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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
BUFFETS, INC.
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(Exact name of registrant as specified in its charter)
MINNESOTA 41-1462294
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(State of incorporation or organization) (I.R.S. Employer Identification No.
10260 VIKING DRIVE, SUITE 100, EDEN PRAIRIE, MN 55344
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
TITLE OF EACH CLASS
TO BE SO REGISTERED
PREFERRED SHARE PURCHASE RIGHTS
Exhibit Index located at page 7
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Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On October 24, 1995, the Board of Directors of Buffets, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding Common Share of the par value of $.01 per share (the
"Common Shares") of the Company. The dividend is payable on November 13, 1995
(the "Record Date") to shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a Series A Junior Participating Preferred Share of the par
value of $.01 per share (the "Preferred Shares") of the Company at a price of
$65 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement"), dated as of October 24, 1995, between
the Company and American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
Initially, the Rights will attach to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares and a Distribution
Date for the Rights will occur upon the earlier of:
(i) the close of business on the fifteenth day following a public
announcement that a person or group of affiliated or associated persons has
become an "Acquiring Person" (i.e. has become, subject to certain
exceptions, the beneficial owner of 20% or more of the outstanding Common
Shares, or
(ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange offer the
consummation of which would result in a person or group of affiliated or
associated persons becoming, subject to certain exceptions, the beneficial
owner of 20% or more of the outstanding Common Shares (or such later date
as may be determined by the Board of Directors of the Company prior to a
person or group of affiliated or associated persons becoming an Acquiring
Person).
Until the Distribution Date,
(i) the Rights will be evidenced by the Common Share certificates and
will be transferred with and only with the Common Shares,
(ii) new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and
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(iii) the surrender for transfer of any Common Share certificate,
even without such notation or a copy of the Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with
the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on November 13, 2005, unless extended or earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution:
(i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares,
(ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares
or convertible securities at less than the then current market price of the
Preferred Shares, or
(iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash
dividends or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those described in clause (ii) hereof).
The number of Preferred Shares issuable upon the exercise of a Right is also
subject to adjustment in the event of a dividend on Common Shares payable in
Common Shares, or a subdivision, combination or consolidation of the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares which are integral multiples of one one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu thereof a payment in cash is made
based on the closing price (pro-rated for the fraction) of the Preferred Shares
on the last trading date prior to the date of exercise.
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In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (unless such person first becomes an
Acquiring Person pursuant to a tender offer or an exchange offer for all
outstanding Common Shares at a price and on terms determined by the Board of
Directors of the Company (prior to any change in control of the Board of
Directors) to be fair to the shareholders and otherwise in the best interests of
the Company and its shareholders and which the Board of Directors recommends to
the shareholders), proper provision shall be made so that each holder of a
Right, other than Rights that are or were beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive upon exercise thereof at the then current exercise price of the Right
that number of Common Shares having a market value of two times the exercise
price of the Right, subject to certain possible adjustments.
In the event that, after the Distribution Date or within 15 days prior
thereto, the Company is acquired in certain mergers or other business
combination transactions (other than a transaction for at least the same
per-share consideration with a person who acquired Common Shares through a
tender offer or exchange offer for all outstanding Common Shares approved by the
Board of Directors in accordance with the preceding paragraph or any wholly
owned subsidiary of such person) or 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) are sold after the
Distribution Date or within 15 days prior thereto, each holder of a Right (other
than Rights which have become void under the terms of the Rights Agreement) will
thereafter have the right to receive, upon exercise thereof at the then current
exercise price of the Right, that number of common shares of the acquiring
company (or, in certain cases, one of its affiliates) having a market value of
two times the exercise price of the Right.
In certain events specified in the Rights Agreement, the Company is
permitted to temporarily suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person (subject to certain exceptions) and prior to
the acquisition by a person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Board of Directors of the Company
may (if there has been no change in control of the Board of Directors) exchange
all or part of the Rights (other than Rights which have become void under the
terms of the Rights Agreement) for Common Shares or equivalent securities at an
exchange ratio per Right equal to the result obtained by dividing the exercise
price of a Right by the current per share market price of the Common Shares,
subject to adjustment.
At any time prior to the close of business on the twentieth day after
a public announcement that a person or group of affiliated or associated persons
has become an Acquiring Person, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right, subject to
adjustment (the "Redemption Price"), payable in cash; provided, however, that
such redemption may occur after any person becomes an Acquiring Person only if
there has not been a change in control of the Board of Directors of
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the Company. The period of time during which the Rights may be redeemed may be
extended by the Board of Directors of the Company if no such change of control
has occurred or if no person has become an Acquiring Person. The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Board of Directors and the Company shall not have any liability to any person as
a result of the redemption or exchange of the Rights pursuant to the provisions
of the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of
the Company, subject to certain limitations after the Distribution Date, without
the consent of the holders of the Rights, including an amendment prior to the
date a person or group of affiliated or associated persons becomes an Acquiring
Person to lower the 20% threshold for exercisability of the Rights to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned by
any person or group of affiliated or associated persons (subject to certain
exceptions) or (ii) 10%.
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.
A copy of the Rights Agreement (including all exhibits thereto), dated
as of October 24, 1995 between the Company and the Rights Agent, specifying the
terms of the Rights, which includes as Exhibit B the form of Right Certificate,
is attached hereto as Exhibit 1 and incorporated herein by reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
Item 2. EXHIBITS.
1. Form of Rights Agreement, dated as of October 24, 1995
between Buffets, Inc. and American Stock Transfer & Trust Company, as
Rights Agent, which includes as Exhibit B the form of Right
Certificate. Pursuant to the Rights Agreement, Right Certificates
will not be mailed until after the earlier of (i) the close of
business on the fifteenth day following a public announcement that a
person or group of affiliated or associated persons has become,
subject to certain exceptions, the beneficial owner of 20% or more of
the outstanding Common Shares, or (ii) the close of business on the
fifteenth day following the commencement or public announcement of a
tender offer or exchange offer the consummation of which would result
in a person or group of affiliated or associated persons becoming,
subject to certain exceptions, the beneficial owner of 20% or more of
the Company's outstanding Common Shares (or such later date as may be
determined by the Board of Directors of the Company prior to a
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person or group of affiliated or associated persons becoming the
beneficial owner of 20% or more of the Company's outstanding Common
Shares).
SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
BUFFETS, INC.
Date: October 30, 1995 By: /C/ CLARK C. GRANT
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Clark C. Grant, Executive Vice
President of Finance, Treasurer
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EXHIBIT INDEX
EXHIBIT NO. PAGE NO.
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1. Form of Rights Agreement 7
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Exhibit 1
to Buffets, Inc. Form 8A Dated October 30, 1995
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SHARE RIGHTS AGREEMENT
BUFFETS, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF OCTOBER 24, 1995
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TABLE OF CONTENTS
Section 1. Certain Definitions ............................................1
Section 2. Appointment of Rights Agent.....................................4
Section 3. Issue of Right Certificates.....................................5
Section 4. Form of Right Certificates......................................7
Section 5. Countersignature and Registration...............................7
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Lost, Stolen, Destroyed or Mutilated Right
Certificates....................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...9
Section 8. Cancellation and Destruction of Right Certificates.............10
Section 9. Reservation and Availability of Preferred Shares...............10
Section 10. Preferred Shares Record Date...................................11
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.....................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....21
Section 13. Consolidation, Merger, Statutory Share Exchange or Sale or
Transfer of Assets or Earning Power............................21
Section 14. Fractional Rights and Fractional Shares........................24
Section 15. Rights of Action...............................................25
Section 16. Agreement of Right Holders.....................................26
Section 17. Right Certificate Holder Not Deemed a Shareholder..............26
Section 18. Concerning the Rights Agent....................................27
Section 19. Merger or Consolidation or Change of Name of Rights Agent......27
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Section 20. Duties of Rights Agent.........................................28
Section 21. Change of Rights Agent.........................................30
Section 22. Issuance of New Right Certificates.............................31
Section 23. Redemption.....................................................31
Section 24. Exchange.......................................................32
Section 25. Notice of Certain Events.......................................34
Section 26. Notices........................................................35
Section 27. Supplements and Amendments.....................................35
Section 28. Successors.....................................................36
Section 29. Benefits of this Agreement.....................................36
Section 30. Severability...................................................37
Section 31. Governing Law..................................................37
Section 32. Counterparts...................................................37
Section 33. Descriptive Headings...........................................37
Exhibit A -- Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Shares
Exhibit B -- Form of Right Certificate
Exhibit C -- Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
Agreement, dated as of October 24, 1995, between Buffets, Inc., a
Minnesota corporation (the "Company"), and American Stock Transfer & Trust
Company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (individually a "Right" and
collectively the "Rights") for each Common Share (as defined in this Agreement)
of the Company outstanding at the Close of Business (as defined in this
Agreement) on November 13, 1995 (the "Record Date"), each Right initially
representing the right to purchase one one-hundredth of a Preferred Share (as
defined in this Agreement), upon the terms and subject to the conditions set
forth in this Agreement, and has further authorized the issuance of one Right
(as such number may hereafter be adjusted pursuant to the provisions of
Section 11) with respect to each Common Share that shall become outstanding (i)
at any time between the Record Date and the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date (as such terms are defined in
this Agreement) or (ii) upon the exercise or conversion, prior to the earlier of
the Redemption Date or the Final Expiration Date, of any option or other
security exercisable for or convertible into Common Shares, which option or
other such security is outstanding on the Distribution Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is defined
in this Agreement) who or which, together with all Affiliates and Associates (as
such terms are defined in this Agreement) of such Person, shall be the
Beneficial Owner (as such term is defined in this Agreement) of 20% or more of
the Common Shares of the Company then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary (as such term is defined in this Agreement) of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, or (iv) any entity holding Common Shares for or pursuant to the
terms of any such plan described in clause (iii) of this sentence.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of Common Shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of the Common Shares of
the Company then outstanding; PROVIDED, HOWEVER, that if a Person shall,
together with all Affiliates or Associates of such Person, become the Beneficial
Owner of 20% or more of the Common Shares of the Company then outstanding by
reason of share acquisitions by the Company and if such Person or such Person's
Affiliates or Associates shall, after such share acquisitions by the Company,
become the Beneficial Owner of any additional Common Shares of the Company, and,
immediately after becoming the Beneficial Owner of such additional Common
Shares, such Person shall, together with all
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Affiliates and Associates of such Person, be the Beneficial Owner of 20% or more
of the Common Shares of the Company then outstanding, then such Person (unless
such Person shall be (1) the Company, (2) any Subsidiary of the Company, (3) any
employee benefit plan of the Company or of any Subsidiary of the Company, or (4)
any entity holding Common Shares for or pursuant to the terms of any such plan
described in clause (3) of this sentence) shall be deemed an "Acquiring Person".
An entity other than the Company or any Subsidiary of the Company holding Common
Shares for or pursuant to the terms of an employee benefit plan of the Company
or of any Subsidiary of the Company and in addition being the Beneficial Owner
of Common Shares that are not held for or pursuant to the terms of any such plan
shall be deemed to constitute an Acquiring Person, notwithstanding anything
herein stated, if, but only if, it, together with its Affiliates and Associates,
shall be the Beneficial Owner of 20% or more, exclusive of those Common Shares
held by it for or pursuant to the terms of any such plan, of the Common Shares
then outstanding.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "beneficial ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, including without
limitation securities with respect to which such Person or any of such Person's
Affiliates or Associates has "beneficial ownership" pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act;
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, whether or not in writing (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, other rights (other than the
Rights), warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, or to have
beneficial ownership of, any securities pursuant to subparagraph (i), (ii) or
(iii) of this paragraph (c) solely because such securities are 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; or (B) the right to vote or dispose of (including
without limitation 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, or to have beneficial
ownership of, any securities pursuant to subparagraph (i), (ii) or (iii) of this
paragraph (c) solely because of the right to vote
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such securities pursuant to an agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote such securities (1) arises
solely from a revocable proxy or consent given to such Person or any of such
Person's Affiliates or Associates in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations under the Exchange Act and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report) as being beneficially owned by such Person; or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to subparagraph (ii)
of this paragraph (c)) or disposing of any voting securities of the Company.
Notwithstanding anything in these definitions of Beneficial Owner, beneficially
own or beneficial ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's beneficial ownership of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to beneficially own under this
Agreement.
(d) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York or Minnesota are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., New
York, New York time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., New York, New York time, on the next
succeeding Business Day.
(f) "Common Shares", when used with reference to the Company, shall
mean shares of Common Stock of the par value of $.01 per share (as such par
value may be changed from time to time) of the Company. "Common Shares", when
used with reference to any Person other than the Company, shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person.
(g) "Continuing Director" shall mean any Person who is a member of
the Board of Directors of the Company, while such Person is a member of the
Board of Directors, who is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a representative or nominee of an Acquiring Person or
of any such Affiliate or Associate, and who was a member of the Board of
Directors of the Company on the date of this Agreement. A
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"Continuing Director" shall also mean any Person who subsequently becomes a
member of the Board of Directors of the Company, while such Person is a member
of the Board of Directors, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate, if such Person's initial
nomination for election or initial election to the Board of Directors is
recommended or approved by the Board of Directors (at a time when a majority of
the directors then serving are Continuing Directors).
(h) "Distribution Date" shall have the meaning set forth in Section
3.
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7.
(j) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of any such entity.
(k) "Preferred Shares" shall mean Series A Junior Participating
Preferred Shares of the par value of $.01 per share (as such par value may be
changed from time to time) of the Company having the rights and preferences set
forth in the Form of Certificate of Designation, Preferences and Rights attached
to this Agreement as Exhibit A hereto.
(l) "Redemption Date" shall have the meaning set forth in Section 7.
(m) "Section 11(a)(ii) Event" shall mean an event described in the
first sentence of Section 11(a)(ii).
(n) "Section 13 Event" shall mean any event described in clauses (w),
(x), (y) or (z) of Section 13(a).
(o) "Shares Acquisition Date" shall mean the first date of 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 an Acquiring Person has become such.
(p) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or other equity interests entitled to vote in the election of directors (or
Persons with comparable responsibilities if the entity has no directors) is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance
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with Section 3, shall prior to the Distribution Date also be the holders of the
Common Shares) in accordance with the terms and conditions of this Agreement,
and the Rights Agent hereby accepts such appointment. The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the 15th day
after the Shares Acquisition Date or (ii) the Close of Business on the 15th day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such plan)
to commence (which intention shall not have been withdrawn within five business
days (as defined in Rule 14d-1 of the General Rules and Regulations under the
Exchange Act) after such public announcement), a tender or exchange offer the
consummation of which would result in beneficial ownership by a Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) of 20% or more of the then
outstanding Common Shares (including any such date that is after the date of
this Agreement and prior to the issuance of the Rights, the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates where the
context so requires) and not by separate Right Certificates, and (y) the right
to receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Right Certificates,
in substantially the form of Exhibit B hereto (the "Right Certificates"),
evidencing one Right for each Common Share so held, subject to adjustment
pursuant to Section 11(i). In the event that an adjustment in the number of
Rights per Common Share has been made pursuant to Section 11(i), at the time
Right Certificates are distributed, the Company may, to the extent provided in
Section 14(a), make the necessary and appropriate adjustments (as set forth in
Section 14(a)) so that Right Certificates are distributed representing only
whole numbers of Rights and pay cash in lieu of fractional Rights pursuant to
Section 14(a).
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As of and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders
thereof, and the registered holders of the Common Shares shall also be the
registered holders of the associated Rights. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on the Record
Date, with or without a copy of the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares which become outstanding after the
Record Date and (i) prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date or (ii) upon the exercise or
conversion, prior to the earlier of the Redemption Date or the Final Expiration
Date, of any option or other security exercisable for or convertible into Common
Shares, which option or other security is outstanding on the Distribution Date,
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Buffets, Inc. and American Stock Transfer & Trust
Company, dated as of October 24, 1995 (the "Rights
Agreement"), the terms of which (including restrictions on
the transfer of such Rights) are hereby incorporated herein
by reference and a copy of which is on file with the
Secretary at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor to its Secretary
from such holder. Under certain circumstances, as set forth
in the Rights Agreement, Rights that are or were acquired or
beneficially owned by an Acquiring Person or any Associate
or Affiliate thereof (as such terms are defined in the
Rights Agreement), may become null and void.
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With respect to certificates containing the foregoing legend, until the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, the registered holders of the Common
Shares shall also be the registered holders of the associated Rights and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be in substantially the form of 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, rule or regulation
(including, without limitation, any rule or regulation of any stock exchange on
which the Rights may from time to time be listed) or to conform to usage or to
reflect adjustments to the Rights made pursuant to this Agreement. Subject to
the provisions of Section 11 and Section 22, the initial Right Certificates,
whenever distributed, shall entitle the holders thereof to purchase such number
of one one-hundredths of a Preferred Share as shall be set forth therein at the
price per one one-hundredth of a Preferred Share set forth therein (the price
per one-hundredth of a Preferred Share being herein called the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price shall be subject to adjustment as provided in
this Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its President, its
Chief Financial Officer or any of its Vice Presidents, either manually or by
facsimile signature. The Right Certificates shall be countersigned, either
manually or by facsimile signature, by the Rights Agent and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the signing 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 Rights Agreement any such person was not such an officer.
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<PAGE>
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or the office or offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, books for registration and transfer of the Right Certificates. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii) hereof
or that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or offices of the Rights Agent designated for such
purpose. Thereupon the Rights Agent shall, subject to Section 14 hereof,
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment by the registered 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 Right Certificates. 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
registered holder shall have duly completed and executed 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) of such Right Certificate or Affiliates or Associates thereof
as the Company shall reasonably request.
(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, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to
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the Rights Agent for countersignature and delivery to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 11(a)(ii) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly completed and executed, to
the Rights Agent at the office or offices of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each one
one-hundredth of a Preferred Share as to which the Rights are exercised, prior
to the earliest of (i) the close of business on November 13, 2005 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be $65,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly completed and executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 in cash, or by certified
check or bank cashier's check or money order payable to the order of the
Company, the Rights Agent shall, subject to Section 20(k), thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total number
of Preferred Shares issuable upon exercise of the Rights under this Agreement
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
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 to be paid in lieu of issuance of fractional interests in shares
in accordance with Section 14, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
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<PAGE>
deliver such cash for fractional interests in shares to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section unless such registered holder shall have
(i) duly completed and executed the form of election to purchase set forth on
the reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) of such Right Certificate or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer,
split-up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates after any
retention period required by the Securities and Exchange Commission has lapsed,
and in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares,
the number of Preferred Shares that will be sufficient to permit the exercise in
full of all outstanding Rights.
(b) The Company will prepare and file, as soon as practicable
following expiration of the Company's right of redemption pursuant to Section
23, a registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the Rights and the Company's securities purchasable upon
exercise of the Rights on an appropriate form, and use its best efforts to cause
such registration statement to (i) become effective as soon as practicable after
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<PAGE>
such filing, and (ii) remain effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities or (B) the Final Expiration
Date. The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed 90 days after the date
the registration statement is filed, the exercisability of the Rights in order
to permit the registration statement to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained or the exercise thereof is not
permitted under applicable law.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price and any applicable
transfer taxes), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares 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 the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights, until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of the Company
are closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares transfer books of the Company are open.
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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 holder of Preferred
Shares for which the Rights shall be exercisable, including without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation,
merger or statutory share exchange in which the Company is the continuing,
surviving or acquiring corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable on
such date pursuant to the exercise of the Rights, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect (and any
applicable transfer taxes), the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of the Company were open,
such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; PROVIDED,
HOWEVER, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of one Right. If an event occurs which
would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any
Person shall become an Acquiring Person (other than (A) pursuant to any
Section 13 Event occurring after the Distribution Date or within 15 days prior
thereto or (B) as a result of an acquisition of Common Shares of the Company
pursuant to a tender offer or an exchange offer for all outstanding Common
Shares of the Company at a price and on terms determined by the Board of
Directors of the Company, at a time when a majority of the directors then
serving are Continuing Directors and after receiving advice from one or more
investment banking firms, to be (1) fair to shareholders (taking into account
all factors which the Board of Directors deems relevant), and (2)
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<PAGE>
otherwise in the best interests of the Company and its shareholders and which
the Board of Directors determines to recommend to the shareholders of the
Company), proper provision shall be made so that each holder of a Right, subject
to Section 11(a)(iii), shall thereafter have a right to receive, upon exercise
thereof by payment of the amount equal to the product of the number of one
one-hundredths of a Preferred Share which would otherwise be issuable upon
exercise of a Right and the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of Preferred Shares, such number of Common
Shares of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is exercisable immediately prior to the occurrence of
the Section 11(a)(ii) Event and (y) dividing that product by 50% of the current
per share market price of the Company's Common Shares (determined pursuant to
Section 11(d) hereof) on the date of such occurrence.
From and after the first occurrence of a Section 11(a)(ii) Event,
any Rights that are or were acquired or beneficially owned by any Acquiring
Person or any Associate or Affiliate of such Acquiring Person shall become null
and void without any further action and no holder of such Rights shall
thereafter have any rights to exercise such Rights or any other rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights that would be void pursuant to the preceding
sentence; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate of such an Acquiring Person or
to any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be canceled.
The Company shall use all reasonable efforts to insure that the provisions
hereof are complied with, but shall have no liability to any holder of a Right
Certificate or other Person as a result of its failure in good faith to make any
determinations with respect to an Acquiring Person or its Affiliates or
Associates.
(iii) If, on the date of the occurrence of a Section
11(a)(ii) Event (the "Adjustment Date"), the Company does not have sufficient
authorized, unissued and unreserved Common Shares available to permit the
exercise in full of all Rights that are exercisable on the Adjustment Date for
the number of Common Shares per Right provided for in Section 11(a)(ii), then
the Exercise Price (as defined below) and the number of Common Shares to be
delivered by the Company upon exercise of a Right shall be further adjusted as
provided in this subparagraph (iii).
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(1) Definitions:
(A) The "Aggregate Market Value" is the product of (i) the
number of Available Shares and (ii) the current per share market price of the
Common Shares on the Adjustment Date, determined as provided in Section 11(d)
hereof.
(B) The "Available Shares" are all unreserved Common Shares
which are authorized and unissued immediately prior to the Adjustment Date.
(C) The "Exercise Price" is the amount of the payment that must
be made by the holder of a Right in connection with the exercise of one Right
immediately prior to the Adjustment Date.
(D) The "Deficiency" is the amount by which (i) two times the
Exercise Price exceeds (ii) the quotient obtained by dividing the Aggregate
Market Value by the number of Rights remaining outstanding immediately prior to
the Adjustment Date (the "Remaining Rights") (which number shall not include the
Rights that are or were beneficially owned by any Acquiring Person (or any
Associate or Affiliate thereof) that shall have become void pursuant to Section
11(a)(ii) hereof).
(2) If the Deficiency is less than or equal to the Exercise Price,
then
(A) the number of Common Shares to be delivered by the Company
upon exercise of a Right shall be adjusted to be equal to the number of
Available Shares divided by the number of Remaining Rights; and
(B) the amount of cash required to be delivered by the holder of
a Right upon the exercise thereof shall be adjusted (the "New Exercise Price")
to equal the Exercise Price minus the Deficiency; PROVIDED, HOWEVER, that in no
event will the New Exercise Price be less than the aggregate par value of the
Common Shares required to be delivered upon the exercise of one Right pursuant
to subparagraph (2)(A) above.
(3) If the Deficiency is greater than the Exercise Price, then
(A) the number of Common Shares to be delivered by the Company
upon exercise of a Right shall be adjusted to equal the quotient obtained by
dividing the Exercise Price by the current per share market price of the Common
Shares on the Adjustment Date;
(B) the New Exercise Price shall equal the aggregate par value
of the Common Shares required to be delivered upon the exercise of one Right
pursuant to subparagraph (3)(A) above; and
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<PAGE>
(C) in lieu of issuing Common Shares (in whole or in part upon
the exercise of Rights) the Company may issue, upon the exercise of Rights at
the New Exercise Price, other equity securities of the Company (including,
without limitation, shares, or units or fractions of shares, of preferred stock
which the Board of Directors of the Company has determined to have substantially
the same value, voting rights and other rights as Common Shares (such equity
securities are herein called "common share equivalents")). To the extent that
such common share equivalents (or fractions thereof) are substituted for Common
Shares upon exercise of the Rights following the occurrence of a Section
11(a)(ii) Event, they shall be substituted on a pro-rata basis with respect to
all Rights (other than Rights that are or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) that shall have become
void pursuant to Section 11(a)(ii) hereof). Such common share equivalents shall
not be included in Available Shares, and all of the Available Shares shall be
reserved, as of the Adjustment Date, for issuance, on a pro-rata basis, upon
exercise of the Rights and may not be substituted for with common share
equivalents upon the exercise of any Right except to the extent that the number
of Common Shares required to be delivered under subparagraph (3)(A) upon the
exercise of such Right exceeds the quotient of the number of Available Shares
divided by the number of Remaining Rights.
(4) If, at the time any adjustment is required pursuant to this
Section 11(a)(iii), the Common Shares shall have no par value, then for the
purposes of this Section 11(a)(iii), the par value of the Common Shares shall be
deemed to be $.01 per share.
(5) In the event that there shall not be sufficient authorized but
unissued and unreserved Common Shares (or common share equivalents the issuance
of which is permitted under Section 11(a)(iii)(3)(C)) to permit the exercise in
full of the Rights in accordance with this subparagraph (iii), the Company shall
use its best efforts to cause the authorization of sufficient additional Common
Shares or common share equivalents to permit such exercise and, if the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional Common Shares or common share equivalents could be
authorized to permit such exercise, the Company may suspend the exercisability
of the Rights for a period not to exceed 90 days in order to seek any
authorization of additional Common Shares or other common share equivalents. 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.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security
15
<PAGE>
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as determined pursuant
to Section 11(d) hereof) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date,
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred 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 per share market
price, and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); PROVIDED, HOWEVER, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation or in a statutory share
exchange) of evidences of indebtedness or cash or non-cash assets (other than a
regular quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current per
share market price of the Preferred Shares (as determined pursuant to Section
11(d) hereof) on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of the
evidences of indebtedness or cash or non-cash assets so to be distributed on, or
of such subscription rights or warrants applicable to, one Preferred Share, and
the denominator of which shall be such then current per share market price of
the Preferred Shares; PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company to be issued
upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date
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<PAGE>
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 if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
PROVIDED, HOWEVER, that in the event that the current per share market price of
the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in such Security or securities convertible into such Security (other
than the Rights) or (B) any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such day the Security
is not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. Except as provided
in Section 11(d)(ii) with respect to Preferred Shares, if on any such day the
Security is not publicly held or no market maker is making a market in the
Security, the fair value of such securities on such day as determined in good
faith by the Board of Directors of the Company (whose determination shall be
described in a statement filed with the Rights Agent) shall be used in lieu of
the closing price for such day. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) If the Preferred Shares are not publicly held or traded in a
manner described in Section 11(d)(i) hereof, then, notwithstanding anything to
the contrary provided in Section 11(d)(i) hereof, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the current
per share market price of the Common Shares as determined
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pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date of this
Agreement) multiplied by one hundred. If neither the Common Shares nor the
Preferred Shares are publicly held or so traded, the "current per share market
price" of the Preferred Shares shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) Except as provided in the third sentence of this Section 11(e),
no adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-millionth of a Preferred Share or
one ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11, but for the first sentence of this Section 11(e),
shall be made no later than the earlier of (i) three years from the date of the
transaction that requires such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price under this Agreement shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share (or other securities) purchasable from time
to time under this Agreement upon exercise of the Rights, all subject to further
adjustment as provided in this Agreement.
(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 (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
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(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued on or after the Distribution Date, shall
be at least 10 days later than the date of the public announcement. If Right
Certificates have been issued on or after the Distribution Date, 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 in this Agreement, shall
bear 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 one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Right Certificates theretofore issued may continue to express
the Purchase Price and the number of one one-hundredths of a Preferred Share
which were expressed at the time of the issuance of such Right Certificates
under this Agreement.
(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
Preferred Shares issuable upon exercise of the Rights, the Company shall take
such corporate action, if any, which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
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(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 issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company 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 the Board of Directors of the Company shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Shares, (ii) issuance wholly for cash of any of the Preferred Shares at less
than the current per share market price, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) dividends on Preferred Shares payable in
Preferred Shares or (v) issuance of rights, options or warrants referred to in
Section 11(b) hereof, hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such shareholders.
(n) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23, 24 or 27, take (or permit
any Subsidiary of the Company to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or diminish
substantially the benefits intended to be afforded by the Rights unless such
action is approved by the Board of Directors of the Company at a time when a
majority of the directors then serving are Continuing Directors.
(o) Anything in this Agreement or the Rights to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise) into a greater or lesser number of Common Shares,
then in any such case (x) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a Preferred Share
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately before such event
and the denominator of which is the number of Common Shares outstanding
immediately after such event and (y) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this
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Section 11(o) shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected. If an
event occurs which would require an adjustment under Section 11(a)(ii) and this
Section 11(o), the adjustments provided for in this Section 11(o) shall be in
addition and prior to any adjustment required pursuant to Section 11(a)(ii).
(p) If any adjustment in the Purchase Price pursuant to paragraph (b)
or (c) of this Section 11 would not be permitted by law, under the Company's
Articles of Incorporation or under the Certificate of Designation, Preferences
and Rights establishing the Preferred Shares, no such issuance of securities or
distribution of evidences of indebtedness or other assets or subscription rights
or warrants, as the case may be, that would require such an adjustment but for
the limitations established by law, the Company's Articles of Incorporation or
such Certificate of Designation, Preferences and Rights shall be made by the
Company.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares or
the Preferred Shares a copy of such certificate and (c) if such adjustment is
made after the Distribution Date, mail a brief summary thereof to each holder of
record of a Right Certificate in accordance with Section 25. The Rights Agent
shall be fully protected in relying on such certificate and on any adjustment
therein contained.
Section 13. CONSOLIDATION, MERGER, STATUTORY SHARE EXCHANGE OR SALE
OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event, after the Distribution Date or within 15 days prior
thereto, directly or indirectly,
(w) the Company shall consolidate with, or merge with and into,
any other Person (other than a wholly owned Subsidiary of the Company), and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger,
(x) any Person (other than a wholly owned Subsidiary of the
Company) shall consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such consolidation or merger, all or part of the
outstanding Common Shares of the Company held by existing shareholders of the
Company shall be changed into or exchanged for stock or other securities of any
other Person (or the Company) or money or any other property (except as a result
of the exercise of statutory dissenters' rights),
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(y) the Company shall effect a statutory share exchange with
outstanding Common Shares of the Company being exchanged for stock or other
securities of any other Person, money or 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 a series of
related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons (other than the Company or one or more of its
wholly owned Subsidiaries),
then, and in each such case (except as may be contemplated by Section 13(e)),
proper provision shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof by payment of the amount equal to the product of the number of
one one-hundredths of a Preferred Share which would otherwise be issuable upon
exercise of a Right and the then current Purchase Price in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, nonassessable and freely tradeable Common
Shares of the Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or adverse claims, as shall be
equal to the result obtained by (x) multiplying the then current Purchase Price
by the number of one one-hundredths of a Preferred Share for which a Right is,
immediately prior to the occurrence of the Section 13 Event, exercisable and (y)
dividing that product by 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such merger, consolidation, statutory share exchange, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares to permit the exercise
of all outstanding Rights) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (w), (x)
or (y) of the first sentence of Section 13(a), the Person (including, without
limitation, the Company as successor thereto or as the surviving corporation)
that is the issuer of any securities into which Common Shares of the Company are
converted in such merger, consolidation or exchange, or if no securities are so
issued, the Person that is the other party to such merger, consolidation or
exchange; and
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(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Shares of such
Person are not at such time or have not been continuously over the preceding 12-
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Shares of which are
and have been so registered, "Principal Party" shall refer to such other Person,
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized, unreserved Common
Shares which have not been issued or are held in treasury to permit the exercise
in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any Section 13 Event, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of the
Rights, on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (1) the date as of which the
Rights are no longer exercisable for such securities or (2) the Final Expiration
Date;
(ii) take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights.
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(e) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(w), (x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired Common Shares pursuant to a tender offer or
exchange offer for all outstanding Common Shares which complies with the
provisions of clause (B) of Section 11(a)(ii) (or a wholly owned Subsidiary of
any such Person or Persons), (ii) the price per Common Share offered in such
transaction is not less than the price per Common Share paid to all holders of
Common Shares whose shares were purchased pursuant to such tender offer or
exchange offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section 13(e),
all Rights hereunder shall expire.
The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, statutory share exchanges or sales or other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there may be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used in lieu of the
closing price for such day.
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(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share, or, if a Right shall then be exercisable for a fraction other
than one one-hundredth of a Preferred Share, integral multiples of that
fraction) upon exercise of the Rights or to distribute certificates which
evidence fractions of Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction). Fractions of Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share or, if a Right shall then be
exercisable for a fraction other than one one-hundredth of a Preferred Share,
integral multiples of that fraction may, at the election of the Company, be
evidenced by depositary receipts pursuant to an appropriate agreement between
the Company and a depositary selected by it, PROVIDED, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, or, if a Right shall then be exercisable for a fraction
other than one one-hundredth of a Preferred Share, integral multiples of that
fraction, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Share. For
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii)) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives such holder's right to receive any fractional Rights or any fractional
shares (except as provided above) upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of any Common Share), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of any other Common Share), 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 (or, prior to the Distribution Date, the associated Common Shares
certificate) in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
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Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) the Company may issue Rights after the Record Date as provided in
this Agreement; and
(e) notwithstanding anything in this Agreement or the Rights to the
contrary, the Company, the Rights Agent and the Board of Directors of the
Company shall not have any liability to any holder of a Right or other Person as
a result of the inability of the Company or the Rights Agent to perform any of
its obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained in this
Agreement 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 25), or to receive
dividends or subscription
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rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions of this
Agreement.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties under this Agreement.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability or expense (including the costs and
expenses of defending against any claim of liability), incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its counsel as set
forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer 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 to this Agreement; PROVIDED, HOWEVER, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. If at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all
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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 imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, the Common Shares
certificates), by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of the "current per share market price") be proved or established
by the Company prior to taking or suffering any action under this Agreement,
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 one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution 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 pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, 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 that such change or adjustment is required); nor shall it by any act
under this Agreement be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Agreement
from any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President or the Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for delay in acting while waiting for those instructions.
(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 pecuniarily interested in any transaction in
which the Company or its Subsidiaries may be interested, or contract with or
lend money to the Company or its Subsidiaries or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing in this
Agreement shall preclude the Rights Agent from acting in any other capacity for
the Company or its Subsidiaries 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 under this Agreement either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
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resulting from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties under this Agreement or in the exercise of its
rights or powers if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the form of assignment or form of
election to purchase, as the case may be, has either not been duly completed and
executed or indicates an affirmative response to enumerated clause 1 and/or 2 on
the reverse side of the applicable Right Certificate, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and, if such notice is mailed after the Distribution Date, to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and, if such notice is mailed after the
Distribution Date, 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, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of the State
of Minnesota or New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of Minnesota or New York), in good standing, having an office in the State
of Minnesota or New York which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million or (b) an affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with
the same
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powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it under this Agreement, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares and Preferred Shares, and, if such notice is filed after the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this
Section, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. REDEMPTION.
(a) Subject to the provisions of Section 27, the Board of Directors
of the Company may, at its option, at any time prior to the earlier of (x) the
Close of Business on the 20th day after the Shares Acquisition Date or (y) the
Close of Business on the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such redemption price
being hereinafter referred to as the "Redemption Price"), PROVIDED, HOWEVER,
that for the purposes hereof the Board of Directors of the Company shall be
entitled to so redeem the Rights after the time at which any Person first
becomes an Acquiring Person only if a majority of the directors then serving are
Continuing Directors. Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after the first occurrence of
a Section 11(a)(ii) Event until such time as the Company's right of redemption
set forth in the first sentence of this Section 23(a) has expired. The
Redemption Price shall be payable in cash by the Company. The redemption of the
Rights by the Board of Directors of the Company may be made effective at such
time and on such basis and with such conditions as the Board of Directors of the
Company in its sole discretion may establish. The Board of Directors and the
Company shall not have any liability to any Person as a result of the redemption
of Rights pursuant to the terms of this Section 23.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only
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right thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right so held. Promptly after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares; PROVIDED, HOWEVER, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption. Any notice
which is mailed in the manner provided in this paragraph shall be deemed given
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
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 except as
specifically set forth in this Section or in Section 24 or in connection with
the purchase of Common Shares prior to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may (at a time when a
majority of the directors are Continuing Directors), at its option, at any time
after the Adjustment Date (as defined in Section 11(a)(iii)), exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares, with each Right to be exchanged for such number of
Common Shares as shall equal the result obtained by dividing (x) the Exercise
Price (as defined in Section 11(a)(iii)) by (y) the current per share market
price of the Common Shares (determined pursuant to Section 11(d) hereof on the
Adjustment Date (such number of shares being hereinafter referred to as the
"Exchange Ratio")). The Exchange Ratio shall be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction affecting the
Common Shares that occurs after the Adjustment Date. Notwithstanding the
foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than (1) the Company,
(2) any Subsidiary of the Company, (3) any employee benefit plan of the Company
or of any Subsidiary of the Company or (4) any entity holding Common Shares for
or pursuant to the terms of any plan described in clause (3) of this sentence),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The
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Company shall promptly mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
authorized, unissued and unreserved to permit the exchange of Rights as
contemplated in accordance with this Section 24, the Company, at its option, may
substitute Preferred Shares (or equivalent preferred shares, as such term is
defined in Section 11(b), or common share equivalents, as such term is defined
in Section 11(a)(iii)(3)(C) hereof), for Common Shares exchangeable for Rights,
at the initial rate of one one-hundredth of a Preferred Share (or equivalent
preferred share) or one common share equivalent for each Common Share, as
appropriately adjusted to reflect stock splits, stock dividends or similar
transactions affecting the Common Shares that occur after the date of this
Agreement.
(d) In the event that there shall not be sufficient Common Shares,
Preferred Shares, equivalent preferred shares or common share equivalents,
authorized, unissued and unreserved to permit the exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Shares or Preferred
Shares, equivalent preferred shares or common share equivalents for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional Common Shares, the Company may pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section. The Board of Directors and the Company shall
not have any liability to any Person as a result of the exchange of Rights
pursuant to the terms of this Section.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to
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make any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), or (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a wholly owned Subsidiary of the
Company), 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 a series of
related transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or Persons
(other than the Company and/or any of its wholly owned Subsidiaries), or (v) to
effect any statutory share exchange with outstanding Common Shares of the
Company being exchanged for stock or other securities of any other corporation
or money or other property, or (vi) to effect the liquidation, dissolution or
winding up of the Company, or (vii) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise), then, in
each such case, the Company shall give to each holder of a Right Certificate, to
the extent feasible and in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, exchange, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii).
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Section 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Buffets, Inc.
10260 Viking Drive Suite 100
Eden Prairie, Minnesota 55344
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage-prepaid, addressed (until another address is
filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Buffets, Inc. Account Administrator
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage-prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may and the
Rights Agent shall, if so directed by the Company, from time to time supplement
or amend this Agreement without the approval of any holders of Common Shares or
Right Certificates in order (i) to extend the Final Expiration Date or, provided
that at the time of such amendment (x) no Person has become an Acquiring Person
or (y) a majority of the directors are Continuing Directors, the period during
which the Rights may be redeemed, notwithstanding anything to the contrary
provided in clause (iv) hereof, (ii) to cure any ambiguity, or to correct or
supplement any provision contained in this Agreement which may be defective or
inconsistent with any other provisions in this Agreement, (iii) prior to the
Distribution Date, to otherwise change or supplement any provision in this
Agreement in any manner which the Company may deem necessary or desirable, or
(iv) following the Distribution Date, to otherwise change or supplement any
provision in this Agreement in any manner which the Company may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Right Certificates (other than Right Certificates evidencing Rights that
shall have become null and void pursuant to Section 11(a)(ii)). Without
limiting the foregoing, the Company may at any time prior to such time as any
Person becomes an Acquiring Person amend this Agreement to lower the thresholds
set forth in Sections 1(a) and 3(a)
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hereof from 20% to not less than the greater of (i) the sum of .001% and the
largest percentage of the outstanding Common Shares then known by the Company to
be beneficially owned by any Person (other than (1) the Company, (2) any
Subsidiary of the Company, (3) any employee benefit plan of the Company or any
Subsidiary of the Company, or (4) any entity holding Common Shares for or
pursuant to the terms of any plan described in clause (3) of this sentence) or
(ii) 10%.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT.
(a) Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of Common Shares) any legal or equitable right, remedy or claim under
this Agreement. This Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Shares).
(b) The Board of Directors of the Company shall have the exclusive
power and total and complete authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors or
the Company or necessary or advisable in the administration of this Agreement,
including without limitation the right and power to interpret this Agreement and
to make conclusively all determinations deemed necessary or advisable for the
administration of this Agreement. All such acts, calculations, interpretations
and determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) that are done or made by the Board of Directors
in good faith shall (x) be final, conclusive and binding on the Company, the
Rights Agent and the holders of the Rights and all other parties and (y) not
subject the Board of Directors to any liability to the holders of the Rights or
any other party.
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines, at a time when a majority of the directors
then serving are Continuing Directors, in their good faith judgment that
severing the invalid language from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in
Section 23 shall be reinstated and shall not expire
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until the close of business on the tenth day following the date of such
determination by the Board of Directors.
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 Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of the State of Minnesota applicable to
contracts to be made and performed entirely within such state.
Section 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 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 of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
BUFFETS, INC.
By: /C/ ROE H. HATLEN
--------------------------
Chief Executive Officer
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: /C/ HERBERT J. LEMMER
--------------------------
Vice President
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EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
OF
BUFFETS, INC.
I, Diane M. Hasbargen, the Secretary of Buffets, Inc., a corporation
organized and existing under the Business Corporation Act of the State of
Minnesota, in accordance with the provisions of Section 302A.401 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Articles of Incorporation of the corporation, the
Board of Directors on October 24, 1995, adopted the following resolution
creating a series of six hundred thousand (600,000) Preferred Shares of the
par value of $.Ol per share designated as Series A Junior Participating
Preferred Shares:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of this corporation in accordance with the provisions
of its Amended and Restated Articles of Incorporation, a series of Preferred
Shares of this corporation be, and it hereby is, created, and that the
designation and amount thereof and the relative rights and preferences of the
shares of such series, are as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Shares" (the "Series A
Preferred Shares"), and the number of shares constituting such series shall
be six hundred thousand (600,000). The number of shares constituting such
series may, unless prohibited by the Articles of Incorporation or by
applicable law of the State of Minnesota, be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of Series A Preferred Shares to a number less than the number of
shares then outstanding plus the number of shares issuable upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the corporation convertible into Series A
Preferred Shares.
2. DIVIDENDS AND DISTRIBUTIONS.
(i) The holders of Series A Preferred Shares, in preference to
the holders of Common Shares and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
last day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance of a
Series A Preferred Share, or fraction thereof, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, one hundred
(100) times the aggregate per share amount of all cash dividends, and one
hundred (100) times the aggregate
<PAGE>
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares (by reclassification or
otherwise), declared on the Common Shares since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any Series A Preferred
Share, or fraction thereof. In the event the corporation shall at any time
after November 13, 1995 declare or pay any dividend on Common Shares payable
in Common Shares, or effect a subdivision or combination or consolidation of
the outstanding Common Shares (by reconstruction or otherwise) into a greater
or lesser number of Common Shares, then in each such case the amount to which
holders of Series A Preferred Shares were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of Common Shares outstanding immediately after such event and the denominator
of which is the number of Common Shares that were outstanding immediately
prior to such event.
(ii) The corporation shall declare a dividend or distribution on
the Series A Preferred Shares as provided in subparagraph (i) of this
paragraph 2 simultaneously with its declaration of a dividend or distribution
on the Common Shares (other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares); provided that, in the event no
dividend or distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on
the Series A Preferred Shares shall nevertheless be payable, out of funds
legally available for such purpose, on such subsequent Quarterly Dividend
Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend Payment
Date immediately preceding the date of issue of such Series A Preferred
Shares, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Series A Preferred
Shares entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
Series A Preferred Shares in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares outstanding at that
time. The Board of Directors may fix a record date for the determination of
holders of Series A Preferred Shares entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not
more than sixty (60) days prior to the date fixed for the payment thereof.
A-2
<PAGE>
3. VOTING RIGHTS. The holders of Series A Preferred Shares shall
have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each Series A Preferred Share shall entitle the holder thereof to one
hundred (100) votes on all matters submitted to a vote of the shareholders of
the corporation. In the event the corporation shall at any time after
November 13, 1995 declare or pay any dividend on Common Shares payable in
Common Shares, or effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a greater or
lesser number of Common Shares, then in each such case the number of votes
per share to which holders of Series A Preferred Shares were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
(ii) Except as otherwise provided herein, in any other
Certificate of Designation, Preferences and Rights creating a series of
Preferred Shares or by law, the holders of Series A Preferred Shares and the
holders of Common Shares and any other capital shares of the corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of the shareholders of the corporation.
(iii) Except as otherwise provided herein or by law, the holders
of Series A Preferred Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Shares and any other capital stock of the corporation
having general voting rights as set forth herein) for taking any corporate
action.
4. CERTAIN RESTRICTIONS.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Shares as provided in
paragraph 2 hereof are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on Series A
Preferred Shares outstanding shall have been paid in full, the corporation
shall not:
(a) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Shares;
(b) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Shares, except dividends paid ratably on the Series A
A-3
<PAGE>
Preferred Shares and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred
Shares, provided that the corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of
stock of the corporation ranking junior (both as to dividends and upon
liquidation, dissolution or winding up) to the Series A Preferred Shares; or
(d) redeem or purchase or otherwise acquire for
consideration any Series A Preferred Shares, or any shares of stock ranking
on a parity with the Series A Preferred Shares, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(ii) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the corporation could, under subparagraph (i)
of this paragraph 4, purchase or otherwise acquire such shares at such time
and in such manner.
5. REACQUIRED SHARES. Any Series A Preferred Shares purchased or
otherwise acquired by the corporation in any manner whatsoever shall
constitute authorized but unissued Preferred Shares and may be reissued as
part of a new series of Preferred Shares by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance
set forth herein, in the Articles of Incorporation, or in any other
Certificate of Designation, Preferences and Rights creating a series of
Preferred Shares or as otherwise required by law.
6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the corporation, no distribution shall be made
(a) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Shares unless, prior thereto, the holders of Series A Preferred Shares shall
have received the greater of (i) $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or (ii) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
hundred (100) times the aggregate amount to be distributed per share to
holders of Common Shares, or (b) to the holders of shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Shares, except distributions made ratably on
the Series A Preferred Shares and all other such parity stock in proportion
to the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution
A-4
<PAGE>
or winding up. In the event the corporation shall at any time after November
13, 1995 declare or pay any dividend on the Common Shares payable in Common
Shares, or effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a greater
or lesser number of Common Shares, then in each such case the aggregate
amount to which holders of Series A Preferred Shares were entitled
immediately prior to such event under clause (a)(ii) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
7. CONSOLIDATION, MERGER, EXCHANGE, ETC. In case the corporation
shall enter into any consolidation, merger, combination, statutory share
exchange or other transaction in which the Common Shares are exchanged for or
changed into other stock or securities, money and/or any other property, then
in any such case the Series A Preferred Shares shall at the same time be
similarly exchanged or changed into an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to one hundred (100)
times the aggregate amount of stock, securities, money and/or any other
property (payable in kind), as the case may be, into which or for which each
Common Share is changed or exchanged. In the event the corporation shall at
any time after November 13, 1995 declare or pay any dividend on Common Shares
payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a greater or lesser number of Common Shares, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of Series A Preferred Shares shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of Common Shares outstanding immediately after such event and the denominator
of which is the number of Common Shares that were outstanding immediately
prior to such event.
8. NO REDEMPTION. The Series A Preferred Shares shall not be
redeemable.
9. RANK. The Series A Preferred Shares shall rank junior in terms
of dividend and liquidation, dissolution and winding up rights to all other
series of the corporation's Preferred Shares hereafter issued that
specifically provide that they shall rank senior to the Series A Preferred
Shares.
10. FRACTIONAL SHARES. Series A Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Preferred Shares.
A-5
<PAGE>
IN WITNESS WHEREOF, I have executed this Certificate of Designation,
Preferences and Rights this 24th day of October, 1995.
-----------------------------------------
Diane M. Hasbargen, Secretary
M1:0018454.05
A-6
<PAGE>
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R-_________ Rights
NOT EXERCISABLE AFTER NOVEMBER 13, 2005 OR SUCH EARLIER DATE AS THE BOARD
OF DIRECTORS ORDERS REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT (SUBJECT
TO ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE
OR WERE ACQUIRED OR BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
BUFFETS, INC.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of October 24, 1995 (the "Rights Agreement") between Buffets,
Inc., a Minnesota corporation (the "Company"), and American Stock Transfer &
Trust Company (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (Minneapolis, Minnesota time) on November 13, 2005 at the
office or offices of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-hundredth of a fully paid, nonassessable
Series A Junior Participating Preferred Share of the par value of $.01 per share
(the "Preferred Shares") of the Company, at a purchase price of $65 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
completed and executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are, except for adjustments required pursuant to the Rights
Agreement, the number and Purchase Price as of November 13, 1995, based on the
Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
<PAGE>
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and which
contains a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the holders
of the Right Certificates (which limitations of rights include the voiding of
the Rights under certain circumstances specified in the Rights Agreement).
Copies of the Rights Agreement are on file with the Secretary at the principal
executive office of the Company and will be mailed without charge by the Company
or the Rights Agent to the holder of this certificate promptly following receipt
by the Company or the Rights Agent of a written request therefor.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), any Rights evidenced by this Right Certificate
that are or were acquired or beneficially owned by an Acquiring Person or an
Associate or Affiliate of such Acquiring Person (as such terms are defined in
the Rights Agreement) shall be null and void from and after the occurrence of
such Section 11(a)(ii) Event.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share as the Rights
evidenced by the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may, but are not required to, be redeemed by
the Company at a redemption price of $.01 per Right, subject to adjustment as
provided in the Rights Agreement, payable in cash and (ii) may, but are not
required to, be exchanged by the Company in whole or in part for Common Shares
or other shares of capital stock of the Company. The Board of Directors of the
Company and the Company shall not have any liability to any person as a result
of the redemption or exchange of the Rights pursuant to the provisions of the
Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractional shares which are
integral multiples of one one-hundredth of a Preferred Share or, if a Right
shall then be exercisable for a fraction other than one one-hundredth of a
Preferred Share, integral multiples of that fraction, which may, at the election
of the Company, be evidenced by depositary receipts), if in lieu thereof a cash
payment is made, as provided in the Rights Agreement.
B-2
<PAGE>
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 manual or facsimile signature of the proper officer of the
Company.
Dated: _________________
BUFFETS, INC.
By: ________________________________
Its: ________________________________
Countersigned:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:_______________________________
Authorized Manual or
Facsimile Signature
B-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ______________________
____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
B-4
<PAGE>
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
/ / are
or
/ / are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) the undersigned
/ / did
or
/ / did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
the time of the acquisition, is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
-----------------------------
Signature
NOTICE
The signature of the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
<PAGE>
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
TO: BUFFETS, INC.
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person which may be issuable upon exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
Dated: _____________________
________________________
Signature
B-6
<PAGE>
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended.
B-7
<PAGE>
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate
/ / are
or
/ / are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement); and
(2) the undersigned
/ / did
or
/ / did not
acquire the Rights evidenced by this Right Certificate from any Person who, at
the time of the acquisition, is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
_____________________________
Signature
NOTICE
The signature of the foregoing Election to Exercise and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-8
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
OF
BUFFETS, INC.
On October 24, 1995, the Board of Directors of Buffets, Inc. (the
"Company"), declared a dividend of one preferred share purchase right (a
"Right") for each outstanding Common Share of the par value of $.01 per share
(the "Common Shares") of the Company. The dividend is payable on November 13
1995 (the "Record Date") to shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a Series A Junior Participating Preferred Share of the par
value of $.01 per share (the "Preferred Shares") of the Company at a price of
$65 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement"), dated as of October 24, 1995, between
the Company and American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
Initially, the Rights will attach to all certificates representing
Common Shares then outstanding and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares and a Distribution
Date for the Rights will occur upon the earlier of:
(i) the close of business on the fifteenth day following a
public announcement that a person or group of affiliated or associated persons
has become an "Acquiring Person" (i.e., has become, subject to certain
exceptions, the beneficial owner of 20% or more of the outstanding Common
Shares), or
(ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange offer the
consummation of which would result in a person or group of affiliated or
associated persons becoming, subject to certain exceptions, the beneficial owner
of 20% or more of the outstanding Common Shares (or such later date as may be
determined by the Board of Directors of the Company prior to a person or group
of affiliated or associated persons becoming an Acquiring Person).
Until the Distribution Date,
(i) the Rights will be evidenced by the Common Share
certificates and will be transferred with and only with the Common Shares,
<PAGE>
(ii) new Common Share certificates issued after the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and
(iii) the surrender for transfer of any Common Share
certificate, even without such notation or a copy of this Summary of Rights
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on November 13, 2005, unless extended or earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution:
(i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Shares,
(ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares or
convertible securities at less than the then current market price of the
Preferred Shares, or
(iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those described in clause (ii) hereof).
The number of Preferred Shares issuable upon the exercise of a Right is also
subject to adjustment in the event of a dividend on Common Shares payable in
Common Shares, or a subdivision, combination or consolidation of the Common
Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Preferred Shares will be issued (other than
fractional shares which are integral multiples of one one-hundredth (subject to
adjustment) of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) if in lieu thereof a payment in cash is made
based
C-2
<PAGE>
on the closing price (pro-rated for the fraction) of the Preferred Shares on the
last trading date prior to the date of exercise.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person (unless such person first becomes an
Acquiring Person pursuant to a tender offer or exchange offer for all
outstanding Common Shares at a price and on terms determined by the Board of
Directors of the Company (prior to any change in control of the Board of
Directors) to be fair to the shareholders and otherwise in the best interests of
the Company and its shareholders and which the Board of Directors recommends to
the shareholders), proper provision shall be made so that each holder of a
Right, other than Rights that are or were beneficially owned by the Acquiring
Person (which will thereafter be void), will thereafter have the right to
receive upon exercise thereof at the then current exercise price of the Right
that number of Common Shares having a market value of two times the exercise
price of the Right, subject to certain possible adjustments.
In the event that, after the Distribution Date or within 15 days prior
thereto, the Company is acquired in certain mergers or other business
combination transactions (other than a transaction for at least the same per-
share consideration with a person who acquired Common Shares through a tender
offer or exchange offer for all outstanding Common Shares approved by the Board
of Directors in accordance with the preceding paragraph or any wholly owned
subsidiary of any such person) or 50% or more of the assets or earning power of
the Company and its subsidiaries (taken as a whole) are sold after the
Distribution Date or within 15 days prior thereto, each holder of a Right (other
than Rights which have become void under the terms of the Rights Agreement) will
thereafter have the right to receive, upon exercise thereof at the then current
exercise price of the Right, that number of common shares of the acquiring
company (or, in certain cases, one of its affiliates) having a market value of
two times the exercise price of the Right.
In certain events specified in the Rights Agreement, the Company is
permitted to temporarily suspend the exercisability of the Rights.
At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person (subject to certain exceptions) and prior to
the acquisition by a person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Board of Directors of the Company
may (if there has been no change in control of the Board of Directors) exchange
all or part of the Rights (other than Rights which have become void under the
terms of the Rights Agreement) for Common Shares or equivalent securities at an
exchange ratio per Right equal to the result obtained by dividing the exercise
price of a Right by the current per share market price of the Common Shares,
subject to adjustment.
At any time prior to the close of business on the twentieth day after
a public announcement that a person or group of affiliated or associated persons
has become an Acquiring Person, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at
C-3
<PAGE>
a price of $.01 per Right, subject to adjustment (the "Redemption Price"),
payable in cash; provided, however, that such redemption may occur after any
person becomes an Acquiring Person only if there has not been a change in
control of the Board of Directors of the Company. The period of time during
which the Rights may be redeemed may be extended by the Board of Directors of
the Company if no such change of control has occurred or if no person has become
an Acquiring Person. The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. The Board of Directors and the Company shall not
have any liability to any person as a result of the redemption or exchange of
the Rights pursuant to the provisions of the Rights Agreement.
The terms of the Rights may be amended by the Board of Directors of
the Company, subject to certain limitations after the Distribution Date, without
the consent of the holders of the Rights, including an amendment prior to the
date a person or group of affiliated or associated persons becomes an Acquiring
Person to lower the 20% threshold for exercisability of the Rights to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned by
any person or group of affiliated or associated persons (subject to certain
exceptions) or (ii) 10%.
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.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
October __, 1995. A copy of the Rights Agreement is available free of charge
from the Company by contacting the Secretary at Buffets, Inc. 10260 Viking
Drive, Eden Prairie, Minnesota 55344. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by reference.
C-4
