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): May 8, 2000
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 of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification
Number)
12 EAST ARMOUR BOULEVARD
KANSAS CITY, MISSOURI
(816) 502-4000
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(Address and Telephone Number of Registrant's Principal Executive Office)
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ITEM 5. OTHER EVENTS
On May 8, 2000, 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 May 26, 2000 (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 May 8,
2000 (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 May 25, 2010 (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 May 8, 2000, 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 May 8, 2000.
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<PAGE>
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: May 8, 2000 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 May 8, 2000, 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 May 8, 2000.
RIGHTS AGREEMENT
INTERSTATE BAKERIES CORPORATION
AND
UMB BANK, N.A.
AS RIGHTS AGENT
DATED AS OF MAY 8, 2000
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions........................................1
Section 2. Appointment of Rights Agent................................5
Section 3. Issue of Right Certificates................................5
Section 4. Form of Right Certificates.................................7
Section 5. Countersignature and Registration..........................8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates...............................................8
Section 7. Exercise of Rights, Purchase Price; Expiration
Date of Rights.............................................9
Section 8. Cancellation and Destruction of Right Certificates........10
Section 9. Availability of Preferred Shares..........................10
Section 10. Preferred Shares Record Date..............................12
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights.................................................12
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares.................................................19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power............................................19
Section 14. Fractional Rights and Fractional Shares...................23
Section 15. Rights of Action..........................................24
Section 16. Agreement of Right Holders................................24
Section 17. Right Certificate Holder Not Deemed a Stockholder.........25
Section 18. Concerning the Rights Agent...............................25
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.....................................................25
Section 20. Duties of Rights Agent....................................26
Section 21. Change of Rights Agent....................................29
Section 22. Issuance of New Right Certificates........................29
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Section 23. Redemption................................................30
Section 24. Exchange..................................................30
Section 25. Notice of Certain Events..................................31
Section 26. Notices...................................................32
Section 27. Supplements and Amendments................................33
Section 28. Successors................................................33
Section 29. Benefits of This Agreement................................33
Section 30. Severability..............................................33
Section 31. Governing Law.............................................34
Section 32. Counterparts..............................................34
Section 33. Descriptive Headings......................................34
Section 34. Administration............................................34
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT (the "AGREEMENT"), dated as of May 8, 2000, 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 May 26, 2000 (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
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Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding of which such Person would
be deemed to be the Beneficial Owner hereunder. For purposes of this definition
of Acquiring Person, if Ralston (as defined below) shall no longer be a
Grandfathered Person (as defined below), Ralston and it Affiliates and
Associates shall not be deemed to beneficially own (as defined below) any
securities that other Affiliates or Associates of Ralston beneficially own in
accordance with the terms and conditions of the Supplement (as defined below).
Further, if any Affiliate or Associate of Ralston shall no longer be a
Grandfathered Person, such Affiliate or Associate shall not be deemed to
beneficially own any Company securities owned by Ralston or any of Ralston's
other Affiliates or Associates, so long as such Affiliate or Associate owns its
securities in accordance with the Supplement. For purposes of this Agreement,
Affiliates and Associates of Ralston shall be deemed to own securities in
accordance with the Supplement so long as the provisions of clause (A)(iii) of
the definition of Grandfathered Persons are complied with within the time period
set out therein.
"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
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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.
"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:
(A) Ralston (as defined below); provided, however, after the Record
Date, that
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Ralston shall cease to be a "Grandfathered Person" upon the
earliest to occur of the following events: (i) Ralston owns less than 15% of
the Common Shares; (ii) Ralston shall acquire Beneficial Ownership of
additional Common Shares (other than Common Shares (a)
issuable upon the exercise of Rights, (b) acquired as a result of a stock split,
stock dividend or similar recapitalization of the Company, (c) purchased in
accordance with Section 2.2 of the Shareholder Agreement between the Company,
Ralston Purina Company ("RPC"), and VCS Holding Company ("VCS"), dated July 22,
1995, as amended (the "Shareholder Agreement"), or (d) purchased in accordance
with the Supplement to the Shareholder Agreement between the Company, RPC and
VCS, dated July 25, 1995 (the "Supplement")); or (iii) sixty (60) days following
delivery of the notification from the Chief Executive Officer of the Company
contemplated by paragraph 4 of the Supplement, unless, within such period,
either (a) the relevant Affiliates and Associates of Ralston divest sufficient
securities so as to decrease the aggregate ownership of all relevant Affiliates
and Associates to the maximum allowable affiliate ownership under the
Supplement, and/or (b) Ralston divests Company securities in an amount which, if
such Affiliates and Associates sold such securities, would be sufficient to
reduce the aggregate ownership of all such Affiliates and Associates to such
maximum;
(B) each purchaser from Ralston pursuant to Section
4.2 of the Shareholder Agreement for so long as such
purchaser does not, at any time, have Beneficial Ownership of more than 15% of
the Common Shares; and
(C) each Affiliate or Associate of Ralston, so long as such
Affiliates or Associates, in the aggregate, do not exceed any applicable
restrictions on ownership of Company securities set
forth in the Supplement. For purposes of this Agreement, Affiliates and
Associates of Ralston shall be deemed not to have exceeded such restrictions so
long as the provisions of clause (A)(iii) of this definition of Grandfathered
Persons are complied with within the time period set out therein.
Notwithstanding anything contained in this Agreement to the
contrary, including without limitation the provisions of Section 11(a)(ii), so
long as the conditions of clause (A)(iii) of this definition of Grandfathered
Persons are complied with within the time period set out therein, any Rights
owned by Ralston, any other Affiliate or Associate of Ralston, or any transferee
of Ralston or any such other Affiliate or Associate, so long as such Affiliate,
Associate or transferee would not otherwise be an Acquiring Person, shall not
become void as a result of any Flip In Event (as defined below) resulting from
the acquisition or ownership of Company securities by an Affiliate or Associate
of Ralston.
"NYSE" shall mean the New York Stock Exchange.
"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.
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"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.
"RALSTON" shall mean the Ralston Purina Company, a Missouri
corporation, and any entity which it controls (as defined in Rule 12b-2 of
the Securities Exchange Act of 1934).
"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 May 8, 2000
(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.
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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 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.
-7-
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 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
CERTIFICATES; 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.
-8-
(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, 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 May
25, 2010 (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,
-9-
(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.
(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 canceled 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.
-10-
(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.
(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
-11-
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 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
-12-
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
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
-13-
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 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
-14-
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 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
-15-
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.
(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
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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
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.
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(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-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 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
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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 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
-19-
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 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.
-20-
(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;
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:
-21-
(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
(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)
-22-
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 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
-23-
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 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.
-24-
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 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
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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 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.
-26-
(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 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
-27-
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
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 monies 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.
-28-
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 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
-29-
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.
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
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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 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
-31-
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
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
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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.
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
-33-
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 hich 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
-34-
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/ Randy S. McPhail
-------------------------
Name: Randy S. McPhail
Title: Vice President
-35-
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
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
A-2
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may 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
A-3
upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(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
A-4
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) 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.
/s/ Charles A. Sullivan
-----------------------
Charles A. Sullivan
Chief Executive Officer
A-5
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R________ _________ Rights
NOT EXERCISABLE AFTER MAY 25, 2010 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 May 8, 2000 (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 May 25, 2010 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 May 26, 2000, 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 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
B-1
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
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
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
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)
B-5
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
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
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On May 8, 2000, 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 May 26, 2000 (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 May 8,
2000 (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
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 25, 2010 (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
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 May 16,
2000. 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
News Release
KANSAS CITY, MO - May 9, 2000
INTERSTATE BAKERIES CORPORATION DECLARES
DIVIDEND DISTRIBUTION OF PREFERRED STOCK PURCHASE RIGHTS
The board of directors of Interstate Bakeries Corporation
("IBC") (NYSE:IBC) today declared a dividend distribution of
one Preferred Stock Purchase Right on each outstanding share
of IBC common stock.
Charles A. Sullivan, Chief Executive Officer of Interstate
Bakeries Corporation, 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 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. Following the acquisition by a person or group of
beneficial ownership of 15% or more of the Company's common
stock and prior to an acquisition of 50% or more of the
common stock, the board of directors may exchange the Rights
(other than Rights owned by that person or group), 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 share, per Right.
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 May 26, 2000, payable to
shareholders of record on that date. The Rights will expire
on May 25, 2010. The Rights distribution is not taxable to
shareholders.
This Rights plan is intended to provide the same protection
as the Rights plan implemented in September 1999 and
subsequently redeemed in February 2000.
The board also announced the continuation of its program to
purchase common shares in open market or negotiated
transactions, by authorizing additional shares, with the
timing and terms of the purchases to be determined by
management based on market conditions. This brings the
total to 7,500,000 shares available under the stock
repurchase program.
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:
Ray Sandy Sutton, Vice President, Secretary & General Counsel
Frank W. Coffey, Senior Vice President & Chief Financial Officer
Interstate Bakeries Corporation
12 East Armour Boulevard
Kansas City, Missouri 64111
(816) 502-4000
