SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): SEPTEMBER 26, 1997
LONE STAR STEAKHOUSE & SALOON, INC
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(Exact name of registrant as specified in its charter)
Delaware 0-19907 48-1109495
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
224 EAST DOUGLAS, SUITE 700, WICHITA, KANSAS 67202
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Address of principal executive offices
Registrant's telephone number, including area code: (316) 264-8889
N/A
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(Former name or former address, if changed since last report.)
Exhibit Index on Page 7.
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Item 5. OTHER EVENTS.
On September 26, 1997, Lone Star Steakhouse & Saloon, Inc.
(the "Company") announced that the Board of Directors of Lone Star Steakhouse &
Saloon, Inc. (the "Company") declared a dividend of one preference share
purchase right (a "Right") for each outstanding share of common stock, par value
$.01 per share (the "Common Shares"), of the Company. The dividend is payable on
October 10, 1997 (the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Participating Preference stock, par value
$.01 per share (the "Preference Shares"), of the Company at a price of $80 per
one one-hundredth of a Preference Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated as of October 3, 1997, between the
Company and First Union National Bank of North Carolina, as Rights Agent (the
"Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has 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 of, 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 earlier of such dates being called the "Distribution Date"), 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 with a copy
of the Summary of Rights attached thereto.
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 issuance 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 or a copy of the
Summary of Rights being attached thereto, 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 (the "Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
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The Rights are not exercisable until the Distribution Date.
The Rights will expire on October 10, 2007 (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 Preference
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
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preference Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preference Share issuable upon exercise of each Right 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.
Preference Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preference Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preference Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preference Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preference Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preference Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preference Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that 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 after a person or group has become an Acquiring Person,
proper provisions will be made so that each holder of a Right will thereafter
have the right
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to receive, upon the exercise thereof at the then current exercise price of the
Right, 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. In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of Common Shares having a market value of
two times the exercise price of the Right.
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 Common
Share, or one one-hundredth of a Preference Share (or of a share of a class or
series of the Company's preference stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
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 Preference Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preference
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 Preference Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis 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.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to lower certain thresholds described above to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%, except
that from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights.
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<PAGE>
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.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Rights may be redeemed
by the Company at the Redemption Price prior to the time that a person or group
has acquired beneficial ownership of 15% or more of the Common Shares.
The Rights Agreement, dated as of October 3, 1997, between the
Company and First Union National Bank of North Carolina, as Rights Agent,
specifying the terms of the Rights and including the form of the Certificate of
Designations setting forth the terms of the Preference Shares as an exhibit
thereto is attached to the Company's Form 8-A as an exhibit and is incorporated
herein by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such exhibit.
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<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(c) EXHIBITS.
4.1 Form of Rights Agreement, dated as of October 3,
1997, between Lone Star Steakhouse & Saloon, Inc. and
First Union National Bank of North Carolina
(Incorporated by reference to the Company's
Registration Statement on Form 8-A filed with the
Commission on October 3, 1997).
99.1 Press Release dated September 26, 1997.
99.2 Form of Letter to Stockholders to be mailed with
copies of Summary of Rights to Purchase Preference
Shares.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LONE STAR STEAKHOUSE & SALOON, INC.
Dated: October 9, 1997 By: /S/ JAMIE B. COULTER
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Name: Jamie B. Coulter
Title: Chairman of the Board
and Chief Executive
Officer
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<PAGE>
EXHIBIT INDEX
4.1 Form of Rights Agreement, dated as of October 3,
1997, between Lone Star Steakhouse & Saloon, Inc. and
First Union National Bank of North Carolina
(Incorporated by reference to the Company's
Registration Statement on Form 8-A filed with the
Commission on October 9, 1997).
99.1 Press Release dated September 26, 1997.
99.2 Form of Letter to Stockholders to be mailed with
copies of Summary of Rights to Purchase Preference
Shares.
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FOR IMMEDIATE RELEASE CONTACT: JOHN D. WHITE
(316) 264-8899
LONE STAR STEAKHOUSE & SALOON, INC. NASDAQ (STAR)
WICHITA, KANSAS SEPTEMBER 26, 1997
LONE STAR STEAKHOUSE & SALOON, INC.
ADOPTS STOCKHOLDER RIGHTS PLAN
Wichita, Kansas, September 26, 1997 -- Lone Star Steakhouse & Saloon, Inc.
("STAR") announced today that its Board of Directors has unanimously adopted a
Stockholder Rights Plan and has declared a dividend granting to its stockholders
the right to purchase for each Common Share one one-hundredth of a share of a
series of preferred stock that will be established by the Company, at a price of
$80.00 for each one one-hundredth of a Preference Share. If a buyer becomes a
15% owner in the Company, all Rights holders except such "Acquiring Person" (as
defined in the "Plan") will be entitled to purchase the Company's stock at a
price discounted from the then market price. If the Company is acquired in a
merger after such acquisition, all Rights holders except the Acquiring Person
will also be entitled to purchase stock in the acquiring company at a discount
in accordance with the Plan. The Rights will be issued on October 10, 1997 or
shortly thereafter, to shareholders on that date.
The Company stated that the Plan is designed to protect stockholders
from various abusive takeover tactics, including attempts to acquire control of
the Company at an inadequate price which would deny stockholders the full value
of their investments. The Company stated that the Plan is not being implemented
in response to any proposal to acquire the Company but is designed to assure
that any acquisition of the Company and/or any acquisition of control of the
Company would take place under circumstances in which the Board of Directors can
secure the best available transaction for all of the Company's stockholders. The
Plan will encourage a potential buyer to negotiate appropriately with the Board
prior to attempting a takeover and will have no effect on lawful proxy
solicitation activity.
Initially, the Rights are attached to the Company's common stock and
are not exercisable. They become detached from the common stock and become
immediately exercisable after any person or group becomes the beneficial owner
of 15% or more of the Company's common stock or 10 days after any person or
group of persons publicly announces a tender or exchange offer that would result
in that same beneficial ownership level.
<PAGE>
The distribution of Rights will be made to common stockholders of
record on October 10, 1997 and shares of common stock that are newly-issued
after that date will also carry Rights until the Rights become detached from the
common stock. The Rights will expire on October 10, 2007. The Company may redeem
the Rights for $.01 each at any time before a buyer acquires a 15% position in
the Company, and under certain other circumstances. The Rights distribution is
not taxable to stockholders. Details of the Plan are included with a letter
which will be mailed to all of the Company's stockholders of record as of
October 10, 1997.
Lone Star owns and operates 239 domestic and 27 international Lone Star
Steakhouse & Saloon restaurants; two Sullivan's Steakhouse restaurants; and
three Del Frisco's Double Eagle Steak House
restaurants.
This Press Release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Although the Company
believes the assumptions underlying the forward-looking statements contained
herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
contained in the Press Release will prove to be accurate.
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Form of Letter to Stockholders
LONE STAR STEAKHOUSE & SALOON, INC. LETTERHEAD
October 10, 1997
To Our Stockholders:
The Company has recently declared a dividend distribution of
Preference Share Purchase Rights (the "Rights"), thereby creating a Stockholder
Rights Plan (the "Plan"). This letter describes the Plan and the reasons of the
Company's Board of
Directors (the "Board") for adopting it.
The Rights contain provisions to protect stockholders in the event of
an unsolicited attempt to acquire the Company, including a gradual accumulation
of shares in the open market, a partial or two-tier tender offer that does not
treat all stockholders equally, a squeeze-out merger and other abusive takeover
tactics which the Board believes are not in the best interests of stockholders.
These tactics unfairly pressure stockholders, squeeze them out of their
investment without giving them any real choice and deprive them of the full
value of their shares.
Over 1,700 companies, including approximately half of the Business
Week 1000 companies and Fortune 500 companies, have issued rights to protect
their stockholders against these tactics. We consider the Plan to be the best
available means of protecting both your right to retain your equity investment
in Lone Star Steakhouse & Saloon, Inc. and the full value of that investment,
while not foreclosing a fair acquisition bid for the Company.
The Rights are not intended to prevent a takeover of the Company and
will not do so. However, they should deter any attempt to acquire the Company in
a manner or on terms not approved by the Board. The Rights are designed to deal
with the very serious problem of another person or company using abusive tactics
to deprive the Company's Board and its stockholders of any real opportunity to
determine the destiny of the Company.
The Rights may be redeemed by the Board for one cent per Right prior
to the accumulation, through open-market purchases, a tender offer or otherwise,
of 15% or more of the Company's shares by a single acquiror or group. Because of
the redemption feature, the Rights should not interfere with any merger or
business combination approved by the Board prior to that time.
The Board believes that the issuance of the Rights does not in any
way weaken the financial strength of the Company or interfere with its business
plans. The issuance of the Rights has
<PAGE>
no dilutive effect, will not affect reported earnings per share, is not taxable
to the Company or to you, and will not change the way in which you can presently
trade the Company's shares. As explained in detail below, the Rights will only
be exercisable if and when the problem arises which they were created to deal
with. They will then operate to protect you against being deprived of your right
to share in the full measure of your Company's long-term potential.
The Board was aware when it acted that some people have advanced
arguments that securities of the sort we are issuing deter legitimate
acquisition proposals. We carefully considered these views and concluded that
the arguments are speculative and do not justify leaving stockholders without
any protection against unfair treatment by an acquiror, who, after all, is
seeking his own company's advantage, not yours. The Board believes that these
Rights represent a sound and reasonable means of addressing the complex issues
of corporate policy created by the current takeover environment.
The Rights were issued on October 10, 1997 to stockholders of record
on that date and will expire in ten years. Initially, the Rights will not be
exercisable, certificates will not be sent to you, and the Rights will
automatically trade with the common shares. However, ten days after a person or
group acquires 15% or more of the Company's shares, or ten business days (or
such later date as may be determined by the Board prior to a person or group
acquiring 15% or more of the Company's shares) after a person or group announces
an offer the consummation of which would result in such person or group owning
15% or more of the shares (even if no purchases actually occur), the Rights will
become exercisable and separate certificates representing the Rights will be
distributed. We expect that the Rights will begin to trade independently from
the Company's shares at that time. At no time will the Rights have any voting
power.
When the Rights first become exercisable, unless a holder is a person
or group who has acquired 15% or more of the Company's shares, that holder will
be entitled to buy from the Company one one-hundredth of a share of a new series
of participating preference stock for $80.00. If the Company is involved in a
merger or other business combination with a person or group or affiliate at any
time after that person or group has acquired 15% or more of the Company's
shares, the Rights will entitle a holder to buy a number of shares of common
stock of the acquiring company having a market value of twice the exercise price
of each Right. For example, if at the time of the business combination the
acquiring company's stock has a per share value of $60, the holder of each Right
would be entitled to receive 4 shares of the acquiring company's common stock
for $120, i.e., at a 50% discount.
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<PAGE>
If any person or group acquires 15% or more of the Company's
outstanding common stock, the "flip-in" provision of the Rights will be
triggered and the Rights will entitle a holder (other than such person or any
member of such group) to buy a number of additional shares of common stock of
the Company having a market value of twice the exercise price of each Right.
Thus, if at the time of the 15% acquisition the Company's stock were to have a
market value per share equal to $10, the holder of each Right (other than such
person or any member of such group) would be entitled to receive 4 shares of the
Company's common stock for $20.
Following the acquisition by any person or group of 15% or more of
the Company's common stock, but only prior to the acquisition by a person or
group of a 50% stake, the Board will also have the ability to exchange the
Rights (other than Rights held by such person or group), in whole or in part,
for one share of common stock (or one one-hundredth of a share of the new series
of participating preference stock) per Right. This provision will have an
economically dilutive effect on the acquiror, and provide a corresponding
benefit to the remaining rightsholders, that is comparable to the flip-in
without requiring rightsholders to go through the process and expense of
exercising their Rights.
While, as noted above, the distribution of the Rights will not be
taxable to you or the Company, stockholders may recognize taxable income upon
the occurrence of certain subsequent events.
In addition to authorizing the purchase rights, your Board today
authorized the new series of participating preference stock purchasable upon
exercise of the Rights. The shares of the new series of participating preference
stock will be nonredeemable. Each preference share will be entitled to an
aggregate dividend equal to the greater of $1 per share or 100 times the
dividend declared on the common shares. In the event of liquidation, the holders
of the preference shares will be entitled to receive an aggregate liquidation
payment equal to the greater of $100 or 100 times the payment made per share of
common stock. Each preference share will have 100 votes, voting together with
the common shares. Finally, in the event of any merger, consolidation or other
transaction in which common shares are exchanged, each preference share will be
entitled to receive 100 times the amount of consideration received per common
share. These rights are protected by customary anti-dilution provisions. In the
event of issuance of preference shares upon exercise of the Rights, in order to
facilitate trading a depositary receipt may be issued for each one one-hundredth
of a preference share. The dividend, liquidation and voting rights, and the
nonredemption feature, of the preference shares are designed so that the value
of the one-hundredth interest in a preference share purchasable with each right
will approximate the value of one share of common stock.
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<PAGE>
In declaring the Rights dividend, we have expressed our confidence in
the future of the Company and our determination that you, our stockholders, be
given every opportunity to participate fully in that future.
On behalf of the Board of Directors,
By /S/ JAMIE B. COULTER
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<PAGE>
SUMMARY OF RIGHTS TO PURCHASE
PREFERENCE SHARES
In September 1997, the Board of Directors of Lone Star
Steakhouse & Saloon, Inc. (the "Company") declared a dividend distribution of
one preference share purchase right (a "Right") for each outstanding share of
common stock, par value $.001 per share (the "Common Shares"), of the Company.
The dividend distribution is payable on October 10, 1997 (the "Record Date") to
the stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Participating Preference Stock, par value $.001 share (the "Preference Shares"),
of the Company at a price of $80.00 per one one-hundredth of a Preference Share
(the "Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and First Union National Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 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 of, 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 earlier of such dates being called the "Distribution Date"), 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 with a copy
of this Summary of Rights attached thereto.
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 issuance 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 or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such
<PAGE>
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 such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on October 10, 2007 (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 Preference
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
Preference Shares, (ii) upon the grant to holders of the Preference Shares of
certain rights or warrants to subscribe for or purchase Preference Shares at a
price, or securities convertible into Preference Shares with a conversion price,
less than the then-current market price of the Preference Shares or (iii) upon
the distribution to holders of the Preference Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preference Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-hundredths of a Preference Share issuable upon exercise of each Right 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.
Preference Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preference Share will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preference Shares will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per Common Share.
Each Preference Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preference Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
B-2
<PAGE>
Because of the nature of the Preference Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Preference Share purchasable upon exercise of each Right should approximate the
value of one Common Share.
In the event that 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 after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, 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. In the event that any person or
group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
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 Common
Share, or one one-hundredth of a Preference Share (or of a share of a class or
series of the Company's preference stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
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 Preference Shares will be issued (other
than fractions which are integral multiples of one one-hundredth of a Preference
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 Preference Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis 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.
B-3
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The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights,
including an amendment to lower certain thresholds described above to not less
than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%, except
that from and after such time as any person or group of affiliated or associated
persons becomes an Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights.
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 Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated October 9, 1997. A copy of the Rights 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
Rights Agreement, which is hereby incorporated herein by reference.
B-4
