SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 8-A/A
AMENDING FORM 8-A DATED MARCH 6, 1986
AS AMENDED ON JANUARY 17, 1996
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
The Kroger Co.
(Exact name of registrant as specified in its
charter)
Ohio 31-0345740
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
1014 Vine Street, Cincinnati, Ohio 45202
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the
Act:
Name of each exchange on
Title of each class which each class is to
registered be registered
- ------------------- -------------------------
Preferred Stock Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the
Act:
None
- ------------------------------------------------------------
(Title of Class)
<PAGE>
This Form 8-A/A amends and supplements the Form 8-A (the "Form
8-A") filed by The Kroger Co. (the "Company") on March 6,
1986, as amended on January 17, 1996, by a Form 8-A/A, with
respect to Common Stock Purchase Rights.
Item 1. Description of Securities to be Registered.
------------------------------------------
Item 1 of the Form 8-A is amended by substituting the
following:
On February 28, 1986, the Board of Directors of The
Kroger Co. (the "Company") declared a dividend distribution of
one Right for each outstanding share of Common Stock, $1.00
par value, of the Company (the "Common Shares"), payable to
the holders of record of the Common Shares on March 19, 1986.
On November 30, 1995, the Board of Directors of the Company
adopted amendments to the Rights Agreement dated as of March
5, 1986, between the Company and The Bank of New York (the
"Rights Agent") pursuant to which the Common Stock Purchase
Rights registered under the Form 8-A were issued (the Rights
Agreement as so amended is referred to as the "Prior Rights
Agreement").
In connection with its declaration of a dividend of one
Common Share on each outstanding Common Share (the "Stock
Dividend"), the Board of Directors of the Company adopted
amendments to the Prior Rights Agreement, effective upon April
4, 1997, the record date for the Stock Dividend. The
amendments are set forth in an Amended and Restated Rights
Agreement (the "Rights Agreement") dated as of April 4, 1997,
between the Company and the Rights Agent, which supersedes the
Prior Rights Agreement. A copy of the Rights Agreement is
attached as an exhibit hereto and is hereby incorporated by
reference. The following summary of the Rights is qualified
in its entirety by reference to the Rights Agreement.
As of the date of this Form 8-A/A, there is associated
with each outstanding Common Share one Right which, except as
set forth below, when exercisable, entitles the registered
holder to purchase from the Company one ten-thousandth of a
share of preferred stock, designated as Series A Preferred
Shares, par value $100 per share (the "Preferred Shares"), at
a price of $87.50 per one ten-thousandth of a share (the
"Purchase Price"), subject to adjustment. The terms of the
Preferred Shares are summarized below and are set forth in a
Form of Certificate of Amendment to the Articles of
Incorporation of the Company attached as Exhibit A to the
Rights Agreement. No further adjustments in the Rights will
be made pursuant to the terms of the Rights Agreement by
reason of the Stock Dividend.
Until the earlier to occur of (i) ten days following a
public announcement that, without the prior consent of the
Board of Directors of the Company, a person or group,
including any affiliates or associates of such person or group
(an "Acquiring Person"), acquired, or obtained the right to
acquire, beneficial ownership of 10% or more of the
outstanding Common Shares (the "Stock Acquisition Date"), or
(ii) ten business days (or such later date as the Board may
determine) following the commencement or announcement of an
intention (which is not subsequently withdrawn) to make a
tender offer or exchange offer which would result in any
person or group (and related persons) having beneficial
ownership of 10% or more of the outstanding Common Shares
without the prior consent of the Board of Directors (the
earlier of such dates being called the "Distribution Date"),
the Rights will be attached to all Common Share certificates
and will be evidenced, with respect to any of the Common Share
certificates outstanding as of April 4, 1997, by the Common
Share certificates. The Rights Agreement provides that, until
the Distribution Date, the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common
Share certificates issued after April 4, 1997, (or as soon
thereafter as is reasonably practicable) upon transfer,
replacement, or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
Common Share certificates outstanding as of April 4, 1997,
even without such a notation, will also constitute the
transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed
to holders of record of the Common Shares as of the close of
business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on March 19, 2006, unless
earlier redeemed by the Company as described below.
In the event that any person becomes an Acquiring Person,
each holder of a Right generally will thereafter have the
right for a 60 day period (or such other period set by the
Board of Directors) to receive upon exercise of the Right that
number of shares of Common Stock (or, under certain
circumstances, of units of one ten-thousandth of a Preferred
Share) having a market value (immediately prior to the
occurrence of an Acquiring Person) of two times the exercise
price of the Right (such right being called the "Subscription
Right"). Notwithstanding the foregoing, following the
occurrence of an Acquiring Person, all Rights that are, or
(under certain circumstances specified in the Rights
Agreement) were, beneficially owned by the Acquiring Person or
any affiliate or associate thereof will be null and void.
In the event that, at any time following the Stock
Acquisition Date, the Company is acquired in a merger or other
business combination transaction or 50% or more of the
Company's assets or earning power are sold (in one transaction
or a series of transactions), proper provision shall be made
so that each holder of a Right shall thereafter have the right
to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common
stock of the acquiring company (or, in the event there is more
than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have
a market value of two times the exercise price of the Right
(such Right being called the "Merger Right"). The holder of a
Right will continue to have the Merger Right whether or not
such holder exercises the Subscription Right.
The Purchase Price payable, the number of Rights, and the
number of Preferred Shares or other securities or property
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination,
or reclassification of the Preferred Shares; (ii) upon the
grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or shares having
the same rights, privileges, and preferences as the Preferred
Shares at less than the current market price of the Preferred
Shares; or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends and excluding
dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above.)
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No
fractional shares will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of
the Preferred Shares (or the Common Shares) on the last
trading date prior to the date of exercise.
At any time prior to the earliest to occur of (i) the
close of business on the Stock Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective upon
the action of the Board of Directors. Additionally, following
the Stock Acquisition Date and the expiration of the period
during which the Subscription Right is exercisable, the
Company may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
combination transaction or series of transactions involving
the Company in which all holders of Common Stock are treated
alike but not involving an Acquiring Person or its affiliates
or associates. Upon the effective date of the redemption of
the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive
the Redemption Price.
All of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the
Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board
in order to cure any ambiguity, defect, or inconsistency, to
make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring
Person), or, subject to certain limitations, to shorten or
lengthen any time period under the Rights Agreement.
The Preferred Shares purchasable upon exercise of the
Rights will be nonredeemable and junior to any other series of
preferred stock the Company may issue (unless otherwise
provided in the terms of such stock). Each Preferred Share
will have a preferential quarterly dividend in an amount equal
to 10,000 times the dividend declared on each Common Share,
but in no event less than $100. In the event of liquidation,
the holders of Preferred Shares will receive a preferred
liquidation payment per share equal to the greater of $25,000
or 10,000 times the payment made per each Common Share. Each
Preferred Share will have one vote, voting together with the
Common Shares. In the event of any merger, consolidation, or
other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 10,000 times the
amount and type of consideration received per Common Share.
The rights of the Preferred Shares, as to dividends,
liquidation, and voting, and in the event of mergers and
consolidations, are protected by customary anti-dilution
provisions. Fractional Preferred Shares will be issuable;
however, the Company may elect to distribute depositary
receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of
one ten-thousandth of a share, an adjustment in cash will be
made based on the market price of the Preferred Shares on the
last trading date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group
that attempts to acquire the Company without conditioning the
offer on the Rights being redeemed or a substantial number of
Rights being acquired. However, the Rights should not
interfere with any merger or other business combination
approved by the Board of Directors.
The form of Amended and Restated Rights Agreement between
the Company and The Bank of New York setting forth the terms
of the Rights, Exhibit A thereto -- the Form of Certificate of
Amendment to the Amended Articles of Incorporation of the
Company specifying the terms of the Preferred Shares, Exhibit
B thereto -- the Form of Rights Certificate -- and Exhibit C
thereto -- the Summary of Rights to Purchase Stock -- are
attached hereto as Exhibit 1 and are incorporated herein by
reference. The foregoing description of the Rights is
qualified by reference to the Amended and Restated Rights
Agreement.
Item 2. Exhibits.
---------
1. Form of Amended and Restated Rights Agreement dated
as of April 4, 1997, between The Kroger Co. and The Bank of
New York which includes, as Exhibit A thereto, the Form of
Certificate of Amendment to the Amended Articles of
Incorporation of the Company specifying the terms of the
Preferred Shares and, as Exhibit B thereto, the form of Rights
Certificate. Pursuant to the Rights Agreement, Rights
Certificates will not be mailed until 10 days after a person
acquires beneficial ownership of 10% or more of the Common
Shares or a person commences or announces its intention to
commence an offer if, upon consummation thereof, such person
would become the beneficial owner of 10% or more of the Common
Shares.
<PAGE>
SIGNATURE
-----------
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly
caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized.
THE KROGER CO.
By (Thomas E. Murphy)
Thomas E. Murphy
Group Vice President
Date: April 4, 1997
<PAGE>
EXHIBIT INDEX
--------------
Exhibit Description
- ------- -----------
1 Form of Amended and Restated Rights Agreement
dated as of April 4, 1997, between The Kroger Co.
and The Bank of New York which includes, as
Exhibit A thereto, the Form of Certificate of
Amendment to the Amended Articles of Incorporation
of the Company specifying the terms of the
Preferred shares and, as Exhibit B thereto, the
form of Rights Certificate. Pursuant to the
Rights Agreement, Rights Certificates will not
be mailed until 10 days after a person acquires
beneficial ownership of 10% or more of the Common
Shares or a person commences or announces its
intention to commence an offer if, upon
consummation thereof, such person would become
the beneficial owner of 10% or more of the Common
Shares.
<PAGE>
Exhibit 1
---------
THE KROGER CO.
and
THE BANK OF NEW YORK
Rights Agent
------------------
Amended and Restated Rights Agreement
Dated as of April 4, 1997
<PAGE>
Table of Contents
Section Page
- --------- ----
1 Certain Definitions 1
2 Appointment of Rights Agent 3
3 Issue of Rights Certificates 4
4 Form of Rights Certificates 5
5 Countersignature and Registration 6
6 Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates 6
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights 7
8 Cancellation and Destruction of Rights
Certificates 9
9 Reservation and Availability of Preferred
Shares 9
10 Preferred Shares Record Date 10
11 Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights 11
12 Certificate of Adjusted Purchase Price or
Number of Shares 18
13 Consolidation, Merger or Sale or Transfer
of Assets or Earning Power 18
14 Additional Covenant 21
15 Fractional Rights and Fractional Shares 21
16 Rights of Action 22
17 Agreement of Rights Holders 22
18 Rights Certificate Holder Not Deemed a
Stockholder 23
19 Concerning the Rights Agent 23
20 Merger or Consolidation or Change of Name
of Rights Agent 24
21 Duties of Rights Agent 24
22 Change of Rights Agent 26
23 Issuance of New Rights Certificates 27
24 Redemption and Termination 28
25 Notice of Certain Events 28
26 Notices 29
27 Supplements and Amendments 30
28 Determination and Actions by the Board
of Directors, etc. 30
29 Successors 31
30 Benefits of this Agreement 31
31 Severability 31
32 Governing Law 31
33 Counterparts 31
34 Descriptive Headings 31
Exhibit A -- Form of Certificate of Amendment to the
Amended Articles of Incorporation of the
Company
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
<PAGE>
AMENDED AND RESTATED RIGHTS AGREEMENT
--------------------------------------
This Agreement, dated as of April 4, 1997, between
The Kroger Co., an Ohio corporation (the "Company"), and The
Bank of New York (the "Rights Agent").
W I T N E S S E T H
---------------------
WHEREAS, on February 28, 1986, the Board of Directors of
the Company authorized and declared a dividend distribution of
one Pre-Amendment Right (as hereinafter defined) for each
outstanding share of Common Stock, par value $1.00 per share,
of the Company (the "Common Stock") outstanding on March 19,
1986, (the "Record Date"), and contemplated the issuance of
one Right (a "Pre-Amendment Right") for each share of Common
Stock of the Company issued between the Record Date and the
earliest of the Distribution Date and the Expiration Date (as
such terms are hereinafter defined), each Right representing
the right to purchase Common Stock, upon the terms and subject
to the conditions set forth in the Amended and Restated Rights
Agreement dated as of November 30, 1995, between the Company
and the Rights Agent (the "Prior Rights Agreement");
WHEREAS, the Board of Directors of the Company has
determined that it is advisable and in the best interests of
the Company (upon consideration of the interests of the
Company's shareholders and the matters set forth in division
(E) of Section 1701.59 of the Ohio Revised Code) to amend and
restate in its entirety the Prior Rights Agreement as set
forth herein and the Pre-Amendment Rights shall henceforth be
governed by the terms and subject to the conditions set forth
herein; and
WHEREAS, this Agreement provides, among other
things, that each Pre-Amendment Right shall, effective upon
the date of this Agreement, hereafter be one Right (a "Right")
and each Right shall represent the right to purchase at the
Purchase Price set forth herein one ten-thousandth of a Series
A Preferred Share of the Company having the rights, powers,
and preferences set forth in the Form of Certificate of
Amendment to the Amended Articles of Incorporation of the
Company attached hereto as Exhibit A, upon the terms and
subject conditions set forth herein, and no other adjustment
shall be made to the Pre-Amendment Rights or the Rights by
reason of the declaration by the Board of Directors of the
Company of a dividend of one share of Common Stock on each
share of Common Stock payable to stockholders of record as of
the date of this Agreement or by the payment of this stock
dividend.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby
agree as follows:
Section 1. Certain Definitions. For purposes of
-------------------
this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person
(as such term is hereinafter defined) who or which, together
with all Affiliates (as such term is hereinafter defined) and
Associates (as such term is hereinafter defined) of such
Person, without the prior approval of the Board of Directors
of the Company, shall be the Beneficial Owner (as such term is
hereinafter defined) of 10% or more of the shares of Common
Stock then outstanding or who was such a Beneficial Owner at
any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of 10% or more of the
outstanding shares of Common Stock, but shall not include the
Company, any subsidiary of the Company (as such term is
hereinafter defined), any employee benefit plan of the Company
or any of its subsidiaries, any entity holding shares of
Common Stock organized, appointed, or established by the
Company or any of its subsidiaries for or pursuant to the
terms of any such plan or any trustee or administrator of any
such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right or
obligation to acquire (whether such right or obligation
is exercisable or effective 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, rights
(other than these Rights), warrants, or options, or
otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own,"
securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement, or understanding (whether or not in
writing); provided, however, that a Person shall be not be
deemed the "Beneficial Owner" of, or to "beneficially own,"
any security under this clause (B) if the agreement,
arrangement, or understanding to vote such security (1)
arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable by
such person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement, or understanding (whether or not
in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described
in clause (B) of subparagraph (ii) of this paragraph
(c)), or disposing of any securities of the Company.
(d) "Business Day" shall mean any day other
than a Saturday, Sunday, or a day on which banking
institutions in the State of Ohio are authorized or obligated
by law or executive order to close.
(e) "Close of business" on any given date
shall mean 5:00 P.M., Cincinnati time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., Cincinnati time, on the next succeeding Business
Day.
(f) "Common Stock" shall mean the Common
Stock, par value $1.00 per share, of the Company, except that
"Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock with the
greatest voting power, or the equity securities or other
equity interest having power to control or direct the
management, of such Person or, if such Person is a subsidiary
of another Person, the Person which ultimately controls such
first-mentioned Person and which has issued and outstanding
such capital stock, equity securities, or equity interests.
(g) "Person" shall mean any individual, firm,
corporation, partnership, or other entity.
(h) "Preferred Shares" shall mean the Series A
Preferred Shares, par value $100 per share, of the Company.
(i) "Rights Agreement" shall mean this
Agreement, including as it may hereafter be amended.
(j) "Stock Acquisition Date" shall mean the
first date of public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such.
(k) A "subsidiary" of any person shall mean
any corporation or other entity of which a majority of the
voting power of the voting equity securities or voting
interests is owned, directly or indirectly, by such Person, or
which is otherwise controlled by such Person.
Section 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 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more Co-
Rights Agents, the respective duties of the Rights Agents and
any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Rights Certificates.
----------------------------
(a) Until the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the
Board of Directors of the Company) after the date of the
commencement of, or first public announcement of the intent of
any Person (other than the Company, any subsidiary of the
Company, or any employee benefit plan of the Company or any of
its subsidiaries, any Person or entity organized, appointed,
or established by the Company or any of its subsidiaries for
or pursuant to the terms of any employee benefit plan or any
trustee or administrator of any such plan) to commence (which
intention to commence remains in effect for five business days
after such announcement), a tender or exchange offer which
would result in such Person becoming an Acquiring Person (the
earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3)
by the certificates for Common Stock registered in the names
of the holders of the Common Stock (which certificates for
Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights
(and the right to receive certificates therefor) will be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the
Company); provided, however, that if a tender or exchange
offer is terminated prior to the occurrence of the
Distribution Date, then no Distribution Date shall occur as a
result of that tender or exchange offer. As soon as
practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business
on the Distribution Date, at the address of such holder shown
on the records of the Company, a certificate for Rights, in
substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common
Stock so held. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
(b) With respect to certificates for the
Common Stock outstanding as of the date of this Agreement,
until the Distribution Date (or earlier redemption, expiration
or termination of the Rights), the Rights will be evidenced by
such certificates for the Common Stock with or without a copy
of the Summary of Rights attached thereto and the registered
holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the Distribution Date
(or earlier redemption, expiration, or termination of the
Rights), the surrender for transfer of any of the certificates
for the Common Stock outstanding on the Record Date, even
without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
(c) Certificates for the Common Stock issued
after the date of this Agreement (or as soon thereafter as is
reasonably practicable), but prior to the earlier of the
Distribution Date or the Expiration Date (as such term is
hereinafter defined), shall be deemed also to be certificates
for Rights, and shall have impressed, printed, stamped,
written, or otherwise affixed onto them the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set forth in
an Amended and Restated Rights Agreement between The
Kroger Co. and The Bank of New York (the "Rights
Agent") dated as of April 4, 1997 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal offices of The Kroger
Co. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed,
may expire, or may be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Kroger Co. will mail to the holder
of this certificate a copy of the Rights Agreement
without charge within five days after receipt of a
written request therefor. Under certain
circumstances, Rights issued to Acquiring Persons
(as defined in the Rights Agreement) or certain
related persons and any subsequent holder of such
Rights may become null and void.
With respect to such certificates containing the
foregoing legend, until the Distribution Date, the Rights
associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any of such certificates
shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. If the
Company purchases or otherwise acquires shares of Common Stock
prior to the Distribution Date, any Rights associated with
such Common Stock shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights
associated with the share of Common Stock which are no longer
outstanding.
Section 4. Form of Rights Certificates.
----------------------------
(a) The Rights Certificates (and the forms of
election to purchase shares and of assignment to be printed on
the reverse thereof) shall each be substantially in the form
set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries, or
endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to
conforn to usage. Subject to the provisions of Section 11 and
Section 23 hereof, the Rights Certificates, whenever
distributed, on their face shall entitle the holders thereof
to purchase such number of units of one ten-thousandth of a
Preferred Share as shall be set forth therein at the price per
share set forth therein (the "Purchase Price"), but the number
of such shares and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a) or Section 23 hereof that represents Rights
beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Rights Certificate issued at any
time upon the transfer of any Rights to such an Acquiring
Person or any Associate or Affiliate thereof or to any nominee
of such Acquiring Person, Associate, or Affiliate, and any
Rights Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement, or adjustment of any
other Rights Certificate referred to in this sentence, shall
contain the following legend:
The Rights represented by this Rights Certificate
were issued to a Person who was an Acquiring Person
or an Affiliate or an Associate of an Acquiring
Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby are null and void.
The provisions of Section 7(e) of this Rights Agreement shall
be operative whether or not the foregoing legend is contained
on any such Rights Certificate.
Section 5. Countersignature and Registration. The
---------------------------------
Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, any Vice Chairman of the Board,
any President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested
by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such
Rights 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
Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificates may be signed on behalf
of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement
any such person was not such an officer.
Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at one of its offices, books
for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates, and the certificate number
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
-----------------------------------
Exchange of Rights Certificates; Mutilated, Destroyed, Lost,
- ------------------------------------------------------------
or Stolen Rights Certificates. Subject to the provisions of
- ------------------------------
Section 4(b), Section 7(e) and Section 15 hereof, at any time
after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split
up, combined, or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to
purchase a like number of units of one ten-thousandths of a
Preferred Share as the Rights Certificate or Rights
Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split
up, combine, or exchange any Rights Certificate shall make
such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Rights Certificates
to be transferred, split up, combined, or exchanged at the
principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. 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 Rights Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction, or mutilation of a Rights Certificate, and, in
case of loss, theft, or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the
Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price;
-----------------------------------
Expiration Date of Rights.
- --------------------------
(a) The registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent, together with
payment of the Purchase Price for each share of Common Stock
as to which the Rights are exercised, at or prior to the
earlier of (i) the close of business on (i) March 19, 2006
(the "Final Expiration Date"), or (ii) the date on which the
Rights are redeemed as provided in Section 24 hereof (such
earlier time being herein referred to as the "Expiration
Date"). Notwithstanding any other provision of this
Agreement, any Person who, prior to the Distribution Date,
becomes a record holder of shares of Common Stock may exercise
all of the rights of a registered holder of a Rights
Certificate with respect to the Rights associated with such
shares of Common Stock in accordance with and subject to the
provisions of this Agreement, including the provisions of
Section 7(e) hereof, as of the date such Person becomes a
record holder of shares of Common Stock.
(b) Subject to the terms and conditions set
forth herein, when exercisable, each Right shall represent the
right to purchase one ten-thousandth of a Preferred Share.
The Purchase Price for each one ten-thousandth of a Preferred
Share pursuant to the exercise of a Right shall initially be
$87.50, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the appropriate form of
election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an
amount equal to any applicable transfer tax (as determined by
the Rights Agent) in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall,
subject to Section 21(k), thereupon promptly (i) requisition
from any transfer agent of the Preferred Shares (or, as the
case may be, shares of Common Stock) (or make available, if
the Rights Agent is the transfer agent) certificates for the
number of shares of stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply
with all such requests; (ii) when appropriate, requisition
from the Company the amount of cash, if any, to be paid in
lieu of issuance of fractional shares in accordance with
Section 15; (iii) promptly after receipt of such certificates,
cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder; and
(iv) when appropriate, after receipt promptly deliver such
cash to or upon the order of the registered holder of such
Rights Certificate. In addition, in the case of an exercise
of the Rights by a holder pursuant to Section 11(a)(ii), the
Rights Agent shall return such Rights Certificate to the
registered holder thereof after imprinting, stamping, or
otherwise indicating thereon that the rights represented by
such Rights Certificate no longer include the rights provided
by Section 11(a)(ii) of the Rights Agreement and if less than
all the Rights represented by such Rights Certificate were so
exercised, the Rights Agent shall indicate that rights under
Section 11(a)(ii) continue to the extent the Rights were not
previously exercised pursuant thereto.
(d) In case the registered holder of any
Rights Certificate shall exercise (except pursuant to Section
11(a)(ii)) less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Rights Certificate
or to his duly authorized assigns, subject to the provisions
of Section 15 hereof.
(e) Notwithstanding anything in this Agreement
to the contrary, from and after the time an Acquiring Person
becomes such, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof)
who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom
the Acquiring Person has a continuing agreement, arrangement,
or understanding regarding the transferred Rights, or (B) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement, or understanding
which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with,
but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or
its Affiliates, Associates, or transferees hereunder.
(f) Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company
shall be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless the certificate
contained in the appropriate form of election to purchase set
forth on the reverse side of the Rights Certificate
surrendered for such exercise shall have been completed and
signed by the registered holder thereof and the Company shall
have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights
--------------------------------------
Certificates. All Rights Certificates surrendered for the
- ------------
purpose of exercise, transfer, split up, combination, or
exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or
in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of
the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of
-------------------------------
Preferred Shares. The Company covenants and agrees that it
- ----------------
will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any authorized and
issued Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights; provided, however
that the Company need not so reserve and keep available shares
of Common Stock (and/or Preferred Shares or other securities)
which may be required by Section 11(a)(ii) until the
occurrence of any event specified in such Section.
So long as the Preferred Shares (and, after the
occurrence of an event specified by Section 11(a)(ii), shares
of Common Stock or other securities, as the case may be)
issuable upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance
upon such exercise.
The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all
Preferred Shares, shares of Common Stock (or other securities,
as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable
shares (or securities).
The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Rights Certificates or of any
certificates for shares of Preferred Shares, Common Stock (or
other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a person other
than, or in respect of the issuance or delivery of Preferred
Shares, shares of Common Stock (or other securities, as the
case may be) in a name other than that of the registered
holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any
certificates for shares of Common Stock (or other securities,
as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction
that no such tax is due.
The Company shall use its best efforts to (i) file,
as soon as practicable following the Distribution Date, a
registration statement under the Securities Act of 1933 (the
"Act") with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as
practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the
date of the expiration of the rights provided by Section 11
(a)(ii). The Company will also take such action as may be
appropriate under the blue sky laws of the various states.
Section 10. Preferred Shares Record Date. Each
----------------------------
person in whose name any certificate for Preferred Shares (or
shares of Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the
Preferred Shares (or shares of Common Stock and/or other
securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the
Rights Certificate evidencing such Rights was duly presented
and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such
presentation and payment is a date upon which the Preferred
Shares (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or
Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which
the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number
------------------------------------
and Kind of Shares or Number of Rights. The Purchase
- --------------------------------------
Price, the number and kind of shares covered by each Right and
the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend
on the Preferred Shares payable in shares or fractional
units of Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the
effective date of such subdivision, combination, or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior
to such date and at a time when the Preferred Shares
transfer books of the Company were open, he would have
owned upon such exercise and 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 exercise of one
Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior
to any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring
Person, then proper provision shall be made so that each
holder of a Right, except as provided in Section 7(e)
hereof, shall, for a period of 60 days (or such other
shorter or longer period as may be established by action
of a majority of the Board of Directors) after the later
of the occurrence of any such event and the effective
date of an appropriate registration statement pursuant to
Section 9, have a right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of Preferred Shares,
such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one
ten-thousandths of a Preferred Share for which a Right is
exercisable immediately prior to the first occurrence of
such event and dividing that product by (y) 50% of the
current market price per share of the Common Stock
(determined pursuant to Section 11(d)) on the date of
such first occurrence (such number of shares being
referred to as the "number of Adjustment Shares").
(iii) In the event that there shall not be
sufficient Treasury shares or authorized but unissued
shares of Common Stock to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph
(ii), notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by
applicable law, each Right shall thereafter represent the
right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of
this Agreement, (x) a number of (or fractions of) shares
of Common Stock (up to a maximum number of shares of
Common Stock which may permissibly be issued) and (y) a
number of (or fractions of) other equity securities of
the Company which the Board of Directors of the Company
has determined to have the same current per share market
price (determined pursuant to Section 11(d)(i) and (ii)
hereof) as one share of Common Stock (such number of (or
fractions of other equity securities of the Company)
being referred to as a "common stock equivalent") (one
ten-thousandth of a Preferred Share shall be deemed to be
a common stock equivalent), equal in the aggregate to the
number of Adjustment Shares; provided, however, if there
are unavailable sufficient shares (or fractions of
shares) of Common Stock and/or shares of common stock
equivalents, then the Company shall, to the extent
permitted by applicable law, take all such action as may
be necessary to authorize additional shares of Common
Stock or common stock equivalents for issuance upon
exercise of the Rights, including the calling of or
meeting of shareholders; provided, further however, if
the Company is unable to cause the authorization of a
sufficient number of additional shares of Common Stock or
common stock equivalents to be available for issuance
upon exercise in full of the Rights, then, in the event
the Rights become so exercisable, notwithstanding any
other provision of this Agreement, each Right shall
thereafter represent the right to receive the Adjusted
Number of Common Shares upon exercise at the Adjusted
Purchase Price (as such terms are hereinafter defined).
As used herein, the term Adjusted Number of Shares of
Common Stock shall be equal to that number of (or
fractions of) shares of Common Stock and/or common stock
equivalents equal to the product of (x) the number of
Adjustment Shares and (y) a fraction, the numerator of
which is the number of shares (or fractions of) of Common
Stock and/or common stock equivalents available for
issuance upon exercise of the Rights and the denominator
of which is the aggregate number of Adjustment Shares
otherwise issuable upon exercise in full of all Rights
(assuming there were sufficient shares of Common Stock
available) (such fraction being referred to as the
"Proration Factor"). The Adjusted Purchase Price shall
mean the product of the Purchase Price and the Proration
Factor. The Board of Directors may, but shall not be
required to, establish procedures to allocate the right
to receive shares of Common Stock and common stock
equivalents upon exercise of the Rights among holders of
Rights.
(b) If the Company shall fix 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 convertible into
Preferred Shares) at a price per share of Preferred Shares (or
having a conversion price per share, if a security convertible
into Preferred Shares) less than the current market price (as
defined in Section 11 (d)) per share of Preferred Shares on
such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the
number of Preferred Shares which the aggregate offering price
of the total number of Preferred Shares to be offered (and/or
the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number
of Preferred Shares outstanding on such record date, plus the
number of additional Preferred Shares 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 exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such
consideration shall be determined reasonably and with good
faith to the holders of Rights by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on
the Rights Agent. Preferred Shares owned by or held for the
account of the Company shal not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in
the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been
fixed.
(c) If the Company shall fix a record date for the
making of a distribution to all holders of Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend), assets (other than a
dividend payable in Preferred Shares, but including any
dividend payable in stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to
in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current
market price (as defined in Section 11(d)) per Preferred Share
on such record date, less the fair market value (as determined
reasonably and with utmost good faith to the holders of Rights
by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent) of the portion of
the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants
distributable in respect of one Preferred Share and the
denominator of which shall be current market price per share
of the Preferred Share; provided, however, that in no event
shall the consideration to be paid upon exercise of one Right
be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right.
Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would be in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation
hereunder, the "current market price" per share of Common
Stock (or any other security) on any date shall be deemed to
be the average of the daily closing prices per share of such
Common Stock (or such other security) for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that
the current per share market price of the Common Stock (or
such other security) is determined during a period following
the announcement by the issuer of such Common Stock (or such
other security, as the case may be) of (i) a dividend or
distribution on such Common Stock (or such other security, as
the case may be) payable in shares of such Common Stock (or
such other security, as the case may be) or securities
convertible into shares of such Common Stock (or such other
security, as the case may be), or (ii) any subdivision,
combination or reclassification of such Common Stock (or such
other security), and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case,
the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the shares of Common Stock
(or such other security) 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 shares of Common Stock (or such other
security) are listed or admitted to trading or, if the shares
of Common Stock (or such other security) or not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the shares of
Common Stock (or such other security) 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 Stock (or such other security) selected
by the Board of Directors of the Company. If on any such date
no market maker is making a market in the Common Stock (or
such other security), the fair value of such shares on such
date as determined reasonably and with good faith the holders
of Rights by the Board of Directors of the Company shall be
used and shall be binding on the Rights Agent. The term,
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock (or
such other security) are listed or admitted to trading is open
for the transaction of business or, if the shares of Common
Stock (or such other security) are not listed or admitted to
trading on any national securities exchange, a Business Day.
If the Common Stock (or such other security) is not publicly
held or not so listed or traded, "current market price" per
share shall mean the fair value per share determined
reasonably and with good faith to the holders of Rights by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(ii) For purpose of any computation hereunder, the
"current market price" per share (or one ten-thousandth of a
share) of Preferred Shares shall be determined in the same
manner as set forth above for the Common Stock in clause (i)
of this Section 11(d) (other than the last sentence thereof).
If the current market price per share (or one ten-thousandth
of a share) of Preferred Shares cannot be determined in the
manner provided above or if the Preferred Shares is not
publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the "current market price"
per share of Preferred Shares shall be conclusively deemed to
be an amount equal to 10,000 (as such number may be
appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied
by the current market price per share of the Common Stock and
the "current market price" per one ten-thousandth of a share
of Preferred Shares shall be equal to the current market price
per share of the Common Stock (as appropriately adjusted). If
neither the Common Stock nor the Preferred Shares are publicly
held or so listed or traded, "current market price" per share
shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of
Common Stock (or such other security) or one-millionth of a
Preferred Share, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section
11(a) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares
contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 15 hereof with respect
to the Common Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase
Price, that number of one ten-thousandths of a Preferred Share
(calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one ten-thousandths of a
Preferred Share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment 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 ten-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for
the number of one ten-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest ten thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election
to adjust the number of rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at
least 10 days later than the date of the public announcement.
If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on
such record date Rights Certificates evidencing, subject to
Section 15 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Rights Certifcates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares (or fractional units
thereof) of Preferred Shares issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share
and the number of shares which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par
value, if any, of the Preferred Shares (or other securities)
issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Preferred Shares (or other
securities) at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event
the issuing to the holder of any Right exercised after such
record date the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such
adjustment.
(m) Anything to the contrary in this Section 11
notwithstanding, the Company, by action of a majority of the
Board of Directors, shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent
that it in its sole discretion shall determine to be advisable
in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred
Shares at less than the current market price, issuance wholly
for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred
Shares, stock dividends or issuance of rights, options or
warrants referred to hereinabove in this Section 11, hereafter
made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a subsidiary of the Company
in a transaction which does not violate Section 11(o) hereof),
(ii) merge with or into any other Person (other than a
subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), or (iii) sell or transfer (or
permit any subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company
and/or any of its subsidiaries in one or more transactions
each of which does not violate Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation,
merger, sale or transfer there are any charter or by-law
provisions or any rights, warrants or other instrument or
securities outstanding or agreements in effect or other
actions taken, which would materially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party"
for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any
of its Affiliates and Associates. The Company shall not
consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such other Person shall
have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this Section 11(n).
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by
Section 24 or Section 27 hereof, take (or permit any
subsidiary to take) any action the purpose of which is to, or
if at the time such action is taken it is reasonably
foreseeable that the effect of such action is to, diminish or
otherwise eliminate the benefits intended to be afforded by
the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date
of this Agreement and prior to the Distribution Date, the
Company shall (i) declare or pay any dividend on the shares of
Common Stock payable in shares of Common Stock or (ii) effect
a subdivision, combination or consolidation of the shares of
Common Stock (by reclassification or otherwise than by payment
of dividends in Common Stock) into a greater or lesser number
of shares of Common Stock, then in any such case, the number
of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so
that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior
to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such
event. The adjustments provided for in this Section 11(p)
shall be made successively whenever such dividend is declared
or paid or such a subdivision, combination or consolidation is
effected.
(q) The exercise of Rights under Section 11(a)(ii)
shall only result in the loss of rights under Section
11(a)(ii) to the extent so exercised and shall not otherwise
affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price
--------------------------------------
or Number of Shares.
- -------------------
Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer
agent for the Common Stock a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall
not be deemed to have knowledge of such adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or
--------------------------------
Transfer of Assets or Earning Power.
- -----------------------------------
(a) In the event that, on or following the Stock
Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with and into, any other
Person, (y) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the shares of
Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other
property or all holders of shares of Common Stock are not
treated alike or following the merger or consolidation the
holders of Common Stock immediately prior to the transaction
do not hold in the same proportion all of the voting power of
the corporation surviving the transaction, or (z) the Company
shall sell, mortgage or otherwise transfer (or one or more of
its subsidiaries shall sell, mortgage or otherwise transfer),
in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of
the Company and its subsidiaries (taken as a whole) to any
other Person, then, and in each such case, proper provision
shall be made so that (i) following the Distribution Date,
each holder of a Right, shall have the right to receive, upon
the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of
shares of freely tradable Common Stock of the Principal Party
(as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims,
as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of shares of
Common Stock for which a Right is then exercisable and
dividing that product by (2) 50% of the current market price
per share of the Common Stock of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall threafter be liable for, and
shall assume, by virtue of such consolidation, merger sale or
transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11
hereof shall apply to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in (x) or (y) of the first sentence of this Section 13, the
Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to the merger or consolidation
(including, if applicable, the Company if it is the surviving
corporation); and
(ii) in the case of any transaction described
in (z) of the first sentence in this Section 13, the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (1) if
the Common Stock of such Person is not at such time and has
not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect subsidiary of another Person,
"Principal Party" shall refer to such other Person; (2) in
case such Person is a subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of
which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value; and (3) in
case such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains
of ownership having an interest in such joint venture as if
such party were a "Subsidiary" of both or all of such joint
venturers and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same
ratio as their direct or indirect interests in such Person
bear to the total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto
the Company and each Principal Party and each other Person who
may become a Principal Party as a result of such
consideration, merger, sale or transfer shall have a
sufficient number of shares of its authorized Common Stock
which have not been issued or reserved for issuance in order
to permit the exercise in full of the Rights in accordance
with this Section 13 and shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the
date of any consolidation, merger, sale or transfer of assets
mentioned in paragraph (a) of this Section 13, the Principal
Party at its own expense will
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, will use its best efforts to cause such registration
statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the
Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon
exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all material respects
with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or
other transfers. The rights under this Section 13 shall be in
addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise
thereunder.
Section 14. Additional Covenant. Notwithstanding
-------------------
any other provision of this Agreement, no adjustment to the
Purchase Price, the number of Preferred Shares (or shares of
Common Stock) (or fractions of a share) for which a Right is
exercisable or the number of Rights outstanding or any similar
adjustment shall be made or be effective if such adjustment
would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Section
11(a)(ii) and Section 13, unless the terms of this Agreement
are amended so as to preserve such benefits.
Section 15. Fractional Rights and Fractional
--------------------------------
Shares.
- -------
(a) The Company shall not be required to issue
fractions of Rights or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole
Right. For the purposes of this Section 15(a), the current
market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall
be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if
on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company.
If on any such date no such market maker is making a market in
the Rights the fair value of the Rights on such date as
determined reasonably and with good faith to the holders of
Rights by the Board of Directors of the Company shall be used
and shall be binding on the Rights Agent.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one ten-thousandth of a Preferred Share)
or of shares of Common Stock (or any other securities) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions
which are integral multiples of one ten-thousandth of a
Preferred Share) or of fractional shares of Common Stock (or
any other securities). Fractions of Preferred Shares 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 the
agreement shall provide that the holders of the depositary
receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the
Preferred Shares represented by the depositary receipts. In
lieu of fractional Preferred Shares that are not integral
multiples of one ten-thousandth of a Preferred Share or in
lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of a
Preferred Share or share of Common Stock (or any other
security), as the case may be. For purposes of this Section
15(b), the current market value of one ten-thousandth of a
Preferred Share or of a share of Common Stock shall be the
closing price of such a share (or fraction thereof) (as
determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right.
Section 16. Rights of Action. All rights of action
----------------
in respect of this Agreement (other than rights of action
given to the Rights Agent under Section 19 hereof) are vested
in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered
holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), 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
Rights Certificate in the manner provided in such Rights
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 shall be entitled to specific performance
of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder
of any Person subject to this Agreement. Holders of Rights
shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any
action to enforce the provisions of this Agreement in which
they successfully prosecute their claims.
Section 17. Agreement of Rights Holders. Every
----------------------------
holder of a Right by accepting the same consents and agrees
with the Company and the Rights Agent and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer;
(c) subject to Section 6 and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the person
in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common
Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall
have any liability to any holder of a Right or a beneficial
interest in a Right or other Person as a result of its
inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction
or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
shall not have sought or otherwise cooperated in obtaining
such order, decree or ruling and must use its best efforts to
have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 18. Rights Certificate Holder Not Deemed a
--------------------------------------
Stockholder. No holder, as such, of any Rights Certificate
- -----------
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the shares of Common Stock or any
other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a
stockholder of the Company 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 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised
in accordance with the provisions thereof.
Section 19. Concerning the Rights Agent. The
---------------------------
Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly.
The indemnity provided for in this Section 19 shall survive
the expiration of the Rights and the termination of this
Agreement.
The Rights Agent shall be protected and shall incur
no liability for or in respect of any action taken, suffered
or omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 20. Merger or Consolidation or Change of
------------------------------------
Name of Rights Agent. Any corporation into which the Rights
- --------------------
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or
any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the
Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the
execution or filing of any 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 22 hereof. In
case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the
name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the
Rights Certificates in this Agreement.
In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered
the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates
and in this Agreement.
Section 21. Duties of Rights Agent. The Rights
----------------------
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person) 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 the Chairman of the Board, any Vice
Chairman of the Board, any President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained
in this Agreement or in the Rights Certificates (except as to
the fact that it has countersigned the Rights Certificates) or
be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any
Rights becoming null and void pursuant to Section 7(e) hereof
or for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 hereof or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any
such adjustment); nor shall it be responsible for any
determination by the Board of Directors of the Company of
current market value of the Rights or Common Stock pursuant to
the provisions of Section 15 hereof; nor shall it by any act
hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Common
Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock will,
when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder and certificates delivered
pursuant to any provision hereof from the Chairman of the
Board, any Vice Chairman of the Board, any President, any Vice
President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and is
authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it
in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to
the Company or to the holders of the Rights resulting from any
such act, omission, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer
without first consulting with the Company.
Section 22. Change of Rights Agent. The Rights
----------------------
Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company and to each transfer
agent of the Common Stock by registered or certified mail, and
to holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock by registered
or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the
Company), then the registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the
laws of the United States or of any state, in good standing,
which is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of
at least $50,000,000. After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Right
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date
of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and, if such appointment occurs
after the Distribution Date, mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure
to give any notice provided for in this Section 22, however,
or any defect therein, shall not affect the legality or
valdity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may
be.
Section 23. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Rights 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 or class of shares or other securities or
property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale
of shares of Common Stock following the Distribution Date and
prior to the Expiration Date, the Company shall with respect
to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Company prior to
the Distribution Date, issue Right Certificates representing
the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) the Company
shall not be obligated to issue any such Right Certificates
if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person
to whom such Right Certificate shall be issued, and (ii) no
Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 24. Redemption and Termination.
--------------------------
(a) (i) The Board of Directors of the Company may,
at its option, at any time prior to 5:00 P.M., Cincinnati
time, on the earlier of (x) the Stock Acquisition Date or (y)
the Final Expiration Date, redeem all but not less than all of
the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). In addition, 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 within 10 days after any Person becomes an Acquiring
Person if (A) the Acquiring Person notifies the Board of
Directors that such Person became an Acquiring Person
inadvertently and (B) during such 10 day period, and at the
time of redemption, the Acquiring Person is no longer the
Beneficial Owner of 10% or more of the then outstanding shares
of Common Stock.
(ii) In addition, the Board of Directors of the
Company may, at its option, at any time following a Stock
Acquisition Date and the expiration of the period during which
the rights of holders of Rights pursuant to Section 11(a)(ii)
hereof may be exercised as a result of the occurrence of such
Stock Acquisition Date, but prior to any event described in
clause (x), (y) or (z) of Section 13(a) hereof, redeem all but
not less than all of the then outstanding Rights at the
Redemption Price in connection with any such event in which
all holders of shares of Common Stock are treated alike and
not involving an Acquiring Person or any Affiliate or
Associate of an Acquiring Person, Affiliate or Associate has
an interest, or any other Person acting, directly or
indirectly on behalf of or in concert with any such Acquiring
Person, Associate or Affiliate (other than involvement by an
Acquiring Person, Affiliate, Associate or such other Person
solely as a holder of shares of Common Stock being treated
like all other such holders).
(b) Immediately upon the date for redemption set
forth (or determined in the manner specified in) in a
resolution of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
Within ten days after the action of the Board of Directors
ordering any such redemption of the Rights, the Company shall
give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice
to the Rights Agent and to all such holders at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 25. Notice of Certain Events. In case the
-------------------------
Company shall at any time on or after the Distribution Date
propose (a) to pay any dividend payable in stock of any class
to the holders of Common Stock or to make any other
distribution to the holders of Common Stock (other than a
regular quarterly cash dividend at a rate not in excess of
125% of the rate of the last regular quarterly cash dividend
theretofore paid) or (b) to offer to the holders of Common
Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options, or (c) to
effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Common Stock), or (d) to effect any consolidation or
merger into or with, or to effect any sale or other transfer
(or to permit one or more of its subsidiaries to effect any
sale or other transfer), in one or more transactions, of more
than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) to, any other Person, or (e)
to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock
dividend, distribution of rights 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 shares of Common Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least 20 days prior to
the record date for determining holders of the shares of
Common Stock for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of
the taking of such proposed action or the date f participation
therein by the holders of the shares of Common Stock whichever
shall be the earlier.
In case any of the events set forth in Section
11(a)(ii) of this Agreement shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the
event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized
-------
by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
The Kroger Co.
1014 Vine Street
Cincinnati, Ohio 45202
Attention: Corporate Secretary
Subject to the provisions of Section 22, any notice
or demand authorized by this Agreement to be given or made by
the Company or by the holder of any Rights Certificate to or
on the Rights Agent shall be 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:
The Bank of New York
48 Wall Street
New York, New York 10286
Notices or demands authorized by this Agreement to
be given or made by the Company or the Rights Agent to the
holder of any Rights Certificate shall be sufficiently given
or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as
shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to
--------------------------
the Distribution Date, the Company may from time to time
supplement or amend any provision of this Agreement in any
respect without the approval of any holders of certificates
representing Common Stock and the Rights. From and after the
Distribution Date, the Company may from time to time
supplement or amend this Agreement without the approval of any
holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with
any other provisions herein, (iii) to shorten or lengthen any
time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders
of Rights. Upon the delivery of a certificate from an
appropriate 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 shall execute such
supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations
of the Rights Agent under Section 19 or Section 21 of this
Agreement and such amendment or supplement shall be effective
regardless of whether or when executed by the Rights Agent.
Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the
holders of Common Shares.
Section 28. Determination and Actions by the Board
--------------------------------------
of Directors, etc. The Board of Directors of the Company
- ------------------
shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may
be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power
to (i) interpret the provisions of this Agreement, and (ii)
make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights
or to amend the Agreement and whether any proposed amendment
adversely affects the interests of the holders of Right
Certificates). For all purposes of this Agreement, any
calculation of the number of shares of Common Stock or other
securities outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding shares of Common Stock or any other securities of
which any Person is the Beneficial Owner, shall 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 as in
effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect
to the foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right
Certificates and all other parties, and (y) not subject the
Board to any liability to the holders of the Right
Certificates or holders of shares of Common Stock.
Section 29. Successors. All the covenants and
----------
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in
--------------------------
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
the Common Stock).
Section 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 shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated.
Section 32. Governing Law. This Agreement, each
-------------
Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of
Ohio and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to
contracts to be made and to be performed entirely within such
State.
Section 33. Counterparts. This Agreement may be
------------
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive
--------------------
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and their respective
corporate seals to be hereunto affixed and attested, all as of
the day and year first above written.
Attest: THE KROGER CO.
/s/ Bruce M. Gack By /s/ Paul Heldman
- -------------------- -------------------
Name: Bruce M. Gack Name: Paul Heldman
Title: Assistant Secretary Title: Vice President,
Secretary and
General Counsel
Attest: THE BANK OF NEW YORK
/s/ Daniel M. Egan By /s/ John I. Sivertsen
- ---------------------- -----------------------
Name: Daniel M. Egan Name: John I. Sivertsen
Title: Assistant Vice President Title: Corporate Vice
President
<PAGE>
Exhibit A
---------
FORM OF CERTIFICATE OF AMENDMENT TO
THE AMENDED ARTICLES OF INCORPORATION OF
THE KROGER CO.
Joseph A. Pichler, Chairman of the Board and Chief
Executive Officer, and Paul W. Heldman, Secretary, of The
Kroger Co., an Ohio corporation for profit with its principal
office at 1014 Vine Street, Cincinnati, Ohio, do hereby
certify that at a meeting of the Board of Directors held
pursuant to notice on the 20th day of March, 1997, the
following resolutions were adopted pursuant to Section
1701.70(B)(1) of the Ohio Revised Code:
RESOLVED, That the Amended Articles of Incorporation of
the Company are amended to delete therefrom Section C.7. and
Section C.8. of Article Fourth, and the Appendix A referenced
therein, designating the Auction Preferred Shares; and further
RESOLVED, That Article Fourth of the Amended Articles of
Incorporation of The Kroger Co. is amended by adding a new
Section C.7. as follows:
7. There is hereby designated a series of Preferred
Shares, entitled "Series A Preferred Shares", to consist
of 50,000 shares, to have the additional preferences and
privileges, the relative, participating, optional or
other special rights, and the qualifications,
limitations, and restrictions as are set forth in
Appendix A attached hereto.
and further;
RESOLVED, That pursuant to Section 1701.72(B) of the Ohio
Revised Code, the restated Amended Articles of Incorporation
of The Kroger Co., are adopted in the form attached hereto, to
supersede and replace the existing Amended Articles of
Incorporation and all amendments thereto.
IN WITNESS WHEREOF, we, acting for and on behalf of
the Company, have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury
and have affixed the seal of the Company on this _______ day
of __________, 1997.
_______________________________
Chairman of the Board and
Chief Executive Officer
__________________________
Secretary
<PAGE>
Appendix A
Of the 5,000,000 preferred shares of the Company, 50,000
shall constitute a series of Voting Preferred Stock and shall
have, subject and in addition to the other provisions of this
Article Fourth, the following relative rights, preferences an
limitations.
Section 1. Designation and Amount. The shares of
----------------------
such series shall be designated as "Series A Preferred
Shares", $100 par value (the "Series A Preferred Stock"). The
number of shares of Series A Preferred Stock may be increased
or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares
of Series A Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or
upon conversion of outstanding securities issued by the
Company.
Section 2. Dividends and Distributions.
----------------------------
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking
prior and superior to the shares of Series A Preferred Stock
with respect to dividends, the holders of shares of Series A
Preferred Stock in preference to the holders of shares of
Common Stock, $1.00 par value (the "Common Stock"), of the
Company and any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly
dividends payable in cash on the 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 share or fraction of a share of Series A
Preferred Stock in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $100.00, or (b) subject to
the provision for adjustment hereinafter set forth, 10,000
times the aggregate per share amount of all cash dividends,
and 10,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock,
since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. In the event the Company
shall at any time after April 4, 1997 (the "Rights Amendment
Date") (i) declare a dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(B) The Company shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution
on the Common Stock (other than a dividend payable in shares
of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a
dividend of $100.00 per share on the Series A Preferred Stock
shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Preferred Stock unless the
date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Preferred Stock in an amount less
than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of
-------------
Series A Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall
entitle the holder thereof to 1 vote on all matters submitted
to a vote of the shareholders of the Company.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of shareholders of the
Company.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Company shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock except dividends
paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock provided that
the Company may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares
of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock or any shares of stock
ranking on a parity with the Series A Preferred Stock except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preference of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the
respective series or classes.
(B) The Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any
shares of stock of the Company unless the Company could, under
paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
-----------------
Preferred Stock purchased or otherwise acquired by the Company
in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions
of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Company, no distribution shall be made to
the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock unless, prior thereto, the holder
of shares of Series A Preferred Stock shall have received per
share, $25,000, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series A Preferred
Stock unless, prior thereto, the holders of shares of Common
Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 10,000 (as
appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following
the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all
outstanding shares of Series A Preferred Stock and Common
Stock, respectively, holders of Series A Preferred Stock and
holders of shares of Common Stock shall receive their ratable
and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event there are not sufficient assets
available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all
other series of Preferred Stock, if any, which rank on a
parity with the Series A Preferred Stock then such remaining
assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation
preferences. In the event there are not sufficient assets
available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Company shall at any time after the
Rights Amendment Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the
---------------------------
Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case the shares of Series A Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set
forth) equal to 10,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
Company shall at any time after the Rights Amendment Date (i)
declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock 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 are outstanding
immediately prior to such event.
Section 8. Redemption. The shares of Series A
-----------
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock
-------
shall rank junior to all other series of the Company's
Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Fractional Shares. Series A Preferred
-----------------
Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
<PAGE>
FILED WITH SECRETARY OF STATE OF OHIO
ON MARCH 26, 1997
AMENDED ARTICLES OF INCORPORATION
OF
THE KROGER CO.
The Kroger Co., a corporation for profit, heretofore
organized and now existing under the laws of the State of
Ohio, makes and files these Amended Articles of Incorporation
and states:
FIRST. The name of the Corporation is THE KROGER CO.
SECOND. The principal office of the Corporation is
located at Cincinnati, in Hamilton County, Ohio.
THIRD. The purpose of said Corporation is to engage in
any lawful act or activity for which corporations may be
formed under Sections 1701.01 to 1701.98, inclusive, of the
Ohio Revised Code.
FOURTH. SECTION A. The maximum number of shares which
the Corporation is authorized to have outstanding is three
hundred fifty-five million (355,000,000), classified as
follows: five million (5,000,000) Cumulative Preferred Shares
of the par value of $100.00 each; and three hundred fifty
million (350,000,000) Common Shares of the par value of $1.00
each.
The express terms and provisions of the shares of the
foregoing classes of stock of the Corporation shall be as
follows:
SECTION B. The holders of Common Shares shall have no
pre-emptive rights to subscribe for or purchase any shares of
any class.
SECTION C. 1. The authorized shares of Cumulative
Preferred Shares may be issued in series from time to time.
All shares of any one series of Cumulative Preferred Shares
shall be alike in every particular and all shares of
Cumulative Preferred Shares shall rank equally. The express
terms and provisions of shares of different series shall be
identical except that there may be variations in respect of
the dividend rate, dates of payment of dividends and dates
from which they are cumulative, redemption rights and price,
liquidation price, sinking fund requirements, conversion
rights, and restrictions on issuance of shares of the same
series or of any other class or series. The Board of
Directors of the Corporation is authorized to fix, by the
adoption of an amendment to the Articles creating each such
series of the Cumulative Preferred Shares, (a) the designation
and number of shares of such series, (b) the dividend rate of
such series, (c) the dates of payment of dividends on shares
of such series and the dates from which they are cumulative,
(d) the redemption rights of the Corporation with respect to
shares of such series and the price or prices at which shares
of such series may be redeemed, (e) the amount or amounts
payable to holders of shares of such series on any voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, which may be different for voluntary and
involuntary liquidation, dissolution, or winding up, (f) the
amount of the sinking fund, if any, to be applied to the
purchase or redemption of shares of such series and the manner
of its application, (g) whether or not the shares of such
series shall be made convertible into, or exchangeable for,
shares of any other class or classes or of any other series of
the same class of stock of the Corporation, and if made so
convertible or exchangeable, the conversion price or prices,
or the rates of exchange, and the adjustments, if any, at
which such conversion or exchange may be made, and (h) whether
or not the issue of any additional shares of such series or
any future series in addition to such series or any other
class of stock shall be subject to any restrictions and, if
so, the nature of such restrictions.
2. Dividends on Cumulative Preferred Shares of any
series shall be payable at rates and on dates to be fixed by
the Board of Directors at the time of the creation of such
series. Dividends of the Cumulative Preferred Shares of all
series shall be cumulative, and no dividends shall be declared
or paid upon or set apart for the Common Stock unless and
until full dividends on the outstanding Cumulative Preferred
Shares of all series shall have been paid or declared and set
apart for payment with respect to all past dividend periods
and the current dividend period. In case of any series of
Cumulative Preferred Shares, dividends shall accrue from and
be cumulative from such dates as may be fixed by the Board of
Directors at the time of the creation of such series. In the
event of the issue of additional Cumulative Preferred Shares
of any series after the initial issue of shares of such series
all dividends paid on Cumulative Preferred Shares of such
series prior to the issue of such additional Cumulative
Preferred Shares and all dividends declared and payable to
holders of record of Cumulative Preferred Shares of such
series on a date prior to such additional issue shall be
deemed to have been paid on the additional shares so issued.
3. If upon any liquidation, dissolution or winding up,
the assets distributable among the holders of the Cumulative
Preferred Shares of all series shall be insufficient to permit
the payment of the full preferential amounts to which they
shall be entitled, then the entire assets of the Corporation
shall be distributed among the holders of the Cumulative
Preferred Shares of all series then outstanding, ratably in
proportion to the full preferential amounts to which they are
respectively entitled. Nothing in this paragraph shall be
deemed to prevent the purchase, acquisition or other
retirement by the Corporation of any shares of its outstanding
stock as now or in the future authorized or permitted by the
laws of Ohio. A consolidation or merger of the Corporation
with or into any other corporation or corporations, or a sale
or transfer of all or substantially all of its property, shall
not be deemed to be a liquidation, dissolution or winding up
of the Corporation.
4. Notice of any proposed redemption of Cumulative
Preferred Shares of any series shall be given by the
Corporation by publication at least once in one daily
newspaper printed in the English language and of general
circulation in the Borough of Manhattan, City of New York,
State of New York, and in the City of Cincinnati, State of
Ohio, the first publication to be at least sixty (60) days,
and not more than ninety (90) days, prior to the date fixed
for such redemption. Notice of any proposed redemption of
Cumulative Preferred Shares of any series also shall be given
by the Corporation by mailing a copy of such notice, at least
sixty (60) days, and not more than ninety (90) days, prior to
the date fixed for such redemption, to the holders of record
of the Cumulative Preferred Shares to be redeemed, at their
respective addresses then appearing upon the books of the
Corporation; but no failure to mail such notice, or defect
therein or in the mailing thereof shall affect the validity of
the proceedings for such redemption. In case of the
redemption of a part only of the Cumulative Preferred Shares
of any series at the time outstanding, the shares to be
redeemed shall be selected by lot or pro rata, as the Board of
Directors may determine. The Board of Directors shall have
full power and authority, subject to the limitations and
provisions herein contained, to prescribe the manner in which,
and the terms and conditions upon which, the shares of the
Cumulative Preferred Shares of any series shall be redeemed
from time to time. On or at any time before the redemption
date specified in such notice, the Corporation shall deposit
in trust, for the holders of the shares to be redeemed, funds
necessary for such redemption with a bank or trust company
organized under the laws of the United States of America or
the State of New York and doing business in the Borough of
Manhattan, City of New York, or organized under the laws of
the United States of America or of the State of Ohio and doing
business in the City of Cincinnati, Ohio; and designated in
such notice of redemption. Upon the publication of the notice
of redemption as above provided, or upon the making of such
deposit, whichever is later, all shares with respect to the
redemption of which such notice and deposit shall have been
given and made shall, whether or not the certificates therefor
shall have been surrendered for cancellation, be deemed to be
no longer outstanding for any purpose, and all rights with
respect to such shares shall thereupon cease and terminate,
except only the rights of the holders of the certificates for
such shares to receive, out of the funds so deposited in
trust, from and after the date of such deposit, the amount
payable upon the redemption thereof, without interest;
provided, however, that no right of conversion, if any,
belonging to such shares, if such right of conversion is, by
its terms, to exist for a period beyond the date of the
publication of such notice or the making of such deposit,
shall be impaired by the publication of such notice or the
making of such deposit. At the expiration of six (6) years
after the date of such deposit, such trust shall terminate.
Any such moneys then remaining on deposit with such bank or
trust company shall be paid over to the Corporation, and
thereafter the holders of the certificates for such shares
shall have no claims against such bank or trust company, but
only claims as unsecured creditors against the Corporation for
the amount payable upon the redemption thereof without
interest.
5. At all meetings of the shareholders, every holder of
record of shares of Cumulative Preferred Shares and every
holder of record of Common Stock shall be entitled to vote and
shall have one vote for each share outstanding in his name on
the books of the Corporation on the record date fixed for such
purpose, or if no record date is fixed, on the date next
preceding the day of such meeting, provided that (1) in the
event that the Corporation should have failed to pay dividends
on any series of Cumulative Preferred Shares for six or more
quarterly dividends, the holders of Cumulative Preferred
Shares of all series, voting as a single class, shall be
entitled to elect two directors, each for a one-year term,
whether or not the board is otherwise divided into classes
with each director elected for a term longer than one year, at
the meeting of shareholders for the election of directors next
succeeding the time such failure to pay these six dividends
first occurs, and (2) no amendment to the Articles of
Incorporation or Regulations shall be made which would be
substantially prejudicial to the holders of outstanding
Cumulative Preferred Shares or any series thereof without the
favorable vote of the holders of two-thirds of the Cumulative
Preferred Shares, voting as a single class, then outstanding,
unless such amendment shall not equally affect all series, in
such case the favorable vote of the holders of two-thirds of
the adversely affected series shall also be required. The
right of holders of Cumulative Preferred Shares to elect these
two directors shall terminate when all such unpaid dividends
on Cumulative Preferred Shares have been paid and the
directors then in office and elected by the holders of
Cumulative Preferred Shares shall forthwith cease to hold
office upon such payments.
6. The holders of the Cumulative Preferred Shares shall
have no pre-emptive rights to subscribe for or purchase any
shares of any class.
7. There is hereby designated a series of Preferred
Shares, entitled "Series A Preferred Shares", to consist of
50,000 shares, to have the additional preferences and
privileges, the relative, participating, optional or other
special rights, and the qualifications, limitations, and
restrictions as are set forth in Appendix A attached hereto.
FIFTH. (a) 1. In addition to any affirmative vote
or approval required by law, these Amended Articles of
Incorporation, or the Regulations of the Corporation:
(A) any merger or consolidation of the Corporation
or any Subsidiary (as hereinafter defined) with or into (i)
any Interested Shareholder (as hereinafter defined) or (ii)
any other corporation (whether or not itself an Interested
Shareholder) which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Shareholder, or
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of related transactions) to or with any Interested Shareholder
or any Affiliate of any Interested Shareholder of any assets
of the Corporation or any Subsidiary having an aggregate fair
market value of $15,000,000 or more, or
(C) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of related
transactions) of any securities or options, warrants or rights
to acquire securities, of the Corporation or any Subsidiary,
to any Interested Shareholder or any Affiliate of any
Interested Shareholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $15,000,000 or more, or
(D) the adoption of any plan or proposal for the
complete or partial liquidation or dissolution of the
Corporation as a result of which an Interested Shareholder
would receive any assets of the Corporation other than cash,
or
(E) any reclassification of securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the Corporation
with any of its Subsidiaries, or any similar transaction
(whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible
securities of the Corporation or any Subsidiary which is
directly or indirectly beneficially owned by any Interested
Shareholder, or
(F) any agreement, contract or other arrangement
which upon consummation will result in any of the transactions
described in this paragraph
(a) 1. shall require the affirmative vote of the
holders of 75% of the outstanding Voting Shares (as
hereinafter defined).
2. The term "Business Combination", as used in
this Article Fifth, shall mean any transaction which is
referred to in any one or more of clauses (A) through (F) of
paragraph (a)(1).
(b) 1. The provisions of paragraph (a)(1) of this
Article Fifth shall not be applicable if either of the
following conditions shall have been satisfied:
(A) the aggregate amount of the cash and fair
market value (as of the date of the consummation of the
Business Combination) of consideration other than cash to be
received per share of Common or Cumulative Preferred or other
Preferred Stock or Capital Stock in such Business Combination
by holders thereof shall be at least equal to the highest of
the following:
(i) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by such Interested Shareholder for
any shares of such class or series of stock acquired by
it within the three-year period prior to the Business
Combination (such price to be appropriately adjusted for
stock splits, stock dividends, reclassification of
securities and other similar events);
(ii) the per share book value of the shares of such
class or series of stock as reported at the end of the
fiscal quarter immediately preceding the public
announcement of the terms of the Business Combination;
(iii) an amount per share which, at a minimum,
bears the same percentage relationship to the market
price per share of the shares of such class or series of
stock immediately prior to the announcement of the
intention to effect the Business Combination as the
highest per share price determined in (i) above bears to
the market price per share of the shares of such class or
series of stock immediately prior to the acquisition by
the Interested Shareholder of beneficial ownership of
more than 5% of the shares of such class or series of
stock but in no event in excess of two times the highest
per share price determined in (i) above;
provided that (i) no Extraordinary Event (as hereinafter
defined) occurs after the Interested Shareholder has become an
Interested Shareholder and prior to the consummation of the
Business Combination, and (ii) if the highest preferential
amount per share of a series of Cumulative Preferred or other
Preferred Stock to which the holders thereof would be entitled
in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the Corporation
(regardless of whether the Business Combination to be
consummated constitutes such an event) is greater than such
aggregate amount, holders of such series of Cumulative
Preferred or other Preferred Stock shall receive an amount for
each such share at least equal to the highest preferential
amount applicable to such series of Cumulative Preferred or
other Preferred Stock; or
(B) Either (i) the Business Combination was
approved by the Board of Directors of the Corporation prior to
the time that the Interested Shareholder acquired beneficial
ownership of in excess of 10% of the outstanding Voting
Shares, (ii) the Interested Shareholder seeking to effect such
Business Combination sought and obtained the prior approval of
the Board of Directors of the Corporation to such Interested
Shareholder's acquisition of beneficial ownership of 10% of
the outstanding Voting Shares or (iii) the Business
Combination was approved by at least two-thirds of the
Continuing Directors of the Corporation.
(c) For the purposes of this Article Fifth:
1. A "Person" shall mean any individual, firm,
corporation, or other entity. When two or more Persons act as
a partnership, syndicate, association or other group for the
purpose of acquiring, voting or disposing of Voting Shares,
such partnership, syndicate, association or other group will
be deemed a "Person" for the purposes of this Article.
2. "Interested Shareholder" shall mean any Person
(other than the Corporation, any Subsidiary or any profit
sharing, employee stock ownership or other employee benefit
plan of the Company or of any Subsidiary or any trustee of or
fiduciary with respect to any such plan acting in such
capacity) who or which, together with its Affiliates and
Associates (as hereinafter defined) and any other Person
acting in concert with such Person is the beneficial owner,
directly or indirectly, of more than 10% of the Voting Shares
as of the record date for the determination of shareholders
entitled to notice of and to vote on any Business Combination.
3. A Person shall be the "beneficial owner" of any
Voting Shares:
(A) which such Person or any of its Affiliates and
Associates would be deemed to beneficially own under Rule 13d-
3 of the Securities Exchange Act as in effect on May 17, 1985,
or
(B) which such Person or any of its Affiliates and
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned (as defined in (A)
or (B) of this paragraph 3) directly or indirectly, by any
other Person with which such first mentioned Person or any of
its Affiliates and Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any Voting Shares.
4. A "Continuing Director" shall mean any member
of the Board of Directors who is not affiliated with an
Interested Shareholder and who was a member of the Board of
Directors immediately prior to the time that the Interested
Shareholder first beneficially owned more than 5% of the
outstanding Voting Shares, and any successor to a Continuing
Director who is not affiliated with an Interested Shareholder
and is recommended to succeed a Continuing Director by two-
thirds of the Continuing Directors.
5. "Affiliate" and "Associate" shall have the
respective meanings given those terms in Rule 12b-2 under the
Securities Exchange Act of 1934, as in effect on May 18, 1984.
6. "Subsidiary" means any corporation, a majority
of the voting shares of which is beneficially owned by the
Corporation.
7. "Voting Shares" shall mean shares of capital
stock of the Corporation entitled to vote generally for the
election of directors (excluding any shares or series of
capital stock entitled to vote only upon the occurrence of
certain contingencies such as the nonpayment of dividends on
Cumulative Preferred Stock or other Preferred Stock),
considered for the purposes of this Article as a single class.
8. The term "Extraordinary Event" shall mean, as
to any Business Combination and Interested Shareholder, any of
the following events that is not approved by two-thirds of the
Continuing Directors:
(A) any failure to declare and pay at the regular
date therefor any full quarterly dividend (whether or not
cumulative) on outstanding Cumulative Preferred Stock or on
any other Preferred Stock then outstanding; or
(B) any reduction in the annual rate of dividends
paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock); or
(C) any failure to increase the annual rate of
dividends paid on the Common Stock as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction
that has the effect of reducing the number of outstanding
shares of the Common Stock; or
(D) the receipt by the Interested Shareholder, after
such Interested Shareholder has become an Interested
Shareholder, of a direct or indirect benefit (except
proportionately as a shareholder) from any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation or
any Subsidiary of the Corporation, whether in anticipation of
or in connection with the Business Combination or otherwise.
(d) Two-thirds of the Continuing Directors (or, if there
are no Continuing Directors, two-thirds of the Outside
Directors) shall have the power and duty to determine for the
purposes of this Article Fifth on the basis of information
known to them (1) the number of Voting Shares beneficially
owned by any Person, (2) whether a Person is an Affiliate or
Associate of another, (3) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation or any
Subsidiary has an aggregate fair market value of $15,000,000
or more, (4) whether the proposed transaction is subject to
this Article Fifth, and (5) such other matters with respect to
which a determination is required under this Article Fifth.
Any such determination shall be conclusive and binding for all
purposes of this Article. For purposes of this paragraph (d),
an Outside Director shall mean a Director of this Corporation
who is not (i) an employee or officer of this Corporation or
of any Interested Shareholder (or any Affiliate of such
Interested Shareholder) seeking to propose or effect a
Business Combination, or (ii) a Director, Associate or
Affiliate of an Interested Shareholder or of any Affiliate of
such Shareholder (other than by reason of being a Director of
the Corporation) or (iii) any relative by blood, marriage or
adoption (excluding relationships more remote than first
cousin) of any of the foregoing.
(e) Nothing contained in this Article Fifth shall be
construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
(f) Notwithstanding any other provisions of these
Amended Articles of Incorporation or of the Regulations of the
Corporation (and notwithstanding the fact that some lesser
percentage may be specified by law, these Amended Articles of
Incorporation or the Regulations of the Corporation), the
affirmative vote of the holders of at least 75% of the Voting
Shares shall be required to amend, repeal, or adopt any
provisions inconsistent with, this Article Fifth.
SIXTH. The following provisions are hereby agreed to for
the purpose of defining, limiting and regulating the exercise
of the authority of the Corporation or of its shareholders, or
of any class of its shareholders, or of its directors, or for
the purpose of creating and defining rights and privileges of
the shareholders among themselves.
(a) This Corporation reserves the right to amend, alter,
change or repeal any provision contained in these Amended
Articles of Incorporation in the manner now or hereafter
prescribed by law, and all rights conferred on officers,
directors, and shareholders herein, including but not limited
to the rights of dissenting shareholders conferred by Ohio
law, are granted subject to this reservation.
(b) Action on any matter at any shareholders' meeting,
or without such meeting, regarding which the statutes of Ohio
provide that unless otherwise provided in the articles of
incorporation or regulations of a corporation, there shall be
the affirmative vote or consent of a larger portion than the
holders of a majority of the shares entitled to vote thereon
or consent thereto, may be taken by the affirmative vote or
consent of the holders of a majority of shares entitled to
vote thereon or consent thereto, but in the event that the
vote or consent is required to be by classes, then, except as
otherwise provided herein, action may be taken on such matter
by the affirmative vote or consent of the holders of a
majority of each class of shares entitled to vote by classes
on such matter.
(c) The Corporation may, when authorized by the Board of
Directors and without any action by the shareholders,
purchase, hold, sell and reissue any of its shares in such
manner and under such terms and conditions as may be
prescribed by the directors.
(d) The Board of Directors shall have the power and
authority to determine the fair value of any property other
than money to be received by the Corporation in payment of its
shares.
(e) The foregoing clauses shall be construed both as
objects and powers, and it is hereby expressly provided that
the foregoing enumeration of specific powers shall not be held
to limit or restrict in any manner the powers of this
Corporation, and are in furtherance of and in addition to, and
not in limitation of, the general powers conferred by the laws
of the State of Ohio.
SEVENTH. These Amended Articles of Incorporation
supersede and take the place of the existing Amended Articles
of Incorporation.
<PAGE>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- Rights
----------
NOT EXERCISABLE AFTER MARCH 19, 2006 OR EARLIER IF NOTICE
OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
[THE RIGHTS REPRESENTED BY THIS CERTIFICATE WERE ISSUED
TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE
OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE
NULL AND VOID.]*
Rights Certificate
The Kroger Co.
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 Amended and
Restated Rights Agreement dated as of April 4, 1997 (the
"Rights Agreement") between The Kroger Co., an Ohio
corporation (the "Company"), and The Bank of New York (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. (Cincinnati time) on
March 19, 2006, at the principal office of the Rights Agent,
or its successors as Rights Agent, one ten-thousandth of a
fully paid, nonassessable share of the Series A Preferred
Shares (the "Preferred Stock") of the Company, at a purchase
price of $87.50 per one ten-thousandth of a share (the
"Purchase Price"), upon presentation and surrender of this
Rights Certificate with the appropriate Form of Election to
Purchase duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of one ten-thousandths
of a share which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per one ten-thousandth of
a share set forth above, are the number and Purchase Price as
of April 4, 1997, based on the Preferred Stock as constituted
at such date.
- ---------------------------
* The portion of the legend in brackets shall be inserted only
if applicable.
<PAGE>
As provided in the Rights Agreement, the Purchase
Price and the number of shares of Preferred Stock, which may
be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment
upon the happening of certain events.
This Rights Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the
holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company
and are also available upon written request to the Company.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the principal office of
the Rights Agent, may be exercised for another Rights
Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised (other than
pursuant to Section 11(a)(ii) of the Rights Agreement) in
part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised. If this Rights
Certificate shall be exercised in whole or in part in pursuant
to Section 11(a)(ii) of the Rights Agreement, the holder shall
be entitled to receive this Rights Certificate duly marked to
indicate that such exercise has occurred as set forth in the
Rights Agreement.
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.
No fractional shares of Preferred Stock (or Common
Stock) will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions of shares of Preferred
Stock which are integral multiples of one ten-thousandth of a
share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of shares of Preferred Stock (or Common
Stock and/or of any other securities of the Company which may
at any time be issuable on the exercise hereof), nor shall
anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of
the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, to receive
notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Rights Certificate shall
have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal. Dated as of
______________________.
ATTEST: THE KROGER CO.
_________________________ By _________________________
Name: Name:
Title: Title:
Countersigned:
[ ]
_________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
-------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED __________________________________________
hereby sell, assigns and transfers unto _____________________
(Please print name and address of transferee)
_____________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________________, 19__
_________________________
Signature
Signature Guaranteed:
<PAGE>
Certificate
------------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not
being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring 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 Rights Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated:____________________, 19__ _________________________
Signature
NOTICE
-------
The signature to the foregoing Assignment must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
-----------------------------
(To be executed if holder desires to
exercise the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To THE KROGER CO.:
The undersigned hereby irrevocably elects to
exercise Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock (or
other securities) issuable upon the exercise of the Rights and
requests that certificates for such shares be issued in the
name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name
of and delivered to:
Please insert social security
or other identifying number
- -------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------
Dated:____________________, 19__ _________________________
Signature
Signature Guaranteed:
<PAGE>
FORM OF ELECTION TO PURCHASE
------------------------------
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To THE KROGER CO.:
The undersigned hereby irrevocably elects to
exercise _______ Rights represented by this Rights Certificate
to purchase the shares of Common Stock (or other securities)
issuable upon the exercise of the Rights and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name
of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------
Dated:____________________, 19__ _________________________
Signature
Signature Guaranteed:
<PAGE>
Certificate
--------------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not
being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring 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 Rights Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated:____________________, 19__ _________________________
Signature
NOTICE
-------
The signature to the foregoing Election to Purchase
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
<PAGE>
Exhibit C
----------
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On February 28, 1986, the Board of Directors of The
Kroger Co. (the "Company") declared a dividend distribution of
one Right for each outstanding share of common stock, par
value $1 per share (the "Common Stock"), of the Company.
After giving effect to certain amendments to the terms of the
Rights adopted up to and including April 4, 1997, there is
associated with each outstanding share of Common Stock one
Right. Except as set forth below, each Right, when
exercisable, entitles the registered holder to purchase from
the Company one ten-thousandth of a share of preferred stock,
designated as Series A Preferred Shares, par value $100 per
share (the "Preferred Shares"), at a price of $87.50 per one
ten-thousandth of a share (the "Purchase Price), subject to
adjustment. The description and terms of the Rights are set
forth in an Amended and Restated Rights Agreement dated as of
April 4, 1997, (the "Rights Agreement") between the Company
and The Bank of New York, as Rights Agent.
Until the earlier to occur of (i) ten days following
a public announcement that, without the prior consent of the
Board of Directors of the Company, a person or group of
affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial
ownership of 10% or more of the outstanding shares of Common
Stock (the "Stock Acquisition Date"), or (ii) ten business
days (or such later date as the Board may determine) following
the commencement of (or a public announcement of an intention
which is not subsequently withdrawn to make) a tender offer or
exchange offer which would result in any person or group and
related persons having beneficial ownership of 10% or more of
the outstanding shares of Common Stock without the prior
consent of the Board of Directors, (the earlier of such dates
being called the "Distribution Date"), the Rights will be
attached to all Common Stock certificates and will be
evidenced, with respect to any of the Common Stock
certificates outstanding as of April 4, 1997, by such Common
Stock certificate and no separate Right Certificates will be
distributed. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and
only with Common Stock certificates. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after April 4, 1997 (or as
soon thereafter as is reasonably practicable) upon transfer or
new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for
Common Stock outstanding as of the Record Date will also
constitute the transfer of the Rights associated with the
Common Stock represented by such certificate, even without
such a notation. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of
the Common Stock as of the close of business on the
Distribution Date, and the separate Rights Certificates alone
will evidence the Rights.
The Rights are not exercisable until the
Distribution Date. The Rights will expire on March 19, 2006,
unless earlier redeemed by the Company as described below.
In the event that any person becomes an Acquiring
Person, each holder of a Right generally will thereafter have
the right for a 60 day period (or such other period set by the
Board of Directors) to receive upon exercise of the Right that
number of shares of Common Stock (or, under certain
circumstances, of units of one ten-thousandth of a Preferred
Share) having a market value (immediately prior to the
occurrence of an Acquiring Person) of two times the exercise
price of the Right (such right being called the "Subscription
Right"). Notwithstanding the foregoing, following the
occurrence of an Acquiring Person, all Rights that are, or
(under certain circumstances specified in the Rights
Agreement) were, beneficially owned by the Acquiring Person or
any affiliate or associate thereof will be null and void.
In the event that, at any time following the Stock
Acquisition Date, the Company is acquired in a merger or other
business combination transaction or 50% or more of the
Company's assets or earning power are sold (in one transaction
or a series of transactions), proper provision shall be made
so that each holder of a Right (other than Rights previously
voided as described above) shall thereafter have the right to
receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common
stock of the acquiring company (or, in the event there is more
than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power
transferred) which at the time of such transaction would have
a market value of two times the exercise price of the Right
(such right being called the "Merger Right"). The holder of a
Right will continue to have the Merger Right whether or not
such holder exercises the Subscription Right.
The Purchase Price payable, the number of Rights,
and the number of Preferred Shares or other securities or
property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Shares, (ii) upon the grant
to holders of the Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or shares having
the same rights, privileges and preferences as the Preferred
Shares at less than the current market price of the Preferred
Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends and excluding
dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustments in the
Purchase Price will be required until cumulative adjustment
require an adjustment of at least 1% in such Purchase Price.
No fractions of shares will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of
the Preferred Shares (or the Common Stock) on the last trading
date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the
close of business on the Stock Acquisition Date or (ii) the
expiration of the Rights, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective upon
the action of the Board of Directors. Additionally, following
the Stock Acquisition Date and the expiration of the period
during which the Subscription Right is exercisable, the
Company may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
combination transaction or series of transactions involving
the Company in which all holders of Common Stock are treated
alike but not involving an Acquiring Person or its affiliates
or associates. Upon the effective date of the redemption of
the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive
the Redemption Price.
All of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the
Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board
in order to cure any ambiguity, defect or inconsistency, to
make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring
Person), or, subject to certain limitations, to shorten or
lengthen any time period under the Rights Agreement.
The Preferred Shares purchasable upon exercise of
the Rights will be nonredeemable and junior to any other
series of preferred stock the Company may issue (unless
otherwise provided in the terms of such stock). Each
Preferred Share will have a preferential quarterly dividend in
an amount equal to 10,000 times the dividend declared on each
Common Share, but in no event less than $100.00. In the event
of liquidation, the holders of Preferred Shares will receive a
preferred liquidation payment per share equal to the greater
of $25,000 or 10,000 times the payment made per each Common
Share. Each Preferred Share will have one vote, voting
together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are
exchanged, each Preferred Share will be entitled to receive
10,000 times the amount and type of consideration received per
Common Share. The rights of the Preferred Shares, as to
dividends, liquidation and voting, and in the event of mergers
and consolidations, are protected by customary anti-dilution
provisions. Fractional Preferred Shares will be issuable;
however, the Company may elect to distribute depositary
receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of
one ten-thousandth of a share, an adjustment in cash will be
made based on the market price of the Preferred Shares on the
last trading date prior to the date of exercise.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Form
8-A/A amending a Registration Statement on Form 8-A. A copy
of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated
herein by reference.
