EXHIBIT 4.1
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DEAN FOODS COMPANY
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
Rights Agreement
Dated as of May 22 , 1998
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Table of Contents
Page
Recitals Recitals.................................................... 1
Section 1. Certain Definitions......................................... 1
Section 2. Appointment of Rights Agent................................. 8
Section 3. Issuance of Rights Certificates............................. 8
Section 4. Form of Rights Certificates................................. 10
Section 5. Execution, Countersignature and Registration................ 10
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates......................................... 11
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights................................................... 11
Section 8. Cancellation and Destruction of Rights Certificates......... 13
Section 9. Reservation and Availability of Preferred Stock............. 14
Section 10. Preferred Stock Record Date................................. 15
Section 11. Adjustments to Purchase Price, Number of Shares or
Number of Rights............................................ 15
Section 12. Certification of Adjustments................................ 27
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power............................................ 27
Section 14. Fractional Rights and Fractional Shares..................... 30
Section 15. Rights of Action............................................ 31
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights......................................... 31
Section 17. Rights Holder Not Deemed a Stockholder...................... 31
Section 18. Concerning the Rights Agent................................. 32
Section 19. Merger or Consolidation or Change of Name of Rights
Agent....................................................... 32
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Section 20. Duties of Rights Agent....................................... 33
Section 21. Change of Rights Agent....................................... 35
Section 22. Issuance of New Rights Certificates.......................... 36
Section 23. Redemption and Termination................................... 36
Section 24. Notice of Certain Events..................................... 37
Section 25. Notices...................................................... 38
Section 26. Supplements and Amendments................................... 38
Section 27. Successors................................................... 40
Section 28. Benefits of this Agreement................................... 40
Section 29. Severability................................................. 40
Section 30. Governing Law................................................ 40
Section 31. Counterparts................................................. 40
Section 32. Descriptive Headings......................................... 40
Section 33. Grammatical Construction..................................... 40
Exhibit A -- Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 22, 1998, between Dean Foods
Company, a Delaware corporation (the "Company"), and Harris Trust and Savings
Bank (the "Rights Agent").
RECITALS
The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock (as defined in Section 1) outstanding on the Record Date
(as defined in Section 1) and has authorized the issuance of one Right for each
share of Common Stock issued after the Record Date and before the earliest of
the Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date (as such terms are defined in Section 1) and in certain cases following the
Distribution Date. Each Right will represent, as of the Record Date, the right
to purchase one one-thousandth of one share of Preferred Stock (as defined in
Section 1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with
all Affiliates and Associates of such Person, is (or has previously been, at any
time after the date of this Agreement, whether or not such Person(s) continues
to be) the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
Notwithstanding the foregoing, a Person shall not become an "Acquiring
Person" solely as the result of (i) an acquisition of Common Stock by the
Company or any Subsidiary 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 Stock then outstanding as determined above, or (ii)
such Person becoming the Beneficial Owner of 15% or more of the Common Stock
then outstanding as determined above solely as a result of an Exempt Event;
provided, however, that if a Person becomes the Beneficial Owner of 15% or more
of the Common Stock then outstanding as determined above solely by reason of
such a share acquisition by the Company or the occurrence of such an Exempt
Event and such Person shall, after becoming the
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Beneficial Owner of such Common Stock, become the Beneficial Owner of any
additional shares of Common Stock by any means whatsoever (other than as a
result of the subsequent occurrence of an Exempt Event, a stock dividend or a
subdivision of the Common Stock into a larger number of shares or a similar
transaction), then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if a majority of the Continuing
Directors (as defined below) or, if there are then no Continuing Directors, a
majority of the Board of Directors of the Company determines in good faith that
a Person who would otherwise be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this Section 1(a), has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this Section 1(a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement. The determination of whether such Person's becoming an Acquiring
Person shall have been inadvertent and the determination of whether the
divestment of sufficient shares shall have been made as promptly as practicable
shall be made by a majority of the Continuing Directors or, if there are then no
Continuing Directors, a majority of the Board of Directors of the Company.
(b) "Adjustment Number" has the meaning set forth in, and shall be
calculated in accordance with, the Certificate of Designation, Preferences and
Rights of Junior Participating Preferred Stock, Series A, attached as Exhibit A
hereto.
(c) "Affiliate" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
(d) "Associate" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement; provided that, for purposes of this Agreement, the term
"Associate" shall not include any Person that is an Exempt Person.
(e) Except as provided below, a Person shall be deemed to be the
"Beneficial Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether
or not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
provided, however, that a Person will not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf
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of such Person or any Affiliate or Associate of such Person until such
tendered securities are accepted for purchase or exchange; and
provided further, that prior to the occurrence of a Triggering Event,
a Person will not be deemed the Beneficial Owner of, or to
beneficially own, securities obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange
Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor
item) of Schedule 13D under the Exchange Act (or any comparable or
successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or
any successor provision; or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with
whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (iii) of this Section 1(d)) or
disposing of any securities of the Company.
Nothing in the preceding sentence shall cause a Person engaged in
business as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person shall be treated as the "Beneficial Owner"
of, or be deemed to "beneficially own," any securities solely by reason of the
ownership of those securities by any other Person that is an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially under the preceding provisions in this
definition.
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(f) "Business Combination" has the meaning set forth in Section 13 of
this Agreement.
(g) "Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York or Illinois are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date means 5:00 p.m., Chicago
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m. Chicago time, on the next succeeding Business Day.
(i) "Common Equivalent Share" has the meaning set forth in Section
11(c)(2)(C) of this Agreement.
(j) "Common Share" has the meaning set forth in Section 11(c)(2)(C)
of this Agreement.
(k) "Common Stock" when used with reference to the Company means the
Common Stock, par value $1.00 per share, of the Company (as the same may be
changed by reason of any combination, subdivision or reclassification of the
Common Stock). "Common Stock" when used with reference to any Person (other than
the Company prior to a Business Combination) means shares of capital stock of
such Person (if such Person is a corporation) of any class or series, or units
of equity interests in such Person (if such Person is not a corporation) of any
class or series, the terms of which shares or units do not limit (as a fixed
amount and not merely in proportional terms) the amount of dividends or income
payable or distributable on such shares or units or the amount of assets
distributable on such shares or units upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such shares or units are subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that if at any
time there are more than one such class or series of capital stock of or equity
interests in such Person, "Common Stock" of such Person will include all such
classes and series substantially in the proportion of the total number of shares
or other units of each such class or series outstanding at such time.
(l) "Continuing Director" means (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board of
Directors of the Company, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person or a representative, designee or nominee of an
Acquiring Person or of any such Affiliate or Associate, and who was a member of
the Board of Directors of the Company on the date of this Agreement, and (ii)
any Person who becomes a member of the Board of Directors of the Company after
the date of this Agreement, while such Person is a member of the Board of
Directors of the Company, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative, designee or nominee of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election, or election, to the Board of Directors of the Company
is recommended or approved by a majority of the Continuing Directors.
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(m) "Current Market Price" per share of Common Stock, Common
Equivalent Share or any other security on any date is the average of the daily
closing prices per share of such Common Stock, Common Equivalent Share or any
other security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date for the purpose of any computation under
this Agreement except computations made pursuant to Section 11(c)(3), and for
the Trading Day immediately prior to such date for the purpose of any
computation under Section 11(c)(3); provided, however, that in the event that
the Current Market Price per share of Common Stock, Common Equivalent Share or
any other security is determined during a period following the announcement by
the issuer of such Common Stock, Common Equivalent Share or any other security
of (i) a dividend or distribution on such Common Stock, Common Equivalent Share
or any other security other than a regular quarterly cash dividend, or (ii) any
subdivision, combination or reclassification of such Common Stock, Common
Equivalent Share or any other 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 Market Price" must be appropriately adjusted to
take into account such dividend, distribution, subdivision, combination or
reclassification. The closing price for each Trading Day shall be the last sale
price, regular way, on such day, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange ("NYSE") or, if the Common Stock, Common Equivalent Share or any
other 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 principal United States national securities exchange on
which the Common Stock, Common Equivalent Share or any other security is listed
or admitted to trading or, if the Common Stock, Common Equivalent Share or any
other 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 Common
Stock, Common Equivalent Share or any other 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 a majority
of the Board of Directors of the Company or, if at the time of such selection
there is an Acquiring Person and at least one Continuing Director, by a majority
of the Continuing Directors. If no such market maker is making a market, the
fair market value of such shares on such day as determined in good faith by a
majority of the Board of Directors of the Company or, if at the time of such
determination there is an Acquiring Person, by a majority of the Continuing
Directors or, if there are then no Continuing Directors, by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company having no current or former relationship with an Acquiring Person, or by
the Board of Directors of the issuer of such Common Stock, Common Equivalent
Share or any other security shall be used, which determination shall be
described in a statement filed with the Rights Agent and shall be binding and
conclusive for all purposes. The term "Trading Day" means a day on which the
principal United States national securities exchange on which the Common Stock,
Common Equivalent Share or any other security is listed or admitted to trading
is open for the transaction of business or, if the Common Stock, Common
Equivalent Share or any other security is not listed or admitted to trading on
any United States national securities exchange, but is traded in the over-the-
counter market, then any day for which the high bid and low asked prices in the
over-the-
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counter market are reported, or if the Common Stock, Common Equivalent Share or
any other security is not traded in the over-the-counter market, then a Business
Day. If the Preferred Stock is not publicly traded, the "current per share
market price" of the Preferred Stock shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant to
this Section 1(m) (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof), multiplied by
the Adjustment Number.
(n) "Distribution Date" means the earlier of (i) the tenth day after
the Stock Acquisition Date and (ii) the tenth Business Day after commencement or
public disclosure of an intention to commence (including, without limitation,
any such commencement or public disclosure which occurs before or after the date
of this Agreement and prior to the issuance of the Rights) a tender offer or
exchange offer by a Person if, after acquiring the maximum number of securities
sought pursuant to such offer, such Person, or any Affiliate or Associate of
such Person, would be an Acquiring Person. A majority of the Continuing
Directors or, if there are then no Continuing Directors, a majority of the Board
of Directors of the Company may defer the date set forth in clause (ii) of the
preceding sentence to a specified later date or to an unspecified later date to
be determined by a subsequent action or event.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(p) "Exchange Date" means the time at which Rights are exchanged
pursuant to Section 11(c)(3).
(q) "Exempt Event" means with respect to any Person, the acquisition
by such Person of Beneficial Ownership of Common Stock solely as a result of the
occurrence of a Triggering Event and the effect of such Triggering Event on the
last proviso of clause (ii) of the definition of Beneficial Owner, other than a
Triggering Event in which such Person becomes an Acquiring Person.
(r) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
(s) "Exercise Amount" means the amount payable by the holder as a
condition to the exercise of one Right. Until and unless it shall be adjusted in
accordance with this Agreement, the Exercise Amount shall be $200.
(t) "Expiration Date" means the Close of Business on August 10, 2008.
(u) "Person" means any individual, firm, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity, and shall
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include any "group" as that term is used in Rule 13d-5(b) under the Exchange Act
(or any successor provision).
(v) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, Series A, par value $1.00 per share, having the rights and
preferences set forth in the Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A, attached hereto as Exhibit A.
(w) "Principal Party" means (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from the Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value, and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the assets or earning power transferred pursuant to such Business Combination
or, if each Person that is a party to such Business Combination 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 reasonably
be determined, whichever of such Persons is the issuer of the Common Stock which
has the greatest aggregate market value; provided, however, that in any such
case, if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case 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 above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(x) "Purchase Price:" Until the Trigger Date, the term Purchase Price
means the price at which one-one thousandth of a share of Preferred Stock shall
be purchasable with the Rights. The Purchase Price shall be $200 per one one-
thousandth of a share of Preferred Stock until and unless it shall be adjusted
pursuant to this Agreement. Immediately after the Trigger Date, the term
"Purchase Price" shall mean the price per Common Share for which Common Shares
shall be purchasable with the Rights. Thereafter the term "Purchase Price" as
applied with respect to each kind of stock or other property purchasable with
the Rights as a result of adjustments prescribed by
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this Agreement shall mean the price at which each share of such stock or the
smallest available unit of such other property is purchasable with the Rights.
(y) "Record Date" means the Close of Business on August 10, 1998.
(z) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(aa) "Redemption Price" has the meaning given to such term in
Section 23.
(bb) "Securities Act" means the Securities Act of 1933, as amended,
and any successor statute.
(cc) "Stock Acquisition Date" means the first date of public
disclosure by the Company, an Acquiring Person or otherwise that an Acquiring
Person has become such.
(dd) "Subsidiary" has the meaning given to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(ee) "Trigger Date" means the first date upon which a Person becomes
an Acquiring Person.
(ff) "Triggering Event" shall mean a Person becoming an Acquiring
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be issued in
respect of and shall be evidenced by the certificates representing the shares of
Common Stock issued and outstanding on the Record Date and shares of Common
Stock issued or which become outstanding after the Record Date and prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date (which certificates for Common Stock shall be deemed to also
be certificates evidencing the Rights), and not by separate certificates; (ii)
the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock, and the surrender for transfer of any certificate for such shares
of Common Stock shall also constitute the surrender for transfer of the Rights
associated with such shares. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the Rights
Agent, at the expense of the Company, shall (except as otherwise provided in
Section 7(e)) mail, by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, as shown by the records of the Company, at the address of
such holder shown on such records, one or more certificates evidencing
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the Rights ("Rights Certificates"), in substantially the form of Exhibit B
hereto, evidencing one Right (as adjusted from time to time pursuant to this
Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) Rights shall be issued in respect of all shares of Common Stock
which are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold (i) pursuant to
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date and shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Dean Foods Company and Harris Trust and Savings Bank
as Rights Agent, dated as of May 22, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of Dean Foods Company. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. Dean Foods
Company 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,
Rights that were, are or become beneficially owned by
Acquiring Persons or their Associates or Affiliates (as such
terms are defined in the Rights Agreement) may become null
and void and the holder of any of such Rights (including any
subsequent holder) shall not have any right to exercise such
Rights.
(c) Notwithstanding any other provision of this Agreement, neither
the Company, the Rights Agent nor anyone else shall have any obligation to issue
any Rights Certificate to an Acquiring Person or to anyone else in whose hands
the Rights nominally represented by such
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Certificate shall be null and void either initially or in connection with a
request to register a transfer of Rights represented by a certificate previously
issued. Furthermore, neither the Company, the Rights Agent nor anyone else shall
be obligated to issue Rights Certificates to any person making a tender offer
which if consummated could render such person an Acquiring Person or to any
Affiliate or Associate of such person until and unless the tender offer is
withdrawn and the person shall have established to the Company's reasonable
satisfaction that such person does not intend to become an Acquiring Person. The
Company shall be entitled to require any person claiming the right to receive a
Rights Certificate to present such evidence as the Company shall require in good
faith to establish to the Company's satisfaction that the Rights represented by
that Certificate have not become null and void under the provisions in Section
7(e) or that the Company is not entitled to withhold such certificate under the
provisions of the preceding sentence.
Section 4. Form of Rights Certificates. The Rights Certificates (and the
form of election to purchase shares and form of assignment to be printed on the
reverse thereof) shall be in substantially the form of Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation 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 this
Agreement, the Rights Certificates, whenever issued, shall be dated as of the
Distribution Date, and on their face shall entitle the holders thereof to
purchase such number of shares of Preferred Stock as shall be set forth therein
at the Purchase Price set forth therein, but the number and kind of such
securities and the Purchase Price shall be subject to adjustment as provided in
this Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by the Company's Chief Executive Officer, President, Chief Financial
Officer, Treasurer or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Company's Secretary or an Assistant
Secretary, either manually or by facsimile signature. Each Rights Certificate
shall be countersigned by the Rights Agent either manually or, if permitted by
the Company, by facsimile signature and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed a Rights Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights
-10-
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced by each Rights Certificate, and the certificate number and the date of
issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 3(c) and Section 14, at any
time after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or following a Triggering Event or a Business
Combination, other securities, cash or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and 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 Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
-11-
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the earliest of the Expiration
Date, the Exchange Date and the Redemption Date, by surrendering the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal corporate trust office of
the Rights Agent, together with payment of the Exercise Amount for each Right
exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Exercise Amount for each Right exercised and an amount equal to
any applicable transfer tax required to be paid by the surrendering holder
pursuant to Section 9(d), the Rights Agent shall, subject to the provisions of
this Agreement, thereupon promptly (i)(A) requisition from any transfer agent
for the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the Preferred Stock (or other
securities, as the case may be) to be purchased (and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests), or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock (or other securities, as the case may be) issuable upon exercise
of the Rights with a depositary agent, requisition from the depositary agent
depositary receipts representing such Preferred Stock (or other securities, as
the case may be) as are to be purchased (in which case certificates for the
Preferred Stock (or other securities, as the case may be) represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company shall direct the depositary agent to comply with such request; (ii)
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 Rights
Certificate, registered in such name or names as may be designated by such
holder; and (iii) if appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 of this Agreement and, promptly after receipt thereof, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 3(c) and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any
Rights that are or were formerly beneficially owned on or after the earlier of
the Distribution Date and the Trigger Date by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such, or (iii) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate
-12-
of such Acquiring Person) who becomes or becomes entitled to be a transferee
prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a direct or indirect transfer (whether or not
for consideration) from the Acquiring Person (or from an Associate or Affiliate
of such Acquiring Person) to holders of equity interests in such Acquiring
Person (or to holders of equity interests in any Associate or Affiliate of such
Acquiring Person) or to any Person with whom the Acquiring Person (or an
Associate or Affiliate of such Acquiring Person) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct or
indirect transfer which a majority of the Continuing Directors or, if there are
then no Continuing Directors, a majority of the Board of Directors of the
Company determines is part of a plan, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(e), shall,
immediately upon the occurrence of a Triggering Event and without any further
action, be null and void and no holder of such Rights shall have any rights
whatsoever with respect to such Rights whether under this Agreement or
otherwise, provided, however, that, in the case of transferees under clause (ii)
or clause (iii) above, any Rights beneficially owned by such transferee shall be
null and void only if and to the extent such Rights were formerly beneficially
owned by a Person who was, at the time such Person beneficially owned such
Rights, or who later became, an Acquiring Person or an Affiliate or Associate of
such Acquiring Person. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) are complied with, but shall have no
liability to any holder of a Rights Certificate or to any other Person as a
result of the Company's failure to make, or any delay in making (including any
such failure or delay by the Continuing Directors or the Board of Directors of
the Company) any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate 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 or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
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 Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
-13-
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event or a Business
Combination, out of its authorized and unissued shares of Common Stock and/or
other securities or out of its authorized and issued shares of Common Stock
and/or other securities held in its treasury) free from preemptive rights or any
right of first refusal, a sufficient number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and/or
other securities) to permit the exercise in full of all Rights from time to time
outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event or a Business
Combination, shares of Common Stock and/or other securities) issuable upon the
exercise of Rights may be listed on any United States national securities
exchange or quoted on any automated quotation system, to use its best efforts to
cause, from and after the time that the Rights become exercisable, all such
shares and/or other securities reserved for such issuance to be listed on such
exchange or quoted on such automated quotation system upon official notice of
issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
-14-
(e) The Company shall (i) as soon as practicable following a
Triggering Event (or such earlier time following the Distribution Date as may be
required by law), prepare and file a registration statement on an appropriate
form under the Securities Act with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which Rights are no longer exercisable for such securities and (B)
the Expiration Date. The Company shall also take such action as may be necessary
or appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercise of the Rights. The
Company may temporarily suspend, for a period of time not to exceed 90 days
after the date of a Triggering Event, the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall make 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.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number and kind of securities, cash and other
property obtainable upon exercise of each Right and the number of Rights
outstanding shall be subject to adjustment from time to time as provided in this
Section 11.
(a) Adjustments Prior to Trigger Date:
(1) In the event the Company shall at any time after the date of
this Agreement and prior to the Trigger Date (i) pay a
dividend or make a distribution on the Common Stock payable in
shares of Common Stock, (ii) subdivide (by a stock split or
otherwise) the outstanding Common Stock into a larger number
of shares, (iii) combine (by a reverse stock split or
otherwise) the outstanding Common Stock into a smaller number
of shares (and any of the actions described in clauses (i),
(ii) or (iii) are herein called a "stock split") then:
-15-
(A) The number of Rights outstanding shall be adjusted so that
after giving effect to such stock split the number of
Rights outstanding shall be exactly equal to the number of
shares of Common Stock outstanding (and so that prior to
the Distribution Date one Right shall be associated with
every share of Common Stock outstanding after such Stock
Split);
(B) The Exercise Amount shall be adjusted by multiplying the
Exercise Amount in effect immediately prior to such stock
split by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately
prior to such stock split and the denominator of which
shall be the number of shares of Common Stock outstanding
immediately after such stock split;
(C) The Purchase Price for each one one-thousandth of a share
of Preferred Stock shall not change; and
(D) The fraction of a share of Preferred Stock purchasable
with each Right immediately after such stock split shall
be equal to the product derived by multiplying the
fraction of a share of Preferred Stock purchasable with
each Right immediately prior to such stock split times the
fraction cited in clause (B) above.
The following example illustrates the intended operation of the
preceding provisions. Assume that initially, each Right would (when
and if it became exercisable) entitle its holder to purchase one one-
thousandth of a share of Preferred Stock for $200 (and accordingly the
initial Exercise Amount and the initial Purchase Price per one one-
thousandth of a share of Preferred Stock are each $200). Assume
further that prior to the Distribution Date, the Company splits its
Common Stock two for one (thereby doubling the number of shares of
Common Stock outstanding). The intended operation of the preceding
adjustment provisions is that: (i) the number of Rights outstanding
would also double; (ii) one Right would be associated with each share
of Common Stock outstanding after the stock split; (iii) each Right
would have an Exercise Amount equal to $100; (iv) each Right will
entitle its holder (when and if the Right becomes exercisable) to
purchase one two-thousandth of one share of Preferred Stock; and (v)
the Purchase Price for each one one-thousandth of a share of Preferred
Stock would remain $200 so that the price for each one two-thousandth
of a share of Preferred Stock purchasable with each Right would be
$100.
-16-
(2) Adjustment in Rights Certificates: In the event the
Distribution Date shall occur and the Company shall issue
separate certificates to represent the Rights, the following
provisions shall thereafter apply:
(A) In the event the number of Rights outstanding are
increased pursuant to Section 11(a)(1), the Company shall
as promptly as reasonably possible distribute to the
record holders of the Rights on the record date for the
stock split giving rise to the increase in the number of
Rights certificates representing the additional Rights
issuable by reason of such stock split.
(B) In the event the number of Rights outstanding are reduced
pursuant to Section 11(a) by reason of the occurrence of
a reverse stock split or its functional equivalent, then
each Rights certificate outstanding prior to such reverse
stock split shall thereafter represent the reduced number
of Rights into which the Rights represented by such
certificate immediately prior to such reverse stock split
shall have been converted by reason of the occurrence of
that reverse stock split.
(b) Basic Triggering Event Adjustments: Upon the first occurrence of a
Triggering Event (except as otherwise provided in this Agreement), each Right
shall be changed so that immediately after the Triggering Event:
(1) it shall no longer be exercisable for Preferred Stock but rather
shall be exercisable for Common Stock;
(2) the number of shares of Common Stock which may be acquired upon
exercise of each Right shall be equal to the result obtained by
dividing (x) 50% of the Current Market Price per share of Common
Stock on the date of the occurrence of the Triggering Event into
(y) the Exercise Amount in effect immediately prior to the
Triggering Event; and
(3) the Purchase Price per Common Share purchasable with each Right
shall be equal to 50% of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering
Event.
(c) Other Post Triggering Event Adjustments.
(1) At any time after the occurrence of a Triggering Event, a majority
of the Continuing Directors or, if there are then no Continuing
Directors, a majority of the Board of Directors of the Company
shall have the right to reduce the Exercise Amount by such amount
as such majority shall desire provided that (i) the reduction
shall not result in
-17-
a Purchase Price lower than the par value per share of the shares
purchasable with the Rights, and (ii) a majority of the Continuing
Directors or, if there are then no Continuing Directors, a
majority of the Board of Directors of the Company shall determine
that such reduction is not contrary to the interests of holders of
Rights (other than any Acquiring Person or any other Person in
whose hands the Rights are void), including, without limitation,
such Directors shall in good faith determine that the value of the
Rights (to holders other than any Acquiring Person or any other
Person in whose hands the Rights are void) immediately after any
such reduction will be at least equal to or greater than the value
of such Rights immediately prior to the public announcement of
such reduction. The term "Reduction Amount" means the amount of
the reduction in the Exercise Amount which shall be made in
accordance with the preceding sentence. In the event any reduction
shall actually be made in accordance with this paragraph, then the
number of Common Shares purchasable with each Right shall be
reduced to an amount having a Current Value equal to the remainder
derived by subtracting the Reduction Amount from the Current Value
as of the date of such adjustment of the number of Common Shares
purchasable with each Right immediately prior to such adjustment.
For purposes of the preceding sentence, (i) the "Current Value" of
a particular number of Common Shares shall be equal to the product
derived by multiplying that particular number times the greater of
(x) the Current Market Price (calculated as prescribed in Section
1) or (y) the closing price per share (calculated as prescribed in
Section 1) for the Common Shares on the Trading Day immediately
prior to the day on which the adjustment shall be made and (ii)
"the number of Common Shares purchasable with each Right
immediately prior to such adjustment" shall be the number after
giving effect to the adjustment to be made on the Trigger Date
pursuant to Section 11(b) and any other adjustments which shall
have been prescribed by this Agreement for the period from the
Trigger Date to the date upon which the adjustment shall be made
under this Section 11(c)(1). Upon making each adjustment under
this Section 11(c)(1), the Purchase Price for each of the Common
Shares purchasable after making such adjustment shall be reduced
to the quotient derived by dividing the Exercise Amount in effect
after such reduction by the number of Common Shares purchasable
with each Right after giving effect to the reduction prescribed by
this Section 11(c)(1). Notwithstanding the foregoing, the right to
reduce the Exercise Amount pursuant to this Section 11(c)(1) shall
not be exercised at any time during which the exchange option set
forth in Section 11(c)(3) is exercisable, unless a majority of the
Continuing Directors (or, if there are then no Continuing
Directors, a majority of the Board of Directors of the Company) in
good faith determines that
-18-
exercise of the Section 11(c)(1) right to reduce the Exchange Amount
would provide greater value to the holders of the Rights (other than
any Acquiring Person or any other Person in whose hands the Rights are
void) than exercise of the Section 11(c)(3) exchange option.
(2) Use of Common Equivalent Shares: In the event that the number of
shares of Common Stock which are authorized by the Company's
certificate of incorporation, but which are not outstanding or
reserved for issuance for purposes other than upon exercise of the
Rights ("Available Common Stock") is not sufficient to permit the
exercise in full of the Rights after the adjustment made in accordance
with Section 11(b), then:
(A) the Company shall first reduce the Exercise Amount pursuant to
Section 11(c)(1) by a Reduction Amount equal to the lesser of (i)
the amount which shall be sufficient to reduce the amount of
Common Stock purchasable with the Rights (after giving effect to
the adjustment prescribed by Section 11(c)(1)) to a number of
shares not in excess of the Available Common Stock or (ii) the
maximum amount permitted by Section 11(c)(1).
(B) If the amount of the adjustment required by the preceding
sentence shall not be sufficient to reduce the amount of Common
Stock purchasable with the Rights to a number of shares not in
excess of the Available Common Stock, then (i) first, the
Available Common Stock shall be allocated among the outstanding
Rights so that each Right shall entitle its holder to purchase
the same quantity of Available Common Stock and (ii) second, each
Right shall additionally entitle its holder to (x) purchase a
fraction of a share of Preferred Stock which when multiplied
times the Adjustment Number then in effect under the terms of the
Preferred Stock produces a product equal to the remainder derived
by subtracting the number of shares of Common Stock purchasable
with each Right after the allocation specified in clause (i) from
the number of shares of Common Stock which would have been
purchasable with such Right if the Corporation had had a
sufficient number of shares of Common Stock to permit the Right
to be exercisable entirely for Common Stock (such remainder being
referred to herein as the "Unallocated Shares") or (y) receive
cash in an amount equal to the Current Value of the Unallocated
Shares (calculated as prescribed in Section 11(c)(1)) as of the
date of substitution of cash for such Shares, or (z) receive any
combination of the foregoing
-19-
so long as each Right entitles its holder to receive the same
amount of fractional shares of Preferred Stock and cash.
(C) The fraction of a share of Preferred Stock equal to the
reciprocal of the Adjustment Number in effect at the time the
term shall be applied shall be deemed to be a "Common Equivalent
Share" for purposes of this Agreement. The Company shall take all
actions reasonably necessary so that as nearly as possible each
Common Equivalent Share represents substantially the same
interest in the Company, has the same dividend rate, and has
other characteristics as similar as possible to one share of
Common Stock. The term "Common Share" whenever it is used in this
Agreement means both a share of Common Stock and a Common
Equivalent Share.
(D) If circumstances after the initial Trigger Date require the use
of Common Equivalent Shares, the Company shall use its best
efforts to obtain authorization to issue a sufficient quantity of
Common Stock to permit Common Stock to be issued upon exercise of
the Rights and/or any exercise of the exchange right under the
following Section. Each time the Company's authorized Common
Stock shall be increased, the adjustment required under the
preceding paragraphs shall be redone to maximize the amount of
Common Stock issuable upon exercise of the Rights. To the extent
excess authorized Common Stock remains after the readjustment
required by the preceding sentence, the holder of any outstanding
Common Equivalent Share shall have the right at any time to
require the Company to exchange that share for a share of Common
Stock.
(E) In no event, however, shall the Company be obligated to reserve
any Common Stock for issuance under the Rights until and unless a
Triggering Event actually occurs.
(F) In no event shall the Company issue any Preferred Stock except
for issuances caused by exercise of the Rights and except for
issuances required by this Section 11(c) (2) or Section 11(d)(6).
(3) Exchange Option:
(A) At any time after the occurrence of a Triggering Event and prior
to (i) the time any Person (other than an Exempt
-20-
Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common
Stock then outstanding and (ii) the occurrence of a Business
Combination, a majority of the Continuing Directors or, if there
are then no Continuing Directors, a majority of the Board of
Directors of the Company may, at their option, cause the Company
to exchange for 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 7(e) hereof),
shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the date of this Agreement (such exchange ratio being
referred to herein as the "Exchange Ratio"). Any partial exchange
shall be effected on a pro rata basis based on the number of
Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(B) Immediately upon the action of a majority of the Continuing
Directors or, if there are then no Continuing Directors, a
majority of the Board of Directors of the Company ordering the
exchange of any particular Rights pursuant to this Section
11(c)(3) and without any further action and without any notice,
the right to exercise those particular Rights shall terminate and
the only right a holder shall have thereafter with respect to any
of those particular Rights shall be to receive the number of
shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange and in addition,
the Company shall promptly mail a notice of any such exchange to
all of the holders of such Rights in accordance with Section 25
of this Agreement; provided, however, that the failure to give,
any delay in giving or any defect in, such notice shall not
affect the validity of such exchange. Each such notice of
exchange will state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged.
The Company shall not 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 Rights Certificates with regard to which such
fractional shares of
-21-
Common Stock would otherwise be issuable an amount in
cash equal to the product derived by multiplying (x)
the subject fraction, by (y) the last sale price of the
Company's Common Stock on the fifth Trading Day
following the public announcement of the exchange by
the Company, or, in case no such sale takes place on
such day, the average of the closing bid and asked
prices on such day, in either case on a when issued
basis (taking into account the exchange), as reported
in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the NYSE (or, if the Company's Common Stock
is not so listed or traded, then as determined in the
manner provided under the definition of "Current Market
Price," adjusted to take into account the exchange). In
determining whether any particular holder shall be
obligated to receive cash in lieu of a fractional
share, the holder shall be entitled to have all Rights
beneficially owned by such holder aggregated so that
only one fractional share shall be attributable to all
the Rights so beneficially owned.
(d) Antidilution Adjustments After the Trigger Date:
(1) In the event the Company shall at any time after the Trigger
Date effect any stock split with respect to its Common
Stock, then the Purchase Price to be in effect after such
stock split shall be determined by multiplying the Purchase
Price in effect immediately prior to such action by a
fraction, the numerator of which shall be the number of
Common Shares outstanding immediately prior to such stock
split and the denominator of which shall be the number of
Common Shares outstanding immediately after such stock
split.
(2) In case the Company shall at any time after the Trigger Date
fix a record date for the making of a distribution to
holders of Common Stock (including any such distribution
made in connection with a reclassification of the Common
Stock or a consolidation or merger in which the Company is
the surviving corporation) of securities (other than Common
Stock and rights, options or warrants referred to in Section
11(d)(3)), cash (other than a regular periodic cash dividend
at an annual rate not in excess of (x) 125% of the annual
rate of the regular cash dividend paid on the Common Stock
during the immediately preceding fiscal year or (y) in the
event that a regular cash dividend was not paid on the
Common Stock during such preceding fiscal year, 5% of the
Current Market Price of the Common Stock on the date such
regular cash dividend was first declared), property,
evidences of indebtedness or assets, the Purchase Price to
-22-
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which
shall be the Current Market Price per share of Common Stock
on such record date, less the fair market value (as
determined in good faith by a majority of the Continuing
Directors or, if at the time of such determination there are
no Continuing Directors, by a nationally recognized
investment banking firm selected by the Board of Directors
of the Company having no current or former relationship with
an Acquiring Person, whose determination shall be described
in a statement filed with the Rights Agent) of such
securities, cash, property, evidences of indebtedness or
assets to be so distributed in respect of one share of
Common Stock, and the denominator of which shall be such
Current Market Price per share of Common Stock on such
record date. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that
such distribution is not made following such adjustment, the
Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not
been fixed.
(3) If the Company shall at any time after the Trigger Date fix
a record date for the issuance of rights, options or
warrants to holders of Common Shares entitling them to
subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per Common Share
(or, in the case of a convertible security, having a
conversion price per Common Share) less than the Current
Market Price per share of Common Stock on such record date
and requiring that the conversion or purchase right be
exercised within 45 calendar days after 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 shares of
Common Shares outstanding on such record date, plus the
number of Common Shares which the aggregate exercise and/or
conversion price for the total number of Common Shares which
are obtainable upon exercise and/or conversion of such
rights, options, warrants or convertible securities would
purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Common Shares
outstanding on such record date, plus the number of
additional Common Shares which may be obtained upon exercise
and/or conversion of such rights, options, warrants or
convertible securities. 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 a majority of the
Continuing Directors or, if at the time of such
determination there
-23-
are no Continuing Directors, by a nationally recognized
investment banking firm selected by the Board of Directors
of the Company having no current or former relationship with
an Acquiring Person, whose determination shall be described
in a statement filed with the Rights Agent and shall be
binding on the Rights Agent. Common Shares owned by or held
for the account of the Company or any Subsidiary 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
issued following such adjustment, the Purchase Price shall
be readjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.
(4) 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 combination or subdivision of the Common Stock,
issuance wholly for cash of any Common Stock at less than
the Current Market Price, issuance wholly for cash of Common
Stock or securities which by their terms are convertible
into or exchangeable or exercisable for Common Shares, stock
dividends or issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the
Company to holders of its Common Shares, shall not be
taxable to such stockholders.
(5) After each adjustment of the Purchase Price pursuant to any
of subsections (1) - (4) immediately above, the number of
Common Shares purchasable with each Right shall be adjusted
to the quotient derived by dividing the Purchase Price as
constituted after giving effect to such adjustment into the
Exercise Amount.
(6) The Company shall not take any of the actions described in
any of subsections (1) - (3) above at a time when any Common
Equivalent Shares are outstanding unless the Company shall
take substantively identical actions with respect to the
outstanding Common Stock and outstanding Common Equivalent
Shares. Conversely, the Company shall not take any actions
with respect to outstanding Common Equivalent Shares
analogous to those described in any of subsections (1) - (3)
above unless the Company shall take substantively identical
actions with respect to the outstanding Common Stock and
outstanding Common Equivalent Shares.
-24-
(e) Recapitalizations.
(1) In the event that after the Trigger Date, the Company shall
issue any securities in a reclassification of the Common
Stock or in any other recapitalization (including any such
reclassification in connection with a consolidation or
merger in which the Company is the surviving corporation),
then in each such event:
(A) the property purchasable with each Right shall be
adjusted to be whatever the owner of that Right would
have owned by reason of both (i) the exercise of that
Right immediately prior to such recapitalization or
reclassification and (ii) the effect of that
recapitalization or reclassification on the property
assumed to have been received in such exercise.
(B) The Exercise Amount shall be allocated among the shares
of stock and/or other units of property for which the
Right shall be exercisable after giving effect to the
adjustment cited in clause (A) based on the fair market
value of such property to determine the Purchase Price
for each such share and/or unit.
(2) To illustrate the intended operation of this provision,
assume that: (i) immediately prior to a reclassification,
each Right were exercisable for 10 Common Shares and the
Exercise Amount were $200 (resulting in a purchase price of
$20 per Common Share); (ii) as a result of the
Reclassification, each outstanding Common Share is
reclassified into two New Common Shares and one Series B
Share; and (iii) immediately after the reclassification, the
market value of each New Common Share was $30 and the market
value of each Series B share was $15. Immediately after the
assumed reclassification, each Right would be exercisable
for 20 New Common Shares at a purchase price of $8 per share
and ten Series B Shares at a purchase price of $4 per share.
(f) In the event a Triggering Event shall occur, or in the event
there shall be a recapitalization or reclassification pursuant to Section 11(e),
or in the event there shall be any merger or other action which shall cause a
change in the property purchasable with the Rights under Section 13, or in the
event there shall be any other occurrence or development which shall cause the
property purchasable with the Rights to consist in whole or in part of anything
other than Preferred Stock, then and in any such event:
(1) The certificates representing the Rights shall automatically
be deemed to represent the adjusted terms of the Rights
without the need to replace such certificates. The Company
shall thereafter make arrangements for the production of
certificates representing the
-25-
revised terms of the Rights resulting from such adjustment
and shall use such certificates to represent Rights for
which new certificates shall be issuable by reason of a
transfer of record ownership or by reason of a request by
the existing record owner for a replacement certificate
representing the revised terms of the Rights.
(2) The principles underlying the adjustment provisions in this
Section 11 and elsewhere in this Agreement shall be applied
to fairly and proportionately adjust the shares or other
property purchasable with the Rights and the purchase price
for each share or other property unit purchasable with the
Rights after giving effect to the adjustments required by
reason of such event to reflect any subsequent capital
changes or other events. Without limiting by implication the
generality of the preceding sentence, the provisions of
Sections 7, 9, 10, 12, 13, 14 and 24 of this Agreement which
related to the Preferred Stock shall after the occurrence of
any such event apply in a substantively identical manner to
the shares or other property purchasable with the Rights
after giving effect to such event.
(g) Before taking any action that would cause an adjustment reducing
the Purchase Price per share at which shares are purchasable with the Rights
below the par value of those shares, 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 shares at such
adjusted Purchase Price.
(h) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Common
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(i) The Company covenants and agrees that on and after the Trigger
Date neither it nor any combination of it and its subsidiaries shall (i)
consolidate with any other Person, or (ii) merge with or into any other Person
or (iii) directly or indirectly sell, lease, or otherwise transfer or dispose of
(in one transaction or a series of related transactions) assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole to any other Person if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer, or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after
-26-
such consolidation, merger, sale, lease, transfer, or disposition the
stockholders (or equity holders) of the Person who constitutes, or would
constitute, the Principal Party in such transaction shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates or (C) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights. The Company shall not
consummate any such consolidation, merger, sale, lease, transfer, or disposition
unless prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(i).
(j) The Company covenants and agrees that, after the Trigger
Date it will not, except as permitted by Section 11(c)(3) of this Agreement,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will, directly or
indirectly, diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.
Section 12. Certification of Adjustments. Whenever an adjustment is made
as provided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the stock then purchasable with the Rights a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if no Rights Certificates have been issued, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. Any adjustment to be made pursuant to Sections
11 and 13 of this Agreement shall be effective as of the date of the event
giving rise to such adjustment. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained, and
shall not be obligated or responsible for calculating any adjustment, nor shall
it be deemed to have knowledge of such an adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
- -------------
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(i) and Section 11(j) of this Agreement) in a transaction in which the Company
is not the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i) and Section 11(j) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation,
-27-
any conversion into or exchange for securities of any other Person, cash or any
other property) or (iv) the Company shall, directly or indirectly, sell, lease,
exchange, mortgage, pledge or otherwise transfer or dispose of (or one or more
of its Subsidiaries shall directly or indirectly sell, lease, exchange,
mortgage, pledge or otherwise transfer or dispose of), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person (other than the Company or any of its Subsidiaries
in one or more transactions each and all of which comply with Section 11(i) and
Section 11(j) of this Agreement).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise of each Right,
such number of shares of Common Stock of the Principal Party as shall be equal
to the result obtained by dividing the Exercise Amount in effect prior to the
Business Combination by 50% of the Current Market Price per share of the Common
Stock of such Principal Party immediately prior to the consummation of such
Business Combination. All shares of Common Stock of any Person for which any
Right may be exercised after consummation of a Business Combination as provided
in this Section 13(a) shall, when issued upon exercise thereof in accordance
with this Agreement, be duly and validly authorized and issued, fully paid,
nonassessable, freely tradeable, not subject to liens or encumbrances, and free
of preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof of any kind or nature
whatsoever. The Purchase Price per share for such Common Stock immediately after
such Business Combination shall be equal to 50% of the Current Market Price per
share of the Common Stock of such Principal Party immediately prior to the
consummation of such Business Combination.
(b) After consummation of any Business Combination, (i) the Principal
Party shall be liable for, and shall assume, by virtue of such Business
Combination and without the necessity of any further act, all the obligations
and duties of the Company pursuant to this Agreement, (ii) the term "Company" as
used in this Agreement shall thereafter be deemed to refer to such Principal
Party and (iii) such Principal Party shall take all steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
in accordance with Section 9) in connection with such Business Combination as
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination unless
prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13, (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities
-28-
purchasable upon exercise of the Rights, (B) use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing and remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date, (C) deliver to
holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 (or any successor form) under the Exchange Act, (D)
use its best efforts to qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the state securities or "blue sky"
laws of such jurisdictions as may be necessary or appropriate, (E) use its best
efforts to list the Rights and the securities purchasable upon exercise of the
Rights on a United States national securities exchange and (F) obtain waivers of
any rights of first refusal or preemptive rights in respect of the Common Stock
of the Principal Party subject to purchase upon exercise of outstanding Rights,
(iii) the Company and the Principal Party shall have furnished to the Rights
Agent an opinion of independent counsel stating that such supplemental agreement
is a legal, valid and binding agreement of the Principal Party enforceable
against the Principal Party in accordance with its terms, and (iv) the Company
and the Principal Party shall have filed with the Rights Agent a certificate of
a nationally recognized firm of independent accountants setting forth the number
of shares of Common Stock of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). The provisions
of Section 11(b) of this Agreement shall be applicable to events which occur
after a Business Combination.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number or kind of shares (or fractions of a share), cash or
other property for which a Right is exercisable or the number of Rights
outstanding or associated with each share of Common Stock or any similar or
other adjustment shall be made or be effective if such adjustment would have the
effect of reducing or limiting the benefits the holders of the Rights would have
had absent such adjustment, including, without limitation, the benefits under
Sections 11 and 13, unless the terms of this Agreement are amended so as to
preserve such benefits, provided that this paragraph shall not prevent any
change prior to the Trigger Date permitted by Section 26(a) and provided that
this Section 13(e) shall not be deemed to limit or impair the right to engage in
an exchange pursuant to Section 11(c)(3).
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the event
the nature of the organization of any Principal Party shall preclude or limit
the acquisition of Common Stock of such Principal Party upon exercise of the
Rights as required by Section 13(a) as a result of a
-29-
Business Combination, it shall be a condition to such Business Combination that
such Principal Party shall take such steps (including, but not limited to, a
reorganization) as may be necessary to ensure that the benefits intended to be
derived under this Section 13 upon the exercise of the Rights are assured to the
holders thereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights.
(b) The Company shall permit the issuance and trading of Preferred
Stock in fractional shares such that the smallest fractional share tradeable at
any particular time shall equal the reciprocal of the Adjustment Number in
effect at that particular time. The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of the reciprocal of the Adjustment Number) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of the
reciprocal of the Adjustment Number). Fractions of shares of Preferred Stock
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Stock. In lieu
of fractional shares of Preferred Stock that are not integral multiples of the
reciprocal of the Adjustment Number, the Company may at its option (i) issue
scrip or warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive the reciprocal of the Adjustment Number of one
share of Preferred Stock upon the surrender of such scrip or warrants
aggregating the reciprocal of the Adjustment Number of one share of Preferred
Stock, or (ii) pay to the registered holders of Rights Certificates at the time
such Rights Certificates are exercised as provided in this Agreement an amount
in cash equal to the same fraction of the relevant closing price of a share of
Preferred Stock. For purposes of this Section 14(b), the relevant closing price
of a share of Preferred Stock shall be the closing price of a share of Preferred
Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Equivalent Shares 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 Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the closing price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
-30-
(d) The holder of a Right by his acceptance thereof expressly waives
any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all rights of
action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Right, may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his rights pursuant to 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 Rights Holders Concerning Transfer and Ownership
of Rights. Every holder of a Right by accepting the same consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, 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 a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificate or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the stock
purchasable with such Right or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote or to receive dividends or
distributions or shall be deemed for any purpose the holder of Preferred Stock
or any other securities, cash or other property which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right (i) to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, (ii) to give or withhold consent to any corporate action,
(iii) to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24),
-31-
(iv) to receive dividends, distributions or subscription rights, (v) to
institute, as a holder of Preferred Stock or other securities issuable on
exercise of the Rights represented by any Rights Certificate, any derivative
action on behalf of the Company, or otherwise, until and only to the extent that
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. 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
negligence, bad faith, willful misconduct or breach of this Agreement 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
the costs and expenses of defending against any claim of liability in the
premises. The indemnity provided for herein shall survive the expiration of the
Rights, the termination of this Agreement, and the resignation or removal of the
Rights Agent. The costs and expenses of enforcing this right of indemnification
shall also be paid by the Company.
The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Preferred Stock or
Common Stock 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 reasonably believed
by it to be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any document 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. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights 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 Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate
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either in the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, the Rights
Agent may consult with legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, the
General Counsel, the Treasurer, any Vice President or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
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 of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any
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Rights 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 Rights Certificate; nor shall it be responsible for
any change or adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 11, 13 or 23 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 Rights
Certificates after actual notice of any change or adjustment is required); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock, Common
Stock or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities 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 performance 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 the
Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, the General Counsel, the Treasurer, any Vice President or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer. 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 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 ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or 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 or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
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(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.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with 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 not be required to take notice or be
deemed to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
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 notice of 30 days in writing mailed to the Company and to each transfer
agent of the Common Stock or Preferred Stock by registered or certified mail
and, at the expense of the Company, to the holders of the Rights Certificates by
either (i) first-class mail or (ii) by disclosure in a periodic report of the
Company required to be filed under the Exchange Act, any permitted report under
the Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. The Company may remove the
Rights Agent or any successor Rights Agent upon notice of 30 days in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by either (i)
first-class mail or (ii) by disclosure in a periodic report of the Company
required to be filed under the Exchange Act, any permitted report under the
Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. 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. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any
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successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of Illinois or the State of New York (or of any other
state of the United States so long as such corporation is authorized to conduct
a banking, corporate trust or stock transfer business in the State of Illinois
or the State of New York) in good standing, which is authorized under such laws
to exercise corporate trust powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. 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; 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 such 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 Stock or
Preferred Stock; the Company shall also either (i) mail a notice thereof in
writing to the registered holders of the Rights Certificates or (ii) make a
disclosure with respect thereto in a periodic report of the Company required to
be filed under the Exchange Act, any permitted report under the Exchange Act, a
press release of the Company or in any proxy or other communication of the
Company with its stockholders. 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 Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by a majority of the Board of Directors of the
Company or, if there is then an Acquiring Person and at least one Continuing
Director, by a majority of the Continuing Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind or class of
securities, cash or other property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the Trigger Date and (ii) the Expiration
Date, redeem all but not less than all of the then-outstanding Rights at a
redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement. The Company may, at its option, pay
the Redemption Price in cash, shares (including fractional shares) of Common
Stock (based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors. The redemption of the Rights by the Board of Directors of the
Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors of the Company in its sole discretion may
establish.
(b) At the time and date of effectiveness set forth in any
resolution of the Board of Directors of the Company ordering the redemption of
the Rights, without any further action and
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without any further 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; provided, however, that such resolution of the Board of
Directors of the Company may be revoked, rescinded or otherwise modified at any
time prior to the time and date of effectiveness set forth in such resolution,
in which event the right to exercise will not terminate at the time and date
originally set for such termination by the Board of Directors of the Company.
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. The Company shall also give notice of
such redemption to the Rights Agent. The Company may elect to give notice of
such redemption to the holders of the then-outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the issuance of Rights
Certificates, on the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner provided in this Agreement shall be
deemed given, whether or not the holder receives the notice. In connection with
any redemption permitted under this Section 23, the Company may, at its option,
discharge all of its obligations with respect to the Rights by (i) issuing a
press release announcing the manner of redemption of the Rights and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the issuance of the Rights Certificates, on the registry books of the
transfer agent for the Common Stock, and upon such action, all outstanding
Rights Certificates shall be null and void without any further action by the
Company. Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23, and other than in connection
with the purchase of shares of Common Stock prior to the earlier of the
Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or after
the Distribution Date, shall propose to (a) pay any dividend payable in stock of
any class to the holders of its Common Shares or to make any other distribution
to the holders of its Common Shares (other than a regular periodic cash dividend
at an annual rate not in excess of 125% of the annualized rate of the cash
dividend paid on the Common Shares during the immediately preceding fiscal
year), or (b) offer to the holders of its Common Shares rights, options or
warrants to subscribe for or to purchase any additional shares of Common Shares
or shares of stock of any class or any other securities, rights or options, or
(c) effect any reclassification of the Common Shares (other than a
reclassification involving only the subdivision of outstanding shares of Common
Shares, a change in the par value of such Common Shares or a change from par
value to no par value), or (d) directly or indirectly effect any consolidation
or merger into or with, or effect any sale, lease, exchange, or other transfer
or disposition (or to permit one or more of its Subsidiaries to effect any sale,
lease, exchange or other transfer or disposition), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to, any other Person, or
(e) effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right, in accordance
with Section 25, a notice of such proposed action, which shall specify any
record date for the purposes of such stock dividend or distribution of rights,
or the date on which such reclassification, consolidation, merger, sale, lease,
exchange, transfer, disposition, liquidation, dissolution or winding up is to
take place and if such holders will or may participate therein, the date of
participation
-37-
therein by the holders of Common 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 (a) or
(b) above at least 20 days prior to the record date for determining holders of
the Common Shares for purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such proposed action
or the date of participation therein, if any, by the holders of Common Shares,
whichever shall be the earlier. The failure to give notice as required by this
Section 24 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11 or 13.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights 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:
Dean Foods Company
3600 N. River Road
Franklin Park, Illinois 60131
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail, and shall be deemed given upon receipt, addressed (until another address
is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Supplements and Amendments.
(a) At any time prior to the Trigger Date, a majority of the
Board of Directors of the Company may, and the Rights Agent shall, if so
directed, supplement or amend any provision of this Agreement, including,
without limitation, the Beneficial Ownership percent as set forth in Section 1
at which a Person becomes an Acquiring Person and the definition of Exempt
Person as
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set forth in Section 1 to include any Person in addition to the Persons
described therein, without the approval of any holders of Rights.
(b) From and after the Trigger Date, a majority of the Board of
Directors of the Company may, and the Rights Agent shall, if so directed, amend
this Agreement without the approval of any holders of Rights Certificates (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained in
this Agreement which may be defective or inconsistent with any other provision
of this Agreement or (iii) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable, so long as such
change or supplement is not prohibited by Section 11(j) or Section 13(f) and
would not otherwise adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or any other Person in whose hands
the rights are void under the provisions of Section 7(e)).
(c) Except as otherwise provided in Section 26(b):
(1) The Board of Directors of the Company (or, where
specifically provided for in this Agreement, the
Continuing Directors) shall have the exclusive power
and authority to administer this Agreement and to
exercise all rights and powers specifically granted to
the Board of Directors of the Company or the Company,
or as may be necessary or advisable in the
administration of this Agreement, including, without
limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a
determination to redeem or not redeem the Rights, to
exchange or not exchange the Rights for Common Stock or
other securities of the Company, or to amend or
supplement this Agreement). No such action,
interpretation or determination (or omission with
respect to the foregoing) shall subject the Board of
Directors of the Company or the Continuing Directors to
any liability to the holders of the Rights.
(2) Immediately upon the action of a majority of the Board
of Directors of the Company providing for any amendment
or supplement pursuant to this Section 26, and without
any further action and without notice, such amendment
or supplement shall be deemed effective. Promptly
following the adoption of any amendment or supplement
pursuant to this Section 26, the Company shall deliver
to the Rights Agent a copy, certified by the Secretary
or any Assistant Secretary of the Company, of
resolutions of a majority of the Board of Directors of
the Company adopting such amendment or supplement. Upon
such delivery, the amendment or supplement shall be
administered by the Rights Agent as part of this
Agreement in accordance with the terms of this
Agreement, as so amended or supplemented.
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(d) Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement will be effective against the Rights Agent without the
execution of such supplement or amendment by the Rights Agent.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. 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 Rights any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights.
Section 29. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or unenforceable under applicable law, (i) such provision shall be
applied to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this
Agreement shall remain in full force and effect. No rule of strict construction,
rule resolving ambiguities against the person who drafted the provision giving
rise to such ambiguities, or other such rule of interpretation shall be applied
against any party with respect to this Agreement.
Section 30. Governing Law. This Agreement and each Rights 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 internal laws of Delaware applicable to contracts to be made
and performed entirely within Delaware, except as to the rights and obligations
of the Rights Agent, which shall be governed by and construed in accordance with
the laws of the State of Illinois.
Section 31. Counterparts. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and both such counterparts shall together constitute but one and the
same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
severalSections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Agreement.
Section 33. Grammatical Construction. Throughout this Agreement, where
such meanings would be appropriate, (a) any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms (e.g., references to "he"
shall also include "she" and "it" and references to "who" and "whom" shall also
include "which") and (b) the plural form of nouns and pronouns shall include the
singular and vice-versa.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
DEAN FOODS COMPANY
By /s/ Eric A. Blanchard
--------------------------------
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
as Rights Agent
By /s/ Susan A. Knaack
--------------------------------
Title: Trust Officer
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Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
DEAN FOODS COMPANY
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Eric Blanchard, Vice President and Secretary of Dean Foods Company,
a corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 151 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
on May 22, 1998, adopted the following resolution creating a series of 100,000
shares of Preferred Stock designated as Junior Participating Preferred Stock,
Series A:
FURTHER RESOLVED, that pursuant to the authority vested in the Board
of Directors by ARTICLE FOUR of the Certificate of Incorporation and out of the
Preferred Stock authorized therein, the Board hereby authorizes that a series of
Preferred Stock of the Corporation be, and it hereby is, created and approved
for issuance in accordance with the Rights Agreement, and that the designation
and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Junior Participating Preferred Stock, Series A" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
100,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of 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 and of any other
junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the fifteenth day of
March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance
of a 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) $20.00 or (b) the Adjustment Number (as defined below) times the
aggregate per share amount of all cash dividends, and the Adjustment
Number 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 or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. The "Adjustment Number" shall initially be
1000. In the event the Corporation shall at any time after August 10,
1998 (i) declare or pay any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock into a
greater number of shares or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number 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 Corporation 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
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $20.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series A Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date
for the
-2-
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the 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 no more than
30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to a number of votes equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) on all
matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or By-Laws, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") that shall extend until
such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly period on all
shares of Series A Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default
period, (1) the number of Directors shall be increased by two,
effective as of the time of election of such Directors as herein
provided, and (2) the holders of Series A Preferred Stock and the
holders of other Preferred Stock upon which these or like voting
rights have been conferred and are exercisable (the "Voting Preferred
Stock") with dividends in arrears equal to six quarterly dividends
thereon, voting as a class, irrespective of series, shall have the
right to elect such two Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section
3(C) or at any annual meeting of stockholders, and thereafter at
annual meetings of stockholders, provided that
-3-
such voting right shall not be exercised unless the holders of at
least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by
the holders of Voting Preferred Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than 10%
of the total number of shares of Voting Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting
of the holders of Voting Preferred Stock, which meeting shall
thereupon be called by the Chairman of the Board, the President, an
Executive Vice President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which
holders of Voting Preferred Stock are entitled to vote pursuant to
this paragraph (C)(iii) shall be given to each holder of record of
Voting Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 10 days and not
later than 60 days after such order or request or, in default of the
calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 10% of the total
number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors
voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their successors
shall have been elected by such holders or until the expiration of the
default period, and (y) any vacancy in the Board of Directors may be
filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class or classes of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular
class or classes of stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Voting Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by
the holders of Voting Preferred Stock as a class shall terminate and
(z) the number of Directors shall be such number as may
-4-
be provided for in the Certificate of Incorporation or By-Laws
irrespective of any increase made pursuant to the provisions of
paragraph (C) of this Section 3 (such number being subject, however,
to change thereafter in any manner provided by law or in the
Certificate of Incorporation or By-Laws). Any vacancies in the Board
of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining
Directors.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly 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
Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred 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 Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity 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
-5-
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under 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 Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, and (ii) an aggregate amount per
share, equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(A) hereof) times the aggregate amount to be distributed per share to
holders of Common Stock, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) 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.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
-6-
Section 9. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
-7-
IN WITNESS WHEREOF, I have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this ___ day
of _________, 1998.
__________________________________________
-8-
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- __________Rights
NOT EXERCISABLE AFTER THE CLOSE OF BUSINESS ON AUGUST 10, 2008 OR EARLIER
IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
DEAN FOODS COMPANY
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of May 22, 1998 (the "Rights Agreement") between
Dean Foods Company, a Delaware corporation (the "Company"), and Harris Trust and
Savings Bank (the "Rights Agent"), unless notice of redemption or exchange shall
have been previously given by the Company, 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. (Chicago time) on August 10, 2008 at the
principal corporate trust office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-thousandth of a fully paid nonassessable
share of the Junior Participating Preferred Stock, Series A, par value $1.00 per
share, of the Company (the "Preferred Stock"), at a purchase price (the
"Purchase Price") of $200 per one one-thousandth share, upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase duly
executed. The Purchase Price may be paid in cash or by certified bank check or
bank draft payable to the order of the Company.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and 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 Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities, cash or other property which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification
and adjustment upon the happening of certain events.
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Trigger Date, by (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a direct or indirect transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring Person) who becomes or
becomes entitled to be a transferee after the Acquiring Person becomes such, or
(iii) a direct or indirect transferee of an Acquiring Person (or of an Associate
or Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in any Associate or
Affiliate of such Acquiring Person) or to any Person with whom the Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Continuing
Directors of, if there are then no Continuing Directors, a majority of the Board
of Directors of the Company determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e) of the Rights Agreement, such Rights shall, immediately upon the occurrence
of a Triggering Event and without any further action, be null and void and no
holder of such Rights (including any subsequent holder) shall have any rights
whatsoever with respect to such Rights whether under the Rights Agreement or
otherwise, provided, however, that, in the case of transferees under clause (ii)
or clause (iii) above, any Rights beneficially owned by such transferee shall be
null and void only if and to the extent such Rights were formerly beneficially
owned by a Person who was, at the time such Person beneficially owned such
Rights, or who later became, an Acquiring Person or an Affiliate or Associate of
such Acquiring Person.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.01 per Right, subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as the
Board of Directors of the Company may determine, at any time prior to the
earlier of (i) the Trigger Date and (ii) the Expiration Date, or (b) may be
exchanged by a majority of the Continuing Directors or, if there are then no
Continuing Directors, by a majority of the Board of Directors of the Company, at
its option, in whole or in part, for shares of the Company's Common Stock or
other Company securities on a one-for-one basis, at any time after the Trigger
Date and prior to (i) any Person (other than an Exempt Person), together with
all Affiliates and
Associates of such Person, becoming the Beneficial Owner of 50% or more of the
Common Stock then outstanding and (ii) the occurrence of a Business Combination.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) evidence fractional shares by
depositary receipts, (ii) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or in bearer form (represented
by a certificate) which shall entitle the holder to receive a full share upon
the surrender of such scrip or warrants aggregating a full share, or (iii) make
a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or any other securities, cash or property which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company, including,
without limitation, 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 to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
* * * * *
-3-
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______ __, ____.
DEAN FOODS COMPANY
By:
_________________________________
Title:
Countersigned:
HARRIS TRUST AND SAVINGS BANK
By:
__________________________
Authorized Officer
-4-
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ________________________________________
hereby sells, assigns and transfers unto________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of Attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of _______________,
with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
1
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate or any Rights evidenced hereby [_] are [_]
are not being sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [_] did [_] did not acquire any of the Rights evidenced by this
Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ___________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights 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 is not completed, the Company 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, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
2
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: DEAN FOODS COMPANY
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
1
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [_] are [_] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [_] did [_] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election
to Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
2
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On May 22, 1998, the Board of Directors of Dean Foods Company (the
"Company") authorized the issuance of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $1.00 per share
(the "Common Shares"), of the Company. The distribution is payable to
stockholders of record at the close of business on August 10, 1998 (the "Record
Date"), and with respect to all Common Shares that become outstanding after the
Record Date and prior to the earliest of the Distribution Date (as defined
below), the redemption of the Rights, the exchange of the Rights, and the
expiration of the Rights (and, in certain cases, following the Distribution
Date). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of Junior Participating Preferred Stock, Series A,
par value $1.00 per share, of the Company (the "Preferred Shares") at a price of
$200 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 (the "Rights Agreement") between the Company and Harris Trust and
Savings Bank as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the tenth day after the date it is
publicly announced that a person or group other than certain exempt persons (an
"Acquiring Person"), together with persons affiliated or associated with such
Acquiring Person (other than those that are exempt persons), has acquired, or
has obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Shares (a "Triggering Event") and (ii) the tenth business day
after the commencement or public disclosure of an intention to commence a tender
offer or exchange offer (other than a "permitted offer" as described below) by a
person other than an exempt person if, upon consummation of the offer, such
person could acquire beneficial ownership of 15% or more of the outstanding
Common Shares (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by Common Share certificates and not by separate
certificates.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the Rights will be transferred with and only with the
Common Shares, and the surrender for transfer of any certificate for Common
Shares will also constitute the transfer of the Rights associated with such
Common Shares. 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 will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). 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 will expire at the close of business
on August 10, 2008 (the "Expiration Date"), unless earlier redeemed or exchanged
by the Company as described below.
In the event that a person becomes an Acquiring Person, each Right
(other than Rights that are or were beneficially owned by the Acquiring Person
and certain related persons and transferees, which will thereafter be void)
shall thereafter be exercisable not for Preferred Shares, but for a number of
Common Shares (or, in certain cases, common equivalent shares) having a market
value of two times the exercise price of the Right. In the event that, at or
after the time a person becomes an Acquiring Person, the Company is involved in
a merger or other business combination in which (i) the Company is not the
surviving corporation, (ii) Common Stock is changed or exchanged, or (iii) 50%
or more of the Company's consolidated assets or earning power are sold, then
each Right (other than Rights that are or were owned by the Acquiring Person and
certain related persons or transferees, which will thereafter be void) shall
thereafter be exercisable for the number of shares of common stock of the
acquiring company which at the time of such transaction have a market value of
two times the exercise price of the Right.
In addition, at any time after a person becomes an Acquiring Person
and before a person has acquired beneficial ownership of 50% or more of the
outstanding common shares, the Company may elect to exchange all or part of the
Rights (excluding void Rights held by an Acquiring Person and certain related
persons and transferees) for Common Shares (or, in certain cases, common
equivalent shares) on a one-for-one basis. The Company also has the ability,
following any person becoming an Acquiring Person, to permit a cashless exercise
of the Rights by reducing both the Purchase Price and the number of Common
Shares (or common equivalent shares) deliverable upon exercise of the Rights.
The Purchase Price payable, and the number and kind of securities,
cash or other 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 or distribution on, or a subdivision or combination of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of rights, options
or warrants to subscribe for Common Shares or securities convertible into Common
Shares at less than the current market price, (iii) upon the distribution to
holders of the Common Shares of securities, cash, evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or retained
earnings) and (iv) in connection with recapitalizations of the Company or
reclassifications of the Common Shares.
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 date prior to the date of exercise.
At any time prior to the earlier of (i) the occurrence of a Triggering
Event and (ii) the Expiration Date, 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 Price will be payable in cash, shares
(including fractional shares) of Common Stock or any other form of consideration
deemed appropriate by the Board of Directors. Immediately upon action of the
Board of Directors ordering redemption of the Rights, the ability of holders to
exercise the Rights will terminate and the only rights of such holders will be
to receive the Redemption Price.
At any time prior to the occurrence of a Triggering Event, the Board
of Directors of the Company may amend or supplement the Rights Agreement without
the approval of the Rights Agent or any holder of the Rights. Thereafter, the
Board of Directors of the Company may not change the Rights Agreement in any
manner which would adversely affect the interests of the holders of the Rights
(other than an Acquiring Person or an affiliate or associate thereof).
The Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $20 per share and 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 minimum preferential liquidation
payment equal to the greater of $100 per share and 1,000 times the payment made
per Common Share. Each Preferred Share will have 1,000 votes per share, voting
together with the Common Shares. In the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred Share
will be entitled to receive 1,000 times the amount received per Common Share.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the 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 prior to the occurrence of a Triggering Event, because until
such time the Rights may generally be redeemed by the Company at $.01 per Right.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Current Report on Form 8-K
and will be filed as an Exhibit to an Application for Registration on Form 8-A.
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.
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