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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 28, 1997
WSMP, Inc.
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(Exact Name of Registrant as Specified in Charter)
North Carolina 0-7277 33-0213512
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1 WSMP Drive, P.O. Box 399, Claremont, NC 28610
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(Address of Principal Executive Offices) (Zip Code)
(704) 459-7626
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Registrant's telephone number,
including area code
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
The securities being registered are Preferred Stock Purchase Rights
(the "Rights"). On August 28, 1997 (the "Rights Dividend Declaration Date"), the
Board of Directors of WSMP, Inc. (the "Company") declared a dividend
distribution of one Right (a "Right") for each outstanding share of Common Stock
of the Company (the "Common Stock") to shareholders of record at the close of
business on September 10, 1997 (the "Record Date"). At August 15, 1997, there
were 3,259,949 shares of Common Stock issued and outstanding and 6,740,051
shares of Common Stock authorized but unissued. No shares of Preferred Stock of
any series were authorized for issuance or issued.
Under certain circumstances, each Right entitles the record holder to
purchase from the Company one one-hundredth of a share of Junior Participating
Preferred Stock, Series A, of the Company (the "Series A Preferred Stock") or,
in certain circumstances, either Common Stock or common stock of an acquiring
company at one-half of its market price. The Rights are designed to make it more
likely that all of the Company's shareholders receive fair and equal treatment
in the event of any proposed takeover of the Company and to guard against the
use of coercive tactics to gain control of the Company. The Rights also provide
protection against a controlling shareholder taking advantage of its position by
engaging in transactions for its benefit and to shareholders' detriment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of September 2, 1997 (the "Rights Agreement") between the Company and American
Stock Transfer & Trust Company, Rights Agent (the "Rights Agent").
Exercise Price
When exercisable, except as set forth below, each Right entitles the
record holder to purchase from the Company one one-hundredth of a share of
Series A Preferred Stock at a price of $30.00 (the "Purchase Price"), subject to
adjustment in certain circumstances.
Transfer and Detachment
Initially, the Rights will not be exercisable, certificates
representing the Rights will not be sent to shareholders, and the Rights will
trade automatically with the Common Stock. The Rights will separate from the
Common Stock and certificates representing the Rights will be distributed upon
the earlier of (i) ten business days following the date (the "Stock Acquisition
Date") of 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 15% or more of the outstanding Common Stock
and (ii) ten business days following the commencement or first public
announcement of an intention to make a tender or exchange offer that, if
successful, would cause the bidder to own 15% or more of the outstanding Common
Stock (the earlier of such dates being called the "Distribution Date"). The
Company expects that the Rights will begin to trade independently at that time.
At no time, however, will the Rights have any voting power. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with the Common Stock, (ii)
new Common Stock certificates issued after the Record Date, upon transfer or new
issuance of the Common Stock, will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any of the
Common Stock certificates will also constitute
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the transfer of the Rights associated with the shares of Common Stock
represented by such certificates.
Exercisability
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 10, 2007 (the "Final Expiration Date"), unless earlier
redeemed by the Company as described below.
Right to Acquire Stock at Half Price
In the event (a "Section 11(a)(ii) Event") that any person becomes an
Acquiring Person at any time after the Rights Dividend Declaration Date
(otherwise than pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock at a price and on terms that are determined to be fair
and in the best interests of the Company and its stockholders by a majority of
the members of the Board of Directors of the Company who are not Acquiring
Persons or representatives or nominees of or affiliated or associated with an
Acquiring Person), after the Distribution Date each holder of a Right will have
the right to receive, upon exercise, shares of Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the Purchase Price then in effect. For example, if at the
time of a Section 11(a)(ii) Event the Common Stock has a per share value of
$20.00, then the holder of each Right (other than the Acquiring Person) would be
entitled to receive eight shares of Common Stock for $80.00 (i.e., at a 50%
discount). All Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
In the event (a "Section 13 Event") that, following the Stock
Acquisition Date, the Company is acquired in a merger or other business
combination transaction or 50% or more of the Company's assets, cash flow or
earning power is sold or transferred, then, except as otherwise provided in the
Rights Agreement, each holder of a Right (except Rights that have been voided)
shall thereafter have the right to receive, upon exercise, the common stock (or
other capital stock) of the acquiring company having a value equal to two times
the Purchase Price then in effect.
Adjustments
The Purchase Price payable, and the number of shares of Series A
Preferred Stock (or other securities or property) issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination, consolidation
or reclassification of, the Series A Preferred Stock, (ii) upon the grant to
holders of the Series A Preferred Stock of certain rights or warrants to
subscribe for Series A Preferred Stock or convertible securities at less than
the current market price of the Series A Preferred Stock or (iii) upon the
distribution to holders of the Series A Preferred Stock of evidences of
indebtedness, cash or assets (excluding regular periodic cash dividends and
dividends payable in Series A Preferred Stock) or subscription rights or
warrants (other than those referred to above). The number of Rights and number
of shares of Series A Preferred Stock issuable upon the exercise of each Right
are also subject to adjustment in the event of a stock split, combination or
stock dividend on the Common Stock.
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With certain exceptions, no adjustment in the Purchase Price will be
required until the time at which cumulative adjustments require an adjustment of
at least one percent of the Purchase Price. No fractional shares of Series A
Preferred Stock will be issued (other than fractions that are integral multiples
of one one-hundredth of a share of Series A Preferred Stock, which may, upon the
election of the Company, be evidenced by depositary receipts). In lieu thereof,
an adjustment in cash will be made based on the market price of the Series A
Preferred Stock on the last trading date next preceding the date of exercise.
Redemption
At any time prior to the earliest to occur of the Stock Acquisition
Date, the Distribution Date and the Final Expiration Date, the Company may, at
its option, by resolution of its Board of Directors, redeem all but not less
than all of the Rights at a redemption price of $.001 per Right, subject to
adjustment (the "Redemption Price"). Immediately upon the action of the Board of
Directors of the Company ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Series A Preferred Stock
Each share of Series A Preferred Stock purchasable upon exercise of the
Rights will be entitled to receive a dividend equal to 100 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders of
the shares of Series A Preferred Stock will be entitled to receive a liquidation
payment equal to the greater of $100 per share and 100 times the liquidation
payment per share of Common Stock. Each share of Series A Preferred Stock will
have one hundred votes. The shares of Series A Preferred Stock will vote
together as one class with the shares of Common Stock. In the event of any
consolidation, merger, combination or other transaction in which shares of
Common Stock are exchanged, each share of Series A Preferred Stock will be
entitled to receive 100 times the amount and type of consideration received per
share of Common Stock.
Shareholder Rights; Tax Matters
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income if the Rights become exercisable for
Common Stock (or other consideration) of the Company or for common stock of an
acquiring company as set forth above.
Amendments
Prior to the first to occur of the Stock Acquisition Date and the
Distribution Date, and subject to the last sentence of this paragraph, the
Company may, by resolution of its Board of Directors, amend any provision of the
Rights Agreement in any respect whatsoever without the approval of any Common
Stock holders. From and after the first to occur of the Stock Acquisition Date
and the Distribution Date, and subject to the last sentence of this paragraph,
the Company may, by resolution of its Board of Directors (which resolution shall
be effective only with the concurrence of a majority of the Continuing Directors
and only if the Continuing
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Directors constitute a majority of the number of directors then in office),
amend the Rights Agreement without the approval of any holders of Rights in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained therein that may be defective or inconsistent with any other
provisions therein, (iii) to shorten or lengthen any time period provided for
therein or (iv) to supplement or amend any other provisions of the Rights
Agreement in any manner that the Company may deem necessary or desirable and
that shall not adversely affect the interests of the holders of Rights (other
than an Acquiring Person or an affiliate or associate of an Acquiring Person);
provided, however, that the Rights Agreement may not be amended to lengthen,
pursuant to clause (iii), (A) a time period relating to when the Rights may be
redeemed or to modify the ability (or inability) of the Board of Directors of
the Company to redeem the Rights, in either case at such time as the Rights are
not then redeemable, or (b) any other time period provided for herein unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of or the benefits to the holders of the Rights (other than an Acquiring
Person or an affiliate or associate of any such Person). Notwithstanding
anything in the Rights Agreement to the contrary, no amendment shall be made on
or after the first to occur of the Stock Acquisition Date and the Distribution
Date that changes the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of one-hundredths of a share of Preferred Stock for which a
Right is then exercisable.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board at the date of the Rights
Agreement and any person who is subsequently elected to the Board if such person
is recommended or elected by a majority of the Continuing Directors, but shall
not include an Acquiring Person, or an affiliate or associate of an Acquiring
Person, or any representative of any such person.
The Rights Agreement between the Company and American Stock Transfer &
Trust Company specifying the terms of the Rights, and the press release
announcing the declaration of the Rights, are attached hereto as exhibits and
are incorporated herein by reference. The foregoing description of the Rights
and of the Series A Preferred Stock is qualified by reference to such exhibits.
Item 7. Exhibits.
99.1 Rights Agreement dated as of September 2, 1997 between WSMP,
Inc. and American Stock Transfer & Trust Company, Rights
Agent.
99.2 Press release dated August 29, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 5, 1997 WSMP, INC.
By: /s/ Richard F. Howard
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Name: Richard F. Howard
Title: Chairman
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Exhibit 99.1
__________________________________________
WSMP, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Rights Agent
________________________________________
Rights Agreement
Dated as of September 2, 1997
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Table of Contents
Section Page
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1 Certain Definitions 1
2 Appointment of Rights Agent 6
3 Issue of Right Certificates 6
4 Form of Right Certificates 8
5 Countersignature and Registration 9
6 Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates 9
7 Exercise of Rights; Purchase Price; Expiration Date of Rights 10
8 Cancellation and Destruction of Right Certificates 12
9 Reservation and Availability of Capital Stock 12
10 Preferred Stock Record Date 13
11 Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights 14
12 Certificate of Adjusted Purchase Price or Number of Shares 22
13 Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 22
14 Fractional Rights and Fractional Shares 25
15 Rights of Action 26
16 Agreement of Rights Holders 26
17 Right Certificate Holder Not a Shareholder 27
18 Concerning the Rights Agent 27
19 Merger or Consolidation or Change of Name of Rights Agent 28
20 Duties of Rights Agent 28
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Section Page
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21 Change of Rights Agent 31
22 Issuance of New Right Certificates 31
23 Redemption and Termination 32
24 Notice of Certain Events 32
25 Notices 33
26 Supplements and Amendments 34
27 Successors 35
28 Determination of Number of Shares Outstanding and Other
Determinations 35
29 Benefits of this Agreement 35
30 Severability 35
31 Governing Law 36
32 Counterparts 36
33 Descriptive Headings 36
Exhibit A -- Resolutions Establishing the Terms of the Junior Participating
Preferred Stock, Series A
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of Rights
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This Rights Agreement, dated as of September 2, 1997 (the "Agreement"),
between WSMP, Inc., a North Carolina corporation (the "Company"), and American
Stock Transfer & Trust Company, a New York corporation (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on August 28, 1997 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Preferred Stock Purchase Right (a "Right") for each share of
Common Stock of the Company (the "Common Stock") outstanding at the Close of
Business (as hereinafter defined) on September 10, 1997 (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued (whether originally issued or delivered from
the Company's treasury) between the Record Date and the Distribution Date, each
Right initially representing the right to purchase one one-hundredth of a share
of Preferred Stock (as hereinafter defined), upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this 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 securities of the Company constituting a
Substantial Block, but shall not include (i) 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 or such Subsidiary as a fiduciary pursuant
to the terms of any such employee benefit plan, (ii) any Person
consisting of or including any or all of Messrs. James C. Richardson,
Jr., David R. Clark and James M. Templeton, but only if and so long as
such Person consists of or includes at least one full-time employee of
the Company, (iii) any Person who or which, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of a Substantial Block solely as a result of a change in the aggregate
number of shares of Common Stock or other voting securities of the
Company outstanding since the last date on which such Person acquired
Beneficial Ownership of any securities of the Company included in such
Substantial Block or (iv) any Person who or which, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner
of a Substantial Block (x) in the good faith belief, as determined by
the Board of Directors of the Company (with the concurrence of a
majority of the Continuing Directors), that such acquisition would not
cause such Person and its Affiliates and Associates to become the
Beneficial Owner of a Substantial Block or (y) without actual
knowledge, as determined by the Board of Directors of the Company (with
the concurrence of a majority of the Continuing Directors), of the
consequences of such Beneficial Ownership under this Agreement and
without any intention of changing or influencing control of the
Company. Notwithstanding clause (iv) of the immediately
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preceding sentence, if any Person who or which is not an Acquiring
Person due solely to the applicability of such clause (iv) does not
cease to be the Beneficial Owner of a Substantial Block by the close of
business on the last Business Day of a period determined by the Board
of Directors of the Company (with the concurrence of a majority of the
Continuing Directors) and specified in a notice from the Company to the
effect that such Person is the Beneficial Owner of a Substantial Block,
then such Person shall, at the end of such specified period, become an
Acquiring Person (and such clause (iv) shall no longer apply to such
Person). No failure by the Company to give such notice for a period of
time, and no notice specifying a particular time period by which such
Person must cease to be the Beneficial Owner of a Substantial Block,
shall be deemed a waiver of the right to subsequently give or modify
such notice.
(b) "Adjustment Shares" shall have the meaning ascribed to
such term in Section 11(a)(ii).
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date hereof.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the
right or obligation to acquire (whether such right or
obligation is exercisable or effective immediately or
otherwise) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, rights (other than
Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of or
to "beneficially own" (i) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange,
(ii) securities issuable upon the exercise of the Rights prior
to a Triggering Event (as such term is hereinafter defined) or
(iii) securities issuable upon the exercise of Rights from and
after the occurrence of a Triggering Event, which Rights were
acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) in connection with an adjustment
made to any Original Rights; or (B) the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), including pursuant to any agreement,
arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of or to "beneficially own" any security
under this clause (B) if the agreement, arrangement or
understanding to vote such security (1) 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 of
the Exchange Act and (2) is not also then reportable by such
person on Schedule 13D under the
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Exchange Act (or any comparable or successor report); or
(ii) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in clause (B) of subparagraph (i) of this
paragraph (c)) or disposing of any voting securities of the
Company.
No part of this definition shall cause a Person ordinarily engaged in
business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own" any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the
Company until the expiration of forty days after the date of such
acquisition.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of North
Carolina are authorized or obligated by law or executive order to
close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., Charlotte time, on such date; provided, however, that, if such
date is not a Business Day, then it shall mean 5:00 P.M., Charlotte
time, on the next succeeding Business Day.
(g) The term "closing price" shall have the meaning ascribed
to such term in Section 14(a).
(h) "Common Stock" when used with reference to the Company
shall mean the Common Stock of the Company. "Common Stock" when used
with reference to any corporation other than the Company shall mean the
capital stock with the greatest voting power or the equity securities
or other equity interest having power to control or direct the
management of such corporation or, if such corporation is a Subsidiary
of another Person, the capital stock with the greatest voting power of
the Person that ultimately controls such corporation. "Common Stock"
when used with reference to any Person not organized in corporate form
shall mean units of beneficial interest that (i) represent the right to
participate generally in the profits and losses of such Person
(including, without limitation, any flow-through tax benefits resulting
from an ownership interest in such Person) and that (ii) are entitled
to exercise the greatest voting power of such Person or, in the case of
a limited partnership, have the power to remove the general partner or
partners.
(i) The term "common stock equivalents" is defined in Section
11(a)(iii).
(j) The term "Company" shall mean a Principal Party, rather
than WSMP, Inc., in the circumstances described in Section 13(a).
(k) "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
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Person, or an Affiliate or Associate of an Acquiring Person, or a
representative, nominee or designee of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board as of the
date hereof, and (ii) any successor of a Continuing Director, while
such successor is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a
representative, nominee or designee of an Acquiring Person or of any
such Affiliate or Associate, and is recommended or elected to succeed
the Continuing Director by a majority of the Continuing Directors.
Where this Agreement requires the concurrence of a majority of the
Continuing Directors for an action to be taken, no such action may be
taken unless, at the time the action is to be taken, one or more
Continuing Directors are then in office.
(l) "Co-Rights Agent" shall have the meaning ascribed to such
term in Section 2 of this Agreement.
(m) The term "current market price" is defined with reference
to the Common Stock in Section 11(d)(i), with reference to the
Preferred Stock in Section 11(d)(ii) and with reference to the Rights
in Section 14.
(n) "Current Value" shall have the meaning ascribed to such
term in Section 11(a)(iii).
(o) "Distribution Date" shall mean the Close of Business on
the tenth Business Day after the earlier of (i) the Stock Acquisition
Date or (ii) the date of the commencement of, or first public
announcement of the intent of any Person (other than (A) the Company,
any Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person organized,
appointed or established by the Company or such Subsidiary as a
fiduciary pursuant to the terms of any such employee benefit plan or
(B) any Person consisting of or including any or all of Messrs James C.
Richardson, Jr., David R. Clark and James M. Templeton, but only if and
so long as such Person consists of or includes at least one full-time
employee of the Company) to commence (which intention to commence is
not publicly withdrawn for five Business Days after such announcement),
a tender or exchange offer for an amount of Common Stock of the Company
that, together with the shares of such stock already beneficially owned
by such Person, constitutes a Substantial Block.
(p) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(q) "Expiration Date" shall mean the earlier of (i) the time
at which the Rights are redeemed as provided in this Agreement and (ii)
the Final Expiration Date.
(r) "Final Expiration Date" shall mean the Close of Business
on September 10, 2007.
(s) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation system.
(t) "National Securities Exchange" shall mean an exchange
registered as a "national securities exchange" under Section 6 of the
Exchange Act.
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(u) "Person" shall mean any individual, firm, corporation,
partnership, association, joint stock company, trust, business trust,
government or political subdivision, any unincorporated organization or
any other association or entity, including any "group" within the
meaning of Section 13(d)(3) of the Exchange Act and the General Rules
and Regulations thereunder.
(v) "Preferred Stock" shall mean shares of Junior
Participating Preferred Stock, Series A, without par value, of the
Company, and, to the extent that there are insufficient shares of such
stock issuable to permit exercise in full of the Rights, any other
series of preferred stock designated for such purpose containing terms
substantially similar to such Junior Participating Preferred Stock,
Series A.
(w) The term "preferred stock equivalents" is defined in
Section 11(b).
(x) "Principal Party" shall have the meaning ascribed to such
term in Section 13(b).
(y) The term "Purchase Price" is defined with reference to the
Preferred Stock in Section 4(a), with reference to the Common Stock
underlying the Rights in Section 11(a)(ii) and with reference to the
Common Stock of a Principal Party in Section 13(a).
(z) "Redemption Price" shall have the meaning ascribed to such
term in Section 23.
(aa) "Restated Charter" shall mean the Restated Charter of the
Company, as amended at the time in question.
(bb) "Right Certificate" shall have the meaning ascribed to
such term in Section 3(a) of this Agreement.
(cc) "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(dd) "Section 11(a)(ii) Trigger Date" shall have the meaning
ascribed to such term in Section 11(a)(iii).
(ee) "Section 13 Event" shall have the meaning set forth in
Section 13(a) hereof.
(ff) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(gg) "Spread" shall have the meaning ascribed to such term in
Section 11(a)(iii).
(hh) "Stock Acquisition Date" shall mean the date of
occurrence of whichever of the following first occurs: (i) the first
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
of the Exchange Act) by the Company or an Acquiring Person that the
Acquiring Person has become such; or (ii) the communication to the
Company (including, without limitation, to the directors of the
Company) of any notice (including, without limitation,
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any written consent or notice related thereto) from an Acquiring Person
indicating or reflecting that the Acquiring Person has become such.
(ii) "Stock Market" shall mean a National Securities Exchange
or NASDAQ.
(jj) "Subsidiary" of any Person shall mean any corporation or
other legal entity of which a majority of the voting power of the
voting equity securities or voting interest is owned, directly or
indirectly, by such Person, or which is otherwise controlled by such
Person.
(kk) "Substantial Block" shall mean a number of shares of the
Common Stock equal to or in excess of 15% of the number of shares of
the Common Stock then outstanding.
(11) "Substitution Period" shall have the meaning ascribed to
such term in Section 11(a)(iii).
(mm) "Summary of Rights" shall have the meaning ascribed to
such term in Section 3(b) of this Agreement.
(nn) "Trading Day" shall mean a day on which the principal
National Securities Exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business or, if the
Common Stock is not listed or admitted to trading on any National
Securities Exchange but is quoted on NASDAQ, a day on which NASDAQ is
in operation, or, if the Common Stock is neither listed or admitted to
trading on any National Securities Exchange nor quoted on NASDAQ, a
Business Day.
(oo) "Triggering Event" shall mean a Section 11(a)(ii) Event
or a Section 13 Event.
Any determination required by the definitions contained in this Section 1 shall
be made by the Board of Directors of the Company in its good faith judgment,
which determination shall be binding and may be conclusively relied upon by the
Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time act as "Co-Rights Agent" and may from time to time
appoint such other Co-Rights Agents as it may deem necessary or desirable. In
the event that the Company appoints one or more Co-Rights Agents, the Company
shall determine the respective duties of the Rights Agent and of any Co-Rights
Agents.
Section 3. Issue of Right Certificates. (a) Until the Distribution
Date, (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for 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 Right
Certificates (as hereinafter defined), and (y) the Rights (and the right to
receive Right Certificates) will be transferable only in connection with the
transfer of the Common
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Stock. The Company will notify the Rights Agent in writing of the date of the
Distribution Date. As soon as practicable after receipt of such notice, the
Rights Agent will, at the expense of the Company, 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 certificates for Rights, in substantially
the form of Exhibit B hereto (each, a "Right Certificate"), evidencing one Right
for each share of Common Stock so held, subject to adjustment as provided herein
and to the provisions of Section 14(a) hereof. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Right 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 Right Certificates.
(b) As soon as practicable after the Record Date, the Company will send
a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), 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 Common
Stock outstanding as of the Record Date, until the earlier of the Distribution
Date or the Expiration Date the Rights will be evidenced by such certificates
for Common Stock, with or without a copy of the Summary of Rights attached
thereto, and the record holders of the Common Stock shall also be the record
holders of the associated Rights. Until the earliest of the Distribution Date,
the Expiration Date and the Final Expiration Date, the surrender for transfer of
any of the certificates representing shares of Common Stock in respect of which
Rights have been issued, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock
issued (or delivered from the Company's treasury) after the Record Date but
(except in certain circumstances as provided in Section 22 hereof) prior to the
earliest of the Expiration Date, the Distribution Date and the Final Expiration
Date. Certificates representing such shares of Common Stock shall also be deemed
to be certificates for Rights and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
WSMP, Inc. and American Stock Transfer & Trust Company (the
"Rights Agent") dated as of September 2, 1997 (the "Rights
Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal
executive offices of WSMP, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. After receipt of a written
request, the Company will promptly mail to
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<PAGE> 11
the holder of this certificate a copy of the Rights Agreement
without charge. Under certain circumstances, Rights issued to
or held by any Person who is, was or becomes an Acquiring
Person or its Affiliate or Associate (as such terms are
defined in the Rights Agreement), whether currently held by or
on behalf of such Persons or by any subsequent holder of such
Rights, may become null and void.
After the due execution of any supplement or amendment to this Agreement, the
references to this Agreement in the foregoing legend shall mean the Agreement as
so supplemented or amended. Until the Distribution Date, the Rights associated
with the Common Stock represented by certificates containing the foregoing
legend shall be evidenced by such certificates alone, the record holders of
Common Stock shall also be the record holders of the associated Rights, and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
Section 4. Form of Right Certificates. (a) The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any Stock
Market on or by which the Rights may from time to time be listed or quoted, or
to conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates, whenever distributed, which are distributed in respect of
shares of Common Stock issued and outstanding as of the Record Date, shall be
dated as of the Record Date, and all Right Certificates which are distributed in
respect of other shares of Common Stock shall be dated as of the respective
dates of issuance of such Common Stock, and in each such case on their face
shall entitle the holders thereof to purchase such number of one-hundredths of a
share of Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as shall be set forth
therein at the price per share set forth therein (such purchase price per
one-hundredth of a share being referred to herein as the "Purchase Price" of the
Preferred Stock), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, any Right
Certificate issued pursuant to Section 3(a), 6, 7(e), 11(i) or 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate thereof; or (ii) a transferee of an Acquiring Person, or
of an Associate or Affiliate thereof, after the Acquiring Person becomes an
Acquiring Person; or (iii) a transferee of an Acquiring Person, or of an
Associate or Affiliate thereof, that prior to or concurrently with the Acquiring
Person becoming an Acquiring Person receives such Rights pursuant to a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person, or pursuant to a transfer to any
Person with whom or with which the Acquiring Person has any agreement,
arrangement or understanding (whether or not in writing) regarding the Rights,
or pursuant to a transfer that the
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<PAGE> 12
Company's Board of Directors has determined is part of a plan, arrangement or
understanding (whether or not in writing) having a primary purpose or effect of
avoiding Section 7(e) hereof; and any Right Certificate issued pursuant to
Section 6, 11 or 22 hereof, upon transfer, exchange, replacement or adjustment
of any other Right Certificate referred to in this sentence, in each case shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right
Certificate are or were beneficially owned
by a Person who was or became an Acquiring
Person or an Affiliate or an Associate of an
Acquiring Person (as such terms are defined
in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented
hereby may become null and void in the
circumstances specified in Section 7(e) of
the Rights Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Right Certificate.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by a duly authorized officer, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by a duly authorized officer
of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and may be issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent (or, at the Company's option,
the Company) will keep or cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date and certificate number of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time
after the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the record holder to purchase a like number of
one-hundredths of a share of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such
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<PAGE> 13
holder (or former holder in the case of a transfer) to purchase. Any record
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the corporate trust office of the Rights Agent.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the record holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof, or of any other Person with whom or with which such holder
or any of such holder's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) for the purpose of acquiring,
holding, voting or disposing of securities of the Company, as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 4(b),
7(e), 14 and 20(k) hereof, countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment from a Right Certificate holder of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of such holder's
Right Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and upon reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the record owner
in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the record holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Sections 9(e), 11(a)(iii) and 23(a)) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the appropriate form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent at
the corporate trust office of the Rights Agent, together with payment of the
aggregate Purchase Price with respect to the total number of one-hundredths of a
share (or other securities, cash or other assets, as the case may be) as to
which the Rights are exercised, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $30.00,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in accordance with paragraph (c) of this Section
7.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the appropriate form of election to purchase and certificate duly
executed, accompanied by payment of the Purchase Price per one-hundredth of a
share of Preferred Stock (or other securities, cash or other assets, as the case
may be) to be purchased and an amount equal to any applicable
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<PAGE> 14
transfer tax (as determined by the Rights Agent), the Rights Agent shall,
subject to Section 20(k) hereof, thereupon (i)(A) promptly requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent) certificates for the total number of
one-hundredths of a share of Preferred Stock to be purchased, and the Company
hereby 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
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary
agent, promptly requisition from the depositary agent depositary receipts
representing such number of one-hundredths of a share of Preferred Stock as are
to be purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent), and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the record holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and, (iv) when appropriate,
after receipt promptly deliver such cash to or upon the order of the record
holder of such Right Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)) must 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 (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
or payment by the Rights Agent if and when appropriate.
(d) In case the record holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the record holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding any other provision of this Agreement, from and
after the first occurrence of a Section 11(a)(ii) Event any Rights beneficially
owned by: (i) an Acquiring Person or any Associate or Affiliate thereof; or (ii)
a transferee of an Acquiring Person, or of an Associate or Affiliate thereof,
after the Acquiring Person becomes an Acquiring Person; or (iii) a transferee of
an Acquiring Person, or of an Associate or Affiliate thereof, that prior to or
concurrently with the Acquiring Person becoming an Acquiring Person receives
such Rights pursuant to a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person, or
pursuant to a transfer to any Person with whom or with which the Acquiring
Person has any agreement, arrangement or understanding (whether or not in
writing) regarding the Rights, or pursuant to a transfer that the Company's
Board of Directors has determined is part of a plan, arrangement or
understanding (whether or not in writing) having a primary purpose or effect of
avoiding this Section 7(e), in each case shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to assure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of the Company's failure to make any determination with respect to an
Acquiring Person or any of its Associates, Affiliates or
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<PAGE> 15
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 record holder upon the occurrence of any purported exercise as set
forth in this Section 7 unless the certificate contained in the appropriate form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise shall have been completed and signed by the record
holder thereof and the Company shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof, or of any other Person with whom or with which
such holder or any of such holder's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities of the Company, as the
Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company other
than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that, prior to the Distribution Date and subject to
Section 11(a)(iii) hereof, it will cause to be reserved and kept available out
of its authorized and unissued shares of Preferred 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 its authorized and issued shares
held in its treasury) the number of shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement, will be sufficient to permit the exercise
in full of all outstanding Rights or will take such other steps as are
appropriate to assure that the number of shares or securities (or their
equivalents) sufficient to permit the exercise in full of all outstanding Rights
will be available upon such exercise.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on or quoted by
any Stock Market, the Company covenants and agrees to use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares or
other securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company covenants and agrees to take all such action as may be
necessary to ensure that all one-hundredths of a share of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights
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<PAGE> 16
shall be, at the time of delivery of the certificates for such shares (subject
to payment of the Purchase Price), duly and validly authorized and issued, fully
paid and non-assessable shares.
(d) The Company further covenants and agrees to pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any certificates for one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax that may be
payable in respect of any transfer or delivery of Right Certificates to a person
other than, or in respect of the issuance or delivery of a number of
one-hundredths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of, the record holder
of the Right Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the record holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
(e) The Company covenants and agrees to use its best efforts to (i)
prepare and file, as soon as practicable following the earliest date after the
first occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined (if
necessary) in accordance with Section 11(a)(iii) hereof, a registration
statement under the Securities Act with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, provided, however, that the
Company shall not be required to file such a registration statement if it
determines that registration is not required under the Securities Act, (ii)
cause such registration statement, if required, to become effective as soon as
practicable after such filing and (iii) cause such registration statement, if
required, to remain effective (with a prospectus 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 securities and (B) the
Expiration Date. The Company also will take such action as may be appropriate
under, or to assure compliance with, the securities laws of the several states
in connection with the exercisability of the Rights. The Company may temporarily
suspend the exercisability of the Rights for a period not to exceed ninety days
after the date set forth in clause (i) of the first sentence of this paragraph
in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as the
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of one-hundredths of a share of Preferred Stock (or
Common Stock and/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 such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
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<PAGE> 17
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are closed, then such Person shall be deemed to have become the record holder of
such shares (fractional or otherwise) on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred 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
Right Certificate, as such, shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights may be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as herein provided.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares, or
fractions thereof, covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after
the Rights Dividend Declaration Date (A) declare a dividend on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock into a greater number of shares, (C)
combine or consolidate the outstanding Preferred Stock into a smaller
number of shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a combination, 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) the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Preferred 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 aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which,
if such right had been exercised immediately prior to such date and at
a time when the Preferred Stock transfer books of the Company were
open, such holder would have owned upon such exercise and would have
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If any event occurs that would require
an adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof,
then the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that any
Person, alone or together with its Affiliates and Associates, 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 Section 13 Event or is an acquisition of Common
Stock of the Company pursuant to a tender or exchange offer for all
outstanding Common Stock of the Company at a price and on terms
determined by at least a majority of the members of the Board of
Directors of the Company who are not Acquiring Persons or
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<PAGE> 18
representatives, nominees, Affiliates or Associates of an Acquiring
Person (the "Outside Directors"), after receiving advice from one or
more investment banking firms but prior to the occurrence of such
Acquiring Person, to be (a) at a price that is fair to shareholders
(taking into account all factors that such Outside Directors deem
relevant, including, without limitation, prices that could reasonably
be achieved if the Company or its assets were to be sold on an orderly
basis designed to realize maximum value) and (b) otherwise in the best
interests of the Company and its shareholders, proper provision shall
be made so that each holder of a Right, except as provided below and in
Section 7(e) hereof, shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, in lieu of a number of one-hundredths of a
share of Preferred Stock, 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 one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of such Section 11(a)(ii) Event, whether or not
such Right was then exercisable, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to for
all purposes of this Agreement as the "Purchase Price" of the Common
Stock underlying each Right) by 50% of the current market price per
share of Common Stock of the Company (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such Section 11(a)(ii)
Event (such number of shares being referred to herein as the
"Adjustment Shares").
(iii) In the event that there shall not be sufficient treasury
shares or authorized but unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company, acting by resolution of its Board of
Directors (with the concurrence of a majority of the Continuing
Directors), shall (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price attributable to such Right (such
excess being referred to herein as the "Spread") and, (B) with respect
to each Right (subject to Section 7(e) hereof), make adequate provision
to substitute for the Adjustment Shares, upon exercise of the Rights
and payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Stock or other equity securities of
the Company (including, without limitation, shares, or units of shares,
of preferred stock that the Company's Board of Directors (with the
concurrence of a majority of the Continuing Directors) considers to
have the same value as shares of Common Stock of the Company (such
shares or units of preferred stock being referred to herein as "common
stock equivalents"), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such Current Value and
aggregate value have been determined by the Company's Board of
Directors (with the concurrence of a majority of the Continuing
Directors) based upon the advice of a nationally recognized investment
banking firm selected by such Board of Directors; provided, however, if
the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty days following the latter of
(x) the first occurrence of a Section 11(a)(ii) Event and (y) the date
on which the Company's right of redemption pursuant to Section 23(a)
expires (the latter of (x) and (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock of the
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<PAGE> 19
Company (to the extent available) and then, if necessary, cash,
securities and/or assets, that in the aggregate have a value equal to
the Spread. If the Company's Board of Directors 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, then the thirty-day period set forth above may be extended to
the extent necessary, but not more than ninety days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period,
as it may be extended, being referred to herein as the "Substitution
Period"). To the extent that the Company determines that some action is
to be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the current market price per share of Common
Stock (as determined pursuant to Section 11(d) hereof) on the Section
11(a)(ii) Trigger Date and the value of any common stock equivalent
shall be deemed to be the same as the value of the Common Stock on such
date.
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or to purchase Preferred Stock (or securities
having substantially the same or more favorable rights, privileges and
preferences as the Preferred Stock ("preferred stock equivalents") or
securities convertible into Preferred Stock or preferred stock
equivalents at a price per share of Preferred Stock or per share of
preferred stock equivalents (or having a conversion price per share, if
a security convertible into Preferred Stock or preferred stock
equivalents) less than the current market price per share of Preferred
Stock (as determined pursuant to Section 11(d) hereof) on such record
date, then 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 Preferred Stock outstanding on
such record date plus the number of additional shares of Preferred
Stock that the aggregate offering price of the total number of such
shares so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such
current market price per share and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date
plus the number of additional shares of Preferred Stock and/or
preferred stock equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid
with a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good
faith by the Company's Board of Directors (with the concurrence of a
majority of the Continuing Directors), 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.
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<PAGE> 20
Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and, in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price that would then be in effect had such record date
not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a combination, consolidation or
merger in which the Company is the continuing or surviving corporation)
of evidences of indebtedness, cash, assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of
the last regular periodic cash dividend theretofore paid or a dividend
payable in Preferred Stock, but including any dividend payable in other
capital stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), then 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 Preferred Stock (as defined in Section 11(d) hereof) on such
record date less the fair market value (as determined in good faith by
the Company's Board of Directors (with the concurrence of a majority of
the Continuing Directors), whose determination shall be described in a
statement filed with the Rights Agent) of the portion of such evidences
of indebtedness, cash, assets or such subscription rights or warrants
so to be distributed or of such subscription rights or warrants
applicable to one one-hundredth of a share of Preferred Stock and the
denominator of which shall be such current market price per one
one-hundredth of a share of Preferred Stock. Such adjustments shall be
made successively whenever such a record date is fixed; and, in the
event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price that would then be in effect
had such record date not been fixed.
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to Section 11(a)(iii), 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 consecutive Trading Days
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 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 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 such Common Stock of (A) a
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 Rights) or (B) any
subdivision, combination or reclassification of such Common
Stock, and prior to the expiration of the requisite thirty- or
ten-Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the "current
market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price
17
<PAGE> 21
for each date shall be the last sale price, regular way, or,
in case no such sale takes place on such date, the average of
the closing bid and asked prices, regular way, in either case
as reported in the consolidated transaction reporting system
with respect to securities listed or admitted to trading on a
National Securities Exchange, or, if the Common Stock is not
listed or admitted to trading on a National Securities
Exchange, the last quoted price, or, if not so quoted, the
average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ, or, if on any
such date the Common Stock is not quoted by NASDAQ, 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 (with the
concurrence of a majority of the Continuing Directors). If on
any such date no market maker is making a market in the Common
Stock, then the fair value of such shares on such date shall
be as determined in good faith by the Board of Directors of
the Company (with the concurrence of a majority of the
Continuing Directors), whose determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes. If the current market price per
share of the Common Stock cannot be determined in the manner
provided above, or if the Common Stock is not publicly held or
not so listed or traded, then "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 (with the
concurrence of a majority of the Continuing Directors), whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share of Preferred Stock shall
be determined in the same manner as set forth above for the
Common Stock in Section 11(d)(i) hereof (other than the last
sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed
or traded in a manner described in Section 11(d)(i), then the
"current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for events such as stock
splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the Rights Dividend
Declaration Date) multiplied by the current market price per
share of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, then
the "current market price" per share of the Preferred Stock
shall mean the fair value per share as determined in good
faith by the Company's Board of Directors (with the
concurrence of a majority of the Continuing Directors), whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the "current market price" of one
one-hundredth of a share of Preferred Stock shall be equal to
the "current market price" of one share of Preferred Stock
divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent in such price; provided, however, that any adjustments that by
reason
18
<PAGE> 22
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 and Section 14 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of Common
Stock or other share or the nearest one-millionth of a share of
Preferred 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 years from the date of
the transaction that mandates such adjustment or (ii) the Expiration
Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the Purchase Price and the number of such
other shares so receivable upon exercise of any Right and the number of
Rights outstanding shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 12, 13 and 14 with respect to the
Preferred Stock shall apply on like terms to any such other shares;
provided, however, that the Company shall not be liable for its
inability or failure to reserve and keep available for issuance upon
exercise of the Rights pursuant to Section 11(a)(ii) a number of shares
of Common Stock greater than the number then authorized by the Restated
Charter but not outstanding or reserved for any other purpose.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of
one-hundredths of a share of Preferred Stock (or other securities)
purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and Section 11(c)
hereof, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one-hundredths of a share of
Preferred Stock (calculated to the nearest one-millionth of a share)
obtained by (i) multiplying (x) the number of one-hundredths of a share
of Preferred Stock covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights, in
substitution for any adjustment in the number of one-hundredths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment in the number of Rights
shall be exercisable for the number of one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to
the nearest ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price
19
<PAGE> 23
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. Such record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates
have been issued, shall be at least ten days later than the date of the
public announcement. If Right Certificates have been issued, then, upon
each adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record, in substitution and replacement
for the Right Certificates held by such holders prior to the date of
adjustment, and, upon surrender thereof, if required by the Company,
new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one-hundredths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-hundredth of a share and the number of one-hundredths
of a share that were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the one-hundredths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action that 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 Preferred Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer, until the
occurrence of such event, the issuance, to the holder of any Right
exercised after such record date, of the number of one-hundredths of a
share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number
of one-hundredths of a share of Preferred Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or other
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company, by action of its Board of Directors (with
the concurrence of a majority of the Continuing
20
<PAGE> 24
Directors), shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its good faith discretion
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of
any Preferred Stock at less than the current market price, (iii)
issuance wholly for cash of Preferred Stock or other securities that by
their terms are convertible into or exchangeable for shares of
Preferred 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 Preferred Stock, shall not be taxable to
such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) combine or consolidate with or
merge with or into any Person (other than a Subsidiary of the Company
in a transaction that complies with Section 11(o) hereof) or (ii) sell
or otherwise transfer (or permit any Subsidiary of the Company to sell
or otherwise transfer), in one transaction or in a series of related
transactions, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof) if at
the time of or immediately after such combination, consolidation,
merger, sale or other transfer there are any Restated Charter or by-law
provisions or any rights, warrants, other securities or other
instruments outstanding or any agreements in effect that would
substantially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights or if prior to, simultaneously with or
immediately after such combination, consolidation, merger, sale or
other transfer the shareholders of the Person that constitutes or would
constitute the Principal Party (as hereinafter defined) shall have
received a distribution of Rights previously owned by such Person or
any of its Associates or Affiliates. The Company shall not consummate
any such combination, consolidation, merger, sale or other transfer
unless prior thereto the Company and such other Person shall have
executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this paragraph (n).
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as may be permitted by Section
23 or 26, 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
(i) declare any dividend on the Common Stock of the Company payable in
such Common Stock, (ii) subdivide the outstanding shares of Common
Stock into a greater number of shares or (iii) combine or consolidate
the outstanding Common Stock of the Company into a smaller number of
shares, then the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying
the number of Rights associated
21
<PAGE> 25
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 of the Company outstanding immediately prior to the
occurrence of such event and the denominator of which shall be the
total number of shares of such Common Stock outstanding immediately
following the occurrence of such event. The adjustments provided for in
this Section 11(p) shall be made successively whenever such a dividend
is declared or paid or such a subdivision, combination or consolidation
is effected. If an event occurs that would require an adjustment under
Section 11(a)(ii) hereof and under this Section 11(p), then the
adjustment provided for in this Section 11(p) shall be in addition and
prior to any adjustment required pursuant to Section 11(a)(ii) hereof.
(q) Notwithstanding any other provision of this Agreement,
after the Distribution Date no adjustment to the Purchase Price, the
number of shares (or fractions of a share) for which a Right is
exercisable or the number of Rights outstanding, or any similar
adjustment, shall be made or be effective if such adjustment would have
the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such adjustment, including, without
limitation, the benefits under Section 11(a)(ii) and Section 13, unless
the terms of this Agreement are amended so as to preserve such
benefits.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and for the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate (or, if prior to the Distribution
Date, then to each holder of a certificate representing shares of Common Stock)
in accordance with Section 25 hereof, but the failure of the Company to make
such certificates or to give such notice shall not affect the validity or the
force or effect of the requirement for such adjustment. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be obligated or responsible for calculating any
adjustment, nor shall it be deemed to have knowledge of such an adjustment
unless it shall have received such certificate. Any adjustment to be made
pursuant to Section 11 or 13 hereof shall be effective as of the date of the
event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event (a "Section 13 Event") that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall combine or
consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) and the Company shall not be the continuing or surviving corporation of
such combination, consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) shall combine or consolidate with, or merge with and into, the Company
and the Company shall be the continuing or surviving corporation of such
combination, consolidation or merger and, in connection with such combination,
consolidation or merger, all or part of the shares of Common Stock shall be
changed into or exchanged for other securities of any Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets, cash flow or earning power aggregating
22
<PAGE> 26
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole and calculated on the basis of the Company's most
recent regularly prepared financial statements) to any other 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(o) hereof), then, and in
each such case (except as provided in 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, not subject to any liens, encumbrances, rights of call, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such one-hundredths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence) and (2)
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to for all purposes of the Agreement as the "Purchase
Price" of the Common Stock of the Principal Party) by 50% of the current market
price per share of Common Stock of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of the consummation of such combination,
consolidation, merger, sale or other transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" as used in this Agreement shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be possible, in relation to the shares of its Common
Stock thereafter deliverable upon exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of a Section 13 Event. The Company shall not consummate any such combination,
consolidation, merger, sale or other transfer unless prior thereto the Company
and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement containing the provisions required by this Section 13.
(b) "Principal Party" shall mean, (i) in the case of any transaction
described in clause (x) or clause (y) of the first sentence of Section 13(a)
hereof, the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger, combination or
consolidation, and, if no securities are so issued, the Person that is the other
party to the merger, combination or consolidation, and, (ii) in the case of any
transaction described in clause (z) of the first sentence of Section 13(a)
hereof, the Person that is the party receiving the greatest portion of the
assets, cash flow or earning power transferred pursuant to such transaction or
transactions; provided, however, that, in any such case: (x) if the Common Stock
of such Person is not at such time and over the preceding 12-month period has
not been continuously 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,
23
<PAGE> 27
then "Principal Party" shall refer to such other Person; (y) in case such Person
is a Subsidiary, directly or indirectly, or an Affiliate of more than one
Person, the Common Stocks 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; and, (z)
in case such Person is owned, directly or indirectly, by an entity other than a
corporation formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (x) and (y) of
this subsection (b) shall apply to each of the chains of ownership having an
interest in such entity as if such party were a Subsidiary of both or all of the
participants in such entity and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such entity bear to the total of such interest.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized shares of Common
Stock that are neither outstanding nor reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in
subsections (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 at its own expense
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, will
use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
securities laws of such jurisdictions as may be necessary or
appropriate to permit the sale of such Rights and securities by the
holders thereof; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights not theretofore exercised
shall thereafter become exercisable in the manner described in Section 13(a)
hereof.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not apply to a transaction described in clauses (x) and (y) of
Section 13(a) hereof if (i) such transaction is consummated with a Person or
Persons who acquired Common Stock of the Company pursuant to a tender or
exchange offer for all outstanding Common Stock of the Company in compliance
with Section 11(a)(ii) hereof (or a wholly-owned Subsidiary of any such Person
or Persons), (ii) the price per share of Common Stock of the Company offered in
such
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transaction is not less than the price per share of Common Stock of the Company
paid to all holders of Common Stock of the Company whose shares were purchased
pursuant to such tender or exchange offer and (iii) the form of consideration
being offered to the remaining holders of Common Stock of the Company pursuant
to such transaction is the same as the form of consideration paid pursuant to
such tender or exchange offer. Upon consummation of the transactions
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
Distribution Date as provided in Section 11(p), or to distribute Right
Certificates that evidence fractional Rights. In lieu of such fractional Rights,
the Company shall pay to the record holders of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the "current market value" of a whole
Right shall be the closing price of a Right for the Trading Day immediately
prior to the date on which such fractional Rights otherwise would have been
issuable. The "closing price" of a Right 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 consolidated transaction reporting system with respect to
securities listed or admitted to trading on a National Securities Stock
Exchange, or, if the Rights are not listed or admitted to trading on a National
Securities Exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ, or, if on any such date the Rights are not quoted by NASDAQ, 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
(with the concurrence of a majority of the Continuing Directors). If on any such
date no such market maker is making a market in the Rights, then the fair value
of the Rights on such date as determined in good faith by the Board of Directors
of the Company (with the concurrence of a majority of the Continuing Directors)
shall be used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of Preferred Stock in integral multiples of
one-hundredths of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a share
of Preferred Stock, the Company may pay to the record holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to
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distribute certificates that evidence fractional shares of Common Stock. In lieu
of fractional shares of its Common Stock, the Company may pay to the record
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share of its Common Stock. For purposes of this Section 14(c), the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock of the Company (as determined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right, by acceptance of the Right, expressly waives
such holder's right to receive any fractional Rights or any fractional shares
upon exercise of the Right, except as otherwise permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective record holders of the Right Certificates
(prior to the Distribution Date, in the record holders of the Common Stock); and
any record holder of any Right Certificate (prior to the Distribution Date, of
the Common Stock), without the consent of or notice to the Rights Agent or the
holder of any other Right Certificate (prior to the Distribution Date, of the
Common Stock), may, in such holder's own behalf and for such holder's own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations hereunder and to injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock; and
(b) at and after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the corporate trust office of the Rights Agent, duly endorsed or accompanied by
proper instruments of transfer and with the appropriate forms and certificates
fully executed; and
(c) subject to Sections 6, 7(e) and 7(f), the Company and the Rights
Agent may deem and treat the person in whose name a Right Certificate (prior to
the Distribution Date, a Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notation
of ownership or writing on the Right Certificate or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) hereof, shall be affected by any notice to the
contrary; and
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<PAGE> 30
(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 or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not a Shareholder. No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Preferred Stock, Common Stock or
other securities of the Company that may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable legal fees and disbursements, incurred in the
administration 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 from and against, any loss, liability or expense incurred
without gross negligence or willful misconduct on the part of the Rights Agent,
for anything done or omitted to be done by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the reasonable
costs and expenses of defending against any claim of liability in the premises.
The indemnification provided for hereunder shall survive the expiration of the
Rights, the termination of this Agreement and the resignation or removal of the
Rights Agent. The reasonable costs and expenses of enforcing this right of
indemnification shall also be paid by the Company.
(b) The Rights Agent may conclusively rely upon and shall be protected
and shall incur no liability for or in respect of any action taken, suffered or
omitted to be taken by it in connection with its administration of this
Agreement or the exercise or performance of its duties hereunder in reliance
upon any Right Certificate or certificate for Common Stock or Preferred Stock or
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
instruction, adjustment notice, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel.
(c) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind
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<PAGE> 31
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of the action.
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 converted or merged or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound, and no implied duties
or obligations shall be read into this Agreement against the Rights Agent:
(a) Before the Rights Agent acts or refrains from acting, the Rights
Agent may consult with legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate thereof 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 any person believed in good faith by the
Rights Agent to be one of the Chairman of the Board of Directors, the President,
any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights
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<PAGE> 32
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates or be required to verify the same (except as to its
countersignature on the Right Certificates), but all such statements and
recitals are and shall be deemed to have been made only by the Company.
(e) The Rights Agent is serving as an administrative agent and,
accordingly, shall not be under any responsibility in respect of the validity of
any provision of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void) or any adjustment in the terms of the Rights (including
the manner, method or amount thereof) under the provisions of Section 11 or 13
hereof or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment is required); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock or
Common Stock to be issued pursuant to this Agreement or any Right Certificate or
as to whether any shares of Preferred Stock or Common Stock 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 execution by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
in good faith by the Rights Agent to be one of the Chairman of the Board of
Directors, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply
to any such officer for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while awaiting such instructions. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted to be
taken by the Rights Agent under this Agreement and the date on or after which
such action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall be not less than ten Business
Days after the date any officer of the Company actually receives such
application, unless any
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<PAGE> 33
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or prior to the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application subject to the proposed action or omission and/or specifying
the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become financially interested in any transaction in
which the Company may be interested or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents. The Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct, provided that such attorneys or agents
were not initially selected or subsequently retained through gross negligence or
willful misconduct.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights
hereunder if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to the Rights Agent.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or clause 2
thereof (and/or clause 3 thereof in the case of the certificate attached to the
form of election to purchase), the Rights Agent shall not take any further
action with respect to such requested exercise of transfer without first
consulting with the Company and receiving written instructions from the Company.
The Rights Agent shall not be charged with knowledge that any Rights are null
and void pursuant to the provisions of Section 7(e) unless the Rights Agent has
received a written certificate to such effect from the Company.
(l) The Rights Agent shall not be required to take notice or be deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
(m) No provision of this Agreement shall require the Rights Agent to
determine whether any Right Certificate issued pursuant to this Agreement is
required pursuant to Section 4(b) to contain the legend specified in Section
4(b). The Rights Agent shall have no liability to any holder of Rights
Certificates or other Person as a result of the failure of any Right Certificate
to contain such legend.
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Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon sixty days' notice in writing mailed to the Company, and to each transfer
agent of the Preferred Stock and Common Stock, by registered or certified mail,
and, at the expense of the Company, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon ten days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Stock and Common Stock by registered or certified mail, and, to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, then the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (which holder shall, with such notice, submit such holder's
Right Certificate for inspection by the Company), then the record holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any State and shall be
authorized under such laws to exercise corporate trust powers and shall be
subject to supervision or examination by federal or state authority. After
appointment, the successor Rights Agent shall be vested, without further act or
deed, with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder and execute and deliver any further assurance, conveyance, act
or deed necessary or appropriate for the purpose of perfecting transfer. 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 the Preferred Stock and shall mail a notice
thereof in writing to the record holders of the Right Certificate (or, prior to
the Distribution Date, the record holders of the Common Stock). Failure to give
any notice provided for in this Section 21, or any defect therein, however,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by resolution of its Board of Directors (which resolution
shall, if adopted after the Stock Acquisition Date, be effective only with the
concurrence of a majority of the Continuing Directors) to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Stock following the Distribution Date and
prior to the Expiration Date, the Company (a) shall, with respect to shares of
Common Stock issued or sold under any plan, agreement or arrangement relating to
the compensation of any director, officer, employee or consultant, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificates shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk
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<PAGE> 35
of material adverse tax consequences to the Company or any Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificates shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Company may, at its
option, by resolution of its Board of Directors, at any time prior to the
earliest to occur of (i) the Stock Acquisition Date, (ii) the Distribution Date
and (iii) the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (the "Redemption Price"), and the Company may,
at its option, pay the Redemption Price either in shares of Common Stock (valued
at their current market price as defined in Section 11(d) on the date of the
redemption), other securities, cash, other assets or any other form of
consideration deemed appropriate by its Board of Directors.
(b) Immediately upon the action of the Board of Directors ordering
redemption of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. Not more than ten
Business Days after the action of the Board of Directors ordering the redemption
of the Rights, the Company shall give notice of such redemption to the Rights
Agent and to the holders of the then outstanding Rights by mailing such notice
to the Rights Agent and to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent (or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock). Any notice 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 payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in connection with the
repurchase of Common Stock prior to the Distribution Date.
(c) In the event that the Company shall at any time after the Rights
Dividend Declaration Date (i) declare any dividend on its Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock
into a greater number of shares or (iii) combine or consolidate the outstanding
shares of Common Stock into a smaller number of shares, then and in each such
event the Redemption Price after such event shall equal the Redemption Price
immediately prior to such event multiplied by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately prior to such
event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event; provided, however, that, in each case,
such adjustment to the Redemption Price shall be made only if the amount of the
Redemption Price shall be reduced or increased by at least $.0001 per Right.
Section 24. Notice of Certain Events. (a) In case the Company shall
propose at any time after the Distribution Date (i) to declare any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
periodic cash dividend at a rate not in excess of 125% of the rate of the last
regular periodic cash dividend theretofore paid), (ii) to offer to the holders
of Preferred
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Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of the Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), (iv) to effect any combination, consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction that complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets,
cash flow or earning power of the Company and its Subsidiaries (taken as a
whole), to any other Person or Persons (other than the Company and/or a
Subsidiary of the Company in one or more transactions each of which complies
with Section 11(o) 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 Right, to the extent feasible and in accordance with Section
25, 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, combination, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is to take place and the date
of participation therein by the holders of the shares of Preferred Stock and/or
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
days prior to the record date for determining holders of the shares of Preferred
Stock and/or Common Stock for purposes of such action and, in the case of any
such other action, at least twenty days prior to the date of the taking of such
proposed action or the date of participation therein by the holders, whichever
shall be the earlier. The failure to give notice required by this Section 24 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
(b) In case a Triggering Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each holder of a Right,
to the extent feasible and in accordance with Section 25, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) or Section 13(a) hereof,
as the case may be, and all references in Section 24(a) hereof to Preferred
Stock shall be deemed thereafter to refer also to Common Stock or other
securities, cash or assets issuable in respect of the Rights.
Section 25. Notices. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
WSMP, Inc.
1 WSMP Drive
P.O. Box 399
Claremont, NC 28610
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
or required by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sent by
registered or certified mail and shall be deemed given upon receipt, addressed
(until another address is filed in writing with the Company) as follows:
33
<PAGE> 37
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, NY 10005
Attention: Corporate Trust Department
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate (or,
if prior to the Distribution Date, to the holder of a certificate representing
any shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the first to occur of
(i) the Stock Acquisition Date and (ii) the Distribution Date, and subject to
the penultimate sentence of this Section 26, the Company may, by resolution of
its Board of Directors, and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement in any respect whatsoever
(including, without limitation, by extending the period within which the Rights
may be redeemed) without the approval of any holders of certificates
representing shares of Common Stock of the Company. From and after the first to
occur of (i) the Stock Acquisition Date and (ii) the Distribution Date, and
subject to the penultimate sentence of this Section 26, the Company may, by
resolution of its Board of Directors (which resolution shall be effective only
with the concurrence of a majority of the Continuing Directors and only if the
Continuing Directors constitute a majority of the number of directors then in
office), and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period provided for herein or (iv) to
supplement or amend any other provisions of this Agreement in any manner that
the Company may deem necessary or desirable and that shall not adversely affect
the interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person), any such supplement or amendment
to be evidenced in writing signed by the Company and the Rights Agent; provided,
however, that this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed or to modify the ability (or inability) of the Board
of Directors of the Company to redeem the Rights, in either case at such time as
the Rights are not then redeemable, or (b) any other time period provided for
herein unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of or the benefits to the holders of the Rights (other
than an Acquiring Person or an Affiliate or Associate of any such Person). Upon
the delivery of a certificate from an appropriate officer of the Company stating
that the proposed supplement or amendment is in compliance with the terms of
this Section 26, the Rights Agent shall execute such supplement or amendment;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, no supplement or amendment that changes the rights and duties of the
Rights Agent under this Agreement shall be effective without the written consent
of the Rights Agent. Notwithstanding anything in this Agreement to the contrary,
no supplement or amendment shall be made on or after the first to occur of the
Stock Acquisition Date and the Distribution Date that changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable. Prior to the first to occur of the Stock Acquisition Date and the
Distribution Date,
34
<PAGE> 38
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determination of Number of Shares Outstanding and Other
Determinations. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time, including
for purposes of determining 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-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
(and, where specifically provided for herein, the Continuing Directors or the
Outside Directors) shall have the exclusive power, authority and discretion to
administer this Agreement and to exercise all rights and powers specifically
granted to them herein, as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power (i) to
interpret the provisions of this Agreement and (ii) to make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, but not limited to, a determination to redeem or not to redeem the
Rights, to supplement or amend the Agreement or to find or to announce publicly
that a Person has become an Acquiring Person). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) done or made in good faith by the
Board of Directors, the Continuing Directors or the Outside Directors, as the
case may be, (x) shall be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other Persons and (y) shall not
subject the Board of Directors, the Continuing Directors or the Outside
Directors to any liability to the holders of the Rights or to any other Person.
Section 29. 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 record holders of the Right Certificates (and, prior to the Distribution
Date, 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 record holders of the Right Certificates (and,
prior to the Distribution Date, the Common Stock). The Rights Agent is serving
as administrative agent of the Company and is not an agent of the holders of the
Rights and/or Right Certificates.
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by any court or other authority to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement nevertheless 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 any
such court or other authority to be invalid, void or unenforceable, and if the
Board of Directors of the Company (with the concurrence of a majority of the
Continuing Directors) determines in good faith that severing the invalid
language from this Agreement would adversely affect the purpose or effect of the
Agreement, and if the right of redemption set forth in Section 23 hereof shall
have expired, then such right shall be reinstated and shall not expire until the
Close of Business on the tenth
35
<PAGE> 39
Business Day following the date of such determination by the Board of Directors.
Without limiting the foregoing, if any provision of this Agreement requiring
that a determination be made by the Board of Directors of the Company with the
concurrence of a majority of the Continuing Directors or Outside Directors or by
the Outside Directors is held by a court or other authority to be invalid, void
or unenforceable, then such determination shall be made by such Board of
Directors in accordance with applicable law, the Company's by-laws and the
Restated Charter.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of North Carolina and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective seals to be hereunto affixed and attested,
all as of the day and year first above written.
[SEAL] WSMP, INC.
Attest: By: /s/ Richard F. Howard
-------------------------------
Name: Richard F. Howard
Title: Chairman
By: /s/ Matthew V. Hollifield
----------------------------
Name: Matthew V. Hollifield
Title: Asst. Secretary
[SEAL] AMERICAN STOCK TRANSFER &
TRUST COMPANY,
Rights Agent
Attest: By: /s/ Herbert J. Lemmer
-------------------------------
Name: Herbert J. Lemmer
Title: Vice President
By: /s/ Susan Silber
----------------------------
Name: Susan Silber
Title: Assistant Secretary
37
<PAGE> 41
Exhibit A
RESOLUTIONS ESTABLISHING THE TERMS OF THE
JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
WHEREAS, Article IV of the Restated Charter of the Corporation
expressly authorizes the Board of Directors of the Corporation to provide for
the issuance of shares of Preferred Stock of the Corporation ("Preferred Stock")
in one or more series, with each series to have such designations, preferred,
relative, participating, optional and other special rights, and such
qualifications, limitations and other restrictions, as the Board of Directors
may authorize; and
WHEREAS, in the judgment of the Board of Directors, it is advisable and
in the best interests of the Corporation to establish a series of Preferred
Stock designated "Junior Participating Preferred Stock, Series A," the number of
shares of which shall be 100,000.
NOW, THEREFORE, BE IT RESOLVED, that, pursuant to Article IV of the
Restated Charter of the Corporation, the Board of Directors of the Corporation
does hereby establish a series of Preferred Stock of the Corporation designated
"Junior Participating Preferred Stock, Series A" (the "Series A Preferred"), and
the number of shares constituting such series shall be 100,000, with the
following designations, preferred, relative, participating, optional and other
special rights and qualifications, limitations and other restrictions:
1. No Dividend or Distribution Rights. The holders of shares of Series
A Preferred shall have no right to any dividends thereon or other distributions
in respect thereof, except pursuant to Section 5.
2. Voting Rights. The holders of shares of Series A Preferred shall
have the following voting rights:
(A) Each one-hundredth of a share of Series A Preferred shall entitle
the holder thereof to one vote on all matters submitted to a vote of the
shareholders of the Corporation.
(B) The holders of shares of Series A Preferred and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of the shareholders of the Corporation.
(C) Except as otherwise provided herein, the holders of shares of
Series A Preferred shall have no voting rights and their consent shall not be
required for taking any corporate action.
3. No Redemption, Conversion or Exchange Rights. The shares of Series A
Preferred shall not be redeemable, convertible or exchangeable for consideration
of any kind or in any amount at the option of any holder or holders thereof.
4. Reacquired Shares. Any shares of Series A Preferred purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred
<PAGE> 42
Stock to be created by resolution or resolutions of the Board of Directors.
5. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares ranking junior (upon liquidation, dissolution or
winding up) to the Series A Preferred unless, prior thereto, the holders of
shares of Series A Preferred shall have received an aggregate amount per share,
subject to the provisions for adjustment hereinafter set forth, not less than
100 times the aggregate amount to be distributed per share to the holders of
shares of Common Stock, or (2) to the holders of shares ranking on a parity
(upon liquidation, dissolution or winding up) with the Series A Preferred,
except distributions made ratably on the Series A Preferred and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event that the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such
case the aggregate amount to which holders of shares of Series A Preferred were
entitled immediately prior to such event under the proviso in clause (l) of the
next preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock outstanding immediately prior to such event.
6. Consolidation, Merger, Etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are changed into or exchanged for other shares or securities,
cash and/or any other property, then in any such case the shares of Series A
Preferred then outstanding shall concurrently be similarly changed or exchanged
in an amount per share (subject to the provisions for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of shares, other securities, cash
and/or other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the event that the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the next preceding sentence with respect to the
change or exchange of shares of Series A Preferred shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
7. Rank. The Series A Preferred shall rank junior to all other series
of the Preferred Stock as to the payment of dividends and the distribution of
assets, except for any and all such series whose terms specify to the contrary.
8. Amendments. The Restated Charter of the Corporation shall not be
amended in any manner that would materially and adversely change the
designations, preferred, relative, participating, optional or other special
rights, or the qualifications, limitations or other restrictions, of the Series
A Preferred without the affirmative vote or consent of the holders of two-thirds
of the outstanding shares of Series A Preferred.
2
<PAGE> 43
Exhibit B
[Form of Right Certificate]
Certificate No. R- __________________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 2, 2007 OR
EARLIER IF NOTICE OF REDEMPTION IS GIVEN.
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 THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. THE RIGHTS SHALL NOT
BE EXERCISABLE, AND SHALL BE VOID SO LONG AS
HELD, BY A HOLDER IN ANY JURISDICTION WHERE
THE REQUISITE QUALIFICATION TO THE ISSUANCE
TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION
SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS
RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Right Certificate
WSMP, INC.
This certifies that _________________, or registered assigns, is the
record owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of September 2, 1997 (the "Rights Agreement") between WSMP
Inc., a North Carolina corporation (the "Company"), and American Stock Transfer
& Trust Company, a New York corporation (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such terms are defined
in Rights Agreement) and prior to 5:00 P.M. (Charlotte time) on September 2,
2007 (the "Final Expiration Date") at the corporate trust office of the Rights
Agent, or its successor as Rights
*The portion of the legend in brackets shall be inserted only if applicable.
<PAGE> 44
Agent, one one-hundredth of a share of the Junior Participating Preferred Stock,
Series A, no par value, of the Company (the "Series A Preferred Stock"), which
fractional share shall be fully paid and nonassessable, at a purchase price of
$30.00 per one one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the appropriate form
of Election to Purchase and the Certificate contained therein duly executed. The
number of Rights evidenced by this Right Certificate (and the number of
one-hundredths of a share that may be purchased upon exercise thereof) set forth
above, and the Purchase Price per one one-hundredth of a share of Series A
Preferred Stock set forth above, are the number and Purchase Price as of
September 2, 1997, based on the Company's capital accounts as constituted on
such date.
Upon the occurrence of a Section 11(a)(ii) Event (as defined in the
Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate
thereof (as defined in the Rights Agreement), (ii) a transferee of an Acquiring
Person, or of an Associate or Affiliate thereof, after the Acquiring Person
becomes an Acquiring Person, or (iii) a transferee of an Acquiring Person, or of
an Associate or Affiliate thereof, that prior to or concurrently with the
Acquiring Person becoming an Acquiring Person received such Rights pursuant to a
transfer from the Acquiring Person to holders of equity interests in such
Acquiring Person, or pursuant to a transfer to any person with whom or with
which the Acquiring Person has any agreement, arrangement or understanding
regarding the Rights, or pursuant to a transfer that the Company's Board of
Directors has determined is part of a plan, arrangement or understanding having
a primary purpose or effect of avoiding this provision, then such Rights shall
become null and void.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Series A Preferred Stock that may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the occurrence of certain events, including Triggering Events
(as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms and conditions of
the Rights Agreement, which terms and conditions are hereby incorporated herein
by reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and are available without
charge upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the corporate trust office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Series A Preferred Stock as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, then the holder
hereof shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
2
<PAGE> 45
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate may be redeemed by the Company, at its option, by
resolution of its Board of Directors, at a redemption price of $.001 per Right,
at any time prior to the earliest to occur of the Stock Acquisition Date (as
defined in the Rights Agreement), the Distribution Date and the Final Expiration
Date.
No fractions of a share of Series A Preferred Stock (other than
fractions that are integral multiples of one one-hundredth of a share of Series
A Preferred Stock) will be issued upon 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 Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of shares of
Series A Preferred Stock or of any other securities of the Company that may at
any time be issuable on the exercise of the Rights represented hereby, 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 shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of a proper officer of the Company and
its corporate seal.
Dated as of
-------------------
[SEAL] WSMP, INC.
By:
-------------------------
Authorized Officer
- ------------------------------
Authorized Officer
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:
--------------------------
Authorized Officer
3
<PAGE> 46
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the record holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________________ hereby sells,
assigns and transfers unto __________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________ attorney to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
------------------------
-------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
4
<PAGE> 47
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
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 Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
-------------------------
-------------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
NOTICE
The signature to the foregoing Assignment must correspond to the name
of the record owner as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE> 48
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate)
To WSMP, INC.:
The undersigned hereby irrevocably elects to exercise __________Rights
represented by this Right Certificate to purchase the shares of Series A
Preferred Stock (or other securities) issuable upon the exercise of the Rights
and requests that certificates for such shares be issued in the name of and
delivered to:
Please insert social security
or other identifying number:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, then a new Right Certificate for the remainder of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated:
------------------------
-------------------------------------------
Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate.)
Signature Guaranteed:
(Signatures must be guaranteed.)
<PAGE> 49
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being exercised, sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
(3) exercising the Right Certificate [ ] will [ ] will not enable the
undersigned, its Affiliates, its Associates and/or any other Person with whom or
with which the undersigned or any of the undersigned's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting or disposing of securities of the
Company, to become an Acquiring Person.
Dated:
--------------------------
___________________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name of the record owner as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective seals to be hereunto affixed and attested,
all as of the day and year first above written.
[SEAL] WSMP, INC.
Attest: By:
----------------------
Name:
Title:
By:
------------------------
Name:
Title:
[SEAL] AMERICAN STOCK TRANSFER
& TRUST COMPANY,
Rights Agent
Attest: By:
----------------------
Name:
Title:
By:
------------------------
Name:
Title:
<PAGE> 51
Exhibit C
SUMMARY OF RIGHTS
On August 28,1997 (the "Rights Dividend Declaration Date"), the Board
of Directors of WSMP, Inc. (the "Company") declared a dividend distribution of
one Right (a "Right") for each outstanding share of Common Stock of the Company
(the "Common Stock") to shareholders of record at the close of business on
September 10, 1997 (the "Record Date"). The following is a summary of the terms
of the Rights.
Each Right entitles the record holder to purchase from the Company one
one-hundredth of a share of Junior Participating Preferred Stock, Series A, of
the Company (the "Series A Preferred Stock") or, in certain circumstances
described in the Rights Agreement referred to below, Common Stock, other
securities, cash or assets, at a price of $30.00, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are set forth in a
Rights Agreement dated as of September 2, 1997 (the "Rights Agreement") between
the Company and American Stock Transfer & Trust Company, Rights Agent (the
"Rights Agent").
Distribution Date; Transfer of Rights
Initially, the Rights will not be exercisable, certificates
representing the Rights will not be sent to shareholders, and the Rights will
trade automatically with the Common Stock. The Rights will separate from the
Common Stock and certificates representing the Rights will be distributed upon
the earlier of (i) ten business days following the date (the "Stock Acquisition
Date") of the first 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 15% or more of the outstanding Common Stock
and (ii) ten business days following the commencement or first public
announcement of an intention to commence a tender or exchange offer that, if
successful, would cause the bidder to own 15% or more of the outstanding Common
Stock (the earlier of such dates being called the "Distribution Date"). The
Company expects that the Rights will begin to trade independently at that time.
At no time, however, will the Rights have any voting power. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with the Common Stock, (ii)
new Common Stock certificates issued after the Record Date, upon transfer or new
issuance of the Common Stock, will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any of the
Common Stock certificates also will constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 10, 2007, unless earlier redeemed by the Company as
described below.
Exercise of Rights for Shares of Common Stock of the Company
In the event (a "Section 11(a)(ii)Event") that any person becomes an
Acquiring Person at any time after the Rights Dividend Declaration Date, after
the Distribution Date each holder of a Right will have the right to receive,
upon exercise and except as otherwise provided in the Rights Agreement, shares
of Common Stock (or, in certain circumstances, cash, property or
2
<PAGE> 52
other securities of the Company) having a value equal to two times the Purchase
Price then in effect. Notwithstanding the foregoing, upon the occurrence of a
Section 11(a)(ii) Event, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void.
Exercise of Rights for Shares of an Acquiring Company
In the event (a "Section 13 Event") that, following the Stock
Acquisition Date, the Company is acquired in a merger or other business
combination transaction or 50% or more of the Company's assets, cash flow or
earning power is sold or transferred, then, except as otherwise provided in the
Rights Agreement, each holder of a Right (except Rights that have been voided)
shall thereafter have the right to receive, upon exercise, common stock (or
other capital stock) of the acquiring company having a value equal to two times
the Purchase Price then in effect.
Adjustments to Purchase Price
The Purchase Price payable, and the number of shares of Series A
Preferred Stock (or other securities or property) issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination, consolidation
or reclassification of, the Series A Preferred Stock, (ii) upon the grant to
holders of the Series A Preferred Stock of certain rights or warrants to
subscribe for Series A Preferred Stock or convertible securities at less than
the current market price of the Series A Preferred Stock or (iii) upon the
distribution to holders of the Series A Preferred Stock of evidences of
indebtedness, cash or assets (excluding regular periodic cash dividends and
dividends payable in Series A Preferred Stock) or subscription rights or
warrants (other than those referred to above). The number of Rights and number
of shares of Series A Preferred Stock issuable upon the exercise of each Right
are also subject to adjustment in the event of a stock split, combination or
stock dividend on the Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until the time at which cumulative adjustments require an adjustment of
at least one percent of the Purchase Price. No fractional shares of Series A
Preferred Stock will be issued (other than fractions that are integral multiples
of one one-hundredth of a share of Series A Preferred Stock, which may, upon the
election of the Company, be evidenced by depositary receipts). In lieu thereof,
an adjustment in cash will be made based on the market price of the Series A
Preferred Stock on the trading date next preceding the date of exercise.
Redemption of Rights
At any time prior to the earliest to occur of the Stock Acquisition
Date, the Distribution Date and the Final Expiration Date, the Company may, at
its option, by resolution of its Board of Directors, redeem all but not less
than all of the Rights at a redemption price of $.001 per Right, subject to
adjustment (the "Redemption Price"). Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
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Series A Preferred Stock
Each share of Series A Preferred Stock purchasable upon exercise of the
Rights will be entitled to receive a dividend equal to 100 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders of
the shares of Series A Preferred Stock will be entitled to receive a liquidation
payment equal to the greater of $100 per share and 100 times the liquidation
payment per share of Common Stock. Each share of Series A Preferred Stock will
have one hundred votes. The shares of Series A Preferred Stock will vote
together as one class with the shares of Common Stock. In the event of any
consolidation, merger, combination or other transaction in which shares of
Common Stock are exchanged, each share of Series A Preferred Stock will be
entitled to receive 100 times the amount and type of consideration received per
share of Common Stock.
Shareholder Rights; Tax Matters
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income if the Rights become exercisable for
Common Stock (or other consideration) of the Company or for common stock of an
acquiring company as set forth above.
Amendments to Terms of the Rights
Prior to the first to occur of the Stock Acquisition Date and the
Distribution Date, and subject to the last sentence of this paragraph, the
Company may, by resolution of its Board of Directors, amend any provision of the
Rights Agreement in any respect whatsoever without the approval of any Common
Stock holders. From and after the first to occur of the Stock Acquisition Date
and the Distribution Date, and subject to the last sentence of this paragraph,
the Company may, by resolution of its Board of Directors (which resolution shall
be effective only with the concurrence of a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the number of
directors then in office), amend the Rights Agreement without the approval of
any holders of Rights in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained therein that may be defective or inconsistent
with any other provisions therein, (iii) to shorten or lengthen any time period
provided for therein or (iv) to supplement or amend any other provisions of the
Rights Agreement in any manner that the Company may deem necessary or desirable
and that shall not adversely affect the interests of the holders of Rights
(other than an Acquiring Person or an affiliate or associate of an Acquiring
Person); provided, however, that the Rights Agreement may not be amended to
lengthen, pursuant to clause (iii), (A) a time period relating to when the
Rights may be redeemed or to modify the ability (or inability) of the Board of
Directors of the Company to redeem the Rights, in either case at such time as
the Rights are not then redeemable, or (b) any other time period provided for
herein unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of or the benefits to the holders of the Rights (other
than an Acquiring Person or an affiliate or associate of any such person).
Notwithstanding anything in the Rights Agreement to the contrary, no amendment
shall be made on or after the first to occur of the Stock Acquisition Date and
the Distribution Date that changes the Redemption Price, the
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Final Expiration Date, the Purchase Price or the number of one-hundredths of a
share of Series A Preferred Stock for which a Right is then exercisable.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board at the date of the Rights
Agreement and any person subsequently elected to the Board if recommended or
elected by a majority of the Continuing Directors, but shall not include an
Acquiring Person, or an affiliate or associate of an Acquiring Person, or any
representative of any such person.
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.
Copies of the Rights Agreement are available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as it may be
amended from time to time, which is incorporated herein by reference.
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Exhibit 99.2
WSMP ADOPTS SHAREHOLDER RIGHTS PLAN
CLAREMONT, N.C. (August 19, 1997) -- WSMP, Inc. (Nasdaq: WSMP), today
announced that its board of directors has adopted a shareholder rights plan and
declared a dividend distribution of one preferred stock purchase right on each
outstanding share of WSMP common stock.
The preferred stock purchase rights will be distributed to common stock
shareholders of record on September 10, 1997. The rights will expire on
September 10, 2007, unless redeemed earlier at $.001 per right, the WSMP board
announced after its regular quarterly meeting on August 28.
The rights are designed to make it more likely that all of the
company's shareholders receive fair and equal treatment in the event of any
proposed takeover of the company and to guard against the use of coercive
tactics to gain control of WSMP. The rights also provide protection against a
controlling stockholder taking advantage of its position by engaging in
transactions for its benefit and to other shareholders' detriment.
Additional information regarding the shareholder rights plan will be
included in a Current Report on Form 8-K to be filed with the Securities and
Exchange Commission on or about September 2, 1997.
WSMP is comprised of a variety of food processing operations and a
restaurant division. It has the capacity to produce more than four million
microwaveable sandwiches per week in its Claremont facility. It also produces
packaged, refrigerated meats, vegetables, desserts and other items targeted for
the Home Meal Replacement market. And WSMP is one of the largest country ham
producers in the nation.
In addition to its food processing facilities, WSMP's restaurant
operations include 34 company-owned and 47 franchised restaurants, with a
majority of these being Western Steer(R) Steaks, Buffet and Bakery restaurants,
Prime Sirloin(R) Buffet, Bakery and Steaks restaurants and Bennett's(TM)
Smokehouse and Saloon restaurants.
CONTACT:
David R. Clark, President and Chief Operating Officer, WSMP, Inc.,
(704) 459-7626
