is filed in writing with
the Rights Agent) as follows:
Envirodyne Industries, Inc.
701 Hauser Road, Suite 190
Oak Brook, Illinois 60521
Attention: President
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made
by the Company or by the holder of any Rights Certificate
to or on the Rights Agent shall be sufficiently given or
made if sent by registered or certified mail, postage
prepaid, addressed (until another address is filed in
writing with the Company) as follows:
Harris Trust & Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attn: Shareholder Services
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates repre-
senting shares of Common Stock) shall be sufficiently
given or made if sent by registered or certified 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. Prior
to the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the
approval of any holders of certificates representing
shares of Common Stock and associated Rights. From and
after the Distribution Date and subject to the penulti-
mate sentence of this Section 27, the Company may and the
Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any
holders of Rights Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision
contained herein which may be defective or inconsistent
with any other provisions herein, (iii) shorten or
lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders
of Rights Certificates (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person); pro-
vided, however, that this Agreement may not be supple-
mented or amended to lengthen, pursuant to clause (iii)
of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than an Acquiring Person and its
Associates and Affiliates). 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.
Notwithstanding anything contained in this Agreement to
the contrary, no supplement or amendment shall be made
unless there are Continuing Directors and shall require
the concurrence of a majority of such Continuing Direc-
tors. Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns here-
under.
Section 29. Determinations and Actions by the
Board of Directors, etc. For all purposes of this Agree-
ment, any calculation of the number of shares of Common
Stock or any other class of capital stock outstanding at
any particular time, including for purposes of determin-
ing the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence
of Rule 13d-3d(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the
Company (with, where specifically provided for herein,
the concurrence of the Continuing Directors) shall have
the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifi-
cally granted to the Board (with, where specifically
provided for herein, the concurrence of the Continuing
Directors) or to the Company, or as may be necessary or
advisable in the administration of this Agreement, in-
cluding, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the
administration of this Agreement (including a determina-
tion to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpreta-
tions and determinations (including, for purpose of
clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (with,
where specifically provided for herein, the concurrence
of the Continuing Directors) in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties,
and (y) not subject the Board or the Continuing Directors
to any liability to the holders of the Rights.
Section 30. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, regis-
tered holders of the Common Stock).
Section 31. Severability. If any term, provi-
sion, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement
to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors
of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close
of business on the tenth day following the date of such
determination by the Board of Directors. Without limit-
ing the foregoing, if any provision requiring a majority
of the Board of Directors of the Company to be Continuing
Directors to act is held by any court of competent juris-
diction or other authority to be invalid, void or unen-
forceable, such determination shall then be made by the
Board of Directors of the Company in accordance with
applicable law and the Company's Certificate of Incorpo-
ration and By-Laws.
Section 32. Governing Law. This Agreement,
each Right and each Rights 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 made and to be per-
formed entirely within such state.
Section 33. Counterparts. This Agreement may
be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the provi-
sions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: ENVIRODYNE INDUSTRIES, INC.
By By
Name: Name:
Title: Title:
Attest: HARRIS TRUST & SAVINGS BANK
By By
Name: Name:
Title: Title:
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER JUNE 26, 2006 OR EARLIER
IF REDEEMED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFI-
CATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREE-
MENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SEC-
TION 7(e) OF SUCH AGREEMENT.](1)
1 The portion of the legend in brackets shall be
inserted only if applicable and shall replace the
preceding sentence.
Rights Certificate
ENVIRODYNE INDUSTRIES, INC.
This certifies that , or
registered assigns, is the registered holder 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 June 26,
1996 (the "Rights Agreement"), between ENVIRODYNE INDUS-
TRIES, INC., a Delaware corporation (the "Company"), and
Harris Trust & Savings Bank, an Illinois banking corpora-
tion (the "Rights Agent"), to purchase from the Company
at any time prior to 5:00 P.M. (Chicago, Illinois, time)
on June 26, 2006, at the principal office of the Rights
Agent designated for such purposes, one fully paid and
nonassessable share of common stock, par value $.01 per
share (the "Common Stock") of the Company, at a purchase
price of $20 per share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate
with the Form of Election to Purchase set forth on the
reverse hereof and the Certificate contained therein duly
executed. The Purchase Price shall be paid in cash. The
number of Rights evidenced by this Rights Certificate,
the number of shares of Common Stock which may be pur-
chased upon exercise thereof and the Purchase Price per
share set forth above are the number of Rights, number of
shares of Common Stock and Purchase Price as of ________
___, ____, based on the Common Stock as constituted at
such date, and are subject to adjustment upon the happen-
ing of certain events as provided in the Rights Agree-
ment.
Upon the occurrence of a Section 11 Event (as
such term is defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are benefi-
cially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Person (as such terms are de-
fined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently
with or after such transfer, became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof
shall have any rights whatsoever with respect to such
Rights from and after the occurrence of such Section 11
Event.
As provided in the Rights Agreement, the Pur-
chase Price and the number of shares of Common Stock
which may be purchased upon the exercise of the Rights
evidenced by this Certificate are subject to modification
and adjustment upon the happening of certain events
(including a Section 11 Event).
This Rights Certificate is subject to all of
the terms, provisions and conditions of the Rights Agree-
ment, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such
Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on
file at the office of the Company and are also available
upon written request to the Company.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the principal
office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number
of shares of Common Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof anoth-
er Rights Certificate or Certificates representing the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agree-
ment, the Rights evidenced by this Certificate (i) may be
redeemed by the Company at its option at a redemption
price of $.001 per Right payable, at the election of the
Company, in cash, Common Stock, or such other consider-
ation as the Board of Directors may determine, at any
time prior to the earlier of the close of business on (a)
the tenth day following the Stock Acquisition Date (as
such time period may be extended or shortened pursuant to
the Rights Agreement) or (b) the Final Expiration Date.
Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors (as
defined in the Rights Agreement).
No fractional shares of Common Stock will be
issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment will be made,
as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate
shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the shares of Common
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 affect-
ing stockholders (except as provided in the Rights Agree-
ment), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided
in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ,
ATTEST: ENVIRODYNE INDUSTRIES, INC.
By
Secretary Title:
Countersigned:
HARRIS TRUST & SAVINGS BANK
By
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
Please print social security or other
identifying number of the transferor:
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
(Please print social security or other
identifying number of the transferee)
this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably consti-
tute and appoint Attorney, to transfer
the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: , 19
Signature
Signature Guaranteed:
Signature must be guaranteed by an Eligible
Guarantor Institution as defined by SEC Rule 17Ad-15 (17
C.F.R. 240.17-Ad-15).
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) 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 Person (as such terms are de-
fined in the Rights Agreement);
(2) after due inquiry and to the best knowl-
edge of the undersigned, it [ ] did [ ] did not acquire
the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: , 19
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon
the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoev-
er.
The signature must be guaranteed by an Eligible
Guarantor Institution as defined by SEC Rule 17Ad-15 (17
C.F.R. 240.17-Ad-15).
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to
exercise Rights represented by the Rights Certificate.)
To: ENVIRODYNE INDUSTRIES, INC.
The undersigned hereby irrevocably elects to
exercise Rights represented by this Rights Cer-
tificate to purchase the shares of Common Stock issuable
upon the exercise of the Rights (or such other securities of
the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certifi-
cates for such shares be issued in the name of and delivered
to:
(Please print name and address)
Please insert social security
or other identifying number:
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance of such Rights shall be regis-
tered in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
Dated: , 19
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certifi-
cate [ ] 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 Person (as such terms are defined
in 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 Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Person.
Dated: , 19
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Pur-
chase and Certificate must correspond to the name as written
upon the face of this Rights Certificate in every particu-
lar, without alteration or enlargement or any change whatso-
ever.
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On June 26, 1996, the Board of Directors of
Envirodyne Industries, Inc. (the "Company") declared a
dividend distribution of one Right for each outstanding
share of common stock, $.01 par value, of the Company
("Common Stock"). The dividend is payable to holders of
record of Common Stock at the close of business on
June 26, 1996. Except as described below, each Right,
when it becomes exercisable, entitles the registered
holder to purchase from the Company one share of Common
Stock at a price of $20 per share (the "Purchase
Price"). The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement")
between the Company and Harris Trust & Savings Bank, as
Rights Agent.
Initially, the Rights will be attached to all
Common Stock certificates representing shares then out-
standing, and no separate Rights Certificate will be
distributed. The Rights will separate from the Common
Stock and a Distribution Date will occur upon the earlier
of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 41% or more of the
outstanding shares of Common Stock (the "Stock Acquisi-
tion Date") or (ii) 10 business days following the com-
mencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 41% or
more of such outstanding shares of Common Stock. Until
the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred
with and only with such Common Stock certificates, (ii)
new Common Stock certificates issued after June 26, 1996
or new issuances will contain a notation incorporating
the Rights Agreement by reference and (iii) the surrender
for transfer of any certificates for Common Stock out-
standing will also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificate.
The Rights are not exercisable until the Dis-
tribution Date and will expire at the close of business
on June 26, 2006, unless earlier redeemed by the Company
as described below.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Shares of Common Stock issued after the Distribution Date
will be issued with Rights if such shares are issued
pursuant to the exercise of stock options or under an
employee benefit plan, or upon the conversion of securi-
ties issued after adoption of the Rights Agreement.
Except as otherwise determined by the Board of Directors,
no other shares of Common Stock issued after the Distri-
bution Date will be issued with Rights.
In the event that a Person becomes an Acquiring
Person (unless such acquisition is made pursuant to a
tender or exchange offer for all outstanding shares of
the Company, at a price determined by a majority of the
independent Directors of the Company who are not repre-
sentatives, nominees, Affiliates or Associates of an
Acquiring Person or the Person or Persons making the
tender offer or exchange offer to be fair and otherwise
in the best interest of the Company and its stockhold-
ers), each holder of a Right will thereafter have the
right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities
of the Company), having a value equal to two times the
Exercise Price of the Right. The Exercise Price is the
Purchase Price times the number of shares of Common Stock
associated with each Right (initially, one). Notwith-
standing any of the foregoing, following the occurrence
of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances speci-
fied in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of
any of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set
forth below.
In the event that following the Stock Acquisi-
tion Date, (i) the Company is acquired in a merger or
consolidation in which the Company is not the surviving
corporation (other than a merger that follows a tender
offer determined to be fair to the stockholders of the
Company, as described in the preceding paragraph) or (ii)
50% or more of the Company's assets or earning power is
sold or transferred, each holder of a Right (except
Rights which have previously been voided as set forth
above) shall thereafter have the right to receive, upon
exercise of the Right, Common Stock of the acquiring
company having a value equal to two times the Exercise
Price of the Right.
The Purchase Price payable, and the number of
shares of Common 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 Common Stock,
(ii) if holders of the Common Stock are granted certain
rights or warrants to subscribe for Common Stock or
convertible securities at less than the current market
price of the Common Stock, or (iii) upon the distribution
to holders of the Common Stock of evidences of indebted-
ness or assets (excluding regular quarterly cash divi-
dends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustments in the
Purchase Price will be required until cumulative adjust-
ments amount to at least 1% of the Purchase Price. No
fractional shares of Common Stock will be issued and, in
lieu thereof, an adjustment in cash will be made based on
the market price of the Common Stock on the last trading
date prior to the date of exercise.
At any time until 10 days following the Stock
Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right.
Under certain circumstances, the decision to redeem shall
require the concurrence of a majority of the Continuing
Directors (as defined in the Rights Agreement). In
addition, the Rights may be exchanged, in whole or in
part, for shares of Common Stock. Immediately upon the
action of the Board of Directors ordering redemption of
the Rights or authorizing any such exchange, the Rights
will terminate (other than, in the case of an exchange,
for Rights not subject to such exchange) and the only
right of the holders of Rights will be to receive the
$.001 redemption price in the case of a redemption or to
receive the shares issuable upon such exchange in the
case of an exchange.
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. While the distribution of the
Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circum-
stances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company as set forth above.
Other than those provisions relating to the
principal economic terms of the Rights, any of the provi-
sions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution
Date (with the concurrence of the Continuing Directors).
After the Distribution Date, the provisions of the Rights
Agreement may be amended by the Board (with the concur-
rence of the Continuing Directors) in order to cure any
ambiguity, to make changes which do not adversely affect
the interests of holders of Rights (excluding the inter-
est of any Acquiring Person), or to shorten or lengthen
any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period
governing redemption shall be made at such time as the
Rights are not redeemable.
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 June 26,
1996. A copy of the Rights Agreement is available free
of charge from the Rights Agent. This Summary Descrip-
tion of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
ENVIRODYNE INDUSTRIES, INC. ADOPTS STOCKHOLDER RIGHTS PLAN
Oak Brook, Illinois, June 26, 1996 - Envirodyne Industries, Inc.
(Nadsaq SmallCap: EDYN), a worldwide manufacturer of plastic food
packaging products and food service supplies, announced that its
Board of Directors today adopted a Stockholder Rights Plan in
which common stock purchase rights will be distributed as a
dividend at the rate of one Right for each share of common stock
of the Company held by stockholders of record as of the close of
business on June 26, 1996. The adoption of the Rights Plan
follows the announcement by Zapata Corporation that Zapata has
raised its ownership of Envirodyne common stock to approximately
40.6% of the shares outstanding. While the Company has been and
continues to be prepared to carefully consider good faith offers
to acquire the Company, the Board believes that the Rights Plan
will enhance the Board's ability to negotiate the best price
possible, on behalf of all of the Company's stockholders, should
a change of control occur. The Rights Plan is designed, among
other things, to prevent an acquiror from gaining control of the
Company without offering a fair price to all of the Company's
stockholders. The Rights will expire on June 26, 2006.
Each Right initially will entitle stockholders to buy one newly-
issued share of common stock of the Company at an exercise price
of $20.00. The Rights will be exercisable only if a person or
group acquires beneficial ownership of 41% or more of the
Company's common stock or commences a tender or exchange offer
upon consummation of which such person or group would beneficial-
ly own 41% or more of the Company's common stock.
If any person becomes the beneficial owner of 41% or more of
Envirodyne's common stock, other than pursuant to a tender or
exchange offer for all outstanding shares of the Company approved
by a majority of the independent directors not affiliated with a
41%-or-more stockholder, then each Right not owned by a 41%-or-
more stockholder or related parties will entitle its holder to
purchase, at the Right's then current exercise price, shares of
the Company's common stock (or, in certain circumstances as
determined by the Board, cash, other property, or other securi-
ties) having a value of twice the Right's then current exercise
price. In addition, if any person has become a 41%-or-more
stockholder and Envirodyne is thereafter involved in a merger or
other business combination transaction with another person in
which the Company does not survive or in which its common stock
is changed or exchanged, or sells 50% or more of its assets or
earning power to another person, each Right will entitle its
holder to purchase, at the Right's then current exercise price,
shares of common stock of such other person having a value of
twice the Right's then current exercise price.
Envirodyne will generally be entitled to redeem the Rights at
$.001 per Right at any time until 10 days (subject to extension)
following a public announcement that a 41% position has been
acquired.
Details of the Stockholder Rights Plan are outlined in a letter
which will be mailed to all stockholders.
*****
