UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 21, 1999
INTERSTATE BAKERIES CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-11165 43-1470322
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
12 E. Armour Blvd., Kansas City, MO 64111
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (816) 502-4000
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On September 21, 1999, the Board of Directors of Interstate Bakeries
Corporation. (the "Company") declared a dividend of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $.01 per
share, of the Company (the "Common Shares"). The Board of Directors of the
Company established that the dividend is payable on October 8, 1999 (the "Record
Date") to the stockholders of record on that date. Prior to the Distribution
Date (as defined below), the Rights will also be attached to all future
issuances of Common Shares. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $80.00 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of
September 21, 1999 (the "Rights Agreement") between the Company and UMB Bank,
N.A., as Rights Agent (the "Rights Agent"). The following description of the
Rights and the Rights Agreement does not purport to be complete and is qualified
in its entirety by the Rights Agreement attached as Exhibit 4.1, which is hereby
incorporated herein by reference.
The Rights will become exercisable on the date (the "Distribution
Date") that is the earlier of (i) 10 business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 15% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement or announcement of an intention to make a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of 15% or more of the outstanding Common Shares. The Rights will
be evidenced, with respect to any of the Common Share certificates outstanding
as of the Record Date, by such Common Share certificate.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuances of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation, will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
thereafter such separate Right Certificates alone will evidence the Rights. The
Rights Agreement provides that anything therein or in the Rights to the contrary
notwithstanding, Rights may be issued subsequent to the Distribution Date under
certain circumstances as set forth in the Rights Agreement.
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The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 7, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case 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
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidence of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a preferential semi-annual
dividend payment of the greater of $1 per share or 1,000 times the dividend
declared per Common Share. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a preferential liquidation payment of the
greater of $1,000 per share or 1,000 times the payment made per Common Share.
Except as required by law, the Preferred Share will not have any voting rights.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend and
liquidation rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right (other than Rights
beneficially owned by the Acquiring Person, which will become void), will
thereafter have the right to receive upon exercise that number of shares of
Common Stock (or that number of one-thousandth of a Preferred Share or of a
share of a class or series of the Company's preferred stock having equivalent
rights, preferences and privileges) having a market value of two times the
exercise price of the Right.
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In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the time any person becomes an Acquiring Person,
the Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-thousandth of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
For so long as Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable the Company may amend the Rights in any manner
that does not adversely affect the interests of holders of the Rights or cause
the Rights again to become redeemable.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
4.1 Rights Agreement, dated as of September 21, 1999,
between the Company and UMB Bank, N.A. as Rights
Agent, which includes the Certificate of
Designations for the Series A Junior Participating
Preferred Stock as Exhibit A and the form of Right
Certificate as Exhibit B.
99.1 Press Release dated September 21, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
INTERSTATE BAKERIES CORPORATION
Dated: September 21, 1999 By: /s/ CHARLES A. SULLIVAN
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Charles A. Sullivan
Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Rights Agreement, dated as of September 21, 1999,
between the Company and UMB, N.A. as Rights Agent,
which includes the Certificate of Designations for
the Series A Junior Participating Preferred Stock as
Exhibit A and the form of Right Certificate as
Exhibit B.
99.1 Press Release dated September 21, 1999.
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RIGHTS AGREEMENT
INTERSTATE BAKERIES CORPORATION
AND
UMB BANK, N.A.
AS RIGHTS AGENT
DATED AS OF SEPTEMBER 21, 1999
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TABLE OF CONTENTS
PAGE
SECTION 1. CERTAIN DEFINITIONS..........................................1
SECTION 2. APPOINTMENT OF RIGHTS AGENT..................................4
SECTION 3. ISSUE OF RIGHT CERTIFICATES..................................4
SECTION 4. FORM OF RIGHT CERTIFICATES...................................6
SECTION 5. COUNTERSIGNATURE AND REGISTRATION............................6
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN
RIGHT CERTIFICATES...........................................7
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS....................................................8
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES...........9
SECTION 9. AVAILABILITY OF PREFERRED SHARES.............................9
SECTION 10. PREFERRED SHARES RECORD DATE................................11
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS ...........................................11
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR
NUMBER OF SHARES............................................18
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNINGS POWER..............................................18
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.....................21
SECTION 15. RIGHTS OF ACTION............................................22
SECTION 16. AGREEMENT OF RIGHT HOLDERS..................................23
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER...........23
SECTION 18. CONCERNING THE RIGHTS AGENT.................................23
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT................................................24
SECTION 20. DUTIES OF RIGHTS AGENT......................................24
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SECTION 21. CHANGE OF RIGHTS AGENT......................................27
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES..........................28
SECTION 23. REDEMPTION..................................................28
SECTION 24. EXCHANGE....................................................29
SECTION 25. NOTICE OF CERTAIN EVENTS....................................30
SECTION 26. NOTICES.....................................................30
SECTION 27. SUPPLEMENTS AND AMENDMENTS..................................31
SECTION 28. SUCCESSORS..................................................31
SECTION 29. BENEFITS OF THIS AGREEMENT..................................32
SECTION 30. SEVERABILITY................................................32
SECTION 31. GOVERNING LAW...............................................32
SECTION 32. COUNTERPARTS................................................32
SECTION 33. DESCRIPTIVE HEADINGS........................................32
SECTION 34. ADMINISTRATION..............................................32
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT (the "AGREEMENT"), dated as of September 21,
1999, between INTERSTATE BAKERIES CORPORATION, a Delaware corporation (the
"COMPANY"), and UMB Bank, N.A., as Rights Agent (the "RIGHTS AGENT").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred stock purchase right (a "RIGHT") for each Common Share
(as defined below) of the Company outstanding as of the Close of Business (as
defined below) on October 8, 1999 (the "RECORD DATE"), each Right representing
the right to purchase one-thousandth (subject to adjustment) of a Preferred
Share (as defined below), or such different amount and/or kind of securities as
shall be hereinafter provided, upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of one
Right (subject to adjustment as provided herein) with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Close of Business on the Distribution Date, the Redemption Date and the
Final Expiration Date (each as defined below); provided, however, that Rights
may be issued with respect to Common Shares that shall become outstanding after
the Distribution Date and prior to the Redemption Date and the Final Expiration
Date in accordance with Section 22.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the undersigned parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meaning indicated:
"ACQUIRING PERSON" shall mean any Person (as defined below)
who or which, together with all Affiliates and Associates (as defined below) of
such Person, without the prior approval of the Company, shall be the Beneficial
Owner (as defined below) of 15% or more of the Common Shares then outstanding,
but shall not include an Exempt Person (as such term is hereinafter defined);
provided, however, that if the Board of Directors of the Company determines in
good faith that a Person who would otherwise be an "Acquiring Person," has
become such inadvertently, and such Person divests himself or itself as promptly
as practicable of beneficial ownership of a sufficient number of Common Shares
so that such Person would no longer be an Acquiring Person, then such Person
shall not be deemed to be or have become an "Acquiring Person" for any purposes
of this Agreement. 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 shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Shares then outstanding, provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the Common Shares then outstanding
by reason of such share acquisitions by the Company and thereafter becomes the
Beneficial Owner of any additional Common Shares, such Person shall be deemed to
be an "Acquiring Person." 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
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number of such securities not then actually issued and outstanding of which such
Person would be deemed to be the Beneficial Owner hereunder.
"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.
A Person shall be deemed the "BENEFICIAL OWNER" of, shall be
deemed to have "BENEFICIAL OWNERSHIP" of and shall be deemed to "BENEFICIALLY
OWN" any securities:
(i) that such Person or any of such Person's
Affiliates or Associates is deemed to beneficially own, directly or indirectly
within the meaning of Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement;
(ii) that such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or upon the
satisfaction of a specified condition) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), written or otherwise, or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, (x) securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase, (y) securities that such
Person has a right to acquire on the exercise of Rights at any time prior to the
time a Person becomes an Acquiring Person or (z) securities issuable upon
exercise of Rights from and after the time a Person becomes an Acquiring Person
if such Rights were acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to Section 3(b) or
Section 22 hereof ("ORIGINAL RIGHTS") or pursuant to Section 11(i) or Section
11(n) with respect to an adjustment to Original Rights; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security by reason of such agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), written or
otherwise, for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to subsection (ii)(B) above) or disposing of shares
of securities of the Company.
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"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Kansas City, Missouri are
authorized or obligated by law or executive order to close.
"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.
"COMMON SHARES" when used with reference to the Company shall
mean shares of Common Stock (as hereinafter defined) of the Company. "COMMON
SHARES" when used with reference to any Person other than the Company shall mean
the capital stock (or, in the case of an unincorporated entity, the equivalent
equity interest) with the greatest voting power of such other Person or, if such
other Person is a subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
"COMMON STOCK" shall mean the common stock, par value $.01
per share, of the Company.
"CURRENT VALUE" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"DISTRIBUTION DATE" shall have the meaning set forth in
Section 3 hereof.
"EXEMPT PERSON" shall mean the Company, any Subsidiary (as
defined below) of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, any entity or trustee holding Common Shares for
or pursuant to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or of any
Subsidiary of the Company, or any Grandfathered Person.
"FINAL EXPIRATION DATE" shall have the meaning set forth in
Section 7 hereof.
"FLIP IN EVENT" shall have the meaning set forth in
Section 11(a)(ii) hereof.
"GRANDFATHERED PERSONS" shall mean Ralston Purina Company and
its Affiliates; provided, however, that Ralston Purina Company and its
Affiliates shall cease to be Grandfathered Persons at such earlier time as (i)
Ralston Purina Company and its Affiliates own less than 15% of the Common
Shares, pursuant to the divestiture provisions of Section 10.6 of that certain
Shareholder Agreement by and among the Company, Ralston Purina Company and VCS
Holding Company dated July 22, 1995 or otherwise, or (ii) Ralston Purina Company
or its Affiliates shall acquire beneficial ownership of additional Common Shares
(other than Common Shares issuable upon the exercise of Rights) after the Record
Date.
"NYSE" shall mean the New York Stock Exchange.
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"PERSON" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability partnership, business trust,
limited liability company, unincorporated association or other entity, and shall
include any successor (by merger or otherwise) to such entity.
"PREFERRED SHARES" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the Form of Certificate of Designations
attached to this Agreement as
Exhibit A.
"REDEMPTION DATE" shall have the meaning set forth in
Section 7 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES ACQUISITION DATE" shall mean the first date of a
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 or such earlier date as a majority of the Board of Directors shall become
aware of the existence of an Acquiring Person.
"SUBSIDIARY" of any Person shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.
"SUMMARY OF RIGHTS" shall mean the Summary of Rights to
purchase Preferred Shares in substantially the form of Exhibit C hereto.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) "DISTRIBUTION DATE" shall mean the date, after the date
hereof, that is the earliest of (i) the tenth Business Day after the Shares
Acquisition Date, or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such time any Person
becomes an Acquiring Person) after the date of the commencement by any Person
(other than an Exempt Person) of, or of the first public announcement of the
intention of such Person (other than an Exempt Person) to commence, a tender or
exchange offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 15% or more of the Common Shares
then outstanding.
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(b) Until the Distribution Date (i) the Rights will be
evidenced (subject to the provisions of Section 3(c) hereof) by the certificates
for Common Shares registered in the names of the holders thereof and not by
separate Rights Certificates, and (ii) the Rights will be transferable only in
connection with the transfer of the associated 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 (other than any Acquiring Person or any Associate or Affiliate
of an Acquiring Person), at the address of such holder shown on the records of
Common Stock of the Company (which records shall be provided to the Rights Agent
should the Rights Agent be requested to do the mailing), a Rights Certificate,
in substantially the form of Exhibit B hereto (a "RIGHTS CERTIFICATE"),
evidencing one Right (subject to adjustment as provided herein) for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
(c) 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 shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares that become
outstanding (including, without limitation, upon transfer of outstanding Common
Shares, disposition of Common Shares out of treasury stock or issuance or
reissuance of Common Shares out of authorized but unissued shares) after the
Record Date but prior to the earliest of the Close of Business on the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in that certain Rights
Agreement between Interstate Bakeries Corporation and UMB
Bank, N.A., as Rights Agent dated as of September 21, 1999
(the "Rights Agreement") as the same may be amended from
time to time, the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of Interstate Bakeries
Corporation. 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. Interstate Bakeries Corporation will mail
to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the
Rights Agreement, Rights owned by or transferred to any
Person who becomes an Acquiring Person (as defined in the
Rights Agreement) and certain transferees thereof will
become null and void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Close of Business on the Distribution Date, the Rights associated with the
Common Shares represented by such certificates
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shall be evidenced by such certificates alone, and the surrender for transfer of
any such certificate, except as otherwise provided herein, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby. In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Close of Business on 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 that are no longer outstanding.
Notwithstanding this paragraph (d), the omission of a legend shall
not affect the enforceability of any part of this Rights Agreement or the rights
of any holder of the Rights.
(e) On the Record Date, or as soon as practicable
thereafter, the Company will send a copy of 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 Close of Business on the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights attached thereto. Until the Close of Business on the Distribution Date
(or the earlier of the Redemption Date or the close of Business on 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 evidenced thereby. The Company shall use all
reasonable efforts to insure that the provisions of this Section 3(e) hereof are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
thereof.
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 substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of the NYSE or
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number of
one one-thousandth of a Preferred Share as shall be set forth therein at the
price per one one-thousandth of a Preferred Share set forth therein (the
"PURCHASE PRICE"), but the number of such one one-thousandth of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of
the Company by the Chairman of the Board of Directors, the President, any of the
Vice Presidents, the Treasurer or the Controller of the Company, either manually
or by facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary, an Assistant
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Secretary, the Treasurer, an Assistant Treasurer, the Controller or a Vice
President of the Company, either manually or by facsimile signature. The Right
Certificates shall be countersigned by the Rights Agent and shall not be valid
for any purpose unless countersigned, either manually or by facsimile. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the Person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any Person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at an office or agency designated for such purpose,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFI CATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 11(a)(ii) and 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption Date or the
Close of Business on 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-thousandth of a Preferred Share as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate 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 agency of the Rights Agent designated for such purpose. Thereupon the
Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company or the Rights Agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof,
upon receipt by the Rights Agent of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of a Right Certificate, and, in case
of loss, theft or destruction, of indemnity or security of the Company and the
Rights Agent reasonably satisfactory to the Rights Agent, 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,
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the Rights Agent will make and deliver a new Right Certificate of like tenor for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall
become exercisable on the Distribution Date, and thereafter the registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part, upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office or agency of the Rights
Agent designated for such purpose, together with payment of the Purchase Price
for each one one-thousandth of a Preferred Share as to which the Rights are
exercised, at any time which is both after the Distribution Date and prior to
the earliest of (i) the Close of Business on October 7, 2009 (the "FINAL
EXPIRATION DATE"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "REDEMPTION DATE") or (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be initially $80.00 for each
one one-thousandth of a Preferred Share purchasable upon the exercise of a
Right. The Purchase Price and the number of one one-thousandth of a Preferred
Share or other securities or property to be acquired upon exercise of a Right
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) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the Preferred 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 hereof, in cash or by certified check, cashier's check
or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (1) (A) requisition from any transfer agent of the Preferred
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, in its sole discretion, shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights hereunder into
a depository, requisition from the depositary agent depositary receipts
representing interests in such number of one one-thousandth 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, (2) when appropriate, requisition from the Company the amount
of cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (3) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (4) when appropriate, after receipt, promptly
deliver cash to be paid in lieu of fractional shares to or upon the order of the
registered holder of such Right Certificate.
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(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his 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 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. The Company shall
use all reasonable efforts to insure that the provisions of this Section 7(e)
hereof are complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees thereof.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall destroy all
cancelled Right Certificates in accordance with applicable laws and regulations,
and in such case shall deliver a certificate of destruction thereof to the
Company.
SECTION 9. 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 or any Preferred Shares held in its treasury, the number of Preferred
Shares that will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the Preferred Shares (and, following the
time that a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed on the NYSE or on
any other national securities exchange or listed or admitted to trading on the
Nasdaq Stock Market, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on the NYSE or such other exchange or listed or admitted
to trading on the Nasdaq Stock Market upon official notice of issuance upon such
exercise.
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(c) From and after such time as the Rights become
exercisable, the Company shall use its best efforts to, if then necessary to
permit the issuance of Preferred Shares (and following the time that a Person
first becomes an Acquiring Person, shares of Common Stock and other securities)
upon the exercise of Rights, register and qualify such Preferred Shares (and
following the time that a Person first becomes an Acquiring Person, shares of
Common Stock and other securities) under the Securities Act and any applicable
state securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing, keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date, and
comply with any requirements of the NYSE (or the Nasdaq Stock Market or any
national securities exchange on which such securities may be listed or admitted
for trading) applicable to the Company. The Company may temporarily suspend, for
a period of time not to exceed 90 days, the exercisability of the Rights in
order to prepare and file a registration statement under the Securities Act and
permit it to become effective, to comply with any applicable state securities or
"Blue Sky" laws, or to comply with any requirements of the NYSE applicable to
the Company. 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 unless the
requisite qualification in such jurisdiction shall have been obtained and until
a registration statement under the Securities Act (if required) shall have been
declared effective and any requirements of the NYSE (or the Nasdaq Stock Market
or any securities exchange on which such securities may be listed or admitted
for trading) applicable to the Company have been satisfied.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares (and,
following the time that a Person becomes an Acquiring Person, shares of Common
Stock and other securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares (or shares of Common Stock or other
securities) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any transfer
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 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 that holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's reasonable satisfaction that no such tax
is due.
(f) The Company agrees to provide to the Rights Agent,
immediately following the later to occur of an event described in Section
11(a)(i)(B) or Section 13 hereof or the Distribution Date, an opinion of counsel
acceptable to the Rights Agent that the Common Stock
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underlying the Rights have been or are being properly registered under the
Securities Act and all securities or "blue sky" laws of the various states, as
applicable, or in the alternative, the Rights are not subject to registration
under the Securities Act and/or any securities or "blue sky" laws of the various
states.
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. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate 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 OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number of Preferred Shares or other
securities or property purchasable upon exercise of 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 or merger in which the Company is the continuing or surviving
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, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive 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, the 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.
(ii) Subject to Section 24 of this Agreement and except
as otherwise provided in this Section 11(a)(ii), in the event any Person becomes
an Acquiring Person (such event being referred to as the "FLIP IN EVENT"), each
holder of a Right shall thereafter have the right to receive, upon exercise
thereof at a price equal to the Purchase Price immediately prior
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to the Flip In Event multiplied by the number of one one-thousandth of a
Preferred Share for which a Right was exercisable immediately prior to such
event, whether or not such Right was then exercisable, in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of Common
Shares (or at the option of the Company, such number of one one-thousandth of
Preferred Shares) as shall equal the result obtained by (x) multiplying the
Purchase Price immediately prior to the Flip In Event by the number of one
one-thousandth of a Preferred Share for which a Right was exercisable
immediately prior to such event, whether or not such Right was then exercisable,
and (y) dividing that product by 50% of the then current per share market price
of the Company's Common Stock (determined pursuant to Section 11(d) hereof) on
the date of the occurrence of the Flip In Event. Notwithstanding anything in
this Agreement to the contrary, however, from and after the Flip In Event, any
Rights that are or were acquired or beneficially owned by (x) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (y) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the Flip In Event or (z) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip In Event pursuant to either (I) a transfer from the
Acquiring Person to holders of its equity securities or to any Person with whom
it has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer that the Board of Directors has determined
is part of a plan, arrangement or understanding that has the purpose or effect
of avoiding the provisions of this paragraph, and subsequent transferees of such
Persons, shall be void without any further action and any holder of such Rights
shall thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and after
the Flip In Event, no Right Certificate shall be issued pursuant to Section 3 or
Section 6 hereof that represents Rights that are or have become void pursuant to
the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be canceled. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exercised pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not pursuant to this Section
11(a)(ii).
(iii) The Company may at its option substitute for a
share of Common Stock issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) such number of fractions of Preferred Shares
having an aggregate current market value equal to the current per share market
price of a share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party (A) determine the excess of (1) the value of the shares
of Common Stock issuable upon the exercise of a Right in accordance with the
foregoing subparagraph (ii) (the "CURRENT VALUE") over (2) the Purchase Price
immediately prior to the Flip In Event multiplied by the number of one
one-thousandth of Preferred Shares for which a Right was exercisable immediately
prior to such event, whether or not such Right was then exercisable (such
excess, the "SPREAD"), and (B) with respect to each Right (other than Rights
that have become void
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pursuant to Section 11(a)(ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with subparagraph (ii) upon
exercise of the Right and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Preferred Shares or other equity
securities of the Company (including, without limitation, shares or fractions of
shares of preferred stock that, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the shares of Common
Stock, are deemed in good faith by the Board of Directors to have substantially
the same value as the shares of Common Stock (such Preferred Shares and shares
or fractions of shares of preferred stock are hereinafter referred to as "COMMON
SHARE EQUIVALENTS"), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having a value that, when added to the
value of the shares of Common Stock actually issued upon exercise of such Right,
shall have an aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been determined
by the Board of Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors; provided,
however, if the Company shall not make adequate provision to deliver Current
Value pursuant to Clause (B) above within thirty (30) days following the Flip In
Event (the "SECTION 11(A)(II) TRIGGER DATE"), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the surrender or
exercise of a Right and without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available), and then, if necessary, such number
or fractions of Preferred Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. If, upon the occurrence of the Flip In Event, the Board of Directors
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full of
the Rights, then, if the Board of Directors so elects, the 30 day period set
forth above may be extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such 30
day period, as it may be extended, is herein called the "SUBSTITUTION PERIOD").
To the extent that the Company determines that some action need be taken
pursuant to the second and/or third sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 11(a)(ii) hereof and the last
sentence of this Section 11(a)(iii) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such second sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the shares of Common Stock shall be the current per share market price
(as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger
Date and the per share or fractional value of any "Common Share equivalent"
shall be deemed to equal the current per share market price of the Common
Shares. The Board of Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive shares of Common Stock
upon the exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).
(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
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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 convertible into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred Shares (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 and equivalent
preferred shares which the aggregate offering price of the total number of
Preferred Shares and/or the total number of 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 market price, and the
denominator of which shall be the number of Preferred Shares and 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. Preferred Shares and
equivalent 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, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular 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
(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 the Company whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Preferred Share, and
the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of a Preferred Share; 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 is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
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(d) (i) Except as otherwise provided herein, 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 shares of such Security or
securities convertible into such shares, 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 by the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, if the Security is not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the Nasdaq Stock Market or
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 date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. 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) For the purpose of any computation hereunder, if
the Preferred Shares are publicly traded, the "CURRENT PER SHARE MARKET PRICE"
of the Preferred Shares shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Shares are not publicly traded but
the Common Stock is publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the shares of Common Stock as determined pursuant to Section 11(d)(i)
multiplied by one thousand (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof). If
neither the Common Stock nor the Preferred Shares are publicly traded, "current
per share market price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent.
(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 that 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
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Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a Preferred Share or share of Common Stock or 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 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a)(i), 11(b), 11(c) and
11(i), and the provisions of Sections 7, 9, 10 and 13 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 hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one one-thousandth of
a Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (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-thousandth of a Preferred Share (calculated to the nearest one
ten-thousandth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-thousandth of a share covered by a Right immediately prior to such
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-thousandth 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-thousandth 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, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
may, 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
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hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and 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-thousandth of a Preferred Share issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-thousandth of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Preferred
Shares or other shares of capital stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Preferred Shares or other such shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the 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 it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) Anything in this Agreement 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
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or otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case, the number of Rights
associated with each Common Share then outstanding, or issued or delivered
thereafter shall be proportionately adjusted so that the number of Rights
thereafter associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total
number of Common Shares outstanding immediately following the occurrence of such
event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment
and (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. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate and
shall not be obligated or responsible for calculating any adjustment.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNINGS POWER.
(a) In the event, directly or indirectly, at any time after
the Flip In Event, (i) the Company shall merge with and into any other Person,
(ii) any Person shall consolidate with the Company, or any Person shall merge
with and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any other
property, or (iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earnings power aggregating 50% or more of the assets or
earnings power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then upon the first occurrence of such event, proper provision
shall be made so that: (A) each holder of record of a Right (other than Rights
which have become void pursuant to Section 11(a)(ii)) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the Purchase
Price immediately prior to the Flip In Event multiplied by the number of one
one-thousandth of a Preferred Share for which a Right was exercisable
immediately prior to such event, whether or not such Right was then exercisable
(as subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c)
and 11(i)), in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of validly issued, fully-paid and non-assessable
and freely tradeable Common Shares of the Principal Party (as defined herein)
not subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the Purchase
Price immediately prior to the Flip In Event by the number of one one-thousandth
of a Preferred Share for which a Right was exercisable immediately prior to such
event, whether or not such Right was then exercisable (as subsequently adjusted
thereafter pursuant to Sections 11(a)(i), 11(b), 11(c) and 11(i)), and (2)
dividing that
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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)(i) hereof) on the
date of consummation of such consolidation, merger, sale or transfer; provided
that the Purchase Price and the number of Common Shares of such Principal Party
issuable upon exercise of each Right shall be further adjusted as provided in
Section 11(f) of this Rights Agreement to reflect any events occurring in
respect of such Principal Party after the date of such consolidation, merger,
sale or transfer; (B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (D)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock in accordance
with Section 9 hereof) in connection with such 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 the
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
provided that, upon the subsequent occurrence of any consolidation, merger, sale
or transfer of assets or other extraordinary transaction in respect of such
Principal Party, each holder of a Right shall thereupon be entitled to receive,
upon exercise of a Right and payment of the Purchase Price as provided in this
Section 13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party purchasable upon the
exercise of a Right pursuant to this Section 13(a), and such Principal Party
shall take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other property.
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in (i) or
(ii) of the first sentence of Section 13(a) hereof, (A) the Person that is the
issuer of the securities into which Common Shares are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer the
Common Shares of which has the greatest aggregate market value of shares
outstanding or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said merger, or, if there is
more than one such Person, the Person the Common Shares of which has the
greatest aggregate market value of shares outstanding or (y) if the Person that
is the other party to the merger does not survive the merger, the Person that
does survive the merger (including the Company if it survives) or (z) the Person
resulting from the consolidation; and
(ii) in the case of any transaction described in (iii)
of the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Shares having the greatest aggregate market value of
shares outstanding;
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provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), (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 if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) hereof unless prior
thereto the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Agreement as the
same shall have been assumed by the Principal Party pursuant to Sections 13(a)
and (b) hereof and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under
the Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date, and
similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Shares of
the Principal Party shall be listed or admitted to trading on the NYSE, the
Nasdaq Stock Market or on another national securities exchange, to list or admit
to trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the NYSE, the Nasdaq Stock Market or
such other securities exchange and, if the Common Shares of the Principal Party
shall not be listed or admitted to trading on the NYSE, the Nasdaq Stock Market
or another national securities exchange, to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by such other system then
in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
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(iv) obtain waivers of any rights of first refusal
or preemptive rights in respect of the Common Shares of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) Furthermore, in case the Principal Party that is to be
a party to a transaction referred to in this Section 13 has provision in any of
its authorized securities or in its certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, Common Shares
of such Principal Party at less than the then current market price per share
(determined pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Shares of such Principal Party at less than such then
current market price, or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Shares of such
Principal Party pursuant to the provisions of Section 13, then, in such event,
the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at
any time after the Flip In Event, enter into any transaction of the type
contemplated by (i)-(iii) of Section 13(a) hereof if (1) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (2)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer of other transaction, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (3) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Right 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 NYSE or,
if the Rights are not listed or admitted to trading on the NYSE, as reported in
the
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principal consolidated transaction reporting system with respect to securities
listed on the Nasdaq Stock Market or other principal national securities
exchange on which the Rights are listed or admitted to trading or, if the rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share 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-thousandth of a Preferred Share, the Company shall 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 the 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)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive
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relief against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the associated 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 agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered on the registration
books of the Company as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and expenses of defending
against any claim of liability arising therefrom, directly or
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indirectly. The indemnity provided hereby shall survive expiration of the
Rights and the termination
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, Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and where necessary, verified or acknowledged, by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth
in Section 20 hereof.
(c) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any
successor of the 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 stock transfer or corporate trust powers of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates in its name as the
successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
only the duties and obligations specifically imposed by this Agreement and no
implied duties or obligations shall be
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read into this Agreement against the Rights Agent, subject to the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of current per share market price) be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer, the Controller 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 gross negligence, bad faith or
wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of facts 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.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for 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 Sections 3, 11, 13, 23 and 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
receipt of a certificate furnished pursuant to Section 12, describing such
change or adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred 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
25
<PAGE>
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any person reasonably believed by the Rights Agent to be one of the Chairman of
the Board of Directors, the President, any Executive Vice President, the
Secretary, the Controller or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Rights Agreement and the date on and/or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually received such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered
to the Right Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify the holder is not
an Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent
shall not take any further action with respect to such requested exercise of
transfer without receiving written instructions from the Company.
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that
26
<PAGE>
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(l) The Rights Agent shall have no responsibility to the
Company, any holders of Rights or any holders of shares of Common Stock for
interest or earnings on any moneys
held by the Rights Agent pursuant to this Agreement.
(m) The Rights Agent shall not be required to take notice
or be deemed to have notice of any event or condition hereunder, including, but
not limited to, a Distribution Date, a Redemption Date, any adjustment of the
Purchase Price of the Common Stock, and adjustment to the Purchase Price of the
Preferred Shares, the existence of an Acquiring Person or any other event or
condition that may require action by the Rights Agent, unless the Rights Agent
shall be specifically notified in writing of such event or condition by the
Company, and all notices or other instruments required by this Agreement to be
delivered to the Rights Agent must, in order to be effective, be received by the
Rights Agent as specified in Section 26 hereof, and in the absence of such
notice so delivered, the Rights Agent may conclusively assume no such event or
condition exists.
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' prior notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' prior 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 or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate or the retiring
Rights Agent may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or the State of 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 New York), in good standing,
having an office in the State of 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. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed and the duties and obligations of the retiring Rights Agent
shall cease and terminate; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the
27
<PAGE>
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the 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 forms as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Shares following the Distribution
Date and prior to the earlier of the Redemption Date and the Expiration Date,
the Company may with respect to Common Shares so issued or sold pursuant to (i)
the exercise of stock options, (ii) any employee plan or arrangement, (iii) the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company or (iv) a contractual obligation of the Company, in each case
existing prior to the Distribution Date, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale.
SECTION 23. REDEMPTION.
(a) The Board of Directors of the Company may, at any time
prior to the Flip In Event, redeem all but not less than all the then
outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (the redemption price being hereinafter referred
to as the "REDEMPTION PRICE"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights 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 each transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.
28
<PAGE>
SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its
option, at any time after the Flip In Event, 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 shares
of Common Stock at an exchange ratio of one share of Common Stock per Right
(such exchange ratio being hereinafter referred to as the "EXCHANGE RATIO").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of Common Shares aggregating 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 shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of the Rights
so exchanged 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 shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company may, in its discretion, take such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the
Rights. In the event that the Company shall determine not to take such action or
shall, after good faith effort, be unable to take such action as may be
necessary to authorize such additional shares of Common Stock, the Company shall
substitute, to the extent of such insufficiency, for each share of Common Stock
that would otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or fractions thereof (or equivalent preferred shares as such term is
defined in Section 11(b)), having an aggregate value equal to the current per
share market price of one share of Common Stock (determined pursuant to Section
11(d) hereof) as of the date of issuance of such Preferred Shares or fractions
thereof (or equivalent preferred shares).
(d) The Company shall not, in connection with any exchange
pursuant to this Section 24, be required to issue fractions of shares of Common
Stock or to distribute certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares of Common Stock, the Company shall pay
to the registered holders of the Right Certificates with regard to which
29
<PAGE>
such fractional shares of Common Stock would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall at any time after the earlier
of the Distribution Date or the Shares Acquisition Date propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or
to make any other distribution to the holder of its Preferred Shares (other than
a regular quarterly cash dividend), (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, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) 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 than by
payment of dividends in Common Shares) then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the stock dividend or distribution of rights or warrants, or the date on
which such 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 event described in Section 11(a)(ii) or
Section 13 shall occur then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate (or if occurring prior to the
Distribution Date, the holders of Common Shares) in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall describe
such event and the consequences of such event to holders of Rights under Section
11(a)(ii) and Section 13 hereof.
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:
Interstate Bakeries Corporation
12 East Armour Boulevard
Kansas City, Missouri 64111
Attention: Secretary
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<PAGE>
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given upon
receipt by the Corporate Trust Department of the Rights Agent or made upon
receipt if sent by registered or certified mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
UMB Bank, N.A., as Rights Agent
P.O. Box 419692
Kansas City, Missouri 64141-6692
Attention: Corporate Trust Department
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. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, (iii) shorten or
lengthen any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable;
provided that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person), and no such amendment may cause
the Rights again to become redeemable or cause the Agreement again to become
amendable other than in accordance with this sentence. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made that changes the Redemption Price. Upon the delivery of a certificate from
an appropriate officer of the Company, and an opinion of counsel reasonably
acceptable to the Rights Agent, which state that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment; provided, however, that the Rights
Agent may, but shall not be obligated to, enter into any such supplement or
amendment which affects the Rights Agent's own rights, duties or immunities
under this Agreement. Prior to the consent of the Rights Agent to any supplement
or amendment, the Rights Agent may require delivery to it of an opinion of
counsel stating that such supplement or amendment is authorized or permitted by
the Agreement, and will, upon execution and delivery thereof, be valid and
binding upon the Company in accordance with its terms.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
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<PAGE>
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement or applicable to 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.
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 Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State, except for Sections 18, 19,
20, and 21, hereof and relating to rights, duties and obligations of the Rights
Agent, which shall be governed by the laws of the State of Missouri, without
reference to its choice of law rules.
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
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 34. ADMINISTRATION. Except as otherwise provided herein,
the Board of Directors of the Company shall have the exclusive power and
authority to administer and interpret the provisions of this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors or
the Company as may be necessary or advisable in the administration of this
Agreement. All such actions, calculations, determinations and interpretations
which are done or made by the Board of Directors in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and shall not subject the Board of Directors to any
liability to the holders of the Rights.
SIGNATURE PAGE FOLLOWS
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
INTERSTATE BAKERIES CORPORATION
By: /s/ CHARLES A. SULLIVAN
--------------------------------------
Charles A. Sullivan
Chief Executive Officer
UMB BANK, N.A., AS RIGHTS AGENT
By: /s/ FRANK C. BRAMWELL
--------------------------------------
Name: Frank C. Bramwell
Title: Senior Vice President
33
<PAGE>
EXHIBIT A
FORM
OF
INTERSTATE BAKERIES CORPORATION
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------------
Interstate Bakeries Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "COMPANY"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Company as required by Section 151 of the General
Corporation Law at a meeting duly called and held on September 21, 1999:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Company (hereinafter called the "BOARD OF DIRECTORS"
or the "BOARD") in accordance with the provisions of the Restated Certificate of
Incorporation, as amended to date (hereinafter called the "CERTIFICATE OF
INCORPORATION"), the Board of Directors hereby creates a series of preferred
stock, par value $.01 per share, of the Company and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "SERIES A
PREFERRED STOCK") and the number of shares constituting the Series A Preferred
Stock shall be 120,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into or exchangeable for Series A Preferred Stock.
A-1
<PAGE>
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the Company (the "PREFERRED STOCK") (or any similar
stock) ranking prior and superior to the Series A Preferred Stock with respect
to dividends, the holders of shares of Series A Preferred Stock, in preference
to the holders of Common Stock, par value $.01 per share of the Company (the
"COMMON STOCK"), and of any other stock of the Company ranking junior to the
Series A Preferred Stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
semi-annual dividends payable in cash on the first day of June and December in
each year (each such date being referred to herein as a "DIVIDEND PAYMENT
DATE"), commencing on the first Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, declared
on the Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by the classification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Dividend Payment Date and the next subsequent
Dividend Payment Date, a dividend of $1 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first 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 Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a semi-annual dividend and before such
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an
A-2
<PAGE>
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
SECTION 3. VOTING RIGHTS. Except as required by the General
Corporation Law, the holders of shares of Series A Preferred Stock shall have no
special voting rights and their consent shall not be required for taking any
corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever semi-annual dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock ranking junior
(as to dividends) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(as to dividends) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) 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 Stock, provided that the Company
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Company ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and
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<PAGE>
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior upon liquidation, dissolution or winding up to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received the greater of (x) $1,000 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 (y) an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event the Company shall at any time declare or pay any dividend on the
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under the
proviso in clause (A) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into such other stock or securities, cash and/or any other property in
an amount per share (subject to the provision for adjustment hereinafter set
forth) equal to 1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
A-4
<PAGE>
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 8. NO REDEMPTION. The shares of Series A Preferred
Stock shall not be redeemable from any holder.
SECTION 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, junior to all other
series of Preferred Stock and senior to the Common Stock.
SECTION 10. AMENDMENT. If any proposed amendment to the Certificate
of Incorporation (including this Certificate of Designations) would alter,
change or repeal any of the preferences, powers or special rights given to the
Series A Preferred Stock so as to affect the Series A Preferred Stock adversely,
then the holders of the Series A Preferred Stock shall be entitled to vote
separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its Chief Executive Officer on this 21st day of
September, 1999.
-----------------------------------------
Charles A. Sullivan
Chief Executive Officer
A-5
<PAGE>
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R________ __________ Rights
NOT EXERCISABLE AFTER OCTOBER 7, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON
WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.
Right Certificate
Interstate Bakeries Corporation
This Right Certificate 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 that certain Rights Agreement, dated as of
September 21, 1999 (the "RIGHTS AGREEMENT"), between Interstate Bakeries
Corporation, a Delaware corporation (the "COMPANY"), and UMB Bank, N.A. as
Rights Agent (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., central daylight time, on October 7, 2009 at the office
or agency of the Rights Agent designated for such purpose, or of its successor
as Rights Agent, one one-thousandth of a fully paid and non-assessable share of
Series A Junior Participating Preferred Stock, par value $.01 per share (the
"PREFERRED SHARES"), of the Company, at a purchase price of $80.00 per one
one-thousandth of a Preferred Share (the "PURCHASE PRICE"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandth of a Preferred Share which may be purchased upon
exercise hereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of October 8, 1999, based on the Preferred
Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price, the number of one one-thousandth of a Preferred Share which may
be purchased upon the exercise of the Rights and the number of Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, as the same may be amended from time to
time, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of
B-1
<PAGE>
the Right Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the designated office or agency
of the Rights Agent. The Company will mail to the holder of this Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or agency 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 Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a redemption
price of $.001 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Stock, par value $.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
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 stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the 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.
SIGNATURE PAGE FOLLOWS
B-2
<PAGE>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________, _______.
ATTEST: INTERSTATE BAKERIES
CORPORATION
By: By:
------------------------------- --------------------------------------
Name: Charles A. Sullivan
Title: Chief Executive Officer
COUNTERSIGNED:
UMB BANK, N.A., AS RIGHTS AGENT
By:______________________________________
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 transfer unto______________________________________________________________
_______________________________________________________________________________
(Please print name, address
and social security number 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 an Eligible Guarantor Institution, as
defined by SEC Rule 17Ad-15 (12 CFR 240.17Ad-15) or any similar rule which the
Rights Agent deems applicable.
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
B-4
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
Interstate Bakeries Corporation:
This undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name, address and social security number)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name, address and social security number)
Dated:______________________
-----------------------------------
Signature
(Signature must conform to holder specified on the Right Certificate)
Signature Guaranteed:
Signatures must be guaranteed by an Eligible Guarantor Institution, as
defined by SEC Rule 17Ad-15 (12 CFR 240.17Ad-15) or any similar rule which the
Rights Agent deems applicable.
_______________________________________________________________________________
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
B-5
<PAGE>
The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement)
-----------------------------------
Signature
_______________________________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase,
as the case may be, must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
B-6
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On September 21, 1999, the Board of Directors of Interstate Bakeries
Corporation. (the "Company") declared a dividend of one preferred stock purchase
right (a "Right") for each outstanding share of common stock, par value $.01 per
share, of the Company (the "Common Shares"). The Board of Directors of the
Company established that the dividend is payable on October 8, 1999 (the "Record
Date") to the stockholders of record on that date. Prior to the Distribution
Date (as defined below), the Rights will also be attached to all future
issuances of Common Shares. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $80.00 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of
September 21, 1999 (the "Rights Agreement") between the Company and UMB Bank,
N.A., as Rights Agent (the "Rights Agent"). The following description of the
Rights and the Rights Agreement does not purport to be complete and is qualified
in its entirety by the Rights Agreement attached as Exhibit 4.1, which is hereby
incorporated herein by reference.
The Rights will become exercisable on the date (the "Distribution Date")
that is the earlier of (i) 10 business days following a public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
have acquired beneficial ownership of 15% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may be determined by
action of the Board of Directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding Common Shares. The Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificate.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share certificates issued
after the Record Date upon transfer or new issuances of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation, will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
thereafter such separate Right Certificates alone will evidence the Rights. The
Rights Agreement provides that anything therein or in the Rights to the contrary
notwithstanding, Rights may be issued subsequent to the Distribution Date under
certain circumstances as set forth in the Rights Agreement.
C-1
<PAGE>
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 7, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case 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
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidence of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a preferential semi-annual
dividend payment of the greater of $1 per share or 1,000 times the dividend
declared per Common Share. In the event of liquidation, the holders of the
Preferred Shares will be entitled to a preferential liquidation payment of the
greater of $1,000 per share or 1,000 times the payment made per Common Share.
Except as required by law, the Preferred Share will not have any voting rights.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend and liquidation
rights, the value of the one one-thousandth interest in a Preferred Share
purchasable upon exercise of each Right should approximate
the value of one Common Share.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right (other than Rights
beneficially owned by the Acquiring Person, which will become void), will
thereafter have the right to receive upon exercise that number of shares of
Common Stock (or that number of one-thousandth of a Preferred Share or of a
share of a class or series of the Company's preferred stock having equivalent
rights, preferences and privileges) having a market value of two times the
exercise price of the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the exercise price of the Right.
C-2
<PAGE>
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the time any person becomes an Acquiring Person, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock, or one one-thousandth of a Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
For so long as Rights are then redeemable, the Company may, except with
respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable the Company may amend the Rights in any manner
that does not adversely affect the interests of holders of the Rights or cause
the Rights again to become redeemable.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A dated September
24, 1999. A copy of the Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Agreement, which is hereby
incorporated herein by reference.
C-3
Kansas City, Missouri
September 21, 1999
Shareholders of Interstate Bakeries Corporation (NYSE-IBC) at its
Annual Shareholders Meeting held in Kansas City, Missouri on
September 21, 1999 approved the following:
1. The election of G. Kenneth Baum, E. Garrett Bewkes, Jr. and
James R. Elsesser as Directors of the Company for three-year
terms.
2. The appointment of Deloitte & Touche LLP as auditors for
fiscal year ending June 3, 2000.
Following the Shareholders Meeting, the Company's Board of Directors
declared the quarterly cash dividend of $0.07 per share on the
Company's common stock, payable November 1, 1999, to stockholders of
record at the close of business October 15, 1999.
The Board of Directors today also declared a dividend distribution of
one Preferred Stock Purchase Right on each outstanding share of IBC
common stock.
Charles A. Sullivan, Chairman and Chief Executive Officer of IBC,
stated, "the Rights are designed to assure that all of IBC's
shareholders receive fair and equal treatment in the event of any
proposed takeover of the Company and to guard against partial tender
offers, squeeze-outs, open market accumulations and other abusive
tactics to gain control of IBC without paying all shareholders a more
equitable value. The Rights are not being issued in response to any
acquisition proposal."
The Rights will be exercisable only if a
person or group acquires 15% or more of IBC's common stock or
announces a tender offer, the consummation of which would result in
ownership by a person or group of 15% or more of the common stock.
Once exercisable, the Rights (other than Rights owned by that person
or group), may be exchanged, in whole or in part, at an exchange
ratio of one share of common stock, or one one-thousandth of a share
of a newly designated series of preferred shares, per Right. The
current ownership of shareholders owning more than 15% of the common
stock will not make the Rights exercisable.
The Rights are intended to enable all IBC shareholders to realize
the long-term value of their investment in the Company. The Rights
will not prevent a takeover, but should encourage anyone seeking to
acquire the Company to negotiate with the Board prior to attempting
takeover. The dividend distribution will be made on October 8, 1999,
payable to shareholders of record on that date. The Rights will
expire on October 7, 2009. The Rights distribution is not taxable to
shareholders.
Interstate Bakeries Corporation is the nation's largest wholesale
baking company with 67 bread and cake bakeries located in strategic
markets from coast-to-coast. The Company is headquartered in Kansas
City, Missouri.
For information on the Company, please contact:
Frank W. Coffey
Senior Vice President and Chief
Financial Officer
Interstate Bakeries Corporation
12 East Armour Boulevard
Kansas City, MO 64111
(816) 502-4000
