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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
KNIGHT-RIDDER, INC.
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(Exact name of registrant as specified in its charter)
Florida 38-0723657
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
One Herald Plaza
Miami, Florida 33132
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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<S> <C>
Preferred Stock New York Stock Exchange
Purchase Rights Frankfurt Stock Exchange
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Page 1 of 64 Pages
The Index to Exhibits is on page 7.
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Item 1. Description of Securities to be Registered.
On June 21, 1996, the Board of Directors of Knight-Ridder, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of Common Stock, par value 2-1/12 cent per share, of the Company (the
"Common Shares") to stockholders of record on July 10, 1996 (the "Record Date")
(the date on which the Company's existing Rights Plan expires). Each Right
entitles the registered holder to purchase from the Company a unit ("Unit")
consisting of one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $1.00 per share, of the Company (the "Preferred
Shares"), at a price of $150 per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to all Common Share certificates
representing Common Shares then outstanding, and no separate Right certificates
will be distributed. Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
has acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Shares (an "Acquiring Person"), or (ii) 10
business days (or such later day as may be determined by action of the Board of
Directors prior to such time as any person or group becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer if, upon
consummation thereof, any person or group would be an Acquiring Person (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such certificate together with a copy of the Summary of
Rights. The date of announcement of the existence of an Acquiring Person
referred to in clause (i) above is hereinafter referred to as the "Share
Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares (including Common Shares issued
pursuant to the stock split affected in the form of a stock dividend on the
Common Shares approved by the Board of Directors on June 21, 1996 (the "1996
Stock Split")) will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, with or without a copy of the
Summary of Rights attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares on the Distribution Date and, thereafter, such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on July 10, 2006, unless earlier redeemed or exchanged
by the Company as described below.
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In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Shares are not changed or exchanged,
(ii) an Acquiring Person engages in one or more "self-dealing transactions" as
set forth in Section 11(a)(ii)(A) of the Rights Agreement, (iii) during such
time as there is an Acquiring Person, one of the events set forth in Section
11(a)(ii)(B) of the Rights Agreement occurs (e.g., a reverse stock split), or
(iv) any person or group of affiliated or associated persons becomes an
Acquiring Person (other than in a tender offer or exchange offer for all
outstanding Common Shares which the Board of Directors of the Company
determines is fair and adequate and otherwise in the best interests of the
Company and its stockholders), the Rights Agreement provides that proper
provision shall be made so that each holder of a Right, except as provided
below, shall thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Common Stock Equivalents (as such term is
defined in the Rights Agreement)) having a value equal to two (2) times the
exercise price of the Right. However, the Rights could not be exercised until
they are no longer redeemable as described below. Upon the occurrence of any
event described in the first sentence of this paragraph, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate (as
such terms are defined in the Rights Agreement) of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of the Rights Agreement,
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 the Rights Agreement or otherwise.
Effective upon, or at any time after, the occurrence of the event
described in clause (iv) of the first sentence of the preceding paragraph (and
prior to the acquisition by any person or group of affiliated or associated
persons of 50% or more of the outstanding Common Shares), the Board of
Directors of the Company may exchange the Rights (except Rights which
previously have been voided as described above), in whole, but not in part, at
an exchange ratio of one Common Share (or, in certain circumstances, one Common
Stock Equivalent) per Right.
In the event that, following the earlier of the Distribution Date and the
Share Acquisition Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger or other business combination transaction
with another person in which the Company is the surviving corporation, but in
which its Common Shares are changed or exchanged, or (iii) more than 50% of the
Company's assets or earning power is sold or transferred, the Rights Agreement
provides that proper provision shall be made so that each holder of a Right
(except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, common stock of the acquiring company
having a value equal to two (2) times the exercise price of the Right.
However, a merger or other business combination will not be subject to this
provision if it follows, and is
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effected on the same terms as, a tender offer or exchange offer approved by the
Board as described above.
The Purchase Price payable, and the number of Units of Preferred Shares or
other securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Shares, (ii)
upon the grant to holders of the Preferred Shares of certain rights, options or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
stock (other than a dividend payable in Preferred Shares), assets or cash
(excluding regular quarterly cash dividends) or of subscription rights, options
or warrants (other than those referred to above). Such terms are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations, or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date (other than the 1996 Stock Split).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Units will be issued and, in lieu thereof,
an adjustment in cash will be made as provided in the Rights Agreement.
At any time prior to the close of business on the tenth day following the
Share Acquisition Date, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right, subject to
adjustment (the "Redemption Price"). Immediately upon the action of the Board
of Directors of the Company ordering the redemption of the Rights (or such later
time as the Board of Directors may establish for the effectiveness of such
redemption), the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The terms of the Rights may be amended by the Company and the Rights Agent,
provided that following the Distribution Date the amendment does not materially
adversely affect the interests of holders of Rights (other than an Acquiring
Person) and provided that no amendment shall be made which decreases the
Redemption Price.
As of May 31, 1996 there were 48,666,003 Common Shares issued and
outstanding and 3,260,801 Common Shares reserved for issuance. Stockholders of
record on July 10, 1996 will receive one Right for each Common Share held. As
long as the Rights are attached to the Common Shares, the Company will issue one
Right with each new Common Share (including shares issued pursuant to the 1996
Stock Split). The Company's Board of Directors has reserved for issuance upon
exercise of the Rights 1,500,000 Preferred Shares.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by its
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Board of Directors, except pursuant to an offer conditioned on a substantial
number of Rights being acquired. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors at a
time when the Rights are redeemable.
The Rights Agreement, specifying the terms of the Rights (which includes
as Exhibit B the form of Right Certificate), is attached hereto as an exhibit
and is incorporated herein by reference. The foregoing description of the
Rights is qualified in its entirety by reference to such exhibit.
Item 2. Exhibits.
99 Rights Agreement, dated as of June 21, 1996, between Knight-Ridder, Inc.
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, which
includes the form of Right Certificate as Exhibit B. Pursuant to the
Rights Agreement, printed Right Certificates will not be mailed until as
soon as practicable after the Distribution Date.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Dated: July 9, 1996
KNIGHT-RIDDER, INC.
By: /s/ Cristina L. Mendoza
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Name: Cristina L. Mendoza
Title: VP & General Counsel
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Index to Exhibits
<TABLE>
Exhibit Page
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<S> <C> <C>
99 Rights Agreement, dated as of June 21, 1996 between 8
Knight-Ridder, Inc. and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, which includes the form of Right
Certificate as Exhibit B.
</TABLE>
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KNIGHT-RIDDER, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Rights Agent
_____________________
Rights Agreement
Dated as of June 21, 1996
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Table of Contents
<TABLE>
<CAPTION>
Section Page
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<S> <C> <C>
1. Certain Definitions .................................................... 1
2. Appointment of Rights Agent ............................................ 5
3. Issue of Right Certificates ............................................ 5
4. Form of Right Certificates ............................................. 7
5. Countersignature and Registration ...................................... 7
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates ................ 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights .......... 8
8. Cancellation and Destruction of Right Certificates ..................... 10
9. Reservation and Availability of Preferred Shares ....................... 10
10. Preferred Shares Record Date ........................................... 12
11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights .............................................................. 12
12. Certificate of Adjusted Purchase Price or Number of Shares ............. 19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power ... 20
14. Additional Covenants ................................................... 23
15. Fractional Rights and Fractional Shares ................................ 24
16. Rights of Action ....................................................... 25
17. Agreement of Rights Holders ............................................ 25
18. Right Certificate Holder Not Deemed a Stockholder ...................... 26
19. Concerning the Rights Agent ............................................ 26
20. Merger or Consolidation or Change of Name of Rights Agent .............. 26
</TABLE>
i
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Table of Contents
(continued)
<TABLE>
<CAPTION>
Section Page
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<S> <C> <C>
21. Duties of Rights Agent ................................................ 27
22. Change of Rights Agent ................................................ 29
23. Issuance of New Right Certificates .................................... 29
24. Redemption ............................................................ 30
25. Exchange .............................................................. 31
26. Notice of Certain Events .............................................. 32
27. Notices ............................................................... 33
28. Supplements and Amendments ............................................ 33
29. Successors ............................................................ 34
30. Determinations and Actions by the Board of Directors, etc. ............ 34
31. Benefits of this Agreement ............................................ 34
32. Severability .......................................................... 34
33. Governing Law ......................................................... 34
34. Counterparts .......................................................... 35
35. Descriptive Headings .................................................. 35
Exhibit A -- Form of Articles of Amendment ................................. A-1
Exhibit B -- Form of Right Certificate ..................................... B-1
Exhibit C -- Form of Summary of Rights ..................................... C-1
</TABLE>
ii
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 21, 1996 (the "Agreement"), between
Knight-Ridder, Inc., a Florida corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as such term is hereinafter defined) for each share of
Common Stock, par value 2-1/12 cent per share, of the Company (the "Common
Shares") outstanding as of the close of business on July 10, 1996 (the "Record
Date"), and has authorized the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Final Expiration Date (as such terms are hereinafter defined), each Right
representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Articles of Amendment attached hereto
as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth (the "Rights").
Accordingly, 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 have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 20% or more of the Common Shares
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary (as
such term is hereinafter defined) of the Company, or (iii) any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan. Notwithstanding the foregoing, (i) no Person shall become an "Acquiring
Person" solely as the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 20% or more of the Common
Shares then outstanding; provided, however, that if a Person becomes the
Beneficial Owner of 20% or more of the Common Shares then outstanding by reason
of share acquisitions by the Company and shall, after such share acquisitions,
become the Beneficial Owner of any additional Common Shares, then such Person
shall be deemed to be an "Acquiring Person"; and (ii) if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph, has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this
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paragraph, then such Person shall not be deemed to have become an "Acquiring
Person" for any purposes of this Agreement.
(b) "Affiliate", "Associate" and "control" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement.
(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 or
Associates beneficially owns, directly or indirectly, within the
meaning of Rule 13d-3 or Rule 13d-5 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of
this Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants
or options, or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially own",
securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase
or exchange;
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own", any security under this
subparagraph (iii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement
or understanding (1) arises solely from a revocable proxy given to
such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable
on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iv) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a
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revocable proxy as described in the proviso to subparagraph (iii)
of this paragraph (c)) or disposing of any securities of the
Company.
If a Person shall be deemed to be the Beneficial Owner of any securities which
are not outstanding, such securities shall be deemed to be outstanding for
purposes of determining the percentage of Common Shares beneficially owned by
such Person.
(d) "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
obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company (or
without express reference to another Person) shall mean the shares of Common
Stock, par value 2-1/12 (cent) per share, of the Company or any other shares of
capital stock of the Company into which the Common Shares are reclassified or
changed. "Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock or other equity securities or equity or
other beneficial interests of such Person with the greatest aggregate voting
power.
(g) "Common Stock Equivalent" shall mean a share, or fraction of a
share, of Preferred Stock, par value $1.00 per share (or any other authorized
class of preferred stock), of the Company having dividend, voting, liquidation
and other rights which result, in the judgment of the Board of Directors, in
such share, or fraction of a share, being approximately equivalent in value to
one Common Share as of the Event Date (as such term is hereinafter defined);
provided, however, that, if in the judgment of the Board of Directors there are
not sufficient authorized but unissued shares of preferred stock available for
the creation of Common Stock Equivalents, "Common Stock Equivalent" shall mean
such cash, reduction in Purchase Price (as such term is hereinafter defined),
other equity securities, debt securities, other assets or any combination of the
foregoing, that the Board of Directors shall determine to be approximately
equivalent in value to one Common Share as of the Event Date. As used herein,
"Event Date" shall mean (i) for purposes of any determination made pursuant to
Section 11(a)(iii) hereof, the date of occurrence of the applicable event
described in Section 11(a)(ii) hereof and (ii) for purposes of any determination
made pursuant to Section 25(c) hereof, the Exchange Date (as such term is
hereinafter defined).
(h) "Continuing Director" shall mean (i) any member of the Company's
Board of Directors, while such Person is a member of the Board, who is not an
Acquiring Person, an Affiliate or Associate of an Acquiring Person or a
representative of an Acquiring Person or any such Affiliate of Associate, and
was a member of the Board prior to the date of this Agreement, or (ii) any
Person who subsequently becomes a member of the Board, while such Person is a
member of the Board, who is not an Acquiring Person, an Affiliate or Associate
of an Acquiring Person or a representative of an Acquiring Person or any such
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Affiliate or Associate, if such Person's nomination for election or election to
the Board is recommended or approved by a majority of the Continuing Directors.
(i) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(j) "Exchange" shall have the meaning set forth in Section 25 hereof.
(k) "Exchange Date" shall have the meaning set forth in Section 7(a)
hereof.
(l) "Exchange Ratio" shall have the meaning set forth in Section 25
hereof.
(m) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Person" shall mean any individual, firm, corporation, partnership
or other entity and shall include any successor by merger or otherwise of such
Person.
(o) "Pre-Approval" shall have the meaning set forth in Section 25(a)
hereof.
(p) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company.
(q) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(r) "Purchase Price" shall have the meaning set forth in Section 4
hereof.
(s) "Record Date" shall have the meaning set forth in the recital of
this Agreement.
(t) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(u) "Redemption Price" shall have the meaning set forth in Section
24(a) hereof.
(v) "Registered Common Shares" shall have the meaning set forth in
Section 13(b) hereof.
(w) "Rights Agent" shall have the meaning set forth in the recital of
this Agreement.
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(x) "Right Certificates" shall have the meaning set forth in Section
3(a) hereof.
(y) "Rights" shall have the meaning set forth in the recital of this
Agreement.
(z) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(aa) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(bb) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity or other beneficial interests is owned,
directly or indirectly, by such Person, or which is otherwise controlled by such
Person.
(cc) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(dd) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
close of business on the tenth day after the Share Acquisition Date or (ii) the
close of business on the tenth business day (or such later day as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date that a tender or exchange offer by
any Person is first published, sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act if, upon
consummation thereof, such Person would be an Acquiring Person (the earlier of
such dates, including any such date which is after the date of this Agreement
and prior to the issuance of the Rights, being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates shall
also be deemed to be certificates for Rights) and not by separate certificates,
and (y) the Rights will be transferable only in connection with the transfer of
the underlying Common Shares. As soon as practicable after the Distribution
Date, the Rights Agent will 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 records of the
Company, one or more Right certificates, in substantially the form of Exhibit B
hereto (the "Right Certificates"), evidencing one Right for
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each Common Share so held, subject to adjustment as provided herein. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable after the Record Date, the Company will
send a copy of a Summary of Rights in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of Common Shares as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company. With
respect to certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
for Common Shares together with a copy of the Summary of Rights, and the
registered holders of Common Shares shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earliest of the
Redemption Date, Exchange Date or Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate.
(c) Rights shall be issued in respect of all Common Shares which
become outstanding (including, without limitation, reacquired Common Shares
referred to in the last sentence of this paragraph (c)) after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date, the
Exchange Date or the Final Expiration Date. Certificates representing such
Common Shares shall also be deemed to be certificates for Rights, and shall bear
the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between
Knight-Ridder, Inc. (the "Company") and ChaseMellon Shareholder
Services, L.L.C., dated as of June 21, 1996 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of
the Rights Agreement without charge promptly after receipt of a
written request therefor. As described in the Rights Agreement,
Rights beneficially owned by (i) an Acquiring Person or any
Associate or Affiliate thereof (as such terms are defined in the
Rights Agreement), (ii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such or (iii) under certain circumstances,
a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee before or concurrently with the
Acquiring Person becoming such, shall become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or the
Final Expiration Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced
<PAGE> 10
7
by such certificates alone and the registered holders of Common Shares shall
also be the holders of the associated Rights, and the surrender for transfer of
any such certificates shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 23 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a share set forth therein (the "Purchase Price"), but
the number of such shares and the Purchase Price shall be subject to adjustment
as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman or Vice Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
of the Company, 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
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices in New York, New York, 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, the Certificate Number of each such Right Certificate and the date
of each of the Right Certificates.
<PAGE> 11
8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Section 7(e) and Section 15 hereof,
at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the earliest of the Redemption Date, the
Exchange Date or the Final 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 Preferred Shares 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 at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Certificates until the registered holder shall
have completed and signed the certificate contained in the form of assignment
set forth on the reverse side of each such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
7(e) and Section 15 hereof, countersign and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company 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 reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will execute and deliver a new
Right Certificate of like tenor to the Rights Agent for 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) The Rights shall not be exercisable prior to the Distribution
Date. The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-hundredth of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on July 10,
2006 (the "Final Expiration Date"), (ii) the time at which
<PAGE> 12
9
the Rights are redeemed as provided in Section 24 hereof (the "Redemption Date")
or (iii) the time at which the Rights are exchanged as provided in Section 25
hereof (the "Exchange Date").
(b) The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $150, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased as set forth below
and an amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9(e) hereof, the
Rights Agent shall, subject to Section 21(j) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent for such shares) certificates for the
number of Preferred Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the Preferred Shares issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of issuance of
fractional shares in accordance with Section 15 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Right Certificate. The payment of the Purchase Price shall be
made in cash or by certified or bank official check or money order payable to
the order of the Company. In the event that the Company is obligated to issue
other securities of the Company pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities are available
for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the occurrence of any event described in Section 11(a)(ii) hereof, any
Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or
<PAGE> 13
10
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which a majority of the Continuing Directors has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), 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. No Right Certificate shall be issued pursuant to Section 3 hereof
that represents Rights beneficially owned by an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof and no Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate. Any Right Certificate delivered
to the Rights Agent for transfer to any of the foregoing Persons, or which
represents void Rights, shall be cancelled. The Company shall use reasonable
efforts to effect compliance with the provisions of this Section 7(e), but
shall have no liability to any holder of Right Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
transfer as set forth in Section 6 hereof or exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares and/or
any
<PAGE> 14
11
authorized and issued Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the Preferred Shares issuable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence of any event
described in Section 11(a)(ii) hereof on which the consideration to be delivered
by the Company has been determined in accordance with Section 11(a)(ii) or
11(a)(iii) hereof, as the case may be, a registration statement under the
Securities 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) subject to Section
25 hereof, cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Final Expiration Date. The Company 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 Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date but prior to
the occurrence of any event described in Section 11(a)(ii) hereof, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates and
of any certificates or depositary receipts for Preferred Shares upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or the issuance or delivery of
certificates or depositary
<PAGE> 15
12
receipts for Preferred Shares in a name other than that of, the registered
holder of the Right Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates or depositary receipts for Preferred Shares
in a name other than that of the registered holder 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 Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the transfer books of the Company with respect to the Preferred
Shares are closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the transfer books of the Company for the Preferred
Shares are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares 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 the Company shall, at any time after the
date of this Agreement, (A) declare a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares into a greater number of shares, (C) combine the
outstanding Preferred Shares into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided
in this Section 11(a) and in Section 7(e) hereof, the Purchase
Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or
reclassification, and the number and kind of Preferred Shares or
shares of capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of Preferred Shares or shares of capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the transfer
books of the Company for the Preferred Shares were open, he would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification.
(ii) Subject to Sections 11(a)(iii) and 25 hereof, in the
event that:
<PAGE> 16
13
(A) any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall consolidate with
or merge into the Company or any of its Subsidiaries or
otherwise combine with the Company or any of its
Subsidiaries, the Company or such Subsidiary shall be the
continuing or surviving corporation of such consolidation,
merger or combination and the Common Shares of the Company
shall remain outstanding and not be changed into or exchanged
for stock or other securities of any other Person or the
Company or cash or any other property, (2) shall, in one or
more transactions (other than in connection with the exercise
of Rights and other than in connection with the exercise or
conversion of securities exercisable for or convertible into
equity securities of the Company or any of its Subsidiaries),
transfer any assets to the Company or any of its Subsidiaries
in exchange (in whole or in part) for equity securities or
for securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its Subsidiaries,
with or without consideration, any additional equity
securities or securities exercisable for or convertible into
equity securities of the Company or any of its Subsidiaries
(other than as part of a pro rata distribution to all holders
of Common Shares), (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of
(in one or more transactions), to, from or with, as the case
may be, the Company or any of its Subsidiaries, assets,
including securities, on terms and conditions less favorable
to the Company than the Company would be able to obtain in an
arm's-length negotiation with an unaffiliated third party, (4)
shall receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time
employment as a regular employee, or fees for serving as a
director, at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (5) 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 Company or any of its Subsidiaries,
or
(B) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company,
or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries
(whether or not with or into or otherwise involving 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 of securities exercisable for or convertible
into securities which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, or
<PAGE> 17
14
(C) any Person shall become an Acquiring Person (unless
the event causing such Person to become an Acquiring Person
is an acquisition of Common Shares pursuant to a tender offer
or an exchange offer for all outstanding Common Shares made
by or on behalf of such Person or any of such Person's
Affiliates or Associates at a price and on terms determined
by a majority of the Continuing Directors, prior to the
consummation of such offer and after receiving advice from
one or more investment banking firms, to be (a) at a price
which is fair and adequate to stockholders (taking into
account all factors which such members of the Board deem
relevant including, without limitation, values that could
reasonably be expected to be realized if the Company were to
remain independent, values that could reasonably be obtained
from a third party and prices which could reasonably be
achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in
the best interests of the Company and its stockholders),
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 a right to receive, upon exercise thereof at
a price equal to 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
and in lieu of Preferred Shares, such number of Common Shares as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and (y)
dividing that product by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per Common Share on the date of
occurrence of the applicable event listed above in this subparagraph
(ii); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) Subject to Section 25 hereof, in the event that the
number of Common Shares which are authorized by the Company'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 the foregoing subparagraph (ii), the Rights shall
not be exercisable for Common Shares, but proper provision shall be
made so that each holder of a Right, except as provided in Section
7(e) hereof, shall thereafter have a right to receive, upon
exercise thereof in accordance with the terms of this Agreement at
the price determined pursuant to subparagraph (ii), such number of
Common Stock Equivalents (or, in the judgment of the Board of
Directors, such combination of Common Stock Equivalents and Common
Shares) as shall equal the number of Common Shares determined
pursuant to subparagraph (ii).
<PAGE> 18
15
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
to subscribe for or purchase (for a period expiring within 45 calendar days
after such record date) Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current market
price (as determined pursuant to Section 11(d) hereof) per Preferred Share on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares so to be offered and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and
the denominator of which shall be the number of Preferred Shares outstanding on
such record date, plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially 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, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of Preferred Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend), assets, stock (other than a dividend payable in
Preferred Shares) or subscription rights, options or warrants (excluding those
referred to in or excluded pursuant to Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per one one-hundredth of a
Preferred Share on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes) of the portion of the cash, assets, stock or
evidences of indebtedness so to be distributed or of such subscription rights,
options or warrants applicable to one one-hundredth of a Preferred Share and
the denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per one one-hundredth of a Preferred Share.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
<PAGE> 19
16
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purposes of any computation hereunder, the
"current market price" per Common Share on any date shall be deemed
to be the average of the daily closing prices per Common Share for
the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in
the event that the current market price per Common Share is
determined during a period following the announcement by the issuer
of such Common Shares of (A) a dividend or distribution on such
Common Shares payable in such Common Shares or securities
convertible into such Common Shares (other than the Rights) or (B)
any subdivision, combination or reclassification of such Common
Shares and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the "current market price" shall be
appropriately adjusted to take into account ex-dividend trading.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Shares are
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 the Common Shares are listed or
admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or,
if on any such date the Common Shares are not quoted by any
such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the
Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company
shall be used and shall be conclusive for all purposes. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if
the Common Shares are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Shares
are not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
<PAGE> 20
17
(ii) For the purpose of any computation hereunder, the
"current market price" per Preferred Share shall be determined in
the same manner as set forth above for the Common Shares in
subparagraph (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per Preferred Share
cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a
manner described in subparagraph (i) of this Section 11(d), the
"current market price" per Preferred Share shall be conclusively
deemed to be an amount equal to 100 times the current market price
per Common Share (as appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to
the Common Shares occurring after the date of this Agreement). If
neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "current market price" per Preferred
Share shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such 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 ten-thousandth of a Common Share or other share or one-millionth of
a Preferred Share, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in this Section 11 and the provisions of Sections 6,
7, 9, 10, 13 and 15 with respect to the Preferred Shares shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such
<PAGE> 21
18
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 share covered by a Right immediately prior to
this adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment in 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 one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement.
If Right Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11(i), the Company 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 15
hereof, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holder 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 Company, 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 one one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a share and the
number of shares 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 one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in
<PAGE> 22
19
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Preferred Shares at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any of the Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, stock dividends
or issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such stockholders.
(n) In the event that any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares (other than the stock split
effected in the form of a stock dividend on the Common Shares approved by the
Board of Directors on June 21, 1996), then in any such case (i) the number of
one one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (ii) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts
<PAGE> 23
20
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 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 27 hereof.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the earlier of the Distribution Date and
the Share Acquisition Date, (x) the Company, directly or indirectly, shall
consolidate with, or merge with and into, any other Person, and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person, directly or indirectly, shall consolidate with, or
merge with and into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding Common Shares
shall be changed into or exchanged for stock or other securities of any other
Person (or of the Company) or cash or any other property, or (z) the Company,
directly or indirectly, shall sell or otherwise transfer (or one or more of its
Subsidiaries, directly or indirectly, shall sell or otherwise transfer), in one
or more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any Person or Persons (other than the Company or one or more wholly owned
Subsidiaries of the Company), then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right is then exercisable
(without taking into account any adjustment previously made pursuant to Section
11(a)(ii) or 11(a)(iii) hereof), in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party (as
hereinafter defined), free and clear of any liens, encumbrances and other
adverse claims and not subject to any rights of call or first refusal, as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof) and (2)
dividing that product by 50% of the current market price (determined pursuant
to Section 11(d)(i) hereof) per Common Share of the Principal Party on the date
of consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) except for purposes of Section
1(f) hereof, the term "Company" shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common Shares) in
connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; provided, however, that, upon the
<PAGE> 24
21
subsequent occurrence of any merger, consolidation, sale of all or substantially
all of the assets, recapitalization, reclassification of shares, reorganization
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right (except as otherwise provided herein) shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had he, at the time of such transaction, owned the
Common Shares of the Principal Party purchasable upon the exercise of a Right
(after giving effect to the foregoing provisions of this Section 13(a)), and
such Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property and (v) the provisions of Sections
11(a)(ii) and 11(a)(iii) hereof shall be of no effect following the occurrence
of any event described in clauses (x), (y) and (z) of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any merger described in clause (x) or (y)
of Section 13(a), any Person that is the issuer of any securities
into which Common Shares of the Company are converted in such
merger, and if no securities are so issued, any Person that is a
party to such merger that survives the merger;
(ii) in the case of any consolidation described in clause (x)
or (y) of Section 13(a), any Person that directly controls, alone
or with other Persons, a corporation that is consolidating with the
Company; and
(iii) in the case of any transaction or transactions described
in clause (z) of Section 13(a), any Person that receives any assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that with respect to such Person (or, if there is more than
one such Person, with respect to each such Person), (1) if the Common Shares of
such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act ("Registered Common Shares"), or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person which has
Registered Common Shares outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Shares of such Person are not Registered Common
Shares or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect
Subsidiary of another Person which has Registered Common Shares outstanding,
"Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (3) if the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person
is directly or indirectly controlled by more than one Person, and one or more
of such latter Persons have Registered Common Shares outstanding, "Principal
Party" shall refer to whichever of such latter Persons is the issuer of
outstanding Registered Common Shares having the greatest aggregate current
market value (determined pursuant to Section 11(d)(i) hereof); or (4) if the
Common Shares of such Person are not Registered Common Shares or such Person is
not a corporation, and such Person is directly or
<PAGE> 25
22
indirectly controlled by more than one Person, and none of such latter Persons
have Registered Common Shares outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the entity having the greatest net assets;
provided, further, however, that if under the foregoing provisions of this
Section 13(b) there shall for any reason be more than one Principal Party,
"Principal Party" shall refer to whichever of such Persons is the issuer of
outstanding Registered Common Shares having the greatest aggregate current
market value (determined pursuant to Section 11(d)(i) hereof) or, if none of
such Persons has Registered Common Shares outstanding, whichever of such
Persons is the entity having the greatest net assets.
(c) Notwithstanding anything herein to the contrary, if the Principal
Party as determined pursuant to paragraph (b) above is not a corporation, proper
provision shall be made so that such Principal Party shall create or otherwise
make available for purposes of the exercise of the Rights in accordance with the
terms of this Agreement, a type or types of securities having a fair market
value (as determined by a nationally recognized investment banking firm selected
by the Board of Directors of the Company) equal to at least the value of the
Common Shares which each holder of a Right would have been entitled to receive
if such Principal Party had been a corporation.
(d) The Company shall not consummate any such consolidation, merger,
sale or transfer unless (1) at the time of and after such consummation the
Principal Party shall have a sufficient number of authorized Common Shares which
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and (2) prior to such consummation
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger or sale or transfer of assets mentioned in paragraph
(a) of this Section 13, the Principal Party will
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to
(A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Final Expiration Date,
and similarly comply with applicable state securities or "blue sky"
laws; and
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
(e) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in clauses (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired
<PAGE> 26
23
Common Shares pursuant to a tender offer or exchange offer for all outstanding
Common Shares which complies with the provisions of Section 11(a)(ii)(C) hereof
(or a wholly owned Subsidiary of any such Person or Persons), (ii) the price per
Common Share paid in such transaction is not less than the price per Common
Share paid to all holders of Common Shares whose shares were purchased pursuant
to such tender offer or exchange offer, (iii) the form of consideration being
offered to the remaining holders of Common Shares pursuant to such transaction
is the same as the form of consideration paid pursuant to such tender offer or
exchange offer and (iv) such transaction is consummated within 180 days after
the consummation of such tender offer or exchange offer (unless prior to the
expiration of such 180 day period, a majority of the Continuing Directors vote
to extend such period.). Upon consummation of any such transaction contemplated
by this Section 13(e), all Rights hereunder shall expire.
Section 14. Additional Covenants.
(a) Except as expressly provided herein, no adjustment to the Purchase
Price, the number of Preferred Shares or other securities for which a Right is
exercisable or the number of Rights outstanding (except as permitted by Section
24 or Section 25 hereof) or any similar adjustment shall be made or be effective
if such adjustment would have the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such adjustment, including,
without limitation, the benefits under Section 11(a)(ii) and Section 13 hereof,
unless the terms of this Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, following the earlier of
the Share Acquisition Date and the Distribution Date, except as permitted by
Sections 24, 25 and 28 hereof, it shall not, directly or indirectly, take any
action the purpose or effect of which is to eliminate or otherwise diminish in
any material respect the benefits intended to be afforded by the Rights.
(c) The Company covenants and agrees that it shall not consummate any
of the transactions described in clauses (x), (y) and (z) of Section 13(a)
hereof if (i) at the time of or after such consummation there are or would be
any charter or by-law provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect (whether of the Company or any
other Person) or any other action taken (whether by the Company or any other
Person) the purpose or effect of which is to eliminate or otherwise diminish in
any material respect the benefits intended to be afforded by the Rights or (ii)
the stockholders of the Principal Party shall have received, either prior to,
simultaneously with, or after the consummation of such transaction, a
distribution of Rights previously owned by the Principal Party or any of its
Affiliates and Associates.
(d) The Company further covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof unless prior thereto the Company and the Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with paragraph (c) above and further providing that the
Principal Party covenants and agrees that it shall not, directly or indirectly,
take any action the purpose or effect of which is to eliminate or otherwise
diminish in
<PAGE> 27
24
any material respect the benefits intended to be afforded by the Rights. The
provisions of this paragraph (d) and paragraph (c) above shall similarly apply
to successive mergers, consolidations, sales or other transfers.
Section 15. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 15(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. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are 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 the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth of a Preferred Share, the
Company may pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a Preferred Share.
For purposes of this Section 15(b), the current market value of one
one-hundredth of a Preferred Share shall be one one-hundredth of the closing
price of a Preferred Share (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
<PAGE> 28
25
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 15.
Section 16. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
Section 17. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company 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
<PAGE> 29
26
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 18. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. Concerning the Rights Agent. (a) The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
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 of
defending against any claim of liability in the premises. In no case will the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damages of any kind whatsoever (including, but not limited to, lost profits),
even if the Rights Agent has been advised of the possibility of such damages.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, instruction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper person or persons.
Section 20. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged with or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any 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
<PAGE> 30
27
under the provisions of Section 22 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at such
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.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at such time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman or Vice Chairman
of the Board, the President, a Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
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 or be required to verify the same (except as to its
countersignature thereof), but all such statements and recitals are and shall be
deemed to have been made by the Company only.
<PAGE> 31
28
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares or Preferred Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Common Shares or Preferred Shares will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman or Vice Chairman of the Board, the President, a Vice
President, the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents for any loss to the Company resulting from any such act, default, neglect
or misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to any item therein, the
Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
<PAGE> 32
29
Section 22. 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 Company and, if instructed by the
Company, to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and, at the expense of the Company, to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Shares and Preferred Shares by registered
or certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of 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 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 $100 million. 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. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and the Preferred 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 22, 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 23. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the earliest of the Redemption Date, the Exchange Date and the Final
Expiration Date, the Company (a) shall, with respect to Common Shares so issued
or sold pursuant to the exercise of employee stock options or under any
employee plan or arrangement outstanding, granted or awarded as of the
<PAGE> 33
30
Distribution Date, or upon the exercise, conversion or exchange of securities
issued by the Company prior to such date, and (b) may, in any other case, if
deemed necessary or appropriate by a majority of the Continuing Directors,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such
Right Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificates would be issued and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 24. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to the close of business on the earlier of (i)
the tenth day following the Share Acquisition Date or (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend, reclassification or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, that if the Board of Directors
authorizes redemption of the Rights as of or after the time an Acquiring Person
becomes such, there must be Continuing Directors then in office and such
redemption must be approved by a majority of such Continuing Directors based on
their determination that such redemption is in the best interest of the Company
and all its stockholders (other than the Acquiring Person and its Associates
and Affiliates). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Notwithstanding anything in this Agreement to
the contrary, the Rights shall not be exercisable after the occurrence of any
event described in Section 11(a)(ii) hereof until such time as the Company's
right of redemption has expired. Without limiting the generality of the
foregoing, the Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the "current market price," as defined in Section
11(d)(i) hereof, of the Common Shares at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that the failure to
give or any defect in such notice shall not affect the validity of such
redemption. Within 10 days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their last address as
it appears 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.
<PAGE> 34
31
(c) Neither the Company nor any of its Subsidiaries may redeem,
acquire or purchase for value any Rights at any time in any manner except (i)
pursuant to a redemption in accordance with this Section 24 or an exchange
pursuant to Section 25 hereof or (ii) in connection with the purchase or other
acquisition of Common Shares prior to the Distribution Date.
Section 25. Exchange. (a) Subject to paragraph (c) of this Section 25,
the Board of Directors of the Company may, at its option, exchange all but not
less than all of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend,
reclassification or similar transaction occurring after the date hereof (such
exchange being hereinafter referred to as the "Exchange" and such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Subject to the
following sentence, the Board of Directors may authorize the Exchange (i) at any
time after the occurrence of the event described in Section 11(a)(ii)(C) hereof
or (ii) at any time prior to the occurrence of the event described in Section
11(a)(ii)(C) hereof (such authorization prior to the occurrence of the event
described in Section 11(a)(ii)(C) hereof is referred to herein as
"Pre-Approval"); provided, however, that in the case of Pre-Approval, the
Exchange will not become effective unless and until such event occurs and (y)
the Board of Directors may, at any time prior to the occurrence of such event,
rescind such authorization. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect the Exchange (including an Exchange
which has been authorized by Pre-Approval) at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, or any entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of Common Shares aggregating 50% or more of the Common Shares
then outstanding.
(b) Immediately upon (i) the action of the Board of Directors of the
Company authorizing the Exchange pursuant to clause (i) of the second sentence
of Section 25(a) or (ii) in the case of Pre-Approval, the occurrence of the
event described in Section 11(a)(ii)(C) hereof, and without any further action
and without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of a holder of Rights included in the Exchange shall be to
receive that number of Common Shares equal to the number of Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of the Exchange (including, if applicable, Pre-Approval thereof);
provided, however, that the failure to give or any defect in such notice shall
not affect the validity of the Exchange. Within 10 days after the effectiveness
of the Exchange pursuant to the first sentence of this Section 25(b), the
Company shall mail a notice of Exchange to the Rights Agent and the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given whether or not the holder receives the notice. Each such
notice of Exchange will state the method by which the Exchange will be effected.
<PAGE> 35
32
(c) In the event that the number of Common Shares which are authorized
by the Company's Certificate of Incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights are not
sufficient to permit the Exchange, the Exchange Ratio shall equal one Common
Stock Equivalent (in lieu of one Common Share) per Right. Alternatively, the
Board of Directors of the Company may, at its option, determine that the Company
shall (i) issue Common Shares in the Exchange to the extent Common Shares are
available and (ii) utilize Common Stock Equivalents in the Exchange as provided
above to the extent Common Shares are not available, in which case such Common
Shares shall be allocated on such basis as the Board of Directors determines
pursuant to Section 30 hereof.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional shares, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional shares would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of one Common Share. For the purposes of this paragraph
(d), the current market value of one Common Share shall be the closing price of
a Common Share (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the Exchange Date.
Section 26. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Shares or to make any
other distribution to the holders of Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of Preferred Shares
rights, options or warrants to subscribe for or to purchase any additional
Preferred Shares at less than the current market price of the Preferred Shares,
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, 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 or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 27
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights, options or
warrants, 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 the Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Preferred Shares, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) of this Agreement
shall occur, then (i) the Company shall as soon as practicable thereafter give
to each holder of a
<PAGE> 36
33
Right Certificate, in accordance with Section 27 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof and (ii) all
references in the preceding paragraph to Preferred Shares shall thereafter be
deemed to refer to Common Shares or, if appropriate, to Common Stock
Equivalents.
Section 27. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Knight-Ridder, Inc.
One Herald Plaza
Miami, Florida 33101
Attention: Secretary
Subject to the provisions of Section 22 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660
Attention: Corporate Secretary
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 28. Supplements and Amendments. Prior to the earlier of the Share
Acquisition Date and the Distribution Date, and subject to the last sentence of
this Section 28, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement, whether or not
adverse to the holders of Rights, without any approval of the holders of
Rights. From and after the earlier of the Share Acquisition Date and the
Distribution Date, and subject to the last sentence of this Section 28, the
Company and the Rights Agent may from time to time supplement or amend this
Agreement without any approval of the holders of Rights 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 extend the period during which the Rights may be redeemed; provided,
however, that such period may not be extended if at the time of such supplement
or amendment the Rights are not then redeemable, or (iv) to change or
supplement the provisions herein to effectuate the purposes of this Agreement,
or to make any other provisions with respect to the Rights, which, in either
such case, shall not materially adversely affect the interests of the holders
of Rights (other than Acquiring Persons and Affiliates or Associates thereof).
Upon the delivery of a certificate
<PAGE> 37
34
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 28, the
Rights Agent shall execute such supplement or amendment; provided, however, that
the Rights Agent may, but shall not be obligated to, enter into any such
supplement or amendment which affects the Rights Agent's own rights, duties or
immunities under this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, (i) no supplement or amendment shall be made which
decreases the Redemption Price and (ii) if the Board of Directors authorizes an
amendment of this Agreement (other than in the manner specified in clauses (i)
and (ii) of the preceding sentence) as of or after the time an Acquiring Person
becomes such, there must be Continuing Directors then in office and such
amendment must be approved by a majority of such Continuing Directors.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Determinations and Actions by the Board of Directors, etc.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
to redeem the Rights pursuant to Section 24 hereof, to exchange or not to
exchange the Rights pursuant to Section 25 hereof or to supplement or amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purpose of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 31. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 32. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 33. Governing Law. This Agreement (other than with respect to the
rights and obligations of the Rights Agent which shall be governed by the laws
of the State of
<PAGE> 38
35
New Jersey) and each Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Florida and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 34. 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 35. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the date and year first above written.
Attest: KNIGHT-RIDDER, INC.
/S/ Cristina L. Mendoza By:/S/ Douglas Harris
- -------------------------------- ---------------------
Name: Cristina L. Mendoza Name: Douglas Harris
Title: Vice President & General Title: Secretary
Counsel
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
/S/ Lorne H. Price By:/S/ Michael A. Nespoli
- -------------------------------- -------------------------
Name: Lorne H. Price Name: Michael A. Nespoli
Title: Group Vice President Title: Vice President
<PAGE> 39
EXHIBIT A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
KNIGHT-RIDDER, INC.
ESTABLISHING
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
KNIGHT-RIDDER, INC., a corporation organized and existing under the
Florida Business Corporation Act (the "Corporation"),
DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, and pursuant to the provisions of
Sections 607.0601 and 607.0602 of the Florida Business Corporation Act, said
Board of Directors, at a meeting duly called and held on June 21, 1996, duly
adopted a resolution amending the Articles of Incorporation to provide for the
issuance of one series of the Corporation's Preferred Stock, $1.00 par value,
to be designated "Series A Junior Participating Preferred Stock," and fixing
the designation, powers, preferences and relative, participating, optional or
other rights, and the qualifications, limitations or restrictions thereof,
which resolution is as follows:
RESOLVED, that pursuant and subject to the provisions of Article THIRD of
the Articles of Incorporation of the Corporation, and in addition to the
rights, powers and preferences granted therein in respect of all series of
Preferred Stock, the Articles of Incorporation are hereby amended to establish
a series of Preferred Stock to which the following provisions shall be
applicable:
Series A Junior Participating Preferred Stock
1. Designation. The series shall be designated as "Series A Junior
Participating Preferred Stock" (hereinafter "this Series").
2. Number. The number of shares of this Series authorized to be
issued is 1,500,000. Such number may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of this Series to a number less than that of the shares then
outstanding.
3. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to this
Series with respect to dividends, the
<PAGE> 40
2
holders of shares of this Series shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available therefor,
quarterly dividends payable in cash on the 15th day of January, April, July and
October 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 this Series, in
an amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set forth, 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 shares of Common Stock or a
subdivision of the outstanding shares of Common Stock by reclassification or
otherwise), declared on the Common Stock, par value 2-1/12 (cent) per share, of
the Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of this
Series. In the event the Corporation shall at any time after July 10, 1996
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock (other than the stock split effected in the form of a stock dividend on
the Common Stock approved by the Board of Directors on June 21, 1996 (the "1996
Stock Split")), then in each such case the amount to which holders of shares of
this Series were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on this
Series as provided in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided, however, that in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on this Series
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of this Series from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares of this Series, 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 this Series 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 this Series in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may
<PAGE> 41
3
fix a record date for the determination of holders of shares of this Series
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.
4. Liquidation, Dissolution or Winding Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (a "Liquidation"), no distribution shall be made (x) to the holders
of Common Stock or any other shares of stock ranking junior (either as to
dividends or upon Liquidation) to this Series unless, prior thereto, the holders
of shares of this Series shall have received an amount per share equal to the
greater of (i) $100, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate amount to be distributed per share to holders of Common Stock, or
(y) to the holders of stock ranking on a parity (either as to dividends or upon
Liquidation) with this Series, except distributions made ratably on this Series
and all other such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such Liquidation. In the event the
Corporation shall at any time after July 10, 1996 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock (other than the 1996 Stock
Split), then in each such case the aggregate amount to which holders of shares
of this Series were entitled immediately prior to such event under clause (ii)
of clause (x) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
For purposes of this Certificate, the voluntary sale, lease, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation to, or a
consolidation or merger of the Corporation with, one or more corporations shall
not be deemed to be a Liquidation.
5. Redemption. The shares of this Series shall not be redeemable.
6. Voting Rights. The holders of shares of this Series shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of this Series shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the Common stockholders of the Corporation. In
the event the Corporation shall at any time after July 10, 1996 declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock (other than the
1996 Stock Split), then in each such case the number of votes per share to which
holders of shares of this Series were entitled immediately prior to such event
shall be adjusted by multiplying such number by a
<PAGE> 42
4
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein, in the Articles of
Incorporation of the Corporation or by law, the holders of shares of this Series
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of Common stockholders of the Corporation.
(C) (i) If at any time dividends on any shares of this
Series shall be in arrears in an amount equal to six full quarterly
dividends thereon, the holders of this Series and all other series
of Preferred Stock (in each case to the extent then entitled
pursuant to the terms of such series), voting together as one class,
shall have the exclusive and special right to elect two directors of
the Corporation, and the number of directors constituting the Board
of Directors of the Corporation shall be increased by two (if not
previously increased in connection with the right of other series of
Preferred Stock entitled to vote together with this Series to elect
directors of the Corporation) for such purpose.
(ii) Whenever any such right of the holders of this
Series shall have vested, such right may be exercised initially
either at a special meeting of the holders of this Series and all
other series so entitled to vote, if any, called as hereinafter
provided, or at any annual meeting of stockholders, and thereafter
at annual meetings of stockholders. The right of the holders of
this Series voting separately as a class with such other series to
elect members of the Board of Directors of the Corporation as
aforesaid shall continue until such time as all dividends accrued on
all shares of this Series shall have been paid in full, or declared
and set apart for payment, at which time the special right of the
holders of this Series so to vote separately as a class with such
other series for the election of directors shall terminate, subject
to revesting in the event of each and every subsequent occurrence of
an arrearage specified in subparagraph (C)(i) above.
(iii) At any time when such special voting power shall
have vested in the holders of this Series as provided in the
preceding subparagraph (C)(i), the proper officer of the Corporation
shall, upon the written request of the holders of record of at least
10% of the then outstanding voting power of shares of this Series
and all other series entitled to vote in the election of such
directors addressed to the Secretary of the Corporation, call a
special meeting of the holders of this Series for the purpose of
electing directors pursuant to this paragraph (C). Such meeting
shall be held at the earliest practicable date. If such meeting
shall not be called by the proper officer of the Corporation within
twenty days after personal service of such written request upon the
Secretary of the Corporation, or within twenty days after mailing
the same within the United States of America, by registered mail
addressed to the Secretary of the Corporation at its principal
office, then the holders of record of at least 10% of the then
outstanding voting
<PAGE> 43
5
power of shares of this Series and all other series entitled to vote
in the election of such directors may designate in writing one of
their number to call such meeting at the expense of the Corporation,
and such meeting may be called by such person so designated by
giving the notice required for annual meetings of stockholders. Any
holder of this Series so designated shall have access to the stock
books of the Corporation for the purpose of causing meetings of
stockholders to be called pursuant to these provisions.
Notwithstanding the provisions of this subparagraph (C)(iii), no
such special meeting shall be called during the period within ninety
days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) At any meeting held for the purpose of electing
directors at which the holders of this Series and any other series
of Preferred Stock shall have the special right to elect directors
as provided in this paragraph (C), the presence, in person or by
proxy, of the holders of 50% of the voting power of the then
outstanding aggregate number of shares of this Series and such other
series shall be required to constitute a quorum for the election of
any director by the holders of such series. At any such meeting or
adjournment thereof, (a) the absence of a quorum shall not prevent
the election of directors other than those to be elected by all such
series of Preferred Stock voting separately as a class, and the
absence of a quorum for the election of such other directors shall
not prevent the election of the directors to be elected by this
Series and any other series of Preferred Stock that may be voting
with it separately as a class, and (b) in the absence of either or
both such quorums, the holders of a majority of the voting power of
the shares present in person or by proxy of the stock or stocks
which lack a quorum shall have power to adjourn the meeting for the
election of directors who they are entitled to elect from time to
time without notice other than announcement at the meeting until a
quorum shall be present.
(v) During any period when the holders of this Series have the
right to vote separately as a class for directors as provided in
paragraph (C) hereof, (1) the directors so elected by the holders
of the one or more series of Preferred Stock entitled to vote for
such directors shall continue in office until the next succeeding
annual meeting or until their successors, if any, are elected by
such holders and qualify or, until termination of the right of the
holders of the one or more series of Preferred Stock entitled to
vote for such directors to vote separately as a class for directors
as provided in paragraph (C) hereof and (2) vacancies in the Board
of Directors shall be filled only by vote of a majority (even if
that be only a single director) of the remaining directors
theretofore elected by the holders of the one or more series of
Preferred Stock which elected the directors whose office shall have
become vacant or if there be no such remaining director, directors
to fill such vacancies shall be elected by the holders of the one
or more series of Preferred Stock entitled to vote for such
directors at a special meeting called pursuant to the provisions of
paragraph (C) hereof. Immediately upon any termination of the
right of the holders of this Series and any other series of
Preferred Stock to vote
<PAGE> 44
6
separately as a class for directors as provided in paragraph (C)
hereof, the term of office of the directors then in office so
elected by the holders of this Series and any such other series
shall terminate. Whenever the term of office of the directors so
elected by the holders of this Series and any such other series
shall terminate and the special voting power vested in the holders
of this Series and any such other series as provided in paragraph
(C) hereof shall have terminated, the number of directors shall be
such number as may be provided for in the by-laws irrespective of
any increase made pursuant to the provisions of paragraph (C).
(D) So long as any shares of this Series are outstanding, the
Corporation shall not, without the consent of the holders of two-thirds of the
outstanding shares of this Series, given by such holders as one class, and given
by vote in person or by proxy at a meeting called for that purpose or given in
writing, amend the Articles of Incorporation or adopt or amend any resolutions
of the Board of Directors to alter or change the powers, preferences or special
rights of this Series so as to affect them adversely.
(E) Except as provided herein, in the Articles of Incorporation
of the Corporation or by law, holders of shares of this Series shall have no
special voting rights and their consent shall not be required for taking any
corporate action.
7. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on this Series as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of this Series outstanding shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any Common Stock or any other shares of stock ranking
junior (either as to dividends or upon Liquidation) to this Series;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon Liquidation) with this Series, except dividends
paid ratably on this Series and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon Liquidation) with this Series; provided, however,
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends
or upon Liquidation) to this Series; or
<PAGE> 45
7
(iv) purchase or otherwise acquire for consideration any
shares of this Series, or any shares of stock ranking on a parity
(either as to dividends or upon Liquidation) with this Series,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 7, purchase or otherwise acquire such shares at such time and in
such manner.
8. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
this Series shall at the same time be similarly exchanged for or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
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 share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after July 10, 1996 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock (other than the 1996 Stock
Split), then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of this Series shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
9. Ranking. This Series shall rank junior to all other series
of the Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets upon Liquidation, unless the terms of any such series
shall provide otherwise.
10. Fractional Shares. This Series may be issued in 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 this
Series.
11. Other Rights. The holders of shares of this Series shall
not have any other preferences or special rights.
<PAGE> 46
8
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Cristina L. Mendoza, its VP and General Counsel, and attested by
Douglas C. Harris, its Secretary, this 9th day of July, 1996.
KNIGHT-RIDDER, INC.
By /s/ Cristina L. Mendoza
---------------------------
Name: Cristina L. Mendoza
Title: Vice President & General Counsel
Attest:
/s/ Douglas C. Harris
- -----------------------------
Name: Douglas C. Harris
Title: Secretary
<PAGE> 47
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER JULY 10, 2006 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT
$.01 PER RIGHT, AND TO EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY (1) AN ACQUIRING PERSON OR ANY ASSOCIATE OR AFFILIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), (2) A TRANSFEREE
OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR AFFILIATE) WHO BECOMES A
TRANSFEREE AFTER THE ACQUIRING PERSON BECOMES SUCH OR (3) UNDER CERTAIN
CIRCUMSTANCES, A TRANSFEREE OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR
AFFILIATE) WHO BECOMES A TRANSFEREE BEFORE OR CONCURRENTLY WITH THE ACQUIRING
PERSON BECOMING SUCH, SHALL BECOME NULL AND VOID.
<PAGE> 48
2
Right Certificate
KNIGHT-RIDDER, 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 June 21, 1996
(the "Rights Agreement"), between Knight-Ridder, Inc., a Florida corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (New
York City time) on July 10, 2006 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, non-assessable share of Series A Junior
Participating Preferred Stock (the "Preferred Shares") of the Company, at a
purchase price of $150 per one one-hundredth of a share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of July 10, 1996, based on the
Preferred Shares as constituted at such date.
From and after the occurrence of any event described in Section 11(a)(ii)
of the Rights Agreement, if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate
thereof (as such terms are defined in the Rights Agreement), (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) under certain
circumstances, a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee before or concurrently with the Acquiring
Person becoming such, such Rights shall become null and void and no holder
hereof shall have any rights with respect to such Rights.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Preferred Shares or other securities, 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.
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 Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company and are also available upon written request to the Company.
<PAGE> 49
3
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.01 per Right or (ii) may be exchanged by the Company at
its option for Common Shares (or, in certain circumstances, Common Stock
Equivalents (as such term is defined in the Rights Agreement)).
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one-hundredth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate 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 Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
<PAGE> 50
4
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of _______________, ____
ATTEST: KNIGHT-RIDDER, INC.
_________________________________ By:_________________________
Secretary Title:
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:_____________________________
Authorized Signature
<PAGE> 51
5
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________________________
hereby sells, assigns and transfers unto ______________________________________
______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated as of _______________, ____
___________________________________________
Signature
Signature Guaranteed:
<PAGE> 52
6
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
Rights evidenced by this Right Certificate [ ] are [ ] are not being sold,
assigned and transferred to a Person who is an Acquiring Person, an Affiliate
or Associate of an Acquiring Person or a nominee of any such Acquiring Person,
Associate or Affiliate;
(3) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated as of _______________, ____
_________________________________________
Signature
<PAGE> 53
7
NOTICE
The signatures to the foregoing Assignment and Certificate 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.
<PAGE> 54
8
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate.)
To KNIGHT-RIDDER, INC.:
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the 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 of such Rights shall
be registered in the name and delivered to:
Please insert social security
or other identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
______________________________________________________________________________
Dated as of _______________, ____
_________________________________________
Signature
Signature Guaranteed:
<PAGE> 55
9
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 or Associate of an Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated as of _______________, ____
____________________________________
Signature
<PAGE> 56
10
NOTICE
The signatures to the foregoing Election to Purchase and Certificate 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.
<PAGE> 57
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On June 21, 1996, the Board of Directors of Knight-Ridder, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of Common Stock, par value 2-1/12 (cent) per share, of the Company (the
"Common Shares") to stockholders of record on July 10, 1996 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
a unit ("Unit") consisting of one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company (the
"Preferred Shares"), at a price of $150 per Unit (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be attached to all Common Share certificates
representing Common Shares then outstanding, and no separate Right certificates
will be distributed. Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
has acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Shares (an "Acquiring Person"), or (ii) 10
business days (or such later day as may be determined by action of the Board of
Directors prior to such time as any person or group becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer if, upon
consummation thereof, any person or group would be an Acquiring Person (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such certificate together with a copy of this Summary of
Rights. The date of announcement of the existence of an Acquiring Person
referred to in clause (i) above is hereinafter referred to as the "Share
Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares (including Common Shares issued
pursuant to the stock split effected in the form of a stock dividend on the
Common Shares approved by the Board of Directors on June 21, 1996 (the "1996
Stock Split")) will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, with or without a copy of this
Summary of Rights attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares on the Distribution Date and, thereafter, such
separate Right Certificates alone will evidence the Rights.
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The Rights are not exercisable until the Distribution Date and will expire
at the close of business on July 10, 2006, unless earlier redeemed or exchanged
by the Company as described below.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Shares are not changed or exchanged,
(ii) an Acquiring Person engages in one or more "self-dealing transactions" as
set forth in Section 11(a)(ii)(A) of the Rights Agreement, (iii) during such
time as there is an Acquiring Person, one of the events set forth in Section
11(a)(ii)(B) of the Rights Agreement occurs (e.g., a reverse stock split), or
(iv) any person or group of affiliated or associated persons becomes an
Acquiring Person (other than in a tender offer or exchange offer for all
outstanding Common Shares which the Board of Directors of the Company
determines is fair and adequate and otherwise in the best interests of the
Company and its stockholders), the Rights Agreement provides that proper
provision shall be made so that each holder of a Right, except as provided
below, shall thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Common Stock Equivalents (as such term is
defined in the Rights Agreement)) having a value equal to two (2) times the
exercise price of the Right. However, the Rights could not be exercised until
they are no longer redeemable as described below. Upon the occurrence of any
event described in the first sentence of this paragraph, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate (as
such terms are defined in the Rights Agreement) of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of the Rights Agreement,
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 the Rights Agreement or otherwise.
Effective upon, or at any time after, the occurrence of the event
described in clause (iv) of the first sentence of the preceding paragraph (and
prior to the acquisition by any person or group of affiliated or associated
persons of 50% or more of the outstanding Common Shares), the Board of
Directors of the Company may exchange the Rights (except Rights which
previously have been voided as described above), in whole, but not in part, at
an exchange ratio of one Common Share (or, in certain circumstances, one Common
Stock Equivalent) per Right.
In the event that, following the earlier of the Distribution Date and the
Share Acquisition Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger or other business combination transaction
with another person in which the Company is the surviving corporation, but in
which its Common Shares are changed or exchanged, or (iii) more
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than 50% of the Company's assets or earning power is sold or transferred, the
Rights Agreement provides that proper provision shall be made so that each
holder of a Right (except Rights which previously have been voided as described
above) shall thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, common stock of the acquiring
company having a value equal to two (2) times the exercise price of the Right.
However, a merger or other business combination will not be subject to this
provision if it follows, and is effected on the same terms as, a tender offer or
exchange offer approved by the Board as described above.
The Purchase Price payable, and the number of Units of Preferred Shares or
other securities issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights, options or warrants to subscribe for Preferred Shares or
convertible securities at less than the current market price of the Preferred
Shares, or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness, stock (other than a dividend payable in Preferred
Shares), assets or cash (excluding regular quarterly cash dividends) or of
subscription rights, options or warrants (other than those referred to above).
Such terms are also subject to adjustment in the event of a stock split of the
Common Shares or a stock dividend on the Common Shares payable in Common Shares
or subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date (other than the 1996 Stock
Split).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Units will be issued and, in lieu thereof,
an adjustment in cash will be made as provided in the Rights Agreement.
At any time prior to the close of business on the tenth day following the
Share Acquisition Date, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right, subject to
adjustment (the "Redemption Price"). Immediately upon the action of the Board
of Directors of the Company ordering the redemption of the Rights (or at such
later time as the Board of Directors may establish for the effectiveness of
such redemption), the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The terms of the Rights may be amended by the Company and the Rights
Agent, provided that following the Distribution Date the amendment does not
materially adversely affect the interests of holders of Rights (other than an
Acquiring Person) and provided that no amendment shall be made which decreases
the Redemption Price.
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A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement will be available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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