SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report: March 12, 1997
HRE Properties, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland 04-2458042*
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation or Organization) Number) Identification Number)
321 Railroad Avenue
Greenwich, Connecticut 06830
203-863-8200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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* I.R.S. Employer Identification Number of HRE Properties, the predecessor to
the registrant prior to the Reorganization described in Registration Statement
No. 333-19113-01.
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Effective as of 4:30 p.m. on March 12, 1997, HRE Properties, a
Massachusetts business trust (the "Trust"), was merged into HRE Properties,
Inc., a Maryland corporation (the "Corporation"). The merger (the "Merger") was
effected pursuant to the Plan of Reorganization (the "Plan of Reorganization")
set forth as Exhibit A to the Joint Proxy Statement/Prospectus of the Trust and
the Corporation contained in Registration Statement No. 333-19133, as amended
(the "Registration Statement"), and pursuant to which the separate existence of
the Trust terminated and the Corporation was the surviving entity of the Merger.
At the effective time of the Merger, each issued and outstanding Trust Common
Share was converted into one share of Common Stock, par value $.01 per share, of
the Corporation, and all properties, assets, liabilities and obligations of the
Trust became properties, assets, liabilities and obligations of the Corporation.
This Report on Form 8-K hereby incorporates by reference the
Registration Statement, which sets forth the additional information necessary to
reflect any material changes made in connection with or resulting from the
Merger.
Item 5. Other Events.
Effective as of the effective date of the Merger, the Trust accepted
the resignation of The First National Bank of Boston as rights agent under that
certain Rights Agreement, dated as of October 28, 1988, as amended, by and
between the Trust and The First National Bank of Boston (the "Original Rignts
Agent") and entered into an amended and restated Rights Agreement, dated as of
March 12, 1997, by and between the Corporation and The Bank of New York, as
Rights Agent (the "Rights Agreement"), which amends and restates the Original
Rights Agreement, pursuant to which certain rights to purchase one one-hundredth
of a share of the Trust's Series A Participating Preferred Shares (or such other
securities or properties of the Trust) on the terms and subject to the
provisions of the Original Rights Agreement, shall become and represent,
effective as of the effective time of the Merger, the right to purchase one
one-hundredth of a share of the Corporation's Series A Participating Preferred
Shares (or such other securities or properties of the Corporation) on the terms
and conditions set forth in the Rights Agreement. A copy of the Rights Agreement
is filed herewith as an exhibit and is hereby incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The exhibits which are filed with this report are set forth in the
Exhibit Index which appears at page 4 of this Report.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Greenwich, State
of Connecticut on March 12, 1997.
HRE PROPERTIES, INC.
By: /s/ James R. Moore
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James R. Moore,
Executive Vice President - Chief
Financial Officer
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EXHIBIT INDEX
The following designated exhibits are filed herewith:
Exhibit
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2.1 The Plan of Reorganization, dated as of December 30, 1996, between
the Corporation and the Trust. Incorporated by reference to Exhibit
2.1 of the Corporation's Registration Statement on Form S-4 filed
with the Securities and Exchange Commission (No. 333-19113-01), as
amended.
4.1 Rights Agreement, dated as of March 12, 1997, between the
Corporation and The Bank of New York, as Rights Agent.
4.2 Form of Articles Supplementary with respect to Series A Preferred
Shares (attached as Exhibit A to the Rights Agreement).
4.3 Form of Preferred Share Purchase Right Certificate (attached as
Exhibit B to the Rights Agreement).
4
HRE PROPERTIES, INC.
and
THE BANK OF NEW YORK
as Rights Agent
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Rights Agreement
Dated as of March 12, 1997
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS.................................................................... 2
SECTION 2. APPOINTMENT OF RIGHTS AGENT............................................................ 6
SECTION 3. ISSUE OF RIGHT CERTIFICATES............................................................ 6
SECTION 4. FORM OF RIGHT CERTIFICATES............................................................. 7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION...................................................... 8
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHT CERTIFICATES.............................................................. 9
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS......................................................................... 10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT
CERTIFICATES........................................................................... 11
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES;
COVENANTS.............................................................................. 12
SECTION 10. PREFERRED SHARES RECORD DATE; ETC...................................................... 13
SECTION 11. ANTIDILUTION ADJUSTMENTS............................................................... 14
SECTION 12. CERTIFICATE OF ADJUSTMENTS............................................................. 22
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER................................................................ 23
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES................................................ 25
SECTION 15. RIGHTS OF ACTION....................................................................... 26
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SECTION 16. AGREEMENT OF RIGHT HOLDERS............................................................. 26
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A
SHAREHOLDER............................................................................ 27
SECTION 18. CONCERNING THE RIGHTS AGENT............................................................ 27
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT........................................................................... 28
SECTION 20. DUTIES OF RIGHTS AGENT................................................................. 28
SECTION 21. CHANGE OF RIGHTS AGENT................................................................. 31
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES..................................................... 32
SECTION 23. REDEMPTION AND TERMINATION............................................................. 32
SECTION 24. NOTICE OF PROPOSED ACTIONS............................................................. 33
SECTION 25. NOTICES................................................................................ 34
SECTION 26. SUPPLEMENTS AND AMENDMENTS............................................................. 34
SECTION 27. SUCCESSORS............................................................................. 35
SECTION 28. DETERMINATION AND ACTIONS BY THE DIRECTORS;
ETC.................................................................................... 35
SECTION 29. BENEFITS OF THIS AGREEMENT............................................................. 36
SECTION 30. GOVERNING LAW.......................................................................... 36
SECTION 31. COUNTERPARTS........................................................................... 36
SECTION 32. DESCRIPTIVE HEADINGS................................................................... 36
SECTION 33. SEVERABILITY........................................................................... 36
EXHIBIT A - ARTICLES SUPPLEMENTARY .................................................................A1
EXHIBIT B - FORM OF RIGHTS CERTIFICATE..............................................................B1
</TABLE>
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RIGHTS AGREEMENT
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Agreement, dated as of March 12, 1997, between HRE Properties, Inc., a
Maryland corporation (the "Corporation"), and The Bank of New York, a New York
banking corporation (the "Rights Agent").
W I T N E S S E T H
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WHEREAS, HRE Properties, a Massachusetts business trust (the "Trust"),
previously entered into a rights agreement dated as of October 28, 1988, as
amended (the "Original Rights Agreement"), with the First National Bank of
Boston, as rights agent (the "Original Rights Agent"), pursuant to which rights
(collectively, the "Rights," and individually a "Right") to purchase one
one-hundredth of a share of the Trust's Series A Participating Preferred Shares
were issued in respect of, and are currently evidenced by the certificates
representing, the Common Shares of the Trust (the "Trust Common Shares"); and
WHEREAS, pursuant to a Plan of Reorganization dated as of December 30,
1996 (the "Plan of Reorganization") between the Corporation and the Trust, the
Trust will be merged (the "Merger") with and into the Corporation, the separate
existence of the Trust will cease, the Corporation will be the surviving entity
in the Merger and each issued and outstanding Trust Common Share will be
converted into one share of Common Stock, par value $.01 per share, of the
Corporation (the "Common Shares"); and
WHEREAS, as a condition to the consummation of the Merger, the
Corporation and the Trust are required to take such action as may be necessary
to provide that all rights of shareholders of the Trust under the Original
Rights Agreement to acquire capital stock or other securities or properties of
the Trust will become, as of the effective time of the Merger, substantially
identical rights to acquire capital stock or other securities or properties of
the Corporation on substantially identical terms and conditions as set forth in
the Original Rights Agreement; and
WHEREAS, as the surviving entity in the Merger, the Corporation will,
by operation of law, succeed to all of the rights, powers, and property of the
Trust and will, by operation of law, become liable for all of the liabilities,
debts and obligations of the Trust, including the rights and obligations of the
Trust under the Original Rights Agreement; and
WHEREAS, in furtherance of the foregoing, the Corporation desires to
amend and restate the Original Rights Agreement as set forth herein, effective
as of the effective time of the Merger, to provide that each Right to purchase
one one-hundredth of a share of the Trust's Series A Participating Preferred
Shares or such other securities or properties of the Trust on the terms and
subject to the provisions of the Original Rights Agreement shall become and
represent, effective as of the effective time of the Merger, the right to
purchase one one-hundredth of a share of the Corporation's Series A
Participating Preferred Shares or such other securities or properties of the
Corporation on the terms and conditions set forth in this Agreement and that
each share of Common
<PAGE>
Stock outstanding at the close of business on the date of the effective time of
the Merger shall include and represent one such Right; and
WHEREAS, on the date hereof (the "Declaration Date") the Directors of
the Corporation have authorized the issuance of, and agreed to issue, one Right
(as such number may be adjusted in accordance with Sections 11(i) or 11(o)
hereof) for every Common Share of the Corporation issued between the Declaration
Date and the Distribution Date; and
WHEREAS, the Original Rights Agent has resigned as rights agent under
the Original Rights Agreement effective as of the effective time of the Merger
and the Rights Agent desires to become the rights agent under this Agreement
effective as of the effective time of the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings indicated:
(a) The term "Acquiring Person" shall mean any Person who or which,
together with all Affiliates of such Person, shall be the Beneficial Owner of
25% or more of the outstanding Common Shares; provided, however, that none of
the Corporation, any Wholly Owned Subsidiary of the Corporation, or any employee
benefit plan of the Corporation, or any trustee of, or member of a committee
having voting or investment power over Common Shares held by any employee
benefit plan of the Corporation acting in such capacity, shall be an "Acquiring
Person" for any purpose of this Agreement.
(b) The term "Affiliate," with respect to any Person, shall mean any
other Person who is, or would be deemed to be, an "affiliate" or an "associate"
of such Person within the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as such Rule is in effect on the
Declaration Date.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3
of the General Rules and Regulations under the Exchange Act
(or any successor rule);
(ii) which such Person or any of such Person's Affiliates has (A)
the right to acquire (whether such right is exercisable
immediately or after the passage of time) pursuant to any
agreement, arrangement or
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understanding (whether or not in writing) or upon the
exercise of conversion, exchange or other rights (other than
the Rights), warrants or options, or otherwise; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate of such Person with which such
Person or any of such Person's Affiliates has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except as
provided in clause (B) below) or disposing of any securities
of the Corporation.
For purposes of this subsection (c), a Person shall not be deemed the
"Beneficial Owner" of or to "beneficially own," (A) securities tendered pursuant
to a tender or exchange offer made by such Person or such Person's Affiliates
until such tendered securities are accepted for purchase or exchange, (B) any
security that is the subject of any agreement, arrangement or understanding
which (1) arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable proxy solicitation rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report).
(d) The term "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obliged by law or executive order to close.
(e) The term "close of business" on any day shall mean 5:00 P.M., New
York City time, on such day; provided, however, that if such day is not a
Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) The term "Common Shares" shall mean the shares of Common Stock, par
value $.01 per share, of the Corporation.
(g) The term "Common Stock" when used with respect to any Person other
than the Corporation shall mean the capital stock with the greatest voting power
or the equity securities or other equity interests having the power to control
or direct the management and affairs of such Person, or if such Person is a
Subsidiary of another Person, the Person who ultimately controls such first
mentioned Person and which has outstanding such Common Stock (or other equity
securities).
(h) The term "Common Share Event" shall mean the occurrence of any
event described in (I) Section 11(a)(ii) hereof or (II) clauses (a), (b) or (c)
of the first sentence of Section 13 hereof.
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(i) The term "Continuing Director" shall mean any director of the
Corporation who (i) is not an Acquiring Person or an Affiliate of an Acquiring
Person and (ii) either was (A) a member of the Directors of the Corporation on
the Declaration Date or (B) nominated for his or her initial term of office by a
majority of the Continuing Directors in office at the time of such nomination.
(j) The term "Declaration Date" shall mean March 12, 1997.
(k) The term "Disqualified Transferee" shall mean any Person who is a
transferee of any Rights from an Acquiring Person or an Affiliate of an
Acquiring Person and becomes such a transferee (x) after the occurrence of a
Common Share Event or (y) prior to or concurrently with the Acquiring Person
becoming such and received such Rights pursuant to a transfer (whether or not
for value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) which a majority of the Continuing Directors then in office
determine is part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of Section 7(e) hereof.
(l) The term "Distribution Date" shall mean the Close of Business on
the date which is the earlier of the tenth Business Day following (x) the Share
Acquisition Date or (y) the Offer Commencement Date.
(m) The term "Offer Commencement Date" shall mean the date of the
commencement of a tender or exchange offer by any Person, other than the
Corporation, a Wholly Owned Subsidiary of the Corporation or any employee
benefit plan of the Corporation or of a Wholly Owned Subsidiary of the
Corporation if, upon consummation thereof, the Person and Affiliates thereof
would be the Beneficial Owner of 30% or more of the then outstanding Common
Shares (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights).
(n) The term "Person" shall mean a corporation, association,
partnership, joint venture, trust, organization, business, limited liability
company, individual or government or any governmental agency or political
subdivision thereof, as well as any syndicate or group deemed to be a person
under Section 14(d)(2) of the Exchange Act.
(o) The term "Preferred Shares" shall mean the Series A Participating
Preferred Shares, par value $.01 per share, of the Corporation, having the
rights and preferences set forth in the form of the Articles Supplementary
attached hereto as Exhibit A.
(p) The term "Share Acquisition Date" shall mean the first date of
public announcement by the Corporation or an Acquiring Person (or an Affiliate
thereof) that an Acquiring Person has become such (including the first date on
which any filing with any governmental authority disclosing that an Acquiring
Person has become such becomes available to the public).
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(q) The term "Subsidiary" shall mean any person of which the
Corporation (or other specified parent) now or hereafter shall directly, or
indirectly through a Subsidiary or Subsidiaries, at the time own at least a
majority of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally, or hold at least a majority of partnership
or similar interests, or be a general partner. The term "Wholly Owned
Subsidiary" shall mean any Subsidiary of which all of the outstanding capital
stock (or other shares of beneficial interest) entitled to vote generally other
than directors' qualifying shares, is owned by the Corporation (or other
specified Person) directly, or indirectly through one or more Wholly Owned
Subsidiaries.
(r) The following terms defined elsewhere in this Agreement in the
Sections set forth below shall have the respective meanings therein defined:
Term Definition
"Act" Section 9(e)
"Closing Price" Section 11(d)
"Common Share Equivalents" Section 11(a)(iii)
"Corporation" Preamble
"current market price" Section 11(d)
"Current Value" Section 11(a)(iii)
"Declaration Date" Preamble; Section 1(j)
"Equivalent Preferred Share" Section 11(b)
"Excess Amount" Section 11(a)(iii)
"Exchange Act" Section l(b)
"Expiration Date" Section 7(a)
"Officers' Certificate" Section 20(b)
"Other Consideration" Section 6(a)
"Purchase Price" Section 4(a)
"Redemption Price" Section 23
"Right Certificate" Section 3(a)
"Rights" Preamble
"Rights Agent" Preamble; Section 21
"Substitution Period" Section 11(a)(iii)
"Trading Day" Section 11(d)
"Trust" Preamble
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation, and the Rights Agent hereby accepts such appointment upon the
terms and conditions hereof. With the consent of the Rights Agent, the
Corporation may from time to time appoint such Co- Rights Agents
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<PAGE>
as it may deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Rights Agent.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) The Corporation hereby expressly affirms the succession by the
Corporation to all of the Trust's rights, powers and obligations under the
Original Rights Agreement, as amended and restated in this Agreement, and all
Rights issued under the Original Rights Agreement are hereby expressly affirmed
by the Corporation as representing rights to purchase Preferred Shares of the
Corporation (or such other securities or property) on the terms and conditions
set forth in this Agreement. Until the Distribution Date (i) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
representing the Common Shares registered in the names of the holders of the
Common Shares (which certificates shall be deemed also to be certificates for
the associated Rights) and not by separate Right Certificates and (ii) the
Rights will be transferable only in connection with the transfer of the
associated Common Shares. The Corporation shall give the Rights Agent prompt
written notice of the Distribution Date. As soon as practicable after the
Distribution Date, and receipt of written notice of the Distribution Date from
the Corporation, the Rights Agent will, at the Corporation's expense, send, by
first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the register of shares of the Corporation, a right
certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing that number of Rights to which such holder is entitled
in accordance with the provisions of this Agreement. In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
Sections 11(i) or 11(o) hereof, at the time of distribution of the Right
Certificates the Corporation shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates. The Rights are exercisable
only in accordance with the provisions of Section 7 hereof and are redeemable
only in accordance with Section 23 hereof.
(b) Until the earlier of the Distribution Date and the Expiration Date,
the surrender for transfer of any of the certificates representing Common Shares
outstanding on the Declaration Date shall also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate.
(c) Rights shall be issued in respect of all Common Shares issued after
the Declaration Date but prior to the earlier of the Distribution Date and the
Expiration Date. Certificates representing such Common Shares and certificates
issued on transfer of Common Shares after the Declaration Date but prior to the
earlier to occur of the dates mentioned in the preceding sentence shall be
deemed also to be certificates for the associated Rights, and shall bear the
following legend (or a legend substantially in the form thereof):
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<PAGE>
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between the issuer and The Bank of New York, as Rights Agent
(the "Rights Agent"), dated as of March 12, 1997 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal offices of the issuer and the designated office of
Rights Agent. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under
certain circumstances as set forth in the Rights Agreement,
Rights issued to or held by any Person who is, was or becomes
an Acquiring Person or any Affiliate thereof (as each such
term is defined in the Rights Agreement), whether currently
held by or on behalf of such Person or by certain subsequent
holders, may become null and void.
With respect to certificates representing Common Shares (whether or not such
certificates include the foregoing legend) until the earlier of the Distribution
Date and the Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any of such certificates shall also constitute
the transfer of the Rights associated with the Common Shares represented by such
certificate.
(d) In addition, the Corporation agrees to issue one Right (as such
number may be adjusted in accordance with Sections 11(c) or 11(n) hereof) in
conjunction with the issuance of any Common Shares reserved for issuance on the
Distribution Date and issued (i) on or after the Distribution Date and (ii)
prior to the Expiration Date (such Rights to be issued to the Person to whom
such Common Shares are issued).
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the form of assignment and the form of
election to purchase and certificate to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to timebe listed, or to conform to usage. The Right Certificates
shall be in a machine printable format and in a form reasonably satisfactory to
the Rights Agent. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates, whenever distributed, shall be dated as of the Declaration
Date, show the date of countersignature, and on their face shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at a price of $65.00 per each one-hundredth
of a share (the "Purchase Price"), but the amount and type of securities
issuable upon the exercise of each Right and the Purchase Price shall be subject
to adjustment as provided herein.
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(b) Any Right Certificate issued pursuant to Sections 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person or
Affiliate of an Acquiring Person or (ii) any Disqualified Transferee, and any
other Right Certificate issued pursuant to Section 6 or 11 hereof upon the
transfer, exchange, replacement or adjustment of any such Right Certificate
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate of an Acquiring Person (as each such
term is defined in the Rights Agreement). Accordingly, this
Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in
Section 7(e) of the Rights Agreement.
The Corporation shall instruct the Rights Agent in writing of the
Rights which should be so legended and shall supply the Rights Agent with such
legended Right Certificates.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
The Right Certificates shall be executed on behalf of the Corporation
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Corporation's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Corporation who shall have signed any of the Right
Certificates shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, issued and delivered with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of
the Corporation; and any Right Certificate may be signed on behalf of the
Corporation by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at that office of the Rights Agent designated for such purpose, books
for registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of countersignature thereof by the Rights Agent.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN
RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at
any time after the close of business on the Distribution Date, and at or prior
to the Expiration Date, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the registered holder to purchase a like number of
one one-hundredths of a Preferred Share (or, following a Common Share Event,
Common Shares and/or such other securities, cash or other property as shall be
issuable in respect of the Rights in accordance with the terms of this Agreement
(such other securities, cash or other property being referred to herein as
"Other Consideration")), as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged with the form of assignment and certificate appropriately
completed and executed, at the office of the Rights Agent designated for such
purpose. Thereupon, subject to Sections 4(b) and 7(e) hereof, the Corporation
shall execute and the Rights Agent countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Corporation may require payment by the holders of Rights of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates which the Corporation is not required to pay in accordance with
Section 9(d) hereof.
(b) Upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, in case of mutilation, upon surrender to the
Rights Agent and cancellation of the mutilated Right Certificate and, in any
case, upon reimbursement to the Corporation and the Rights Agent of all
reasonable expenses incidental thereto, the Corporation will execute and deliver
a new Right Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Except as otherwise provided herein, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby in whole or in part
at any time from and after the Distribution Date and prior to the earliest of
(i) the close of business on November 13, 1998 (which date may be extended
Pursuant to Section 26) or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (such earlier time being herein referred to as the
"Expiration Date"). At the Expiration Date, all rights will be extinguished and
all Right Certificates shall become null and void. To exercise Rights, the
registered holder of the Right Certificate
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evidencing such Rights shall surrender such Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed,
to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment in cash, or by certified check or bank check, of
the Purchase Price with respect to the total number of one one-hundredths of a
Preferred Share (or, after a Common Share Event, Common Share and/or Other
Consideration) as to which the Rights are exercised (which payment shall include
any additional amount payable by such Person in accordance with Section 9(d)
hereof). The Rights Agent shall promptly deliver to the Corporation all payments
of the Purchase Price received in respect of Right Certificates accepted for
exercise.
(b) The Purchase Price for each one-hundredth of a Preferred Share
issuable pursuant to the exercise of a Right shall initially be $65, shall be
subject to adjustment as provided in Section 11 hereof and shall be payable in
lawful money of the United States of America.
(c) Upon receipt of a Right Certificate representing the Rights, with
the form of election to purchase and certificate set forth on the reverse side
thereof duly executed, accompanied by payment of the Purchase Price and an
amount equal to any applicable transfer tax or evidence satisfactory to the
Corporation of payment of such tax, the Rights Agent, subject to Section 7(e),
Section 11(a)(iii) and Section 20(k) hereof, shall thereupon promptly (i) if
prior to a Common Share Event, requisition from any transfer agent of the
Preferred Shares (or from the Corporation if there shall be no such transfer
agent, or make available if the Rights Agent is such transfer agent)
certificates for the total number of one one-hundredths of a Preferred Share to
be purchased and the Corporation hereby irrevocably authorizes such transfer
agent to comply with any such request, or if after a Common Share Event,
requisition from the appropriate person required to issue or deliver the Common
Shares or Other Consideration issuable pursuant to Section 11(a)(ii) or Section
13 certificates evidencing, or other evidence of, such Common Shares or Other
Consideration, (ii) after receipt of such certificates or Other Consideration,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder, and (iii) when appropriate, requisition from the Corporation or
other appropriate Person the amount of cash to be paid in lieu of issuance of a
fractional share in accordance with Section 14 hereof and after receipt promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. After the occurrence of a Common Share Event, the Corporation will
make all necessary arrangements so that the Common Shares and/or Other
Consideration then deliverable in respect of the Rights are available for
distribution by the Rights Agent. For purposes of this Section 7, the Rights
Agent shall be entitled to rely, and shall be protected in relying, on an
Officers' Certificate from the Corporation to the effect that the Distribution
Date has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the
registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be executed and delivered by the
Corporation to the Rights Agent and countersigned and delivered by the Rights
Agent to the registered holder of such Right Certificate or to his duly
authorized assigns.
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(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Common Share Event, any Rights beneficially
owned by (i) an Acquiring Person, (ii) an Affiliate of an Acquiring Person or
(iii) a Disqualified Transferee shall become null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Corporation shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates or Disqualified Transferees hereunder.
(f) Notwithstanding anything in this Agreement or any Right Certificate
to the contrary, neither the Rights Agent nor the Corporation shall be obligated
to undertake any action with respect to a registered holder of any Right
Certificate upon the occurrence of any purported exercise thereof unless such
registered holder shall have (i) completed and signed the certificate following
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates thereof as the Corporation shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents (other than the Rights Agent), be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall
be cancelled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Rights Agent shall deliver all cancelled Right Certificates to the Corporation.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES; COVENANTS.
(a) The Corporation covenants and agrees as long as any of the Rights
are outstanding, it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares (or, following the occurrence of a
Common Share Event, out of its authorized and unissued shares or similar units
of Common Shares and/or other securities, or out of its authorized and issued
securities held in its treasury), the number of Preferred Shares (or, following
the occurrence of a Common Share Event, shares or units of Common Shares and/or
other securities) that, except as provided in Section 11(a)(ii) hereof, would
then be sufficient to permit the exercise in full of all outstanding Rights.
(b) The Corporation covenants and agrees that on and after the
Distribution Date so long as the Preferred Shares (or, following the occurrence
of a Common Share Event, the Common Shares or other securities) issuable upon
the exercise of Rights may be listed on any
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national securities exchange, the Corporation shall use its best efforts to
cause all shares (or similar units) reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Corporation covenants and agrees that it will take all such
action as may be necessary to ensure that each one one-hundredth of a Preferred
Share (or, following the occurrence of a Common Share Event, each share and/or
similar unit of Common Shares or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such shares (or
units), subject to payment of the Purchase Price, be duly and validly authorized
and issued and fully paid and nonassessable.
(d) The Corporation 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 issuance or delivery of the Right Certificates
or of any Preferred Shares (or, following the occurrence of a Common Share
Event, any shares and/or similar units of Common Shares or other securities)
upon the exercise of Rights; provided, however, that the Corporation shall not
be required to pay any transfer tax which may be payable in respect of any
transfer involved in the transfer or delivery of Right Certificates or in the
issuance or delivery of certificates for any number of one one-hundredths of a
Preferred Share (or, following the occurrence of a Common Share Event, shares
and/or similar units of Common Shares or other securities) in a name other than
that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-hundredths of a Preferred Share (and, following the occurrence of a
Common Share Event, any shares and/or similar units of Common Shares or other
securities) upon the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Corporation's
satisfaction that no such tax is due.
(e) The Corporation shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Common
Share Event on which theconsideration to be delivered by the Corporation upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (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 Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the
Expiration Date. The Corporation will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Corporation may temporarily suspend the exercisability of the Rights in
order to prepare and file such registration statement. Upon any such suspension,
the Corporation shall issue a public announcement, in each case with
simultaneous written notice to the Rights Agent, stating that the exercisability
of the Rights has been temporarily suspended. The Corporation shall thereafter
issue a public announcement, in
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each case with simultaneous written notice to the Rights Agent, at such time as
the suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained. The Rights Agent may assume that any Right exercised is permitted
to be exercised under applicable law and shall have no liability for acting in
reliance upon such assumption.
SECTION 10. PREFERRED SHARES RECORD DATE; ETC.
Each Person in whose name any certificate for any number of one
one-hundredths of a Preferred Share (or, following the occurrence of a Common
Share Event, shares and/or similar units of Common Shares or other securities)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such fractional shares of Preferred Shares (or
such shares and/or units of Common Shares or other securities, as the case may
be) represented thereby, and such certificate shall be dated, as of the date
which is the later of (i) the date upon which the Right Certificate evidencing
such Rights was duly surrendered or (ii) the date upon which payment of the
Purchase Price (and any applicable transfer taxes) in respect thereof was made;
provided, however, that if such date is a date upon which the relevant transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares (or units) on, and such certificate shall be dated,
the next succeeding Business Day on which such transfer books of the Corporation
are open; and provided, further, that the Corporation covenants and agrees that
it shall not close such transfer books for a period exceeding ten consecutive
days. Prior to the exercise of the Rights evidenced thereby (which shall be
deemed to have occurred on the date such certificate evidencing Preferred
Shares, Common Shares or other securities shall be dated in accordance with this
Section 10), the holder of a Right Certificate, as such, shall not be entitled
to any rights of a security holder of the Corporation with respect to securities
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Corporation, except as expressly provided herein.
SECTION 11. ANTIDILUTION ADJUSTMENTS.
The Purchase Price and the number and kind of securities covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event that the Corporation shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
shares of Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine outstanding Preferred Shares into a smaller number of shares or (D)
issue, change or alter any shares of its beneficial interests in a
reclassification or recapitalization or (including any such reclassification or
recapitalization in connection with a consolidation or merger in which the
Corporation is the continuing or surviving entity) except as otherwise provided
in Section 7(e) then, and in each such case, the Purchase Price in effect at the
time of the record date for such dividend or the effective time of such
subdivision,
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combination, reclassification or recapitalization, and the number and kind of
Preferred Shares or other shares of beneficial interests issuable at such time,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of
Preferred Shares or other shares of beneficial interests which, if such Right
had been exercised immediately prior to such time and at a time when the
Preferred Shares register or other transfer books of the Corporation were open,
such holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, reclassification or
recapitalization. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11 (a) (ii) hereof, the adjustment
provided in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event
(A) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the date of this Agreement, directly or
indirectly (1) shall merge into the Corporation or otherwise
combine with the Corporation, the Corporation shall be the
continuing or surviving entity of such merger or combination and
the Common Shares shall remain outstanding and no shares thereof
shall be changed or otherwise transformed into stock or other
securities of any other Person or the Corporation or cash or any
other property, (2) shall, in one or more transactions, transfer
any assets to the Corporation or any Subsidiary in exchange (in
whole or in part) for shares of any class of its equity securities
or for securities exercisable for or convertible into shares of
any such class or otherwise obtain from the Corporation or any
Subsidiary, with or without consideration, any additional shares
of any such class or securities exercisable for or convertible
into shares of any such class (other than as part of a pro rata
distribution to all holders of such class), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of (in one transaction or a series of
transactions), to, from or with the Corporation or any of the
Corporation's Subsidiaries or any employee benefit plan maintained
by the Corporation or any Subsidiary or any trustee or fiduciary
with respect to such plan acting in such capacity, assets
including securities on terms and conditions less favorable to the
Corporation or such Subsidiary or plan than the Corporation or
such Subsidiary or plan would be able to obtain through
arm's-length negotiation with an unaffiliated third party (other
than pursuant to a transaction set forth in Section 13(a) hereof),
(4) shall engage in any transaction with the Corporation or such
Subsidiary or plan not in the ordinary course of the Corporation's
business involving the sale, purchase, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction or a
series of transactions) of assets having an aggregate fair market
value of more than $500,000 (other than pursuant to a transaction
set forth in Section 13(a) hereof), (5) shall receive any
compensation from the Corporation or any of the Corporation's
Subsidiaries other than compensation for full-time employment
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as a regular employee at rates in accordance with the
Corporation's (or such Subsidiary's) past practices or (6) shall
receive the benefit directly or indirectly (except proportionately
as a stockholder) of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantage provided by the Corporation or any of its Subsidiaries
or any employee benefit plan maintained by the Corporation or any
Subsidiary or any trustee or fiduciary with respect to such plan
acting in such capacity; or
(B) any Person (other than the Corporation, any Subsidiary of
the Corporation, any employee benefit plan of the Corporation or
of any Subsidiary of the Corporation, or any Person or entity
organized, appointed or established by the Corporation for or
pursuant to the terms of any such plan), alone or together with
its Affiliates, shall, at any time after the Declaration Date,
become the Beneficial Owner of 25% or more of the shares of Common
Shares then outstanding other than pursuant to a transaction to
which the provisions of Section 13(a) apply; or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any
combination thereof), or recapitalization of the Corporation, or
any merger or consolidation of the Corporation with any of its
Subsidiaries, or any repurchase by the Corporation or any of its
Subsidiaries of the Common Shares, or any other class or series of
securities issued by the Corporation (whether or not with or into
or otherwise involving an Acquiring Person or any Affiliate of an
Acquiring Person), which has the effect, directly or indirectly,
of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities or securities
exercisable for or convertible into any class of equity securities
of the Corporation or any of its Subsidiaries which is directly or
indirectly beneficially owned by an Acquiring Person or any
Affiliate of an Acquiring Person;
then, and in each such case, proper provision shall be made so
that each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the occurrence of an event
described in this Section 11(a) (ii), such number of Common Shares
as shall equal the result obtained by (x) multiplying an amount
equal to the then current Purchase Price by an amount equal to the
number of one one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of
any such event, and dividing that product by (y) 50% of the
current market price per Common
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Share of the Corporation (as defined in Section 11(d) hereof)
determined as of the date of such first occurrence.
(iii) In the event that the number of Common Shares which are
authorized by the Corporation's Articles of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii) hereof, in lieu of issuing Common Shares in accordance with
Section 11(a)(ii) the Corporation shall (A) determine an amount (the "Excess
Amount") equal to the excess of (1) the value (the "Current Value") of the
Common Shares issuable upon the exercise of a Right in accordance with Section
11(a)(ii) hereof, over (2) the Purchase Price and (B) with respect to each
Right, make adequate provision to substitute for such Common Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Shares or other equity securities of the Corporation
(including, without limitation, shares or units of preferred shares which the
Directors of the Corporation have deemed, in good faith, to have the same value
as a Common Share (such preferred shares hereinafter referred to as "Common
Share Equivalents")), (4) debt securities of the Corporation, (5) other assets
or (6) any combination of the foregoing having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Directors
of the Corporation, in good faith, based upon the advice of a nationally
recognized investment banking firm selected by the Directors of the Corporation;
provided, however, subject to the provisions of Section 9(e), if the Corporation
shall not have made adequate provision to deliver value pursuant to clause (B)
above within 30 days following the first occurrence of a Common Share Event,
then the Corporation shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price, Common
Shares (to the extent available) and then, if necessary, cash, securities and/or
assets which in the aggregate are equal to the Excess Amount. If the Directors
of the Corporation shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
exercise in full of the Rights, the 30-day period set forth above may be amended
to the extent necessary, but not more than 90 days following the first
occurrence of such a Common Share Event, in order that the Corporation may seek
shareholder approval for the authorization of such additional shares (such
30-day period, as it may be extended to 90 days, is referred to herein as the
"Substitution Period"). To the extent that the Corporation determines that some
action is to be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Corporation (x) shall provide, subject to Section 7(e)
hereof, that (except as shall be determined by a majority of the Continuing
Directors) such action shall apply uniformly to all outstanding Rights which
shall not have become null and void and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Corporation shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended. The Corporation shall thereafter issue a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11 (a) (iii) , the value of the Common Shares shall be the
current market price per Common Share (as determined pursuant to Section 11(d)
hereof) on the date of the first occurrence of such a Common Share Event.
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(b) In the event the Corporation shall after the Declaration Date fix a
record date for the issuance of any options, warrants or other rights to all
holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Shares (or (i) shares having the same rights, privileges and preferences as the
shares of any number of one one-hundredths of a Preferred Share ("Equivalent
Preferred Shares") or (ii) securities convertible into Preferred Shares (or
Equivalent Preferred Shares)), at a purchase price per share of Preferred Shares
or Equivalent Preferred Shares (or having a conversion price per Preferred Share
or Equivalent Preferred Share, if a security is convertible into Preferred
Shares or Equivalent Preferred Shares) less than the current market price per
share of Preferred Share (determined in accordance with Section 11(d) hereof)
determined as of such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares and/or Equivalent Preferred Shares which the
aggregate minimum offering price of the total number of one one-hundredths of a
Preferred Share and/or per Equivalent Preferred Share so to be offered (and/or
the aggregate minimum conversion price of such convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the maximum number of additional Preferred Shares and/or Equivalent
Preferred Shares to be offered for subscription or purchase (or the maximum
number of shares into which such convertible securities so to be offered are
convertible). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, for purposes of this
Section 11(b) the value of such consideration shall be the fair market value
thereof as determined in good faith by the Directors of the Corporation (which
determination shall be described in an Officers' Certificate filed with the
Rights Agent). Preferred Shares owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed (subject, however, to such
other adjustments as are provided herein).
(c) In the event that the Corporation shall after the Declaration Date
fix a record date for the making of a distribution to all holders of Preferred
Shares (including any such distribution made in connection with a consolidation
or merger in which the Corporation is the surviving or continuing entity) of
evidences of indebtedness, cash (other than regular quarterly cash dividends),
other property (other than a dividend payable in a number of one one-hundredths
of a Preferred Share, but including any dividend payable in shares other than
Preferred Shares) or subscription rights
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or warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the current market price per Preferred
Share (as defined in Section 11(d) hereof) determined as of such record date,
less the fair market value, as determined in good faith by the Directors of the
Corporation (which determination shall be described in an Officers' Certificate
filed with the Rights Agent) of that portion of such evidences of indebtedness,
such other property and/or such subscription rights or warrants applicable to
one Preferred Share and of which the denominator shall be such current market
price per Preferred Share. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed (subject, however, to
such other adjustments as are provided herein).
(d) For the purposes of any computation hereunder, the "current market
price" per share (or unit) of any security on any date shall be deemed to be the
average of the daily Closing Price of such security for the 20 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current market price per share of such security is determined
during a period following or including the announcement by the issuer of such
security of (i) a dividend or distribution on such security payable in shares
(or units) of such security or securities convertible into shares (or units) of
such security or (ii) any subdivision, combination or reclassification of such
security, and prior to the expiration of 20 Trading Days after (A) the
ex-dividend date for such dividend or distribution, or (B) the record date for
such subdivision, combination or reclassification, as the case may be, then, and
in each such case, the "current market price" shall be the Closing Price of such
security on the last day of such 20 Trading Day period. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the transaction of
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. For purposes of this Agreement,
the "Closing Price" of any security on any day shall be the last sale price,
regular way, with respect to shares (or units) of such security, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, with respect to such security, in either case as reported
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange; or, if
such security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such security is listed or admitted to trading; or, if such security is
not so listed or admitted to trading, the last quoted price with respect to
shares (or units) of such security, or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market with respect to
shares (or units) of such security, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other similar system
then in use; or, if on any such date such security is not quoted by any such
organization, the average of the closing bid and asked prices with respect to
shares (or units) of such security, as furnished by a professional market maker
making a market in such security selected by the Directors of the Corporation in
good faith; or, if no such market maker is available, the fair market value of
shares (or units) of such security as of such day as determined in good faith by
the Directors of the Corporation (which determination shall be described in an
Officers' Certificate filed with the Rights Agent); provided, however, that if
the Closing Price of a Preferred Share as of any Trading Day cannot be
reasonably determined by the foregoing provisions, the "Closing Price" of one
one-hundredth of a Preferred Share on such Trading Day shall be the Closing
Price of a Common Share on such Trading Day.
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(e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest (x) ten-thousandth of a Common Share or
securities other than Preferred Shares or Equivalent Preferred Shares or (y)
one-millionth of a Preferred Share or Equivalent Preferred Share.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 hereof shall be made no later than the earlier of
(i) three years from the date of the transaction which mandates the adjustment
or (ii) the Expiration Date.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Share Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Corporation
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to such other shares contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions of Sections
7, 9, 10, 11(d) and 13 hereof with respect to the Preferred Shares shall apply
on like terms to any such other shares.
(g) All Right Certificates originally issued by the Corporation
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights represented thereby, all subject to further adjustment as
provided herein.
(h) Unless the Corporation shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made pursuant to Sections 11(b) and 11(c) hereof,
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a Preferred Share (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths
of a Preferred Share covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment and (ii)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Corporation may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten- thousandth) obtained by dividing (x) the
Purchase Price in effect immediately prior to such adjustment by (y) the
Purchase Price in effect
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immediately after such adjustment of the Purchase Price. The Corporation shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i) the
Corporation shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Corporation, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Corporation, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Corporation, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon exercise of such Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-hundredth of a Preferred Share and such number of one
one-hundredths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the Preferred Shares times a
fraction the numerator of which is the number of one one-hundredths of a
Preferred Share issuable upon exercise of the Rights and the denominator of
which is one hundred, the Corporation shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable such number of one
one-hundredths of a Preferred Share at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the number of one one-hundredths of a Preferred Share and other beneficial
shares or securities of the Corporation, if any, issuable upon such exercise
over and above the number of one one-hundredths of a Preferred Share and other
beneficial shares or securities of the Corporation, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Corporation shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to receive such
additional securities upon the occurrence of the event requiring such
adjustment.
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(m) Anything in this Section 11 to the contrary notwithstanding, the
Corporation 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, by means of a resolution of the Directors acting in good
faith (which resolution shall be conclusive on all concerned if approved by a
majority of the Continuing Directors then in office), shall determine to be
advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price thereof, issuance wholly for cash of Preferred Shares or
other securities which by their terms are convertible into or exchangeable for
Preferred Shares, share dividends or issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made or declared by the
Corporation to the holders of its Preferred Shares, shall not be taxable to such
holders or shall reduce the taxes payable by such holders.
(n) The Corporation covenants and agrees that it shall not at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Corporation in a transaction which complies with Section 11(p)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Corporation in a transaction which complies with Section 11(p) hereof) or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets (taken at asset value as stated on the
books of the Corporation determined in accordance with generally accepted
accounting principles consistently applied) or earning power of the Corporation
(on an individual basis) or the Corporation and its Subsidiaries (on a
consolidated basis) to any other Person or Persons (other than the Corporation
or any of its Subsidiaries in one or more transactions each of which complies
with Section 11(p) hereof), if at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreement or arrangements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Corporation shall at any time after the Declaration Date and
prior to the Distribution Date (i) declare a dividend on the outstanding Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine the outstanding Common Shares into a smaller number of shares or
(iv) issue any of its beneficial shares in a reclassification of the outstanding
Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing or surviving
entity), the number of Rights associated with each Common Share or other such
beneficial shares then outstanding, or issued or delivered thereafter but prior
to the Distribution Date, shall be proportionately adjusted so that the number
of Rights thereafter associated with each Common Share or other such beneficial
shares following any such event shall equal the result obtained by multiplying
the number of Rights associated with each Common Share immediately prior to such
event by a fraction the numerator which shall be the total number of Common
Shares outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event.
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(p) After the Distribution Date, the Corporation shall not, except as
permitted by Section 23 or Section 26 hereof, 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 diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
SECTION 12. CERTIFICATE OF ADJUSTMENTS.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof,
the Corporation shall (a) promptly prepare an Officers' 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 Preferred Shares and the Common Shares a copy of such Officers'
Certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing Common Shares) in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such Officers'
Certificate and on any adjustment therein contained, and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such an Officers' Certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER.
In the event that, following the Share Acquisition Date, directly or
indirectly, (a) the Corporation shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Corporation in a transaction
which complies with Section 11(p) hereof), and the Corporation shall not be the
continuing or surviving entity of such consolidation or merger, (b) any Person
(other than a Subsidiary of the Corporation in a transaction which complies with
Section 11(p) hereof) shall consolidate with, or merge with and into the
Corporation, the Corporation shall be the continuing or surviving entity of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the Common Shares of the Corporation shall be changed or
otherwise transformed into stock or other securities of any other Person or the
Corporation or cash or any other property or (c) the Corporation shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions assets or
earning power aggregating more than 50% of (A) the assets (taken at asset value
as stated on the books of the Corporation and determined in accordance with
generally accepted accounting principles consistently applied) or (B) the
earning power, of the Corporation (on an individual basis) or the Corporation
and its Subsidiaries (on a consolidated basis) to any other Person or Persons
(other than the Corporation or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(p)), then, from and after
such event, proper provision shall be made so that (i) each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then-current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a Right is
then exercisable in accordance with the terms of this Agreement, such number of
shares of validly authorized and issued, fully paid and non-assessable Common
Stock of such other Person (or, in the case of a transaction described in clause
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(b) above in which no Common Shares are changed or otherwise transformed into
stock or other securities of any other Person, the Corporation, or, in the case
of a transaction or series of transactions described in clause (c) above, the
Person receiving the greatest amount of assets or earning power of the
Corporation), not subject to any loans, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (x)
multiplying the Purchase Price in effect immediately prior to the first
occurrence of any Common Share Event by the number of one one-hundredths of a
Preferred Share for which a Right is exercisable immediately prior to such first
occurrence (and without taking into account any prior adjustment made pursuant
to Section 11(a)(ii)) and dividing that product by (y) 50% of the current market
price (as defined in Section 11(d) hereof) per Common Stock of such other Person
determined as of the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Stock shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Corporation pursuant to this Agreement; (iii)
the term "Corporation" shall thereafter be deemed to refer to such issuer, it
being specifically intended that the provisions of Section 11 hereof (other than
Section 11(a)(ii) hereof) shall apply only to such issuer following the first
occurrence of a Common Share Event under this Section 13; (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock) in connection with such consummation as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Common Share Event described in clauses (a), (b) or (c) of
this Section 13. In connection with any Common Share Event described in Section
13(a), (b) or (c) involving the Corporation and any other Person, if the Common
Stock of such other Person (the "Other Person") is not at such time and has not
been continuously over the preceding twelve-month period registered under
Section 12 of the Exchange Act ("Registered Common Stock") or the Other Person
is not a corporation, then the Rights (in lieu of being exercisable for the
Common Stock of the Other Person) shall become exercisable for the Common Stock
of one of the following different Persons:
(1) if the Other Person is a direct or indirect
subsidiary of a Person that has Registered Common Stock outstanding, then the
Rights shall become exercisable for the Common Stock of such Person;
(2) if the Other Person is a direct or indirect
Subsidiary of a Person (but is not a direct or indirect Subsidiary of a Person
which has Registered Common Stock outstanding), then the Rights shall become
exercisable for the Common Stock of the ultimate parent entity of the Other
Person;
(3) if the Other Person is directly or indirectly
controlled by more than one Person, and one or more of such Persons has
Registered Common Stock outstanding, then the Rights shall become exercisable
for the Common Stock of whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
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(4) if the Other Person is directly or indirectly
controlled by more than one Person, and none of such Persons has Registered
Common Stock outstanding, then the Rights shall become exercisable for the
Common Stock of whichever ultimate parent entity is the corporation having the
greatest stockholders equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
The Corporation shall not consummate any such consolidation, merger, sale or
transfer unless (i) such issuer shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
as will permit the exercise in full of the Rights in accordance with this
Section 13 and (ii) prior thereto the Corporation and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so providing
and further providing that as soon as practicable after the date of any Common
Share Event described above in this Section 13 such issuer will (A) prepare and
file a registration statement under the Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, and
cause such registration statement to (I) become effective as soon as practicable
after such filing and (II) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date and take such
action as may be required to ensure that any acquisition of such Common Stock
upon the exercise of the Rights complies with any applicable state security or
"blue sky" laws and (B) will deliver to holders of the Rights historical
financial statements of such issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act. Furthermore, in case the Person which is to be party to a
transaction referred to in this Section 13 has any provision in any of its
authorized securities or in its charter or by-laws or other agreement or
instrument governing its affairs, which provision would have the effect of (i)
causing such Person to issue, in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, shares of Common
Stock of such Person at less than the then current market price per share
thereof (as defined in Section 11(d) hereof), or to issue securities exercisable
for, or convertible into, Common Stock of such Person at less than such then
current market price (other than to holders of Rights pursuant to this Section
13) or (ii) providing for any special payment, tax or similar provisions in
connection with the issuance of Common Stock of such Person pursuant to the
provisions of this Section 13; then, in such event, the Corporation hereby
agrees with each holder of the Rights that it shall not consummate any such
transaction unless prior thereto the Corporation and such Person shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that such provision in question shall have been cancelled, waived or amended or
that the authorized securities shall be redeemed so that it will have no effect
in connection with, or as a consequence of, the consummation of the proposed
transaction. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Common Share Event described in this Section 13 shall occur at any time
after the occurrence of a Common Share Event described in Section 11(a)(ii)
hereof, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in this Section 13.
The Rights Agent may rely and be fully protected in relying upon a
certificate of the Corporation stating that the provisions of this Section 13
have been fulfilled. Notwithstanding
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anything in this Agreement to the contrary, the prior written consent of the
Rights Agent must be obtained in connection with any supplemental agreement
which alters the rights or duties of the Rights Agent.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Corporation shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In lieu of
issuing such fractional Rights, there may, at the option of the Corporation, be
paid to the registered holders of the Rights with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a) the current market value of a whole Right shall be the
Closing Price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Corporation shall not be required to issue fractions of shares
of its beneficial interests upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than, in each case with
respect to Preferred Shares or Equivalent Preferred Shares, fractions which are
integral multiples of one one-hundredth of a Preferred Share or Equivalent
Preferred Share, as the case may be). In lieu of fractional shares, there may,
at the option of the Corporation, be paid to the registered holders of Rights at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of a share of its beneficial
interests. For purposes of this Section 14(b), the current market value of a
share of such beneficial interests shall be the Closing Price of such shares of
beneficial interests for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or (except as provided in
Section 14(b) hereof) any fractional share upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION.
Excepting the rights of action given the Rights Agent under Section 18
hereof, all rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights; and any registered holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Right, may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights in the manner provided in such Right Certificate and in
this Agreement, and the Corporation hereby agrees to reimburse such registered
holder for all expenses (including reasonable attorneys' fees) incurred by such
registered holder in connection therewith. 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 the obligations hereunder, and shall be entitled to injunctive relief
against actual or threatened violations of the obligations hereunder of any
Person subject to this Agreement.
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SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right by accepting the same consents and agrees with
the Corporation 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 Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Corporation and the Rights Agent may deem and treat the person
in whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates, or, prior to the Distribution Date, the
associated Common Share certificates, made by anyone other than the Corporation
or the Rights Agent) for all purposes whatsoever, and neither the Corporation
nor the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Corporation must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Right shall be entitled to vote, receive
dividends or otherwise be deemed for any purpose the holder of any securities of
the Corporation which may be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a shareholder of the Corporation or any right to vote in the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 24), or to receive dividends or preemptive rights, or
otherwise, until the time specified in Section 10 hereof.
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SECTION 18. CONCERNING THE RIGHTS AGENT.
The Corporation agrees to pay to the Rights Agent such compensation as
shall be agreed in writing between the Corporation and the Rights Agent 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 disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses
(including reasonable attorneys' fees and expenses) of defending against any
claim of liability for any of the foregoing.
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for any number of one one-hundredths of a Preferred Share or for
other securities of the Corporation, instrument of assignment or transfer, power
of attorney, opinion, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper person or persons.
The provisions of this Section 18 shall survive the expiration of the
Rights and the termination of this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
Any corporation into which the Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent shall be a party, or any corporation
succeeding to all or substantially all the stock transfer or shareholder
services business of the Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement and any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right 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 Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt
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the countersignature under its prior name and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name and in all such
cases such Right Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel to the Corporation), 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) be proved
or established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate (an "Officers' Certificate") signed by the Chairman
of the Corporation, the President or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Corporation and delivered to the Rights Agent, provided, however, that so long
as any Person is an Acquiring Person hereunder, such Officers' Certificate shall
be signed and delivered by a majority of the Continuing Directors; and such
Officers' 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 Officers' Certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature on such Right Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any
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covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedures (except with respect to the
exercise of Rights evidenced by Right Certificates after the Rights Agent's
actual receipt of an Officers' Certificate describing any such adjustment or
procedures); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any number of one one-hundredths of a
Preferred Share, or any shares or similar units of other securities, will, when
issued, be validly authorized and issued, fully paid and nonassessable, nor
shall the Rights Agent be responsible for the legality of the terms hereof in
its capacity as an administrative agent.
(f) The Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further acts, instruments. and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Corporation, the President or any Vice President or the
Secretary or any Assistant Secretary or the Treasurer or any Assistant Treasurer
of the Corporation, 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 Corporation may, at the option of the Rights Agent, set forth in writing,
any action proposed to be taken or omitted by the Rights Agent with respect to
its duties or obligations under this Rights Agreement and the date on and/or
after which such action shall be taken or omitted, and the Rights Agent shall
not be liable for any action taken or omitted in accordance with a proposal
included in any such application on or after the date specified therein (which
date shall not be less than three Business Days after the date any such officer
of the Corporation actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received in response to such
application written instructions specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or for any other
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, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties 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.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certification appearing on the reverse side
thereof following the form of election to purchase 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
of transfer without first consulting with the Corporation.
(l) In addition to the foregoing, the Rights Agent shall be protected
and shall incur no liability for, or in respect of, any action taken or omitted
by it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.
(m) The Corporation agrees to give the Rights Agent prompt written
notice of any event or ownership which would prohibit the exercise or transfer
of the Right Certificates.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Corporation and to each transfer agent of the Preferred Shares and
the Common Shares by registered or certified mail. The Corporation may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent, to each transfer agent of the Preferred Shares and
the Common Shares by registered or certified mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Corporation shall appoint a successor to the Rights Agent. If the Corporation
shall fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent, then
the Rights Agent or the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights
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Agent. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, shall be a corporation organized and doing business under the laws
of the United States, the State of New York (or of any other State of the United
States so long as such corporation is authorized to do business as a banking
institution in the state of New York), in good standing, having a principal
office in the State of New York, which is authorized under such laws to exercise
corporate trust, stock transfer or shareholder services 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 the purpose; and,
except as the context herein otherwise requires, such successor Rights Agent
shall be deemed to be the "Rights Agent" for all purposes of this Agreement. Not
later than the effective date of any such appointment the Corporation shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Shares and the Common Shares, and mail a notice thereof
in writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by the Directors
of the Corporation to reflect any adjustment or change in the Purchase Price per
share and the number or kind or class of shares of stock or beneficial interests
or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION.
The Continuing Directors then in office may, at any time prior to the
earlier of (i) the close of business on the tenth Business Day following the
date any Person (other than the Corporation, any Subsidiary of the Corporation,
any employee benefit plan of the Corporation or of any Subsidiary of the
Corporation, or any Person or entity organized, appointed or established by the
Corporation for or pursuant to the terms of any such plan), alone or together
with its Affiliates, shall, at any time after the Declaration Date, become the
Beneficial Owner of 25% or more of the shares of Common Shares then outstanding,
or (ii) the Expiration Date, at their option, upon the affirmative vote or
written consent of not less than a majority of such Continuing Directors redeem
all (but not less than all) of the then outstanding Rights at a redemption price
of $.01 per Right, appropriately adjusted to reflect any share split, share
dividend, combination of Common Shares or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, if the Corporation is then restricted or
prohibited from
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paying the Redemption Price in cash, then the Corporation may, at its option,
pay the Redemption Price by delivery of such other consideration, including
without limitation, Common Shares or units of Common Shares and/or other
securities, or other property or assets of the Corporation, or a combination
thereof, as a majority of the Continuing Directors determine in their sole
discretion to be a fair and equivalent Redemption Price, which determination
shall be final and binding. Immediately upon the taking of such action ordering
the redemption of all of the Rights, evidence of which shall have been filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights so redeemed will terminate and the only right
thereafter of the holders of such Rights so redeemed shall be to receive the
Redemption Price (without the payment of any interest thereon). Within 10 days
after such action ordering the redemption of all of the Rights, the Corporation
shall 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
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of an
event described in Section 11(a)(ii) until such time as the Corporation's right
of redemption hereunder has expired.
SECTION 24. NOTICE OF PROPOSED ACTIONS.
In case the Corporation shall propose (a) to pay any dividend payable
in stock of any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), or (b) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or beneficial shares of any class or any other securities, rights or
options, or (c) to effect any reclassification of the Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect any consolidation or merger into or with any other
Person other than a Subsidiary of the Corporation in a transaction which
complies with Section 11(p) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of more than 50% of (A)
the assets (determined on the basis of the net asset value thereof as reflected
on the books of the Corporation and in accordance with generally accepted
accounting principles consistently applied) or (B) the earning power, of the
Corporation (on an individual basis) or of the Corporation and its Subsidiaries
(on a consolidated basis) to, any other Person (other than the Corporation or
any of its Subsidiaries in one or more transactions each of which complies with
Section 11(p) hereof) or (e) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation shall give to
the Rights Agent and each holder of a Right, in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such dividend, distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Preferred Shares, if any such date is to be fixed, and
such notice shall be
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so given in the case of any action covered by clause (a) or (b) above at least
twenty days prior to the record date for determining holders of Preferred Shares
for purposes of such action, and in the case of any such other action, at least
twenty days prior to the date of the taking of such proposed action or the date
of participation therein by the holders of Preferred Shares whichever shall be
the earlier, provided, however, no such notice shall be required pursuant to
this Section 24, if any Subsidiary of the Corporation effects a consolidation or
merger with or into, or effects a sale or other transfer of assets or earnings
power to any other Subsidiary or the Corporation. The failure to give notice
required by this Section 24 or any defect therein shall not affect the legality
or validity of the action taken by the Corporation or the vote upon any such
action.
In case any Common Share Event described in Section 11(a)(ii) hereof
shall occur, then, in any such case, the Corporation shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Right
Certificate in accordance with Section 25 hereof, a notice of the occurrence of
such Common Share Event, which shall specify such event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Corporation with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Corporation, including the Rights, for purposes of this
Agreement and no other notice need be given.
SECTION 25. NOTICES.
Notices or demand authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to the Corporation
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:
HRE PROPERTIES, INC.
321 Railroad Avenue
Greenwich, Connecticut 06830
Attention: President
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Corporation or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation) as
follows:
THE BANK OF NEW YORK
101 Barclay Street, Floor 12 West
New York, New York 10286
Attention: Stock Transfer Administration
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Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Corporation.
SECTION 26. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 26, the Continuing Directors then in office may, upon the
affirmative vote or written consent of not less than a majority of such
Continuing Directors, supplement or amend any provision of this Agreement from
time to time without the approval of any holders of certificates representing
Common Shares. From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, the Continuing Directors then in office
may, upon the affirmative vote or written consent of not less than a majority of
such Continuing Directors, supplement or amend this Agreement from time to time
without the approval of any holders of Right Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which such Continuing
Directors may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Right Certificates (other than an Acquiring
Person, an Affiliate of an Acquiring Person or a Disqualified Transferee);
provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, any time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares. Notwithstanding anything contained in
this Agreement to the contrary, no supplement or amendment shall be made which
decreases the Redemption Price, changes the Expiration Date, changes the manner
of calculating the Purchase Price, decreases the Purchase Price other than
pursuant to Section 11 hereof, decreases the number of one one-hundredths of a
Preferred Share for which a Right is exercisable or affects any right vested in
the Rights Agent. Upon the delivery of a certificate from an appropriate officer
of the Corporation which states that the proposed supplement or amendment is in
compliance with the terms of this Section, the Rights Agent shall execute such
supplement or amendment. The Rights Agent shall join with the Corporation in the
execution and delivery of any such supplement or amendment, unless such
supplement or amendment affects any of the rights, duties or obligations of the
Rights Agent hereunder, in which case the Rights Agent may, but shall not be
required to, join in such execution and delivery.
SECTION 27. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
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SECTION 28. DETERMINATION AND ACTIONS BY THE DIRECTORS; ETC.
The Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and exercise all rights and powers
specifically granted to the Directors, or to the Corporation, 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 or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below
all omissions with respect to the foregoing) which are done or made by the
Directors in good faith and with the concurrence of a majority of the Continuing
Directors then in office shall (x) be final, conclusive and binding on the
Corporation, the Rights Agent, the holders of the Rights and all other parties
and (y) not subject any Director to any liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Corporation, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the associated Common
Shares) any legal or equitable right, remedy or claim under this Agreement or
the Rights; but this Agreement shall be for the sole and exclusive benefit of
the Corporation, the Rights Agent and the registered holders of the Rights (and,
prior to the Distribution Date, the associated Common Shares).
SECTION 30. GOVERNING LAW.
This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of The State of New York and for all
purposes shall be governed by and construed in accordance with the laws of said
state applicable to contracts to be made and performed entirely within said
state.
SECTION 31. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 32. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
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SECTION 33. SEVERABILITY.
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
HRE PROPERTIES, INC.
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By:
----------------------------------
Name:
Title:
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EXHIBIT A
ARTICLES SUPPLEMENTARY
OF
HRE PROPERTIES, INC.
HRE Properties, Inc., a Maryland corporation (the "Corporation"),
certifies as follows:
FIRST: Under the authority contained in Section 7.2 of the charter of
the Corporation, the Board of Directors of the Corporation on March ___, 1997,
classified 150,000 shares of the Preferred Stock of the Corporation as the
"Series A Participating Preferred Shares."
SECOND: A description of the Series A Participating Preferred Shares,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as set or changed by the Board of Directors of the
Corporation is as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Participating Preferred Shares" (the "Series A Shares")
and the number of shares constituting such series shall be 150,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Shares ranking prior
and superior to the Series A Shares with respect to dividends, the
holders of Series A Shares shall be entitled to receive, when, as and
if declared by the Directors out of funds legally available for the
purpose, quarterly dividends payable in cash to holders of record on
the 15th 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
Shares, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $.25 or (b) subject to the provision for adjustment
set forth in Section 7 hereof, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in Common Shares or a subdivision of the
outstanding Common Shares (by reclassification or otherwise), declared
on the common stock of the Corporation (the "Common Shares") since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Shares.
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(B) The Corporation shall declare a dividend or
distribution on the Series A Shares as provided in paragraph (A) of
this Section 2 immediately after it declares a dividend or distribution
on the Common Shares (other than a dividend payable in shares of or
subdivision with respect to Common Shares); provided however, that, in
the event no dividend or distribution shall have been declared on the
Common Shares during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $.25 per share on the Series A Shares 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 Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series
A Shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Shares in an amount less than the total amount of
all 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 Directors may fix a record date for the
determination of holders of shares of Series A Shares entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall be no more than 60 days prior to the date fixed for
the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Shares
shall have the following voting rights:
(A) Subject to the provision for adjustment set forth
in Section 7 hereof, each share of Series A Shares shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation.
(B) Except as otherwise provided herein, in the charter
of the Corporation (the "Charter") or bylaws, the holders of shares of
Series A Shares and the holders of shares of Common Shares shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C)
(i) If at the time of any annual meeting of
stockholders for the election of Directors a default in
preferred dividends (as hereinafter defined) shall
exist, the holders of shares of Preferred Shares voting
separately as a class without
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regard to series (with each share of Preferred Shares
being entitled to that number of votes to which it is
entitled on matters submitted to stockholders
generally, or, if it is not entitled to vote with
respect to such matters, to one vote), shall have the
right to elect two members of the Directors of the
Corporation. The holders of Common Shares shall not be
entitled to vote in the election of the two Directors
so to be elected by the holders of shares of Preferred
Shares. Any Director elected by the holders of shares
of Preferred Shares, voting as a class as aforesaid,
shall continue to serve as such Director for the full
term for which he shall have been elected
notwithstanding that prior to the end of such term a
default in preferred dividends shall cease to exist.
If, prior to the end of the term of any Director
elected by the holders of the Preferred Shares, voting
as a class as aforesaid, a vacancy in the office of
such Director shall occur by reason of death,
resignation, removal or disability, or for any other
cause, such vacancy shall be filled for the unexpired
term in the manner provided in the Charter, provided
that, if the Charter provides that such vacancy shall
be filled by election by the stockholders at a meeting
thereof, the right to fill such vacancy shall be vested
in the holders of Preferred Shares, voting as a class
as aforesaid, unless in any such case, no default in
preferred dividends shall exist at the time of such
election.
(ii) For the purposes of paragraph (C)(i) of this
Section 3, a default in preferred dividends shall be
deemed to have occurred whenever the amount of
dividends in arrears upon any series of Preferred
Shares shall be equivalent to six full quarterly
dividends or more and, having so occurred, such default
in preferred dividends shall be deemed to exist
thereafter until all accrued dividends on all shares of
Preferred Shares then outstanding shall have been paid
to the end of the last preceding quarterly dividend
period. Nothing herein contained shall be deemed to
prevent an amendment of the Charter or the bylaws, in
the manner therein provided, which shall increase the
number of Directors so as to provide as additional
places on the Board of Directors either or both the
director positions to be filled by the two Directors so
to be elected by the holders of the Preferred Shares or
to prevent any other change in the number of directors
of the Corporation.
(D) Except as set forth herein, holders of Series A
Shares shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Shares 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 Shares as provided in Section 2
are in arrears, thereafter and until
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all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Shares outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distribution on, or redeem or purchase or otherwise
acquire for consideration any shares of capital stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Shares;
(ii) declare or pay dividends on or make any other
distributions of any shares of capital stock ranking on
a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Shares,
except dividends paid ratably on the Series A Shares
and all such parity shares 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 any shares of capital stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Shares,
provided that the Corporation may at any time redeem,
purchase or otherwise acquire such parity shares in
exchange for any shares of capital stock of the
Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the
Series A Shares; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Shares, or any shares of capital
stock ranking on a parity with the Series A Shares,
except in accordance with a purchase offer made in
writing or by publication (as determined by the
Directors) to all holders of such shares upon such
terms as the 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 capital 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. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution shall be
made to the holders of shares of capital stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the
Series A Shares unless, prior thereto, the holders of shares of Series
A Shares shall have
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received $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 (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of
Series A Shares unless, prior thereto, the holders of shares of Common
Stock (which term shall include, for the purposes only of this Section
5, any series of the Corporation's Preferred Shares ranking on a parity
with the Common Shares upon liquidation, dissolution or winding up)
shall have received an amount per share (the "Common Adjustment") equal
to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
Section 7 hereof to reflect such events as share splits, share
dividends and recapitalizations with respect to the Common Shares; such
number in clause (ii), the "Adjustment Number"). In the event, however,
that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Shares. Following the
payment of the full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of Series A
Shares and Common Shares, respectively, holders of Series A Shares and
holders of shares of Common Shares shall receive their ratable and
proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to one (1) with respect to such Series A
Shares and Common Shares, on a per share basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other
series of Preferred Shares, if any, which rank on a parity with the
Series A Shares, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences.
Section 6. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the Common Shares are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the Series A Shares shall
at the same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment set forth in Section 7 hereof) equal to
100 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
Common Share is changed or exchanged.
Section 7. Certain Adjustments. In the event the Corporation shall at
any time declare or pay any dividend on Common Shares payable in Common Shares,
or effect a subdivision or combination or consolidation of the outstanding
Common Shares (by reclassification or otherwise than by payment of a dividend in
Common Shares) into a greater or lesser number of shares of Common Shares, then,
in each such case, the amounts set forth in Sections 2(A), 3(A), 5(A) and 6
hereof with respect to the multiple of (i) cash and non-cash dividends, (ii)
votes, (iii) the Series A Liquidation Preference and (iv) an aggregate amount of
stock, securities, cash and/or other property referred to in Section 6 hereof,
shall be adjusted by multiplying such amount by a fraction the
-A-5-
<PAGE>
numerator of which is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
Section 8. Ranking. The Series A Shares shall rank pari passu with (or
if determined by the Directors in any vote establishing any other series of
Preferred Shares, either senior or preferred to or junior and subordinate to as
the case may be) each other series of Preferred Shares of the Corporation with
respect to dividends and/or preference upon liquidation, dissolution or winding
up.
Section 9. Redemption. Series A Shares may be redeemed by the
Corporation at such times and on such terms as may be agreed to between the
Corporation and the redeeming stockholder, subject to any limitations which may
be imposed by law or the Charter.
Section 10. Amendment. The Charter shall not be amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Series A Shares so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series A
Shares, if any, voting together as a single class.
Section 11. Fractional Share. Series A Shares may be issued by
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Shares.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf on this ___th day of
_____________, 1997, by its President who acknowledges that these Articles
Supplementary are the act of the Corporation and that to the best of his
knowledge, information and belief and under penalties for perjury, all matters
and facts contained in these Articles Supplementary are true in all material
respects.
ATTEST: HRE PROPERTIES, INC.
________________________ By: ________________________ (SEAL)
James R. Moore Willing L. Biddle
Secretary President
-A-6-
<PAGE>
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER NOVEMBER 13, 1998 OR EARLIER UNDER
CERTAIN CIRCUMSTANCES AS SET FORTH IN THE RIGHTS AGREEMENT
OR IF NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE CORPORATION, AT $.01 PER
RIGHT (PAYABLE IN CASH OR OTHER CONSIDERATION) ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED
BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]*
Right Certificate
HRE PROPERTIES, INC.
This certifies that ___________________ , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of March 12, 1997 (the "Rights Agreement") between HRE
Properties, Inc., a Maryland corporation (the "Corporation"), and The Bank of
New York (the "Rights Agent"), to purchase from the Corporation at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York City time) on November 13, 1998 (the
"Expiration Date"), except as hereinafter provided, at the office of the Rights
Agent, designated for such purpose, one one-hundredth of a fully paid
nonassessable share of the Series A Participating Preferred Shares, par value
$.01 per share ("Preferred Shares"), of the Corporation, at a purchase price of
$65 per each one one-hundredth share (the "Purchase Price") upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
set forth on the reverse side hereof and the certificate contained therein duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of one-hundredths of a share which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of March 12, 1997, based on the shares of Preferred Shares
of the Corporation as constituted at such date.
- ---------------------------
* The portion of the legend in brackets shall be inserted only if
applicable.
-B1-
<PAGE>
As provided in the Rights Agreement, the Purchase Price and the number
of Preferred Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
In the circumstances described in Section 11(a)(ii) of the Rights
Agreement, the securities issuable upon the exercise of the Rights evidenced
hereby shall be the Common Shares and/or other securities of the Corporation. In
the circumstances described in Section 13 of the Rights Agreement, the
securities issuable upon the exercise of the Rights evidenced hereby shall be
the common stock or similar equity securities of an entity other than the
Corporation.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and 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 Corporation and the holders of the Right Certificates. Copies
of the Rights Agreement are on file at the designated office of the Rights Agent
and may be obtained by the holder of any Rights upon written request to the
Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, with
the Form of Election to Purchase and the certificate set forth on the reverse
side hereof duly executed, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of Preferred Shares as the Rights evidenced
by the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof, another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Corporation at any time at a
redemption price of $.01 per Right, payable in cash or other consideration as
set forth in the Rights Agreement (which amount is subject to adjustment as
provided in the Rights Agreement.)
No fractional Preferred Shares (or other securities) will be issued
upon the exercise of any Right or Rights evidenced hereby (other than fractions
which are an integral multiple of one one-hundredth of a share of Preferred
Shares), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Preferred Shares
or of any other securities of the Corporation which may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any
-B2-
<PAGE>
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation. Dated as of March 12, 1997.
HRE PROPERTIES, INC.
By:
----------------------
Name:
Title:
- -------
ATTEST:
[Seal]
- -----------------------------------
Name:
Title:
Countersigned:
THE BANK OF NEW YORK, as Rights Agent
BY:
--------------------------------
Name:
Authorized Signatory
Date of Countersignature:
-B3-
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________ hereby sells, assigns and transfers
unto __________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
whose social security or tax identification number is:____________, the Rights
evidenced by this Right Certificate, together with all right, title and interest
herein, and does hereby irrevocably constitute and appoint
____________________________, Attorney, to transfer the within Right Certificate
on the books of the within-named Corporation, with full power of substitution.
Dated: _______________________, 19___.
________________________________
Signature
(Signatures to the foregoing
Assignment must correspond to
the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.)
Signature Guaranteed:
-B4-
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right
Certificate.)
To HRE Properties, Inc.:
The undersigned hereby irrevocably elects to exercise
___________________________ Rights represented by this Right Certificate to
purchase the Preferred Shares (or other securities) issuable upon the exercise
of such Rights and requests that certificates for such shares be issued in the
name of:
Please insert social security
or other identifying number:_______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_______________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:______________________, 19___
-B5-
<PAGE>
_____________________________________________
Signature
(Signatures to the foregoing Election to
Purchase and the following certificate must
conform in all respects to name of holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as each such term is defined in the
Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it
(i) [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
after the occurrence of a Common Share Event (as defined in the Rights
Agreement) from any Person who is, was or became an Acquiring Person or an
Affiliate of an Acquiring Person and (ii) is not otherwise a Disqualified
Transferee (as defined in the Rights Agreement).
Dated:______________________, 19___ ___________________________________
Signature
-B6-
