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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
The Elder-Beerman Stores Corp.
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(Exact name of registrant as specified in its charter)
Ohio 31-0271980
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(State of incorporation or organization) (I.R.S. employer identification no.)
3155 El-Bee Road, Dayton, Ohio 45439
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(Address of principal executive offices)
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<S> <C>
If this form relates to the registration of a class of If this form relates to the registration of a class of
securities pursuant to Section 12(b) of the Exchange securities pursuant to Section 12(g) of the Exchange
Act and is effective pursuant to General Instruction Act and is effective pursuant to General Instruction
A.(c), please check the following box. [ ] A.(d), please check the following box. [X]
</TABLE>
Securities to be registered pursuant to Section 12(b) of the Act: N/A
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<TABLE>
<CAPTION>
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> <C>
None Not Applicable
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</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Preferred Shares
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(Title of class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On November 11, 1998, the Directors of The Elder-Beerman Stores
Corp. (the "Company") approved Amendment No. 1 (the "Amendment"), dated as of
November 11, 1998, to the Rights Agreement, dated as of December 30, 1997 (the
"Rights Agreement"), by and between the Company and Norwest Bank Minnesota, N.A.
(the "Rights Agent"). The Amendment provides that the Final Expiration Date (as
defined in the Rights Agreement) of the Rights Agreement shall be January 9,
2008, which is the tenth anniversary of the Record Date (as defined in the
Rights Agreement).
The foregoing description of the Amendment is qualified in its
entirety by reference to the full text of the Amendment, which is attached as an
exhibit hereto and incorporated herein by reference. Copies of the Rights
Agreement, and the related Summary of Rights, which is attached as Exhibit C to
the Rights Agreement, are available free of charge from the Company.
ITEM 2. EXHIBITS.
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Number Description
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<S> <C>
4.1 Rights Agreement, dated as of December 30, 1997, by and
between the Company and Norwest Bank Minnesota, N.A.
4.2 Amendment No. 1, dated as of November 11, 1998, to the Rights
Agreement, dated as of December 30, 1997, by and between the
Company and Norwest Bank Minnesota, N.A.
99.1 Press Release, dated November 13, 1998.
</TABLE>
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SIGNATURE
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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.
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<S> <C>
THE ELDER-BEERMAN STORES CORP.
By: /s/ Scott J. Davido
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Name: Scott J. Davido
Title: Senior Vice President, General Counsel and
Secretary
</TABLE>
Date: November 17, 1998
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EXHIBIT INDEX
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<CAPTION>
Exhibit Number Description
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<S> <C>
4.1 Rights Agreement, dated as of December 30, 1997, by and
between the Company and Norwest Bank Minnesota, N.A.
4.2 Amendment No. 1, dated as of November 11, 1998, to the
Rights Agreement, dated as of December 30, 1997, by and
between the Company and Norwest Bank Minnesota, N.A.
99.1 Press Release, dated November 13, 1998.
</TABLE>
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Exhibit 4.1
================================================================================
RIGHTS AGREEMENT
Dated as of December 30, 1997
By and Between
THE ELDER-BEERMAN STORES CORP.
and
NORWEST BANK MINNESOTA, N.A.,
as Rights Agent
================================================================================
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TABLE OF CONTENTS
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Page
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1. Certain Definitions ........................................................... 1
2. Appointment of Rights Agent ................................................... 5
3. Issue of Right Certificates ................................................... 5
4. Form of Right Certificates .................................................... 6
5. Countersignature and Registration ............................................. 6
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates .................................. 7
7. Exercise of Rights; Purchase Price; Expiration Date of Rights ................. 7
8. Cancellation and Destruction of Right Certificates ............................ 9
9. Company Covenants Concerning Securities and Rights ............................ 9
10. Record Date ................................................................... 10
11. Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights
............................................................................... 11
12. Certificate of Adjusted Purchase Price or Number of Securities ................ 19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power .......... 19
14. Fractional Rights and Fractional Securities ................................... 21
15. Rights of Action .............................................................. 23
16. Agreement of Rights Holders ................................................... 23
17. Right Certificate Holder Not Deemed a Stockholder ............................. 24
18. Concerning the Rights Agent ................................................... 24
19. Merger or Consolidation or Change of Name of Rights Agent ..................... 24
</TABLE>
(i)
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<TABLE>
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Page
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20. Duties of Rights Agent ....................................................... 25
21. Change of Rights Agent ....................................................... 26
22. Issuance of New Right Certificates ........................................... 27
23. Redemption ................................................................... 28
24. Exchange ..................................................................... 29
25. Notice of Certain Events ..................................................... 29
26. Notices ...................................................................... 30
27. Supplements and Amendments ................................................... 31
28. Successors; Certain Covenants ................................................ 31
29. Benefits of This Agreement ................................................... 31
30. Governing Law ................................................................ 32
31. Severability ................................................................. 32
32. Descriptive Headings, Etc .................................................... 32
33. Determinations and Actions by the Board ...................................... 32
34. Counterparts ................................................................. 33
Exhibit A ......................................................................... A-1
Exhibit B ......................................................................... B-1
Exhibit C ......................................................................... C-1
</TABLE>
(ii)
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RIGHTS AGREEMENT
----------------
This RIGHTS AGREEMENT, dated as of December 30, 1997 (this
"Agreement"), is made and entered into by and between The Elder-Beerman Stores
Corp., an Ohio corporation (the "Company"), and Norwest Bank Minnesota, N.A.
(the "Rights Agent").
RECITALS
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WHEREAS, pursuant to the final confirmation order entered by the
Bankruptcy Court in Jointly Administered Case No. 95-33643 on December 30, 1997,
the Company has effected a distribution of one right (a "Right") for each Common
Share (as hereinafter defined) outstanding as of the Close of Business (as
hereinafter defined) on the day that is ten days after the date on which the
Company's Registration Statement on Form 10 is declared effective by the
Securities and Exchange Commission (the "Record Date"), each Right initially
representing the right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined), on the terms and subject to the conditions herein set
forth, and further authorized and directed the issuance of one Right (subject to
adjustment as provided herein) with respect to each Common Share issued or
delivered by the Company (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as
hereinafter defined) or as provided in Section 22.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "ACQUIRING PERSON" means any Person (other than the Company or any
Related Person) who or which, together with all Affiliates and Associates of
such Person, is the Beneficial Owner of 20% or more of the then-outstanding
Common Shares; PROVIDED, HOWEVER, that a Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the number of
Common Shares outstanding unless and until such time as (i) such Person or any
Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of
additional Common Shares representing 1% or more of the then-outstanding Common
Shares, other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Common Shares are
treated equally, or (ii) any other Person who is the Beneficial Owner of Common
Shares representing 1% or more of the then-outstanding Common Shares thereafter
becomes an Affiliate or Associate of such Person; PROVIDED FURTHER, HOWEVER,
that a Person (other than the Company or any Related Person) who or which,
together with all Affiliates and Associates of such Person, was, at the time of
the public announcement by the Company on December 30, 1997 of the distribution
of the Rights, the Beneficial Owner of 20% or more of the then-outstanding
Common Shares shall not be deemed to have become an Acquiring Person unless and
until such time as (A) such Person or any Affiliate or Associate of such Person
thereafter becomes the Beneficial Owner of additional Common Shares representing
1% or more of the then-outstanding Common Shares other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Common Shares are treated equally or (B) any other Person
who is the Beneficial Owner of Common
<PAGE> 5
Shares representing 1% or more of the then-outstanding Common Shares thereafter
becomes an Affiliate or Associate of such Person. Notwithstanding the foregoing,
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 (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
(b) "AFFILIATE" and "ASSOCIATE" will have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
(c) A Person will be deemed the "BENEFICIAL OWNER" of, and to
"BENEFICIALLY OWN," any securities:
(i) the beneficial ownership of 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 (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, warrants, options or other rights
(in each case, other than upon exercise or exchange of the Rights);
PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(iii) of which any other Person is the Beneficial Owner, if
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement, or understanding (whether or not in writing)
with such other Person (or any of such other Person's Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of
any securities of the Company;
PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial Owner of, or
to Beneficially Own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not
in writing) which (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 (B) if such beneficial ownership arises
solely as a result of such Person's status as a "clearing agency," as defined in
Section 3(a)(23) of the Exchange Act; PROVIDED FURTHER, HOWEVER, that nothing in
this paragraph (c) will cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own, any securities
acquired through such Person's
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participation in good faith in an underwriting syndicate until the expiration of
40 calendar days after the date of such acquisition, or such later date as the
Board of Directors of the Company may determine in any specific case.
(d) "BUSINESS DAY" means any day other than a Saturday, Sunday or a day
on which banking institutions in the State of Ohio (or such other state in which
the principal office of the Rights Agent is located) are authorized or obligated
by law or executive order to close.
(e) "CLOSE OF BUSINESS" on any given date means 5:00 P.M., Eastern
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it means 5:00 P.M., Eastern time, on the next succeeding Business Day.
(f) "COMMON SHARES" when used with reference to the Company means the
shares of common stock, without par value, of the Company; PROVIDED, HOWEVER,
that, if the Company is the continuing or surviving corporation in a transaction
described in Section 13(a)(ii), "Common Shares" when used with reference to the
Company means shares of the capital stock or units of the equity interests with
the greatest aggregate voting power of the Company. "Common Shares" when used
with reference to any corporation or other legal entity other than the Company,
including an Issuer, means shares of the capital stock or units of the equity
interests with the greatest aggregate voting power of such corporation or other
legal entity.
(g) "DISTRIBUTION DATE" means the earlier of: (i) the Close of Business
on the Share Acquisition Date, or (ii) the Close of Business on the tenth
Business Day (or, unless the Distribution Date shall have previously occurred,
such later date as may be specified by the Board of Directors of the Company)
after the date of the commencement of a tender or exchange offer by any Person
(other than the Company or any Related Person), if upon the consummation thereof
such Person would be the Beneficial Owner of 20% or more of the then-outstanding
Common Shares.
(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(i) "EXPIRATION DATE" means the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23 or exchanged as provided in Section 24, and (iii) the
time at which all exercisable Rights are exchanged as provided in Section 24.
(j) "FINAL EXPIRATION DATE" means (i) the first anniversary of the
Effective Date or (ii) such later date as the Board of Directors, by resolution
adopted prior to the first anniversary of the Effective Date, may establish, but
not later than the tenth anniversary of the Effective Date.
(k) "FLIP-IN EVENT" means any event described in clauses (A), (B) or
(C) of Section 11(a)(ii).
(l) "FLIP-OVER EVENT" means any event described in clauses (i), (ii) or
(iii) of Section 13(a).
(m) "ISSUER" has the meaning set forth in Section 13(b).
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(n) "NASDAQ" means The National Association of Securities Dealers'
Automated Quotation System, commonly referred to as "The NASDAQ Stock Market."
(o) "PERSON" means any individual, firm, corporation or other legal
entity, and includes any successor (by merger or otherwise) of such entity.
(p) "PREFERRED SHARES" means shares of Series A Preferred Stock,
without par value, of the Company having the rights and preferences set forth in
the form of Certificate of Designation of Series A Preferred Stock attached as
EXHIBIT A.
(q) "PURCHASE PRICE" means initially $60.00 per one one-hundredth of a
Preferred Share, subject to adjustment from time to time as provided in this
Agreement.
(r) "RECORD DATE" has the meaning set forth in the Recitals to this
Agreement.
(s) "REDEMPTION PRICE" means $.01 per Right, subject to adjustment by
resolution of the Board of Directors of the Company to reflect any stock split,
stock dividend or similar transaction occurring after the Record Date.
(t) "RELATED PERSON" means (i) any Subsidiary of the Company or (ii)
any employee benefit or stock ownership plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to the terms
of any such plan.
(u) "RIGHT" has the meaning set forth in the Recitals to this
Agreement.
(v) "RIGHT CERTIFICATES" means certificates evidencing the Rights, in
substantially the form attached as EXHIBIT B.
(w) "RIGHTS AGENT" means Norwest Bank Minnesota, N.A., unless and until
a successor Rights Agent has become such pursuant to the terms of this
Agreement, and thereafter, "Rights Agent" means such successor Rights Agent.
(x) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(y) "SHARE ACQUISITION DATE" means the first date of public
announcement by the Company (by press release, filing made with the Securities
and Exchange Commission or otherwise) that an Acquiring Person has become such.
(z) "SUBSIDIARY" when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; PROVIDED, HOWEVER, that for purposes of Section 13(b),
"Subsidiary" when used with reference to any Person means any corporation or
other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.
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(bb) "TRADING DAY" means any 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.
(cc) "TRIGGERING EVENT" means any Flip-in Event or Flip-over Event.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3, will also be, prior to the Distribution Date, the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the requirements of the New York Stock Exchange
governing transfer agents and registrars. The Company may from time to time act
as co-Rights Agent or appoint such co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights Agent pursuant to the
terms of this Agreement may be taken by any such co-Rights Agent. To the extent
that any co-Rights Agent takes any action pursuant to this Agreement, such
co-Rights Agent will be entitled to all of the rights and protections of, and
subject to all of the applicable duties and obligations imposed upon, the Rights
Agent pursuant to the terms of this Agreement.
3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution Date, (i)
the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates), (ii)
the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates. On or as promptly as practicable
after the Record Date, the Company will send 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
as of such date, a copy of a Summary of Rights to Purchase Preferred Stock in
substantially the form attached as EXHIBIT C.
(b) Rights will be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares will have stamped on, impressed on, printed on,
written on, or otherwise affixed to them the following legend or such similar
legend as the Company may deem appropriate and as is 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 or transaction reporting system on
which the Common Shares may from time to time be listed or quoted, or to conform
to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between The
Elder-Beerman Stores Corp. and Norwest Bank Minnesota, N.A., dated as
of December 30, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on
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file at the principal executive offices of The Elder-Beerman Stores
Corp. The Rights are not exercisable prior to the occurrence of certain
events specified in the Rights Agreement. Under certain circumstances,
as set forth in the Rights Agreement, such Rights may be redeemed, may
be exchanged, may expire, may be amended, or may be evidenced by
separate certificates and no longer be evidenced by this Certificate.
The Elder-Beerman Stores Corp. will mail to the holder of this
Certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge, promptly after receipt of a written request
therefor. Under certain circumstances as set forth in the Rights
Agreement, Rights that are or were beneficially owned by an Acquiring
Person or any Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement) may become null and void.
(c) As promptly as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send), by
first class, 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, a Right Certificate evidencing
one Right for each Common Share so held, subject to adjustment as provided
herein. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(d) In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares will be deemed canceled and retired so
that the Company will not be entitled to exercise any Rights associated with the
Common Shares so purchased or acquired.
4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the form of
election to purchase and the form of assignment to be printed on the reverse
thereof) will be substantially in the form attached as EXHIBIT B with such
changes and 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 or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 22, the Right
Certificates, whenever issued, on their face will entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as are set forth
therein at the Purchase Price set forth therein, but the Purchase Price, the
number and kind of securities issuable upon exercise of each Right and the
number of Rights outstanding will be subject to adjustment as provided herein.
5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates will
be executed on behalf of the Company by any one or more of its Chairman of the
Board, any Vice Chairman, its President or any Vice President, either manually
or by facsimile signature, and will have affixed thereto the Company's seal or a
facsimile thereof which will be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates will countersigned, either manually or by facsimile, by the Rights
Agent and will not be valid for any purpose unless so countersigned. In case any
officer of the Company who signed any of the Right Certificates ceases to be
such officer of the Company before countersignature by the Rights Agent
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<PAGE> 10
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, is a proper officer
of the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices 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 or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such books
will show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a) Subject to the
provisions of Sections 7(d) and 14, at any time after the Close of Business on
the Distribution Date and prior to the Expiration Date, any Right Certificate or
Right Certificates representing exercisable Rights may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share (or other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any such Right Certificate
or Right Certificates must make such request in a writing delivered to the
Rights Agent and must surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d) and 14, the
Company will prepare, execute and deliver to the Rights Agent, and the Rights
Agent will countersign and deliver, one or more new Right Certificates 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, if requested by the Company,
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 prepare, execute and
deliver a new Right Certificate of like tenor to the Rights Agent and the Rights
Agent will countersign and deliver such new Right Certificate to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS. (a)
The registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise
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provided herein) in whole or in part at any time after the Distribution Date and
prior to the Expiration 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 office or offices of the Rights Agent designated for such
purpose, together with payment in cash, in lawful money of the United States of
America by certified check or bank draft payable to the order of the Company,
equal to the sum of (i) the exercise price for the total number of securities as
to which such surrendered Rights are exercised and (ii) an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with the provisions of Section 9(d).
(b) Upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by payment as
described above, the Rights Agent will promptly (i) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all such
requests), or, if the Company elects to deposit Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (and the Company
hereby irrevocably authorizes and directs such depositary agent to comply with
all such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be), 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, (iii) when appropriate,
requisition from the Company or any transfer agent therefor (or make available,
if the Rights Agent is the transfer agent) certificates representing the number
of equivalent common shares to be issued in lieu of the issuance of Common
Shares in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates, 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, (v) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with the provisions of
Section 14 or in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii), (vi) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate, and (vii) when appropriate, deliver any due bill or other
instrument provided to the Rights Agent by the Company for delivery to the
registered holder of such Right Certificate as provided by Section 11(l).
(c) In case the registered holder of any Right Certificate exercises
less than all the Rights evidenced thereby, the Company will prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such new
Right Certificate to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 or exercise of a Right Certificate as
set forth in this Section 7 unless the registered holder of such Right
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the
reverse side of the Right Certificate surrendered for such
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transfer, split up, combination, exchange 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 may
reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Right Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Right Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.
9. COMPANY COVENANTS CONCERNING SECURITIES AND RIGHTS. The Company
covenants and agrees that:
(a) It will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held
in its treasury, a number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights in accordance
with Section 7.
(b) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other
securities) issuable upon the exercise of the Rights may be listed on a
national securities exchange, or quoted on NASDAQ, it will endeavor to
cause, from and after such time as the Rights become exercisable, all
securities reserved for issuance upon the exercise of Rights to be
listed on such exchange, or quoted on NASDAQ, upon official notice of
issuance upon such exercise.
(c) It will take all such action as may be necessary to ensure
that all Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) delivered upon
exercise of Rights, at the time of delivery of the certificates for
such securities, will be (subject to payment of the Purchase Price)
duly authorized, validly issued, fully paid and nonassessable
securities.
(d) It will pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates and of any certificates
representing securities issued upon the exercise of Rights; PROVIDED,
HOWEVER, that the Company will not be required to pay any transfer tax
or charge which may be payable in respect of any transfer or delivery
of Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts representing securities
issued upon the exercise of Rights in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or
depositary receipts representing securities issued upon the exercise of
any Rights until any such tax or charge has been paid (any such tax or
charge being payable by the holder of such
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<PAGE> 13
Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax
is due.
(e) It will use its best efforts (i) to file on an appropriate
form, as soon as practicable following the later of the Share
Acquisition Date and the Distribution Date, a registration statement
under the Securities Act with respect to the securities issuable upon
exercise of the Rights, (ii) to cause such registration statement to
become effective as soon as practicable after such filing, and (iii) to
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 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 after the date
set forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such
registration statement and to permit it to become effective. Upon any
such suspension, the Company will 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 determines that a
registration statement should be filed under the Securities Act or any
state securities laws following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been
declared effective and, upon any such suspension, the Company will
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. Notwithstanding
anything in this Agreement to the contrary, the Rights will not be
exercisable in any jurisdiction if the requisite registration or
qualification in such jurisdiction has not been effected or the
exercise of the Rights is not permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the
contrary, after the later of the Share Acquisition Date and the
Distribution Date it will not take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably
foreseeable that such action will eliminate or otherwise diminish the
benefits intended to be afforded by the Rights.
(g) In the event that the Company is obligated to issue other
securities of the Company and/or pay cash pursuant to Section 11, 13,
14 or 24 it will make all arrangements necessary so that such other
securities and/or cash are available for distribution by the Rights
Agent, if and when appropriate.
10. RECORD DATE. Each Person in whose name any certificate representing
Preferred Shares (or Common Shares and/or other securities, as the case may be)
is issued upon the exercise of Rights will for all purposes be deemed to have
become the holder of record of the Preferred Shares (or Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate will 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
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<PAGE> 14
the Company for the Preferred Shares (or Common Shares and/or other securities,
as the case may be) are closed, such Person will be deemed to have become the
record holder of such securities on, and such certificate will be dated, the
next succeeding Business Day on which the transfer books of the Company for the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate will not be entitled to any rights of a holder of any security
for which the Rights are or may become exercisable, including without limitation
the right to vote, to receive dividends or other distributions, or to exercise
any preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SECURITIES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities issuable
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company at any time after the Record Date
(A) declares a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivides the outstanding Preferred Shares, (C) combines
the outstanding Preferred Shares into a smaller number of Preferred
Shares, or (D) issues any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification and/or the
number and/or kind of shares of capital stock issuable on such date
upon exercise of a Right, will be proportionately adjusted so that the
holder of any Right exercised after such time is entitled to receive
upon payment of the Purchase Price then in effect the aggregate number
and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the
holder of such Right would have owned upon such exercise (and, in the
case of a reclassification, would have retained after giving effect to
such reclassification) and would have been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value, if
any, of the shares of capital stock issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both
this Section 11(a)(i) and Section 11(a)(ii) or Section 13, the
adjustment provided for in this Section 11(a)(i) will be in addition
to, and will be made prior to, any adjustment required pursuant to
Section 11(a)(ii) or Section 13.
(ii) Subject to the provisions of Section 24, if:
(A) any Person becomes an Acquiring Person; or
(B) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, directly or indirectly, (1) merges into the Company
or otherwise combines with the Company and the Company is the
continuing or surviving corporation of such merger or combination
(other
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<PAGE> 15
than in a transaction subject to Section 13), (2) merges or otherwise
combines with any Subsidiary of the Company, (3) in one or more
transactions (otherwise than in connection with the exercise, exchange
or conversion of securities exercisable or exchangeable for or
convertible into shares of any class of capital stock of the Company or
any of its Subsidiaries) transfers cash, securities or any other
property to the Company or any of its Subsidiaries in exchange (in
whole or in part) for shares of any class of capital stock of the
Company or any of its Subsidiaries or for securities exercisable or
exchangeable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries, or otherwise obtains
from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of
the Company or any of its Subsidiaries or securities exercisable or
exchangeable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries (otherwise than as part
of a pro rata distribution to all holders of shares of any class of
capital stock of the Company, or any of its Subsidiaries), (4) sells,
purchases, leases, exchanges, mortgages, pledges, transfers or
otherwise disposes (in one or more transactions) to, from, with or of,
as the case may be, the Company or any of its Subsidiaries (otherwise
than in a transaction subject to Section 13), any property, including
securities, on terms and conditions less favorable to the Company than
the Company would be able to obtain in an arm's-length transaction with
an unaffiliated third party, (5) receives any compensation from the
Company or any of its Subsidiaries other than compensation as a
director or a regular full-time employee, in either case at rates
consistent with the Company's (or its Subsidiaries') past practices, or
(6) receives 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
(C) during such time as there is an Acquiring Person, there is
any reclassification of securities of the Company (including any
reverse stock split), or any 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), other than a transaction subject to
Section 13, 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 of the Company or any of its
Subsidiaries, or of securities exercisable or exchangeable for or
convertible into equity securities of the Company or any of its
Subsidiaries, of which an Acquiring Person, or any Affiliate or
Associate of any Acquiring Person, is the Beneficial Owner;
then, and in each such case, proper provision will be made so that each
holder of a Right, except as provided below, will thereafter have the
right to receive, upon exercise thereof in accordance with the terms of
this Agreement at an exercise price per Right equal to the product of
the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the first occurrence of a Flip-in
Event (or, if any other Flip-in Event shall have previously occurred,
the product of the then-current Purchase Price multiplied by the number
of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the first occurrence of a
Flip-in Event), in lieu of Preferred Shares, such number of
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<PAGE> 16
Common Shares as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to
the date of the occurrence of a Flip-in Event (or, if any other Flip-in
Event shall have previously occurred, multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to the date of the
first occurrence of a Flip-in Event), and dividing that product by (y)
50% of the current per share market price of the Common Shares
(determined pursuant to Section 11(d)) on the date of the first
occurrence of such Flip-in Event. Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (A) any
Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (B) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the occurrence
of a Flip-in Event, or (C) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or
concurrently with the occurrence of a Flip-in Event pursuant to either
(1) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (2) a
transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has the purpose or
effect of avoiding the provisions of this Section 11(a)(ii), and
subsequent transferees of any of such Persons, will be void without any
further action and any holder of such Rights will thereafter have no
rights whatsoever with respect to such Rights under any provision of
this Agreement. The Company will use all reasonable efforts to ensure
that the provisions of this Section 11(a)(ii) are complied with, but
will have no liability to any holder of Right Certificates or any 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. Upon the occurrence of a Flip-in Event, no Right
Certificate that represents Rights that are or have become void
pursuant to the provisions of this Section 11(a)(ii) will thereafter be
issued pursuant to Section 3 or Section 6, and any Right Certificate
delivered to the Rights Agent that represents Rights that are or have
become void pursuant to the provisions of this Section 11(a)(ii) will
be canceled. Upon the occurrence of a Flip-over Event, any Rights that
shall not have been previously exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only pursuant to Section 13
and not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip-in Event, if there are not
sufficient Common Shares authorized but unissued or issued but not
outstanding to permit the issuance of all the Common Shares issuable in
accordance with Section 11(a)(ii) upon the exercise of a Right, the
Board of Directors of the Company will use its best efforts promptly to
authorize and, subject to the provisions of Section 9(e), make
available for issuance additional Common Shares or other equity
securities of the Company having equivalent voting rights and an
equivalent value (as determined in good faith by the Board of Directors
of the Company) to the Common Shares (for purposes of this Section
11(a)(iii), "equivalent common shares"). In the event that equivalent
common shares are so authorized, upon the exercise of a Right in
accordance with the provisions of Section 7, the registered holder will
be entitled to receive (A) Common Shares, to the extent any are
available, and (B) a number of equivalent common shares, which the
Board of Directors of the Company has determined in good faith to have
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<PAGE> 17
a value equivalent to the excess of (x) the aggregate current per share
market value on the date of the occurrence of the most recent Flip-in
Event of all the Common Shares issuable in accordance with Section
11(a)(ii) upon the exercise of a Right (the "Exercise Value") over (y)
the aggregate current per share market value on the date of the first
occurrence of a Flip-in Event of any Common Shares available for
issuance upon the exercise of such Right; PROVIDED, HOWEVER, that if at
any time after 90 calendar days after the latest of the Share
Acquisition Date, the Distribution Date and the date of the first
occurrence of a Flip-in Event, there are not sufficient Common Shares
and/or equivalent common shares available for issuance upon the
exercise of a Right, then the Company will be obligated to deliver,
upon the surrender of such Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available), equivalent
common shares (to the extent available) and then cash (to the extent
permitted by applicable law and any agreements or instruments to which
the Company is a party in effect immediately prior to the Share
Acquisition Date), which securities and cash have an aggregate value
equal to the excess of (1) the Exercise Value over (2) the product of
the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of the most recent
Flip-in Event (or, if any other Flip-in Event shall have previously
occurred, the product of the then-current Purchase Price multiplied by
the number of one one-hundredths of a Preferred Share for which a Right
would have been exercisable immediately prior to the date of the
occurrence of such Flip-in Event if no other Flip-in Event had
previously occurred). To the extent that any legal or contractual
restrictions prevent the Company from paying the full amount of cash
payable in accordance with the foregoing sentence, the Company will pay
to holders of the Rights as to which such payments are being made all
amounts which are not then restricted on a pro rata basis and will
continue to make payments on a pro rata basis as promptly as funds
become available until the full amount due to each such Rights holder
has been paid.
(b) In the event that the Company fixes a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), "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 per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is 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 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 per share market
price and the denominator of which is 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);
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value, if any, of the
shares of capital stock issuable upon
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<PAGE> 18
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which is in a form other than cash, the value of
such consideration will be as determined in good faith by the Board of Directors
of the Company, whose determination will be described in a statement filed with
the Rights Agent. Preferred Shares owned by or held for the account of the
Company will not be deemed outstanding for the purpose of any such computation.
Such adjustment will be made successively whenever such a record date is fixed,
and in the event that such rights, options or warrants are not so issued, the
Purchase Price will be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In the event that the Company fixes a record date for the making of
a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Preferred Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on such record date
or, if earlier, the date on which Preferred Shares begin to trade on an
ex-dividend or when issued basis for such distribution, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination will be described in a statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, cash, assets or stock so
to be distributed or of such subscription rights, options or warrants applicable
to one Preferred Share, and the denominator of which is such current per share
market price of the Preferred Shares; PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value, if any, of the shares of capital stock issuable upon
exercise of one Right. Such adjustments will be made successively whenever such
a record date is fixed; and in the event that such distribution is not so made,
the Purchase Price will 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 purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date will be deemed to be
the average of the daily closing prices per share of such Common Shares
for the 30 consecutive Trading Days immediately prior to such date;
PROVIDED, HOWEVER, that in the event that the current per share market
price of the Common Shares 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 per share market price will be
appropriately adjusted to take into account ex-dividend trading or to
reflect the current per share market price per Common Share equivalent.
The closing price for each day will 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
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<PAGE> 19
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 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
the Common Shares are not publicly held or not so listed or traded, or
are not the subject of available bid and asked quotes, "current per
share market price" will mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights
Agent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares will be
determined in the same manner as set forth above for Common Shares in
Section 11(d)(i), other than the last sentence thereof. If the current
per share market price of the Preferred Shares cannot be determined in
the manner provided above, the "current per share market price" of the
Preferred Shares will be conclusively deemed to be an amount equal to
the current per share market price of the Common Shares multiplied by
one hundred (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or
similar transactions relating 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, or the subject of
available bid and asked quotes, "current per share market price" of the
Preferred Shares will mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights
Agent. For all purposes of this Agreement, the current per share market
price of one one-hundredth of a Preferred Share will be equal to the
current per share market price of one Preferred Share divided by one
hundred.
(e) Except as set forth below, no adjustment in the Purchase Price will
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 will be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 will be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of a Common Share or other security,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 will be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) will be subject to adjustment
from time to time
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in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Shares (and the Purchase Price in respect thereof)
contained in this Section 11, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Shares (and the Purchase Price in respect thereof)
will apply on like terms to any such other securities (and the Purchase Price in
respect thereof).
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price pursuant to Section
11(b) or Section 11(c), each Right outstanding immediately prior to the making
of such adjustment will 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 one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a Preferred Share
issuable upon exercise of a Right immediately prior to such adjustment of the
Purchase Price 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 one one-hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will 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 will 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
will 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. Such 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, will be at least 10 calendar 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 will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the option of the
Company, will cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof if required by the Company, new
Right Certificates evidencing all the Rights to which such holders are entitled
after such adjustment. Right Certificates so to be distributed will 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 will be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
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<PAGE> 21
(j) Without respect to any adjustment or change in the Purchase Price
and/or the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate 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 or below the then par value, if any, of any other securities of
the Company issuable upon exercise of the Rights, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Preferred Shares or such other securities, as the case may be, at such adjusted
Purchase Price.
(l) In any case in which this Section 11 otherwise requires 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 issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or
other 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 delivers to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company will 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 in its good faith judgment the Board of Directors of the Company
determines to be advisable in order that any (i) consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less
than the current per share market price therefor, (iii) issuance wholly for cash
of Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
stockholders.
(n) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares payable
in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines
the outstanding Common Shares into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which is the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(n) will be made
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<PAGE> 22
successively whenever such a dividend is paid or such a subdivision, combination
or reclassification is effected.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SECURITIES.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) 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) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Right Certificate in accordance with Section 26.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) In the event that:
(i) at any time after a Person has become an Acquiring Person,
the Company consolidates with, or merges with or into, any other Person
and the Company is not the continuing or surviving corporation of such
consolidation or merger; or
(ii) at any time after a Person has become an Acquiring
Person, any Person consolidates with the Company, or merges with or
into the Company, and the Company is the continuing or surviving
corporation of such merger or consolidation and, in connection with
such merger or consolidation, all or part of the Common Shares is
changed into or exchanged for stock or other securities of any other
Person or cash or any other property; or
(iii) at any time after a Person has become an Acquiring
Person, the Company, directly or indirectly, sells or otherwise
transfers (or one or more of its Subsidiaries sells or otherwise
transfers), in one or more transactions, assets or earning power
(including without limitation securities creating any obligation on the
part of the Company and/or any of its Subsidiaries) representing in the
aggregate 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 of its wholly owned Subsidiaries;
then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date, such number of duly authorized,
validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date and dividing that product by (y)
50% of the current per share market price of the Common Shares of the Issuer
(determined pursuant to Section 11(d)), on the date of the occurrence of such
Flip-over Event; (B) the Issuer will thereafter be liable for, and will assume,
by virtue of the occurrence of such Flip-over Event, all the obligations and
duties of the
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<PAGE> 23
Company pursuant to this Agreement; (C) the term "Company" will thereafter be
deemed to refer to the Issuer; and (D) the Issuer will take such steps
(including without limitation the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) in connection
with such consummation as may be necessary to assure that the provisions hereof
are thereafter applicable, as nearly as reasonably may be possible, in relation
to its Common Shares thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" means (i) in the case of
any Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person
that is the continuing, surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described in
Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described
in Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including without limitation securities
creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term "Issuer" means such
other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term "Issuer" means whichever of
such Persons is the issuer of the equity security having the greatest aggregate
market value. Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a corporation or other legal entity having
outstanding equity securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal entity
having outstanding equity securities, then all references to Common Shares of
the Issuer will be deemed to be references to the Common Shares of the
corporation or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such corporation or other
legal entity having outstanding equity securities, (I) proper provision will be
made so that the Issuer creates or otherwise makes available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, a kind or
kinds of security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would have been
entitled to receive if the Issuer had been a corporation or other legal entity
having outstanding equity securities; and (II) all other provisions of this
Agreement will apply to the issuer of such securities as if such securities were
Common Shares.
(c) The Company will not consummate any Flip-over Event if, (i) at the
time of or immediately after such Flip-over Event, there are or would be any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the stockholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have
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<PAGE> 24
not been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior to such consummation
the Company and the Issuer have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in subsections (a) and
(b) of this Section 13 and further providing that as promptly as practicable
after the consummation of any Flip-over Event, the Issuer will:
(A) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities issuable
upon exercise of the Rights on an appropriate form, and use its best
efforts to cause such registration statement to (1) become effective as
soon as practicable after such filing and (2) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(B) take all 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; and
(C) deliver to holders of the Rights historical financial
statements for the Issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) The provisions of this Section 13 will similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Flip-over Event occurs at any time after the occurrence of a Flip-in
Event, except for Rights that have become void pursuant to Section 11(a)(ii),
Rights that shall not have been previously exercised will cease to be
exercisable in the manner provided in Section 11(a)(ii) and will thereafter be
exercisable in the manner provided in Section 13(a).
14. FRACTIONAL RIGHTS AND FRACTIONAL SECURITIES. (a) The Company will
not be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, the Company
will pay as promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights otherwise would be
issuable, an amount in cash equal to the same fraction of the current market
value of one Right. For the purposes of this Section 14(a), the current market
value of one Right is the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights otherwise would
have been issuable. The closing price for any day is 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 the Rights are not
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<PAGE> 25
publicly held or are not so listed or traded, or are not the subject of
available bid and asked quotes, the current market value of one Right will mean
the fair value thereof as determined in good faith by the Board of Directors of
the Company, whose determination will be described in a statement filed with the
Rights Agent.
(b) The Company will 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 provides that the holders of such
depositary receipts 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 any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section 14(b),
the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common
Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; PROVIDED, HOWEVER, that if the
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively deemed to be
an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one hundred (as such number may be appropriately adjusted to reflect events such
as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
PROVIDED FURTHER, HOWEVER, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
(c) Following the occurrence of a Triggering Event, the Company will
not be required to issue fractions of Common Shares or other securities issuable
upon exercise or exchange of the Rights or to distribute certificates which
evidence any such fractional securities. In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such security. For purposes of this
Section 14(c), the current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing price thereof
(as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise or exchange; PROVIDED, HOWEVER, that if neither the Common
Shares nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid and
asked quotes, the current market value of one Common Share or such other
security will mean the fair value thereof as determined in good faith by the
Board of Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent.
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<PAGE> 26
15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, 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 holder of any 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 therefore be entitled to
specific performance of the obligations under this Agreement, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to this Agreement.
16. 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 are
transferable only in connection with the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer.
(c) The Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent will be
affected by any notice to the contrary.
(d) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or
exchange of a Right, except as otherwise provided in Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation;
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<PAGE> 27
PROVIDED, HOWEVER, that the Company will use its best efforts to have
any such order, decree or ruling lifted or otherwise overturned as soon
as possible.
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder, as
such, of any Right Certificate will be entitled to vote, receive dividends, or
be deemed for any purpose the holder of Preferred Shares or any other securities
of the Company which may at any time be issuable upon the exercise of the Rights
represented thereby, nor will 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 25), 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 of this Agreement or
exchanged pursuant to the provisions of Section 24.
18. CONCERNING THE RIGHTS AGENT. (a) The Company will 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 will also indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, suit, action, proceeding or expense,
incurred without negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done 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 arising
therefrom, directly or indirectly.
(b) The Rights Agent will be protected and will 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 evidencing Preferred Shares or Common Shares or other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed, and, where necessary, verified or acknowledged, by the proper
Person or Persons.
19. 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 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 is a party, or any corporation succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. If at the time such successor Rights Agent
succeeds 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 if at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name
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<PAGE> 28
of the successor Rights Agent; and in all such cases such Right Certificates
will have the full force provided in the Right Certificates and in this
Agreement.
(b) If at any time the name of the Rights Agent changes and at such
time any of the Right Certificates have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and if at that time any of the Right
Certificates have not 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 will have the full force provided in the
Right Certificates and in this Agreement.
20. 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, will 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 will
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 deems 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 of the Board, the President, any Vice
President, the Secretary or the Treasurer of the Company and delivered
to the Rights Agent, and such certificate will 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 will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant contained in
this Agreement or in any Right Certificate; nor will it be responsible
for any adjustment required under the provisions of Sections 11 or 13
(including any adjustment which results in Rights becoming void) 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
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<PAGE> 29
Certificates after actual notice of any such adjustment); nor will it
by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of stock or other
securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of stock or other securities
will, when issued, be duly authorized, validly issued, fully paid and
nonassessable.
(f) The Company 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 of the Board, the President, any
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 will 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 precludes the Rights Agent from acting in any other
capacity for the Company or for any other Person.
(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 will not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof. The Rights Agent will not be under any
duty or responsibility to ensure compliance with any applicable federal
or state securities laws in connection with the issuance, transfer or
exchange of Right Certificates.
(j) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise, transfer, split up, combination or
exchange, either (i) the certificate attached to the form of assignment
or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 or 2
thereof, or (ii) any other actual or suspected irregularity exists, the
Rights Agent will not take any further action with respect to such
requested exercise, transfer, split up, combination or exchange without
first consulting with the Company, and will thereafter take further
action with respect thereto only in accordance with the Company's
written instructions.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
calendar days' notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or the Common Shares by
26
<PAGE> 30
registered or certified mail, and to the holders of the Right Certificates by
first class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 calendar 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 Preferred Shares and the Common Shares by registered or certified mail,
and to the holders of the Right Certificates by first class mail. If the Rights
Agent resigns or is removed or otherwise becomes incapable of acting, the
Company will appoint a successor to the Rights Agent. If the Company fails to
make such appointment within a period of 30 calendar 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 will, 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, will be a corporation or other legal entity 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 or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
will 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 will 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 will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Preferred Shares or the Common Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, will 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.
22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind of securities issuable upon
exercise of the Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold pursuant to
the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are exercisable or exchangeable for, or
convertible into Common Shares, and (b) may, in any other case, if deemed
necessary, appropriate or desirable by the Board of Directors of the Company,
issue Right Certificates representing an equivalent number of Rights as would
have been issued in respect of such Common Shares if they had been issued or
sold prior to the Distribution Date, as appropriately adjusted as provided
herein as if they had been so issued or sold; PROVIDED, HOWEVER, that (i) no
such Right Certificate will be issued if, and to the extent that, in its good
faith judgment the Board of Directors of the Company determines that the
issuance of such Right Certificate could have a material adverse tax consequence
to the Company or to the
27
<PAGE> 31
Person to whom or which such Right Certificate otherwise would be issued and
(ii) no such Right Certificate will be issued if, and to the extent that,
appropriate adjustment otherwise has been made in lieu of the issuance thereof.
23. REDEMPTION. (a) Prior to the Expiration Date, the Board of
Directors of the Company may, at its option, redeem all but not less than all of
the then-outstanding Rights at the Redemption Price at any time prior to the
Close of Business on the Share Acquisition Date. Any such redemption will be
effective immediately upon the action of the Board of Directors of the Company
ordering the same, unless such action of the Board of Directors of the Company
expressly provides that such redemption will be effective at a subsequent time
or upon the occurrence or nonoccurrence of one or more specified events (in
which case such redemption will be effective in accordance with the provisions
of such action of the Board of Directors of the Company).
(b) Immediately upon the effectiveness of the redemption of the Rights
as provided in Section 23(a), 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 will be to receive the Redemption Price,
without interest thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce such
redemption and, within 10 calendar days thereafter, will give notice of such
redemption to the holders of the then-outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; PROVIDED, HOWEVER, that the failure to give, or any defect
in, any such notice will not affect the validity of the redemption of the
Rights. Any notice that is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights will state the method by which the payment of
the Redemption Price will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the Board
of Directors of the Company (based upon the fair market value of such other
consideration, determined by the Board of Directors of the Company in good
faith) or any combination thereof. The Company may, at its option, combine the
payment of the Redemption Price with any other payment being made concurrently
to holders of Common Shares and, to the extent that any such other payment is
discretionary, may reduce the amount thereof on account of the concurrent
payment of the Redemption Price. If legal or contractual restrictions prevent
the Company from paying the Redemption Price (in the form of consideration
deemed appropriate by the Board of Directors) at the time of redemption, the
Company will pay the Redemption Price, without interest, promptly after such
time as the Company ceases to be so prevented from paying the Redemption Price.
(c) At any time following the Share Acquisition Date, the Board of
Directors of the Company may relinquish the right to redeem the Rights under
this Section 23 by duly adopting a resolution to that effect. Immediately upon
adoption of such resolution, the rights of the Board of Directors of the Company
to redeem the Rights will terminate without further action and without any
notice. Promptly after adoption of such a resolution, the Company will publicly
announce such action; PROVIDED, HOWEVER, that the failure to give, or any defect
in, any such notice will not affect the validity of the action of the Board of
Directors of the Company.
28
<PAGE> 32
24. EXCHANGE. (a) The Board of Directors of the Company may, at its
option, at any time after the Share Acquisition Date, exchange all or part of
the then-outstanding and exercisable Rights (which will not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii)) for Common
Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the Record Date (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Any such exchange will be effective immediately
upon the action of the Board of Directors of the Company ordering the same,
unless such action of the Board of Directors of the Company expressly provides
that such exchange will be effective at a subsequent time or upon the occurrence
or nonoccurrence of one or more specified events (in which case such exchange
will be effective in accordance with the provisions of such action of the Board
of Directors of the Company). Notwithstanding the foregoing, the Board of
Directors of the Company will not be empowered to effect such exchange at any
time after any Person (other than the Company or any Related Person), who or
which, together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the then-outstanding Common Shares.
(b) Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right with
respect to such Rights thereafter of the holder of such Rights will be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the effectiveness
of the exchange of any Rights as provided in Section 24(a), the Company will
publicly announce such exchange and, within 10 calendar days thereafter, will
give notice of such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice will not affect
the validity of such exchange. Any notice that is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any Common Share exchangeable for a Right (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Board of Directors of the Company (whose
determination will be described in a statement filed with the Rights Agent),
equal to the current market value of one Common Share (determined pursuant to
Section 11(d)) on the Trading Day immediately preceding the date of the
effectiveness of the exchange pursuant to this Section 24.
25. NOTICE OF CERTAIN EVENTS. (a) If, after the Distribution Date, the
Company proposes (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 periodic 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 or shares of stock of any class or
any other securities, rights, or
29
<PAGE> 33
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 assets or
earning power (including without limitation securities creating any obligation
on the part of the Company and/or any of its Subsidiaries) representing more
than 50% of the assets and earning power of the Company and its Subsidiaries,
taken as a whole, to any other Person or Persons other than the Company or one
or more of its wholly owned Subsidiaries, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or pay any dividend
on the Common Shares payable in Common Shares or to effect a subdivision,
combination or reclassification of the Common Shares then, in each such case,
the Company will give to each holder of a Right Certificate, to the extent
feasible and in accordance with Section 26, a notice of such proposed action,
which specifies the record date for the purposes of such stock dividend,
distribution or offering 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 Common Shares and/or Preferred Shares, if any such date is
to be fixed, and such notice will be so given, in the case of any action covered
by clause (i) or (ii) above, at least 10 calendar days prior to the record date
for determining holders of the Preferred Shares for purposes of such action,
and, in the case of any such other action, at least 10 calendar days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, whichever
is the earlier.
(b) In case any Triggering Event occurs, then, in any such case, the
Company will as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.
26. NOTICES. (a) 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 will 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:
The Elder-Beerman Stores Corp.
3155 El-Bee Road
Dayton, Ohio 45439
Attention: Executive Vice President - Administration
(b) Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent will 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:
30
<PAGE> 34
Norwest Bank Minnesota, N.A.
c/o Norwest Shareowner Services
161 North Concord Exchange
South St. Paul, Minnesota 55075
(c) 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 (or,
if prior the Distribution Date, to the holder of any certificate evidencing
Common Shares) will 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.
27. SUPPLEMENTS AND AMENDMENTS. Prior to the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last sentence
of this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (a) to cure any ambiguity, (b) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (c) to shorten or lengthen any time period
hereunder, or (d) to supplement or amend the provisions hereunder in any manner
which the Company may deem desirable; provided that no such supplement or
amendment shall adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person), and no such supplement or amendment shall cause the Rights again to
become redeemable or cause this Agreement again to become supplementable or
amendable otherwise than in accordance with the provisions of this sentence.
Without limiting the generality or effect of the foregoing, this Agreement may
be supplemented or amended to provide for such voting powers for the Rights and
such procedures for the exercise thereof, if any, as the Board of Directors of
the Company may determine to be appropriate. Upon the delivery of a certificate
from an officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
will execute such supplement or amendment; PROVIDED, HOWEVER, that the failure
or refusal of the Rights Agent to execute such supplement or amendment will not
affect the validity of any supplement or amendment adopted by the Board of
Directors of the Company, any of which will be effective in accordance with the
terms thereof. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment may be made which decreases the stated Redemption Price
to an amount less than $0.01 per Right.
28. SUCCESSORS; CERTAIN COVENANTS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent will be
binding on and inure to the benefit of their respective successors and assigns
hereunder.
29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will 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. This Agreement will be for the sole and exclusive benefit of
31
<PAGE> 35
the Company, the Rights Agent, and the registered holders of the Right
Certificates (or prior to the Distribution Date, the Common Shares).
30. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder will be deemed to be a contract made under the
internal substantive laws of the State of Ohio and for all purposes will be
governed by and construed in accordance with the internal substantive laws of
such State applicable to contracts to be made and performed entirely within such
State.
31. 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 will remain in full force and
effect and will in no way be affected, impaired or invalidated; PROVIDED,
HOWEVER, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.
32. DESCRIPTIVE HEADINGS, ETC. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions hereof.
Unless otherwise expressly provided, references herein to Sections, paragraphs
and Exhibits are to Sections, paragraphs and Exhibits of or to this Agreement.
33. DETERMINATIONS AND ACTIONS BY THE BOARD. For all purposes of this
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
will be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of Directors of
the Company will have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including without limitation
the right and power to (a) interpret the provisions of this Agreement and (b)
make all determinations deemed necessary or advisable for the administration of
this Agreement (including any determination as to whether particular Rights
shall have become void). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (ii) below, any omission with
respect to any of the foregoing) which are done or made by the Board of
Directors of the Company in good faith will (i) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties and (ii) not subject the Board of Directors of the Company to any
liability to any Person, including without limitation the Rights Agent and the
holders of the Rights.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
<TABLE>
<S> <C>
[SEAL]
Attest: THE ELDER-BEERMAN STORES CORP.
/s/ Scott J. Davido By: /s/ John A. Muskovich
- ---------------------------------------- --------------------------------------
Scott J. Davido John A. Muskovich
Senior Vice President, General Counsel President, Chief Operating Officer and
and Secretary Chief Financial Officer
[SEAL]
Attest: NORWEST BANK MINNESOTA, N.A.
/s/ Kelly A. Beenen By: /s/ William J. Kennedy
- ---------------------------------------- --------------------------------------
Name: Kelly A. Beenen William J. Kennedy
Title: Vice President Vice President
</TABLE>
33
<PAGE> 37
EXHIBIT A
---------
CERTIFICATE OF ADOPTION
OF AMENDMENT
TO AMENDED ARTICLES OF INCORPORATION
OF
THE ELDER-BEERMAN STORES CORP.
We, John A. Muskovich, President, and Scott J. Davido, Secretary, of
The Elder-Beerman Stores Corp., an Ohio corporation (the "Company"), do hereby
certify that pursuant to the final confirmation order entered by the Bankruptcy
Court in Jointly Administered Case No. 95-33643 on December 30, 1997, the
Company has duly and validly caused the adoption of the following resolution to
amend the Amended Articles of Incorporation of the Company to establish the
express terms of the Series A Preferred Stock:
RESOLVED, that Article IV of the Amended Articles of
Incorporation of this Company be, and it hereby is, amended by adding after
Division B of Article IV of the Amended Articles of Incorporation a new Division
B, Part A as set forth below:
DIVISION B, PART A
SERIES A PREFERRED STOCK
Section 1. The Series A Preferred Stock (hereinafter sometimes
called this "Series" or the "Series A Preferred Shares") shall have the express
terms set forth in this Division B, Part A.
Section 2. The number of shares of this Series shall be
250,000.
Section 3. (a) The holders of record of Series A Preferred
Shares shall be entitled to receive, when and as declared by the Directors in
accordance with the terms hereof, out of funds legally available for the
purpose, cumulative quarterly dividends payable in cash on the first 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 Series A Preferred
Share or fraction of a Series A Preferred Share in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $1.00 per share or (ii) 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 or Common Stock, or a subdivision of the
outstanding Common Stock (by reclassification or otherwise)), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any Series A Preferred Share or fraction of a Series A Preferred
Share. In the event the Company shall at any time declare or pay any dividend
A-1
<PAGE> 38
on the Common Stock payable in Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount to which holders of Series A Preferred Shares were entitled
immediately prior to such event under clause (ii) 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) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such Series A Preferred Shares, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issues is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. No dividends shall be paid upon or declared and set apart for
any Series A Preferred Shares for any dividend period unless at the same time a
dividend for the same dividend period, ratably in proportion to the respective
annual dividend rates fixed therefor, shall be paid upon or declared and set
apart for all Serial Preferred Stock of all series then outstanding and entitled
to receive such dividend. The Board of Directors may fix a record date for the
determination of holders of Series A Preferred Shares entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be no more than 40 days prior to the date fixed for the payment thereof.
Section 4. The Series A Preferred Shares are not redeemable.
Section 5. (a) As provided in the Amended Articles of
Incorporation, subject to the provision for adjustment hereinafter set forth,
each Series A Preferred Share will entitle the holder thereof to one hundred
votes on all matters submitted to a vote of the shareholders of the Company. In
the event the Company at any time (i) declares a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues any shares of its
capital stock in a reclassification of the outstanding shares of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), then,
in each such case and regardless of whether any Series A Preferred Shares are
then issued or outstanding, the number of votes per share to which holders of
Series A Preferred Shares would otherwise be entitled immediately prior to such
event will be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in any other
Preferred Stock Designation creating a series of Preferred Stock or any similar
stock, or by law, the holders of Series A Preferred Shares and the holders of
shares of Common Stock and any other capital stock of the Company
A-2
<PAGE> 39
having general voting rights will vote together as one class on all matters
submitted to a vote of shareholders of the Company.
(c) Except as set forth in the Amended Articles of
Incorporation or herein, or as otherwise provided by law, holders of Series A
Preferred Shares will have no voting rights.
Section 6. (a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company
(hereinafter referred to as a "Liquidation"), no distribution shall be made to
the holders of shares of stock ranking junior (either as to dividends or upon
Liquidation) to the Series A Preferred Shares, unless, prior thereto, the
holders of Series A Preferred Shares shall have received at least an amount per
share equal to one hundred times the then applicable Purchase Price as defined
in the Rights Agreement, as the same may be from time to time amended in
accordance with its terms (which Purchase Price shall be determined by the
Company's Board of Directors at its first meeting following December 30, 1997),
subject to adjustment from time to time as provided in the Rights Agreement,
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not earned or declared, to the date of such payment, provided that
the holders of shares of Series A Preferred Shares shall be entitled to receive
at least an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of Common Stock (the "Series A Preferred Shares Liquidation
Preference").
(b) In the event, however, that the net assets of the Company
are not sufficient to pay in full the amount of the Series A Preferred Shares
Liquidation Preference and the liquidation preferences of all other series of
Serial Preferred Stock, if any, which rank on a parity with the Series A
Preferred Shares as to distribution of assets in Liquidation, all shares of this
Series and of such other series of Serial Preferred Stock shall share ratably in
the distribution of assets (or proceeds thereof) in Liquidation in proportion to
the full amounts to which they are respectively entitled.
(c) In the event the Company shall at any time declare or pay
any dividend on the Common Stock payable in consolidation of the outstanding
Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock) into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of Series A Preferred Shares were
entitled immediately prior to such event pursuant to the proviso set forth in
paragraph (a) above, 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.
(d) The merger or consolidation of the Company into or with
any other corporation, or the merger of any other corporation into it, or the
sale, lease or conveyance of all or substantially all the property or business
of the Company, shall not be deemed to be a Liquidation for the purpose of this
Section 6.
Section 7. The Series A Preferred Shares shall not be
convertible into Common Stock.
A-3
<PAGE> 40
IN WITNESS WHEREOF, John A. Muskovich, President, and Scott J.
Davido, Secretary, of The Elder-Beerman Stores Corp., acting for and on behalf
of the Company, have hereunto subscribed their names this __th day of December,
1997.
-----------------------------------
John A. Muskovich
President
-----------------------------------
Scott J. Davido
Secretary
A-4
<PAGE> 41
FORM OF RIGHT CERTIFICATE
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 30, 1998 (SUBJECT TO POSSIBLE EXTENSION
AT THE OPTION OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR
AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT
AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS
AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY
BECOME NULL AND VOID.
Right Certificate
THE ELDER-BEERMAN STORES CORP.
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 December 30, 1997 (the "Rights Agreement"),
between The Elder-Beerman Stores Corp., an Ohio corporation (the "Company"), and
Norwest Bank Minnesota, N.A. (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. (Eastern time) on the Expiration Date (as such
term is defined in the Rights Agreement) at the principal office or offices of
the Rights Agent designated for such purpose, one one-hundredth of a fully paid
nonassessable share of Series A Preferred Stock, without par value (the
"Preferred Shares"), of the Company, at a purchase price per one one-hundredth
of a Preferred Share as determined by the Company's Board of Directors at its
first meeting following December 30, 1997 (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and related Certificate duly executed. If this Right Certificate is
exercised in part, the holder will be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights
not exercised. The number of Rights evidenced by this Right Certificate (and the
number of one one-hundredths of a Preferred Share which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of the date of the Rights Agreement, based on
the Preferred Shares as constituted at such date.
B-1
<PAGE> 42
As provided in the Rights Agreement, the Purchase Price and/or the
number and/or kind of securities issuable upon the exercise of the Rights
evidenced by this Right Certificate are subject to adjustment upon the
occurrence 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 of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and can
be obtained from the Company without charge upon written request therefor. Terms
used herein with initial capital letters and not defined herein are used herein
with the meanings ascribed thereto in the Rights Agreement.
Pursuant to the Rights Agreement, from and after the first occurrence
of a Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (ii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the occurrence of a Flip-in Event, or (iii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the occurrence of a Flip-in
Event pursuant to either (a) a transfer from an Acquiring Person to holders of
its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (b)
a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has the purpose or effect of avoiding
certain provisions of the Rights Agreement, and subsequent transferees of any of
such Persons, will be void without any further action and any holder of such
Rights will thereafter have no rights whatsoever with respect to such Rights
under any provision of the Rights Agreement. From and after the occurrence of a
Flip-in Event, no Right Certificate will be issued that represents Rights that
are or have become void pursuant to the provisions of the Rights Agreement, and
any Right Certificate delivered to the Rights Agent that represents Rights that
are or have become void pursuant to the provisions of the Rights Agreement will
be canceled.
This Right Certificate, with or without other Right Certificates, may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities, as the case may be) as
the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right or may be exchanged in whole or in part. The Rights
Agreement may be supplemented and amended by the Company, as provided therein.
The Company is not required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the option of the
B-2
<PAGE> 43
Company, be evidenced by depositary receipts) or other securities issuable upon
the exercise of any Right or Rights evidenced hereby. In lieu of issuing such
fractional Preferred Shares or other securities, the Company may make a cash
payment, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, will be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement 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 have been exercised in accordance with the
provisions of the Rights Agreement.
This Right Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________, ____.
[SEAL]
ATTEST: THE ELDER-BEERMAN STORES CORP.
By:
- --------------------------------------- ------------------------------
Secretary John A. Muskovich
President
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By:
---------------------------------
Authorized Signature
B-3
<PAGE> 44
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: __________, ____
_______________________________
Signature
Signature Guaranteed:
B-4
<PAGE> 45
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, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such 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 became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, ____
_______________________________
Signature
B-5
<PAGE> 46
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To The Elder-Beerman Stores Corp.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of and
delivered to:
Please insert social security
or other identifying number: ___________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:
Please insert social security
or other identifying number: ___________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: __________, ____
_______________________________
Signature
Signature Guaranteed:
B-6
<PAGE> 47
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 any such Person (as such terms are defined pursuant
to 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 became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, ____
_______________________________
Signature
NOTICE
SIGNATURES ON THE FOREGOING FORM OF ASSIGNMENT AND FORM OF ELECTION TO
PURCHASE AND IN THE RELATED CERTIFICATES 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.
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE PROGRAM) PURSUANT TO RULE 17AD-15
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
B-7
<PAGE> 48
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On December 30, 1997, pursuant to the final confirmation order entered
by the Bankruptcy Court in Jointly Administered Case No. 95-33643, The
Elder-Beerman Stores Corp. (the "Company") effected a distribution of one right
(a "Right") for each outstanding share of Common Stock, without par value (the
"Common Shares"), of the Company. The distribution is payable on the day that is
ten days after the date on which the Company's Registration Statement on Form 10
is declared effective by the Securities and Exchange Commission (the "Record
Date") to the stockholders of record as of the close of business on the Record
Date. Each Right entitles the registered holder thereof to purchase from the
Company one one-hundredth of a share of Series A Preferred Stock, without par
value (the "Preferred Shares"), of the Company at a price (the "Purchase Price")
per one one-hundredth of a Preferred Share as determined by the Company's Board
of Directors at its first meeting following December 30, 1997, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 30, 1997 (the "Rights Agreement"), between the
Company and Norwest Bank Minnesota, N.A. as Rights Agent (the "Rights Agent").
Under the Rights Agreement, the Rights will be evidenced by the
certificates evidencing Common Shares until the earlier (the "Distribution
Date") of: (i) the close of business on the first date (the "Share Acquisition
Date") of public announcement by the Company that a person (other than a person
that has maintained beneficial ownership of at least 20% of the outstanding
Common Shares since the adoption of the Rights Agreement, the Company, a
subsidiary or employee benefit or stock ownership plan of the Company or any of
its affiliates or associates), together with its affiliates and associates, has
acquired beneficial ownership of 20% or more of the outstanding Common Shares
(any such person or group being hereinafter called an "Acquiring Person") or
(ii) the close of business on the tenth business day (or such later date as may
be specified by the Company's Board of Directors (the "Board")) following the
commencement of a tender offer or exchange offer by any person (other than the
Company, a subsidiary or employee benefit or stock ownership plan of the Company
or any of its affiliates or associates), the consummation of which would result
in beneficial ownership by such person 20% or more of the outstanding Common
Shares.
The Rights Agreement provides that, until the Distribution Date, the
Rights may be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), any
certificate evidencing Common Shares of the Company issued upon transfer or new
issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
evidencing Common Shares will also constitute the transfer of the Rights
associated with such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of Common Shares as of the
close of business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights. No Right is exercisable at any time prior to the
Distribution Date. The Rights will expire on the first anniversary of the
Effective Date or such later date as the Board of Directors, by resolution
adopted prior to the first anniversary of the Effective Date, may establish, but
not later than the tenth anniversary of the Effective Date (the "Final
Expiration Date") unless earlier redeemed, exchanged or amended by the Company
as described below. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including the right to vote
or to receive dividends.
C-1
<PAGE> 49
The Purchase Price payable, and the number of the Preferred Shares or
other securities issuable, upon exercise of the Rights will be 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 Preferred Shares of certain rights or
warrants to subscribe for or purchase the Preferred Shares at a price, or
securities convertible into the Preferred Shares with a conversion price, less
than the then-current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in the Preferred Shares) or subscription rights or warrants
(other than those referred to above). The number of outstanding Rights and the
number of one one-hundredths of the Preferred Shares issuable upon exercise of
each Right will be subject to adjustment in the event of a stock dividend on the
Common Shares payable in Common Shares or a subdivision, combination or
reclassification of Common Shares occurring, in any such case, prior to the
Distribution Date.
The Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled, in connection with the
declaration of a dividend on the Common Shares, to a preferential dividend
payment equal to the greater of (i) $1.00 per share and (ii) an amount equal to
100 times the related dividend declared per Common Share. Subject to customary
anti-dilution provisions, in the event of liquidation, the holders of Preferred
Shares will be entitled to a preferential liquidation payment equal to the
greater of (a) $100 per share and (b) an amount equal to 100 times the
liquidation payment made per Common Share. Because of the nature of the
Preferred Shares' dividend, voting and liquidation rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon exercise of a Right
should approximate the value of one Common Share.
Rights will be exercisable to purchase Preferred Shares only after the
Distribution Date occurs and prior to the occurrence of a Flip-in Event as
described below. A Distribution Date resulting from the commencement of a tender
offer or exchange offer described in clause (ii) of the second paragraph of this
summary could precede the occurrence of a Flip-in Event and thus result in the
Rights being exercisable to purchase Preferred Shares. A Distribution Date
resulting from any occurrence described in clause (i) of the second paragraph of
this summary would necessarily follow the occurrence of a Flip-in Event and thus
result in the Rights being exercisable to purchase Common Shares or other
securities as described below.
Under the Rights Agreement, in the event (a "Flip-in Event") that (i)
any person or group, together with its affiliates and associates, becomes an
Acquiring Person, (ii) any Acquiring Person or any affiliate or associate
thereof merges into or combines with the Company and the Company is the
surviving corporation, (iii) any Acquiring Person or any affiliate or associate
thereof effects certain other transactions with the Company, or (iv) during such
time as there is an Acquiring Person the Company effects certain transactions,
in each case as described in the Rights Agreement, then, in each such case,
proper provision will be made so that from and after the later of the
Distribution Date and the date of the occurrence of such Flip-in Event each
holder of a Right, other than Rights that are or were owned beneficially by an
Acquiring Person (which, from and after the date of a Flip-in Event, will be
void), will have the right to receive, upon exercise thereof at the then-current
exercise price of the Right, that number of Common Shares (or, under certain
circumstances, an
C-2
<PAGE> 50
economically equivalent security or securities of the Company) that at the time
of such Flip-in Event have a market value of two times the exercise price of the
Right.
In the event (a "Flip-over Event") that, at any time after a person has
become an Acquiring Person, (i) the Company merges with or into any person and
the Company is not the surviving corporation, (ii) any person merges with or
into the Company and the Company is the surviving corporation, but all or part
of the Common Shares are changed or exchanged for stock or other securities of
any other person or cash or any other property, or (iii) 50% or more of the
Company's assets or earning power, including securities creating obligations of
the Company, are sold, in each case as described in the Rights Agreement, then,
and in each such case, proper provision will be made so that each holder of a
Right, other than Rights which have become void, will thereafter have the right
to receive, upon the exercise thereof at the then-current exercise price of the
Right, that number of shares of common stock (or, under certain circumstances,
an economically equivalent security or securities) of such other person that at
the time of such Flip-over Event have a market value of two times the exercise
price of the Right.
From and after the later of the Share Acquisition Date and the
Distribution Date, Rights (other than any Rights that have become void) will be
exercisable to purchase Common Shares as described above, upon payment of the
aggregate exercise price in cash. In addition, at any time after the Share
Acquisition Date 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 Company may exchange the Rights (other than any rights that have
become void), in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).
For all purposes of the Rights Agreement, any person that, at the time
of the public announcement by the Company on December 30, 1997 of the
distribution of the Rights, has beneficial ownership of 20% or more of the
then-outstanding Common Shares, or that becomes the beneficial owner of 20% or
more of the then-outstanding Common Shares solely as a result of a reduction in
the number of Common Shares outstanding, will not be deemed to have become an
Acquiring Person unless and until such time as (i) such person, or any affiliate
or associate of such person, thereafter becomes the beneficial owner of
additional Common Shares representing 1% or more of the then-outstanding Common
Shares or (ii) any other person that is the beneficial owner of Common Shares
representing 1% or more of the then-outstanding Common Shares thereafter becomes
an affiliate or associate of such person.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company will not be required to issue fractional
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share, which may, at the option of the Company, be
evidenced by depositary receipts) or fractional Common Shares or other
securities issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
The Company may, at its option, redeem the Rights in whole, but not in
part, at a price of $.01 per Right, subject to adjustment (the "Redemption
Price"), at any time prior to the close of business on the Share Acquisition
Date. Immediately upon any redemption of the Rights, the right
C-3
<PAGE> 51
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The Rights Agreement may be amended by the Company without the approval
of any holders of Right Certificates, including amendments that increase or
decrease the Purchase Price, that add other events requiring adjustment to the
Purchase Price payable and the number of the Preferred Shares or other
securities issuable upon the exercise of the Rights or that modify procedures
relating to the redemption of the Rights, except that no amendment may be made
that decreases the stated Redemption Price to an amount less than $.01 per
Right.
The Board will have the exclusive power and authority to administer the
Rights Agreement and to exercise all rights and powers specifically granted to
the Board or to the Company therein, or as may be necessary or advisable in the
administration of the Rights Agreement, including without limitation the right
and power to interpret the provisions of the Rights Agreement and to make all
determinations deemed necessary or advisable for the administration of the
Rights Agreement (including any determination to redeem or not redeem the Rights
or to amend or not amend the Rights Agreement). All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the Board in good faith will be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and will not subject the Board to any liability
to any person, including without limitation the Rights Agent and the holders of
the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 10. A copy
of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights is as of the Record Date, does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by this reference.
C-4
<PAGE> 1
Exhibit 4.2
-----------
THE ELDER-BEERMAN STORES CORP.
3155 El-Bee Road
Dayton, Ohio 45439
November 11, 1998
Norwest Bank Minnesota, N.A.
c/o Norwest Shareowner Services
161 North Concord Exchange
South St. Paul, Minnesota 55075
Re: Amendment No. 1 to the Rights Agreement
---------------------------------------
Ladies and Gentlemen:
Pursuant to and in accordance with Section 27 of the Rights
Agreement (the "Rights Agreement"), dated as of December 30, 1997, by and
between The Elder-Beerman Stores Corp. (the "Company") and Norwest Bank
Minnesota, N.A., as rights agent, the Company, by resolution adopted by its
Directors, hereby amends the Rights Agreement as follows:
1. Section 1(j) of the Rights Agreement is hereby amended to read in
its entirety as follows:
"Final Expiration Date" means the tenth anniversary of the Record
Date.
2. The Rights Agreement shall not otherwise be supplemented or
amended by virtue of this Amendment No. 1 to the Rights Agreement, but shall
remain in full force and effect.
3. Capitalized terms used without other definition in this Amendment
No. 1 to the Rights Agreement shall be used as defined in the Rights Agreement.
4. This Amendment No. 1 to the Rights Agreement will be deemed to be
a contract made under the internal substantive laws of the State of Ohio and for
all purposes will be governed by and construed in accordance with the internal
substantive laws of such State applicable to contracts to be made and performed
entirely within such State.
5. This Amendment No. 1 to the Rights Agreement may be executed in
any number of counterparts and each of such counterparts will for all purposes
be deemed to be an original, and all such counterparts will together constitute
but one and the same instrument.
<PAGE> 2
Norwest Bank Minnesota, N.A.
November 11, 1998
Page 2
6. Exhibits B and C to the Rights Agreement shall be deemed amended
in a manner consistent with this Amendment No. 1 to the Rights Agreement.
Very truly yours,
THE ELDER-BEERMAN STORES CORP.
By: /s/ Scott J. Davido
-----------------------------------
Name: Scott J. Davido
Title: Senior Vice President,
General Counsel and
Secretary
Accepted and agreed to as of the
effective time specified above:
NORWEST BANK MINNESOTA, N.A.
By: /s/ Suzanne M. Swits
-------------------------------
Name: Suzanne M. Swits
Title: Assistant Vice President
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE: INVESTOR INQUIRIES:
Scott J. Davido
Sr. Vice President, General Counsel
and Director of Investor Relations
(937) 296-2683
ELDER-BEERMAN BOARD EXTENDS TERM OF
SHAREHOLDER RIGHTS AGREEMENT
DAYTON, OHIO, NOVEMBER 13, 1998 -- The Elder-Beerman Stores Corp. (Nasdaq: EBSC)
announced today that its Board of Directors has extended the term of its
shareholder rights plan. With an initial term of one year, the rights agreement
allowed the Board to extend the plan for a total of ten years. As a result of
the Board action, the company's shareholder rights plan will expire on January
9, 2008. No other action was taken by the Board with respect to the rights
agreement.
According to Frederick J. Mershad, Chairman and Chief Executive
Officer of Elder-Beerman, "The Board extended the rights plan after careful
study. This extension was not in response to any pending takeover threat against
the company. Shareholder rights plans, which typically have a ten-year term, are
intended to protect a company and its shareholders from potentially unfair
takeover practices. Extending the rights agreement protects Elder-Beerman and
its shareholders by ensuring that all shareholders receive a fair price and are
treated equally in the event of a takeover."
(more)
<PAGE> 2
ELDER-BEERMAN BOARD EXTENDS TERM OF SHAREHOLDER RIGHTS AGREEMENT / p.2
The nation's eighth largest independent department store chain, The
Elder- Beerman Stores Corp. now operates 60 stores in Ohio, Indiana, West
Virginia, Michigan, Illinois, Kentucky, Wisconsin and Pennsylvania.
Headquartered in Dayton, Ohio, Elder-Beerman reported total revenues of $607.9
million and net sales from store operations of $581.4 million on an operating
base of 48 stores in 1997. The company's Bee-Gee shoe division operates 62
El-Bee and Shoebilee! shoe stores in seven states. Elder-Beerman also operates
two furniture superstores.
###
Note: This press release contains forward-looking statements that are based
on management's current beliefs, estimates and assumptions concerning the
operations, future results and prospects of Elder-Beerman and the retail
industry in general. All statements that address operating performance,
events or developments that management anticipates will occur in the
future, including statements related to future sales, profits, expenses,
income and earnings per share, or statements expressing general optimism
about future results, are forward-looking statements. In addition, words
such as "expects," "anticipates," "intends," "plans," "believes," "hopes,"
and "estimates," and variations of such words and similar expressions, are
intended to identify forward-looking statements.
The statements described in the preceding paragraph constitute "forward-
looking statements" within the meaning of Section 27A of the Securities Act
of 1933 (the "Securities Act"). Because these statements are based on a
number of beliefs, estimates and assumptions that could cause actual
results to differ materially from those in the forward-looking statements,
there is no assurance that forward-looking statements will prove to be
accurate.
Any number of factors could affect future operations and results, including
the following: increasing price and product competition; fluctuations in
consumer demand and confidence; the availability and mix of inventory;
fluctuations in costs and expenses; the effectiveness of advertising,
marketing and promotional programs; weather conditions that affect consumer
traffic in stores; the continued availability and terms of financing; the
outcome of pending and future litigation; consumer debt levels; and other
general economic conditions, such as the rate of employment, inflation and
interest rates and the performance of the capital markets. This list of
factors is not exclusive.
Forward-looking statements are subject to the safe harbors created in the
Securities Act. Elder-Beerman undertakes no obligation to update publicly
any forward-looking statements, whether as a result of new information,
future events or otherwise.
