SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /x/
Filed by a party other than the registrant/ /
Check the appropriate box:
/x/ Preliminary proxy statement / / Confidential, for Use of the
Commission Only
(as permitted by
Rule 14a-6(e) (2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14(a)-12
MELVILLE CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6-(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
MELVILLE CORPORATION
ONE CVS DRIVE
WOONSOCKET, RHODE ISLAND 02895
------------------------------
, 1996
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders to be
held at [time], Eastern time on [Date], at the offices of Melville
Corporation, One CVS Drive, Woonsocket, Rhode Island. (Please note this new
location). The formal Notice of Annual Meeting of Stockholders and Proxy
Statement are attached.
At this meeting, we will have the opportunity to present the proposal of the
Board of Directors, among other things, to change the name of the Corporation
to "CVS Corporation" and to reincorporate the Corporation in Delaware (the
"Proposal"). This Proposal is consistent with actions we have taken under the
strategic restructuring program announced in October 1995.
At that time we outlined plans designed to achieve various strategic,
profitability and growth objectives as well as significant cost savings, and
thereby increase value for the Corporation's stockholders. Substantial
progress has been made towards completion of the restructuring program. The
spinoff of the common stock of Footstar, Inc. to the Corporation's
stockholders, which is the principal remaining component of the restructuring,
will be completed prior to the Special Meeting.
The proposed change of Melville Corporation's name to "CVS Corporation" is
intended to communicate that the going-forward entity will be principally a
chain drug company with CVS as its core business. The proposed
reincorporation into Delaware and related charter and bylaw amendments are
generally intended to modernize the Corporation's charter and bylaws and to
provide the corporate law advantages afforded by Delaware law. We believe
these changes will serve the Corporation well in the future.
Details of the Proposal are set forth in the Notice of Special Meeting of
Stockholders and the Proxy Statement. It is important that your shares be
represented and voted at the meeting. Accordingly, after reading the attached
Proxy Statement, we urge you to sign, date and return the enclosed proxy card
whether you plan to attend or not. Your vote is important, regardless of the
number of shares you own.
Thank you.
Sincerely
Stanley P. Goldstein
Chairman of the Board
MELVILLE CORPORATION
ONE CVS DRIVE
WOONSOCKET, RHODE ISLAND 02895
------------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
[DATE]
------------------------------
To Our Stockholders:
You are cordially invited to attend the Special Meeting of the
Stockholders of Melville Corporation (the "Corporation") which will be held
at the offices of the Corporation, One CVS Drive, Woonsocket, Rhode Island
02895 on [Date] at [time] New York time for the following purposes:
1. to act upon a proposal to incorporate a new holding company for the
Corporation in Delaware resulting in shareholders owning shares of
such new Delaware holding company named "CVS Corporation" and, in
connection therewith, to effect the amendments to the holding
company's charter and bylaws described in the accompanying proxy
statement; and
2. to transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on [date] as the
record date for the determination of stockholders entitled to receive notice
of, and to vote at, the meeting or at any adjournment or adjournments thereof.
By Order of the Board of Directors.
Stanley P. Goldstein
Chairman of the Board
Woonsocket, Rhode Island
_______, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING OF STOCKHOLDERS IN
PERSON, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
MELVILLE CORPORATION
ONE CVS DRIVE
WOONSOCKET, RHODE ISLAND 02895
______________________________
PROXY STATEMENT
[DATE]
______________________________
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Melville Corporation ("Melville"
or the "Corporation") of proxies to be voted at the special meeting (the
"Special Meeting") of stockholders of the Corporation which has been
scheduled for [Day and Date] and any adjournment or adjournments thereof.
The shares represented by each properly executed proxy solicited by the
Board of Directors and received by the Corporation will be voted as
specified by the stockholder on the proxy. If no such specification is
made, shares will be voted (i) FOR the proposal to incorporate a new
holding company for Melville in Delaware and, in connection therewith, to
effect the amendments to the holding company's charter and bylaws, all as
described herein under "III. Proposal: To Change the State of
Incorporation From New York to Delaware and to Effect Certain Charter
Amendments" (the "Reincorporation and Charter Amendment Proposal" or the
"Proposal"), and (ii) in accordance with the judgment of the person or
persons voting such proxies with respect to such other matters, if any, as
may properly come before the meeting. Any such proxy may be revoked at any
time before its exercise by giving written notice of revocation to the
Secretary of the Corporation, by submitting a later-dated proxy or by
voting in person at the meeting (after having notified the Secretary at any
time prior to the voting of the proxy). As used in this Proxy Statement,
"holding company" means the corporation that is the holding company for the
Melville group of companies (which holding company (i) prior to the
Effective Time (as defined below) is the Corporation, and (ii) if the
Proposal is approved by the requisite vote of stockholders at the Special
Meeting, as of and after the Effective Time will be a newly formed Delaware
corporation named "CVS Corporation" ("CVS")).
If sufficient stockholders approve the Proposal, (i) at the
Effective Time CVS New York, Inc. ("Merger Sub"), a wholly-owned New York
subsidiary of CVS, will be merged with and into the Corporation, and the
Corporation will be the surviving corporation in such merger (the
""Merger") and will be renamed "CVS New York, Inc.", (ii) pursuant to the
Merger, at the Effective Time, each stockholder of the Corporation will
receive an equal number of shares of CVS in exchange for each share of
capital stock of the Corporation held by such stockholder immediately prior
to the Effective Time, (iii) as a result of the Merger, the Corporation
will become a wholly owned subsidiary of CVS, (iv) following the Effective
Time, the Corporation will cease to be a publicly traded company, and
stockholders will hold shares of CVS, which will be a New York Stock
Exchange-listed public company, (v) the Certificate of Incorporation and
Bylaws of CVS in effect as of the Effective Time will be in the forms
attached as Appendices B and C hereto, and such Certificate of
Incorporation and Bylaws of CVS will be substantially the same as the
Certificate of Incorporation (the "Melville Charter") and Bylaws of the
Corporation in effect prior to the Effective Time, except for the
differences therein described herein under "III. Proposal: To Change the
State of Incorporation From New York to Delaware and to Effect Certain
Charter Amendments -- Material Changes in the CVS Charter and Bylaws From
the Melville Charter and Bylaws" and (vi) the directors and officers of CVS
will be the same as those of Melville. For additional information on the
Proposal, see "III. Proposal: To Change the State of Incorporation From
New York to Delaware and to Effect Certain Charter Amendments."
Approval of the Proposal will require the affirmative vote of
two-thirds of the outstanding shares of Melville Common Stock (as defined
below) and Melville ESOP Preference Stock (as defined below) entitled to
vote thereon at the Special Meeting, voting as a single class. Proxies
solicited by the Board of Directors will be voted FOR the Proposal, unless
stockholders specify otherwise.
Even if sufficient stockholders approve the Proposal, the Board of
Directors has reserved the right to terminate and abandon the Merger as
described below under "III. Proposal: To Change the State of
Incorporation From New York to Delaware and to Effect Certain Charter
Amendments."
If sufficient stockholders fail to approve the Proposal, the
Corporation will remain a New York corporation and the holding company for
the Melville group, and its existing Certificate of Incorporation and
Bylaws will not be amended in connection herewith.
This Proxy Statement, the attached Notice of Special Meeting of
Stockholders and the enclosed Proxy are first being mailed to stockholders
of the Corporation on or about [date].
I. BACKGROUND TO THE PROPOSAL
Melville has, up to the time of the Restructuring Program
described below, been a diversified retailer operating in four business
segments: prescription drugs and health and beauty care through its CVS
business; apparel through its Bob's Stores, its Marshalls business (up to
the time of the sale of Marshalls on November 17, 1995) and its Wilson's
leather goods chain (up to the time of the sale of Wilson's on May 25,
1996); footwear through its Meldisco, Footaction and Thom McAn businesses
(the holding company for which will be Footstar, Inc. ("Footstar") as of
the Footstar Spinoff referred to below); toys through its Kay-Bee business
(up to the time of the sale of Kay-Bee on May 5, 1996) and home furnishings
through its Linens 'n Things and This End Up businesses (up to the time of
the sale of This End Up on May 31, 1996).
In Melville's letter to shareholders accompanying its 1994 Annual
Report, Melville informed its shareholders that it was commencing a
strategic review of its organization and operations which it expected would
be substantially completed by December 31, 1995. In early 1994, Melville
began to explore various transaction structures, and this activity was
accelerated in late 1994 and throughout 1995 with a view to designing,
formulating and implementing Melville's restructuring strategy and plan.
In this strategic review, Melville worked with its financial advisers and
legal counsel and accountants in an analysis and valuation of, among other
things, the financial, market, credit, tax, accounting and regulatory
implications of alternative transactions and structures, and Melville and
its advisers examined the mix of its businesses and the role and strategy
of each in generating sales and profits, as well as each business' market
position and growth potential.
These preparatory efforts of Melville's management and advisers
culminated in the formulation and announcement in October 1995 of Melville's
comprehensive strategic restructuring program (the "Restructuring Program")
designed to achieve various strategic, profitability and growth objectives as
well as significant cost savings, and thereby to increase value for Melville
shareholders. The Restructuring Program included:
(i) The planned creation of independent retailing companies in
the chain drug and footwear industries. After giving effect to the
Restructuring Program, the remaining Melville (which, subject to
requisite stockholder approval at the Special Meeting, will be renamed
CVS Corporation) will be a publicly traded holding company consisting of
CVS and, initially, Linens 'n Things and Bob's. On June 3, 1996,
Melville announced a formal plan to separate Linens 'n Things and Bob's
from CVS, with Linens 'n Things and Bob's to be classified as
discontinued operations in Melville's financial statements. Footstar
will constitute the footwear company which will become publicly traded
through the distribution (the "Footstar Spinoff") by Melville, pro rata
to Melville's shareholders, of all shares of common stock of Footstar
held by Melville.
(ii) The previously announced sale of Marshalls, which was
completed on November 17, 1995.
(iii) The previously announced sale of Kay-Bee Toys to
Consolidated Stores Corporation, which was completed on May 5, 1996.
(iv) The previously announced sale of Wilson's to an investor
group led by Wilson's management and other investors, which was
completed on May 25, 1996; and the sale of This End Up to an outside
investor group which was completed on May 31, 1996.
(v) The recording by Melville of an after-tax charge of
approximately $753.1 million in the fourth quarter of 1995 relating to
the Restructuring Program. An additional after-tax charge of
approximately $148 million was recorded by Melville in the second
quarter of 1996, resulting primarily from the actions announced by
Melville on June 3, 1996 regarding Linens 'n Things, Bob's and Thom
McAn.
(vi) A revision of Melville's dividend policy to align the payout
with the new Melville's growth and capital needs, as well as with the
prevailing practices in each industry segment. In January 1996,
Melville announced that its quarterly dividend would be reduced to $0.11
per share from $0.38 per share.
* * *
As of the date of this proxy statement, substantial progress has
been made towards completion of the Restructuring Program, with the
Footstar Spinoff constituting the principal component of the Restructuring
Program that remains to be completed. The Corporation intends to effect
the Footstar Spinoff prior to the Special Meeting.
The Board of Directors believes that the Proposal is in the best
interests of the Corporation as it embarks on its post-Restructuring
Program era. The proposed change of name to "CVS Corporation" is intended
to communicate that the Corporation will be principally a chain drug
company with CVS as its core business. The proposed reincorporation into
Delaware and related charter and bylaw amendments are generally intended to
modernize the holding company's charter and bylaws and to provide the
corporate law advantages afforded by Delaware law as described below under
"III. Proposal: To Change the State of Incorporation From New York to
Delaware and to Effect Certain Charter Amendments--Principal Reasons for
Changing the State of Incorporation."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information as to beneficial ownership of
Melville Common Stock as of August 31, 1996 by persons beneficially owning
more than 5% of the Melville Common Stock, by directors of Melville, and by
all directors and executive officers of Melville (who will be in office at
the time of the Special Meeting) as a group. The Corporation is not aware
of any person who owned beneficially more than 5% of the outstanding voting
securities of the Corporation as of August 31, 1996, except as shown in the
following table.
Principal Stockholders
<TABLE>
<S> <C> <C> <C>
Percent
Title of Class Name and Address of Beneficial Owner No. of Shares of Class*
- - - -------------- ------------------------------------ ----------- ---------
Common Stock FMR Corp.(1) 13,552,054 12.8%
82 Devonshire Street
Boston, MA 02109
Common Stock Brinson Partners, Inc.(2) 6,904,354 6.5%
209 S. LaSalle Street,
11th Floor
Chicago, IL 60604-1295
Series One ESOP Melville Corporation and Subsidiaries 5,807,168 100%
Convertible Employee Stock Ownership Plan Trust
Preference c/o Bank of New York, as Trustee(3)
Stock 48 Wall Street
New York, NY 10005
<FN>
___________
* This calculation is based on all outstanding shares of Common Stock and
Series One ESOP Convertible Preference Stock as of August 31, 1996, and
the percent of voting securities owned by FMR Corp., Brinson Partners,
Inc. and the ESOP Trust are 12.1%, 6.2% and 5.2%, respectively.
(1) FMR Corp. ("FMR") filed a statement with the Securities and
Exchange Commission (the "SEC") dated July 10, 1996 on Schedule 13G under
the Securities Exchange Act of 1934, as the parent holding company in
accordance with Rule 13d-1(b)(ii)(G) of such Act, disclosing beneficial
ownership of greater than 5% of the Corporation's Common Stock (13,552,054
shares). According to the statement, FMR and/or subsidiaries have neither
shared voting power nor shared dispositive power over any of these shares,
and FMR has certified that all of these shares were acquired in the
ordinary course of business, and not for the purpose of changing or
influencing the control of the Corporation.
(2) Share ownership information relating to Brinson Partners, Inc. set
forth in the table above is based on information contained in a 13(f) Filing
Report obtained from CDA/Spectrum as of August 31, 1996.
(3) Each participant in the Melville Corporation and Subsidiaries
Employee Stock Ownership Plan ("ESOP") instructs the Trustee of the ESOP
how to vote his or her shares. As to unallocated shares and shares with
respect to which the Trustee receives no timely voting instructions, the
Trustee, pursuant to the ESOP Trust Agreement, votes these shares in the
same proportion as it votes all of the shares with respect to which it has
received timely voting instructions. As of the date hereof, each share of
Series One ESOP Convertible ESOP Preference Stock is entitled to one vote
per share on all matters submitted to a vote of the holders of Common
Stock, voting together with the holders of Common Stock as a single class.
See "V. Voting, Solicitation Of Proxies And Future Shareholder Proposals."
</FN>
</TABLE>
Management
The names and beneficial ownership of the directors of the Corporation, and
the aggregate beneficial ownership of all directors and executive officers of
the Corporation who will be in office at the time of the Special Meeting) as a
group, are set forth below.
<TABLE>
<S> <C> <C> <C>
Ownership of Percent
Corporation's of
Title of Class Name Stock(1) Class
- - - -------------- -------------------------------- ------------- -------
Common Stock Allan J. Bloostein 8,500(2) *
Common Stock W. Don Cornwell 3,100(2) *
Common Stock Thomas P. Gerrity 3,000(2) *
Common Stock Stanley P. Goldstein 637,130(2)(3)(4)(5) *
Common Stock Michael H. Jordan 8,400(2) *
Common Stock William H. Joyce 4,000(2) *
Common Stock Terry R. Lautenbach 7,800(2) *
Common Stock Harvey Rosenthal 264,786(2)(3)(4) *
Common Stock Thomas M. Ryan 118,223(2)(3)(4) *
Common Stock Ivan G. Seidenberg 4,000(2) *
Common Stock Patricia Carry Stewart 8,500(2) *
Common Stock M. Cabell Woodward, Jr. 12,000(2) *
Common Stock All directors and executive 1,199,659(2)(3)(4)(5) 1.1%
officers as a group (17 persons)
<FN>
___________
* Less than 1%.
(1) Unless otherwise indicated, ownership means sole voting and investment
power. The number of shares and other information indicated in this
table and, unless otherwise indicated, throughout this Proxy Statement,
are as of August 31, 1996. The information in footnotes (2) and (3)
below does not reflect any adjustments relating to the stock options to
be made in connection with the Footstar Spinoff.
(2) The following shares of Common Stock included above for the indicated
persons and group are not presently owned, but were subject to options
which were outstanding on August 31, 1996 and were exercisable within
60 days thereafter: Mr. Goldstein, 452,000; Mr. Rosenthal, 239,666;
Mr. Ryan, 59,600; each of Messrs. Bloostein, Jordan, Woodward and Ms.
Stewart, 8,000; Mr. Lautenbach, 6,000; Mr. Seidenberg, 4,000; Mr.
Joyce, 3,000; Mr. Cornwell, 3,000; Mr. Gerrity, 2,000; directors
and executive officers as a group 879,866 (17 persons).
(3) The following shares of Common Stock included above for the indicated
persons and group were granted under the Corporation's Omnibus Stock
Incentive Plan and are subject to certain restrictions as to continued
employment and transfer of such shares as provided in the plan: Mr.
Goldstein, 7,946; Mr. Rosenthal, 4,730; Mr. Ryan, 28,610; executive
officers as a group (7 persons) 78,176.
(4) The Melville Corporation and Subsidiaries Employee Stock Ownership
Plan (the "ESOP") held as of August 31, 1996, 1996, 5,807,168 shares of
the Corporation's Series One ESOP Convertible Preference Stock. The
Bank of New York, the trustee of the ESOP, will vote shares held by the
ESOP in proportion to instructions received from plan participants. As
of December 31, 1995, the last date on which an allocation was made,
Messrs. Goldstein and Rosenthal have each been allocated 671 shares;
Mr. Ryan has been allocated 647 shares; and all executive officers as
a group (7 persons) have been allocated 2,983 shares. These amounts
have not been included in the above table.
(5) Of the shares shown opposite Mr. Goldstein's name, 9,434 shares are
owned of record by a non-profit charitable foundation of which he is
President and shares voting and investment power and 20,000 shares are
owned by Mr. Goldstein's wife. Mr. Goldstein disclaims beneficial
ownership of all such shares.
</FN>
</TABLE>
III. PROPOSAL: TO CHANGE THE STATE OF INCORPORATION FROM NEW
YORK TO DELAWARE AND TO EFFECT CERTAIN CHARTER AMENDMENTS
The Corporation's Board of Directors has unanimously approved, and
recommends for shareholder approval, the Proposal, including the Merger, the
Merger Agreement (as defined below) and the Reincorporation (as defined
below). These transactions will not result in any change in the business or
the consolidated assets, liabilities or net worth of the reincorporated
entity. In addition, the directors and officers of CVS will be the same as
those of Melville. Reincorporation in Delaware by forming CVS as a new
Delaware holding company will afford the advantages of certain provisions of
the corporate laws of Delaware and will effect certain amendments to the
holding company's organizational documents (including the change of name to
"CVS Corporation").
The Proposal entails (i) the change of the holding company's state
of incorporation to Delaware from New York through the merger structure
described below resulting in (x) shareholders owning shares of a new
Delaware holding company named "CVS Corporation" and (y) the Corporation
thereby becoming a wholly owned subsidiary of CVS, and (ii) in connection
therewith, effecting the amendments to the holding company's certificate of
incorporation and bylaws described below.
The proposed reincorporation from New York to Delaware (the
"Reincorporation") will be effected by a triangular merger structure
pursuant to which Melville will become a wholly owned subsidiary of CVS.
Under the proposed merger structure, CVS New York, Inc. ("Merger Sub"), a
newly formed wholly-owned New York subsidiary of CVS organized for such
purpose shall be merged with and into Melville (the "Merger"). Melville
will be the surviving corporation (the "Surviving Corporation") in the
Merger and will be renamed "CVS New York, Inc." Pursuant to the Merger, at
the Effective Time and as further described below, each stockholder of the
Corporation will receive an equal number of shares of CVS in exchange for
each share of capital stock of the Corporation held by such stockholder
immediately prior to the Effective Time.
An Agreement and Plan of Merger (the "Merger Agreement"), in the
form attached hereto as Appendix A, relating to the Merger has been
unanimously approved by the Board of Directors. The Merger Agreement
provides, however, that the Board of Directors may terminate the Merger
Agreement and abandon the Merger, even after requisite stockholder approval
thereof, if for any reason (including, but not limited to, the number of
shares for which appraisal rights have been exercised and the cost to the
Corporation thereof) the Board of Directors determines that it is
inadvisable to proceed with the Merger. See "Rights of Dissenting
Stockholders" below. The description contained herein of the Merger
Agreement, the Merger and the Reincorporation does not constitute a full
statement of such transactions, is a summary thereof and is subject to and
qualified in its entirety by reference to the Merger Agreement and the
other Appendices hereto.
The Merger will become effective at such time, after the Merger
Agreement has been duly authorized and adopted by the requisite approval of
shareholders of Melville, as the certificate of merger is duly filed with
the Secretary of State of the State of New York or at such later time as is
specified in the certificate of merger (the "Effective Time"). From and
after the Effective Time, the Surviving Corporation will possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities and duties of Melville and Merger Sub, all as
provided under New York law.
The Certificate of Incorporation of CVS (the "CVS Charter")
provides for the authorization of 350,120,619 shares of capital stock of
which (i) 300,000,000 shares are Common Stock, $.01 par value per share
("CVS Common Stock"), (ii) 120,619 shares are Cumulative Preferred Stock,
$.01 par value per share ("CVS Preferred Stock"), and (iii) 50,000,000 are
Preference Stock, $1 par value per share ("CVS Preference Stock").
At the Effective Time of the Merger, (i) each share of common
stock, par value $1 per share ("Melville Common Stock"), of Melville issued
and outstanding, or held in the treasury of Melville, shall be converted
(without the surrender of stock certificates or any other action) into one
fully paid and non-assessable share of CVS Common Stock issued and
outstanding or held in the treasury of CVS, as the case may be (with the
same rights, powers and privileges as the shares so converted); (ii) each
share of Series One ESOP Convertible Preference Stock, par value $1 per
share ("Melville ESOP Preference Stock"), of Melville issued and
outstanding shall be converted (without the surrender of stock certificates
or any other action) into one fully paid and non-assessable share of Series
One ESOP Convertible Preference Stock, par value $1 per share ("CVS ESOP
Preference Stock"), of CVS issued and outstanding (with the same rights,
powers and privileges as the shares so converted); (iii) each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one share of common stock
of the Surviving Corporation with the same rights, powers and privileges as
the shares so converted and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation; and (iv) each option (a
"Melville Option") to purchase shares of Melville Common Stock which has
been granted pursuant to any employee stock option or compensation plan or
arrangement of Melville shall, without any action on the part of the
optionee, be converted into an option to purchase the same number of shares
of CVS Common Stock on the same terms and with the same exercise price as
were applicable with respect to such Melville Option immediately prior to
the Effective Time.
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS TO EXCHANGE THEIR
EXISTING MELVILLE STOCK CERTIFICATES FOR STOCK CERTIFICATES OF CVS.
OUTSTANDING CERTIFICATES FOR SHARES OF COMMON STOCK OR ESOP PREFERENCE
STOCK OF THE CORPORATION SHOULD NOT BE DESTROYED OR SENT TO THE CORPORATION
OR TO CVS. The CVS Common Stock will be listed on the New York Stock
Exchange ("NYSE") under the symbol "CVS". Delivery of certificates for the
Corporation's Common Stock and ESOP Preference Stock issued prior to the
effectiveness of the Merger will constitute "good delivery" of shares in
transactions subsequent to the Merger. Certificates representing shares of
CVS Common Stock and CVS ESOP Preference Stock will be issued with respect
to transfers consummated after the Effective Time. New certificates will
also be issued upon the request of any stockholder, subject to normal
requirements as to proper endorsement, signature guarantee, if required,
and payment of applicable taxes.
PURSUANT TO THE MERGER, STOCKHOLDERS OF MELVILLE IMMEDIATELY PRIOR
TO THE EFFECTIVE TIME WILL, AT THE EFFECTIVE TIME, BECOME STOCKHOLDERS OF
CVS WHICH IS A DELAWARE CORPORATION WITH ITS OWN CERTIFICATE OF
INCORPORATION AND BYLAWS, ALL OF WHICH WILL RESULT IN CHANGES IN THE RIGHTS
OF THE STOCKHOLDERS.
For additional information and details relating to these and other
changes, reference is made to the CVS Charter, attached as Appendix B to
this Proxy Statement, and the discussions below in this Proxy Statement
under "--Principal Reasons for Changing the State of Incorporation," "--
Material Differences Between New York and Delaware Corporation Laws" and
"-- Material Changes in the CVS Charter and Bylaws From the Melville
Charter and Bylaws." The discussion herein of the provisions of the CVS
Charter and Bylaws is subject to, and qualified in its entirety by
reference to, all the provisions of the CVS Charter and Bylaws attached
hereto as Appendices B and C, respectively. Copies of the Certificate of
Incorporation and By-laws of Melville are available for inspection at the
principal office of Melville and copies will be sent to stockholders upon
request.
Principal Reasons For Changing The State Of Incorporation To Delaware
For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically
updated and revised to meet changing business needs. Delaware corporate
law offers a predictability, responsiveness and sophistication that is
conducive to the transacting of business. As a result, many corporations
initially choose Delaware as their domicile and many others have
reincorporated in Delaware in a manner similar to that proposed by the
Corporation. Because of Delaware's long-standing policy of encouraging
incorporation in that state, and its consequent preeminence as the state of
incorporation for many major corporations, the Delaware courts have
developed considerable expertise in dealing with corporate issues and a
substantial body of case law has developed construing Delaware law and
establishing public policies with respect to Delaware corporations.
Delaware has a more highly developed body of case law interpreting its
corporate statutes than other states, and this case law advantage gives its
corporate law an added measure of predictability that is crucial in a
judicial system based largely on precedent. These factors often provide
the directors and management of Delaware corporations with greater
certainty and predictability in managing the affairs of the corporation.
Furthermore, the Delaware court system provides for the expeditious
resolution of corporate disputes. Delaware has a specialized Court of
Chancery which hears cases involving corporate law. Since the Court of
Chancery has no jurisdiction over criminal or tort cases, its dockets are
not backlogged. Moreover, appeals to the Supreme Court of Delaware in
important corporate cases can be made and decided quite rapidly.
For a discussion of certain differences in stockholders' rights
and the powers of management under the Delaware General Corporation Law
(the "Delaware GCL") and the New York Business Corporation Law (the "New
York BCL") see "-- Material Differences Between New York and Delaware
Corporation Laws" and "-- Material Changes in the CVS Charter and Bylaws
From the Melville Charter and Bylaws."
In the event the Proposal is not approved, the Corporation will
remain a New York corporation and the holding company for the Melville
group, and its Certificate of Incorporation and Bylaws will not be amended
in connection herewith.
Material Differences Between The New York and Delaware Corporation Laws
The Merger will effect several changes in the rights of
stockholders as a result of differences between the New York BCL and the
Delaware GCL. The provisions of the New York BCL and Delaware GCL differ
in numerous respects. Summarized below are certain of the principal
differences between the New York BCL and the Delaware GCL affecting the
rights of stockholders. This summary does not purport to be a complete
statement of differences affecting stockholders' rights under the New York
BCL and the Delaware GCL and is subject to, and qualified in its entirety
by reference to, all the provisions thereof.
Dividends.
The Delaware GCL provides that a corporation may, unless otherwise
restricted by its certificate of incorporation, declare and pay dividends
out of surplus, or if no surplus exists, out of net profits for the fiscal
year in which the dividend is declared and/or the preceding fiscal year
(provided that the amount of capital of the corporation is not less than
the aggregate amount of the capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution
of assets). Under the New York BCL, dividends may be paid only out of
surplus.
Vote Required for Certain Transactions.
The New York BCL requires that certain mergers and consolidations
and sales of all or substantially all of the assets not in the ordinary
course of business be approved by the holders of two-thirds of the
outstanding stock entitled to vote thereon. Under the Delaware GCL, such
transactions require approval by the holders of a majority of the
outstanding stock entitled to vote thereon, and a vote of the stockholders
of the surviving corporation is not necessary where, in the case of a
merger, (i) no amendment of its certificate of incorporation is effected,
(ii) each share of its stock outstanding immediately prior to the effective
time is to be an identical outstanding or treasury share of the surviving
corporation after the effective time, and (iii) the merger results in no
more than a 20% increase in its outstanding common stock.
Holding Company Reorganization.
A new Section 251(g) has been added to the Delaware GCL permitting
a Delaware corporation to reorganize as a holding company without
stockholder approval. The reorganization contemplated by the statute is
accomplished by merging the subject corporation with or into a direct or
indirect wholly owned subsidiary of the corporation and converting the
stock of the corporation into stock of another direct or indirect wholly
owned subsidiary of the corporation, which would be the new holding
company. The statute eliminates the requirement for a stockholder vote on
such a merger but contains several provisions designed to ensure that the
rights of stockholders are not changed by or as a result of the merger,
except and to the extent that such rights could be changed without such
stockholder approval under existing law.
Thus, the resulting holding company must be a Delaware corporation
and have the same certificate of incorporation (except for provisions that
could have been amended or deleted without stockholder approval), bylaws,
and directors that the corporation had prior to the reorganization. The
corporation or its successor must, as a result of the reorganization,
become a direct or indirect wholly owned subsidiary of the holding company
and must retain the same certificate of incorporation and bylaws that the
corporation had prior to the reorganization (except that the capitalization
may be reduced and except for the addition of the provision described in
the next sentence). To ensure that the voting rights of the stockholders
of the corporation are not changed or evaded as a result of the
reorganization, the statute requires that the certificate of incorporation
of the corporation provide that any extraordinary transactions involving
the corporation be approved by the stockholders of the holding company by
the same vote required of the stockholders of the corporation under the
Delaware GCL and/or by the corporation's certificate of incorporation. To
ensure that any restrictions on stockholders of the corporation imposed by
Section 203 or any exemption from such restrictions remain unaffected by a
holding company reorganization, the statute further provides that the
provisions of Section 203 will apply to persons who are stockholders of the
holding company immediately after the effectiveness of a holding company
reorganization to the same extent that they applied to stockholders of the
corporation immediately prior to the reorganization. In order for no
stockholder vote to be required, a holding company reorganization must be
tax-free for federal income tax purposes to stockholders of the
corporation. Appraisal rights are not available to stockholders in a
merger that qualifies as a holding company reorganization.
There is no analogous provision under the New York BCL.
Dissenters' Rights of Appraisal.
Under the New York BCL, dissenting stockholders who follow
prescribed statutory procedures are entitled to appraisal rights in
connection with certain mergers, consolidations and sales of all or
substantially all the assets of a corporation. The Delaware GCL provides
similar rights and procedures for mergers and consolidations only.
Furthermore, under the Delaware GCL, even in the case of a merger or
consolidation, such dissenters' appraisal rights are not provided for
shares of a constituent corporation that are listed on a national
securities exchange or the NASDAQ National Market System or are held of
record by more than 2,000 stockholders, so long as the only consideration
to be received by holders in such merger or consolidation consists of any
combination of (i) shares of stock of the surviving corporation, (ii)
shares of stock of any corporation, which shares are listed on a national
securities exchange or the NASDAQ National Market System or are held of
record by more than 2,000 stockholders, or (iii) cash in lieu of fractional
shares.
The availability of appraisal rights to stockholders of the
Corporation who dissent with respect to the Merger is discussed under
"Rights of Dissenting Stockholders" below.
Business Combination Statutes.
The New York BCL prohibits any "business combination" (as therein
defined) between a "resident domestic corporation" and an "interested
shareholder" for a period of five years after the date that the interested
shareholder became an interested shareholder unless prior to that date the
board of directors of the resident domestic corporation approved the
business combination or the transaction that resulted in the interested
shareholder becoming an interested shareholder. After such five year
period has elapsed, such a business combination is permitted only if (i) it
is approved by a majority of the outstanding voting stock not owned by the
interested stockholder or its affiliate or (ii) certain statutory fair
price requirements are met. A "resident domestic corporation" is defined
as any corporation that (i) is incorporated in New York, (ii) has its
principal executive offices and significant business operations in New York
or has at least 250 employees or 25% of its employees employed primarily in
New York (including employees of its 80% subsidiaries), and (iii) has at
least 10% of its voting stock beneficially owned by New York residents. An
"interested stockholder" is any person who beneficially owns, directly or
indirectly, 20% or more of the outstanding voting stock of the corporation.
Section 203 of the Delaware GCL prohibits any "business
combination" (as therein defined) between a Delaware corporation and an
"interested stockholder" for three years following the date that the
interested stockholder became an interested stockholder unless (i) prior to
that date the board of directors approved the business combination or the
transaction that resulted in the interested stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction that
resulted in the interested stockholder becoming an interested stockholder
the interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced (not counting
shares owned by persons who are directors and also officers and not
counting certain shares in employee stock plans), or (iii) on or subsequent
to such date the business combination is approved by the board of directors
and approved at meeting (not by written consent) by at least two-thirds of
the outstanding voting stock not owned by the interested stockholder. The
Delaware GCL defines "interested stockholder" as any person who
beneficially owns, directly or indirectly, 15% or more of the outstanding
voting stock of the corporation. Unlike the New York BCL, the Delaware GCL
does not require, in order to be covered by these statutory provisions,
that the corporation's principal executive offices or significant
operations be located in Delaware or that at least a specified percentage
of its voting stock be beneficially owned by Delaware residents.
Accordingly, the provisions of Section 203 of the Delaware GCL will apply
to CVS.
Corporate Action by Written Consent Without a Stockholders' Meeting.
The New York BCL permits corporate action without a stockholders'
meeting only upon the unanimous written consent of holders of all
outstanding shares entitled to vote on such action. The Delaware GCL
provides that, unless the certificate of incorporation provides otherwise,
any action required or permitted to be taken at an annual or special
meeting may be taken without a meeting of stockholders upon the written
consent of holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize the proposed corporate
action at a meeting at which all shares entitled to vote thereon were
present and voted, and then requires the corporation to provide prompt
notice of the actions taken through such procedure to the stockholders who
did not consent with respect to such action. The CVS Charter expressly
includes a provision requiring that corporate action by stockholders can
only be taken by unanimous written consent in order to provide the same
protection currently afforded the Corporation's stockholders.
Classification of the Board of Directors.
The New York BCL permits a classified board with as many as four
classes (with each class to be as nearly equal in number as possible), but
forbids fewer than three directors in any class. The Delaware GCL permits a
classified board of directors with as many as three classes, without
specifying any minimum number required in each class. The CVS Charter does
not provide for a classified board of directors.
Number of Directors.
Under the Delaware GCL, a corporation may have as few as one
director and there is no statutory upper limit on the number of directors.
The specific number may be fixed in the bylaws or in the certificate of
incorporation, but if fixed in the certificate of incorporation, may be
changed only by amendment of the certificate of incorporation. If the
certificate of incorporation is silent as to the number of directors, the
board of directors may fix or change the authorized number of directors
pursuant to a provision of the bylaws. The CVS Charter provides that the
number of CVS directors shall be between three and eighteen as determined
by the Board.
Under the New York BCL, the number of directors may not be less
than three, and any higher number may be fixed by the by-laws or by action
of the stockholders or of the board of directors under the specific
provisions of the by-laws adopted by the stockholders. The number of
directors may be increased or decreased by amendment of the by-laws or by
action of the stockholders or of the board of directors under the specific
provisions of a by-law adopted by the stockholders, subject to certain
limitations.
Issuance to Officers, Directors and Employees of Rights or Options to
Purchase Shares.
The New York BCL requires the affirmative vote of a majority of
the shares entitled to vote in order to issue to officers, directors or
employees options or rights to purchase stock. The Delaware GCL does not
require stockholder approval of such transactions. However, CVS will be
subject to various other applicable legal requirements, such as rules of
the Securities and Exchange Commission and the NYSE, which may make
stockholder approval of certain rights or option plans and grants
thereunder necessary or desirable in certain circumstances.
Loans to Directors.
Under the Delaware GCL, loans may be made to employees or
officers, even those who are also directors, if the Board of Directors
finds that the loan may benefit the corporation. The New York BCL requires
that loans to directors be authorized by an affirmative vote of
stockholders (excluding, for this purpose, shares of the director who is
the proposed borrower).
Redeemable Shares.
The Delaware GCL permits redeemable shares to be subject to
redemption, in accordance with the terms thereof, by the corporation at its
option or at the option of the holders thereof, provided that at the time
of such redemption, the corporation has outstanding shares of at least one
class or series of stock with full voting powers which are not subject to
redemption. The New York BCL generally permits redemption of common shares
only at the option of the corporation.
Consideration for Shares.
Under the New York BCL, neither obligations of the subscriber for
future payments nor obligations of the subscriber for future services
constitutes payment or part payment for shares of a corporation.
Furthermore, certificates for shares may not be issued until the full
amount of the consideration therefor has been paid (except in the case of
shares purchased pursuant to stock options granted to directors, officers
or employees under a plan permitting installment payments). Under the
Delaware GCL, shares of stock may be issued, and deemed to be fully paid
and nonassessable, if the corporation receives consideration (in the form
of cash, services rendered, personal property, real property, leases of
real property, or a combination thereof) for the full subscription price or
having a value not less than the par value of such shares and the
corporation receives a binding obligation of the subscriber to pay the
balance of the subscription price.
Inspection of Stockholders List.
With respect to the inspection of stockholder lists, the New York
BCL provides a right of inspection, upon at least five days' written
demand, to (i) any person who shall have been a stockholder of record for
at least six months immediately preceding his demand or (ii) any person
holding, or thereunto authorized in writing by the holders of, at least 5%
of any class of outstanding shares. The corporation has certain rights
calculated to assure itself that the demand for inspection is not for a
purpose that is in the interest of a business or object other than the
business of the corporation.
The Delaware GCL permits any stockholder to inspect the
stockholders list for any purpose reasonably related to such person's
interest as a stockholder. In addition, for a period of at least ten days
prior to each stockholders meeting, a list of stockholders entitled to vote
at the meeting shall be open for examination by any stockholder for any
purpose germane to the meeting.
Material Changes in the CVS Charter and Bylaws From the Melville Charter
and Bylaws
The CVS Charter and Bylaws (in the forms attached as Appendices B
and C, respectively, to this Proxy Statement) will be in effect at the
Effective Time and will govern the rights of stockholders in the event the
Proposal is approved. The CVS Charter is substantially similar to the
Melville Charter. Except for the provisions relating to change in name,
corporate purpose, indemnification and limitation of liability, the ability
to call special meetings of stockholders, and amending the bylaws, the
differences between the two are primarily as a result of differences
between the New York BCL and the Delaware GCL. Set forth below is a
summary of the material changes in the CVS Charter and Bylaws from the
Melville Charter and Bylaws. The bylaws of CVS and Melville are
substantially similar except that the bylaws of CVS reflect the Delaware
GCL and the provisions of the CVS Charter. The following summary does not
purport to be a complete statement of such changes or of the CVS Charter
and Bylaws and is qualified in its entirety by reference to such Charter
and Bylaws documents. Copies of the Certificate of Incorporation and By-
laws of Melville are available for inspection at the principal office of
Melville and copies will be sent to stockholders upon request.
Name of Corporation.
The Delaware corporation, the stock of which will be issued to
stockholders in the Merger, will be named "CVS Corporation".
Purpose Clause.
The purpose clause in the CVS Charter will permit CVS "to engage in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended."
The current Melville purpose clause includes numerous purposes
reflecting a company principally engaged in the shoe business, as well as
other related retail businesses.
By virtue of the change, the CVS Charter will contain a purpose
clause that is in keeping with modern Delaware corporate charters and will
afford CVS flexibility in its corporate purposes and activities.
Indemnification and Limitation of Liability.
The CVS Charter provides for indemnification of directors and
officers (including provisions authorizing the advancement of expenses
incurred in connection with certain applicable proceedings) to the fullest
extent permitted by the Delaware GCL.
Provisions relating to indemnification of directors and officers
of Melville are included in Melville's Bylaws rather than in the Melville
Charter. Such provisions provide for indemnification of directors and
directors to the fullest extent permitted by applicable New York law (and
also provide for advancement of expenses upon receipt of a repayment
undertaking to the extent such person is ultimately determined not to be
entitled to indemnification). Indemnification is stated to be available
where an officer or director has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or certain types of
proceedings. Any other indemnification, unless awarded by a court, is
available only if authorized by the corporation in the specific case (i) by
the Board of Directors acting by a quorum of directors who are not parties
to such action or proceeding upon a finding that the director or officer
has met the specified standard of conduct or (ii) if such a quorum is not
obtainable or, even if obtainable, if a quorum of disinterested directors
so directs, (a) by the Board of Directors upon the opinion in writing of
independent legal counsel that indemnification is proper because the
specified standard of conduct has been met or (b) by the shareholders upon
a finding that such officer or director has met the specified standard of
conduct. The relevant Bylaw provisions also require that, if a person is
indemnified otherwise than by court order or action of the shareholders,
the corporation notify the shareholders within a specified time period of
certain facts relating to such indemnification.
The CVS Charter expressly authorizes the corporation to purchase
and maintain directors and officers liability insurance to insure against
liabilities or losses incurred in such capacities whether or not the
corporation would have the power to indemnify the individual under the
Delaware GCL. There is no similar provision in the Melville Charter or
Bylaws.
Furthermore, the CVS Charter provides that a director of the
corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director to the fullest
extent permitted by Delaware Law. There is no similar provision in the
Melville Charter or Bylaws. This provision in the CVS Charter is intended
to afford directors additional protection and limit their potential
liability from suits alleging a breach of the duty of care by a director.
As a result of the inclusion of such a provision, stockholders may be
unable to recover monetary damages against directors for actions taken by
them that constitute negligence or that are otherwise in violation of their
duty of care, although it may be possible to obtain injunctive or other
equitable relief with respect to such actions. If equitable remedies are
found not to be available to stockholders in any particular situation,
stockholders may not have an effective remedy against a director in
connection with such conduct.
In general, the purpose of the changes in the CVS Charter is to
provide indemnification and exculpation provisions that are customary in
modern charter documents of Delaware corporations (particularly in charter
documents of major, public corporations that have incorporated in Delaware).
Stockholder Action by Unanimous Written Consent; Special Meetings.
The New York BCL permits corporate action without a shareholder
meeting only upon the written consent of all shareholders entitled to vote
on such action. Accordingly, the Melville Charter does not contain a
provision prohibiting shareholder action by written consent. Since the
Delaware GCL permits that, unless the certificate of incorporation
expressly provides otherwise, corporate action may be taken without a
meeting of stockholders upon the written consent of holders of outstanding
stock having not less than the minimum number of votes that would be
necessary to authorize the proposed corporate action at a meeting, the CVS
Charter expressly includes a provision requiring that corporate action by
stockholders can only be taken by unanimous written consent in order to
provide the same protection currently afforded the Corporation's
stockholders.
Melville's Bylaws (and not the Melville Charter) contain provisions
that state that special meetings of stockholders (other than those regulated
by statute) may be called in writing by the Chairman of the Board of
Directors, the President or by a vote of the majority of the Board of
Directors then holding office.
The CVS Charter contains a similar provision that provides that a
special meeting of stockholders may only be called by the Board of
Directors, the Chairman of the Board of Directors or the President and may
not be called by any other person. The CVS Charter also provides that
whenever holders of one or more classes or series of CVS Preferred Stock or
CVS Preference Stock have the right, voting separately as a class or series
to elect directors, such holders may call, pursuant to the terms of the
charter (or of the applicable resolution or resolutions adopted by the
Board of Directors), special meetings of holders of such CVS Preferred
Stock or CVS Preference Stock.
Change in Par Value of Certain Authorized Capital Stock.
The CVS Charter authorizes the Corporation to issue the same
number of shares of CVS Common Stock, Preferred Stock and Preference Stock
as does the Melville Charter, but the CVS Charter (i) reduces the par value
of the CVS Common Stock to $.01] par value per share from the $1 par value
per share of Common Stock set forth in the Melville Charter and (ii)
reduces the par value per share of the CVS Preferred Stock to $.01 per from
the $100 par value per share of Preferred Stock set forth in the Melville
Charter. One effect of this change in par value is to reduce CVS'
franchise taxes payable in Delaware which are calculated based on the par
value and number of shares of the authorized capital stock.
Deletion of Terms of Cumulative Preferred Stock--Series B.
The terms of the Cumulative Preferred Stock--Series B are not
included in the CVS Charter since no shares of Cumulative Preferred
Stock--Series B of Melville were outstanding immediately prior to the
Effective Time. CVS has 120,619 shares of Cumulative Preferred Stock
authorized for issuance, none of which will be outstanding immediately
following the Effective Time.
Amending the Bylaws.
The CVS Charter and Bylaws provide for the alteration, amendment or
repeal of the bylaws or the adoption of new bylaws by the stockholders
entitled to vote thereon at any annual or special meeting or by the Board of
Directors.
The Melville Bylaws authorize the stockholders to amend, repeal or
adopt bylaws by the affirmative vote of the holders of a majority of all
the shares outstanding and entitled to vote at any regular or special
meeting of the stockholders, if notice of the proposed alteration or
amendment is contained in the notice of the meeting and subject to certain
notice requirements in the event of a change in the time or place for the
election of directors. The Melville Bylaws also authorize the Board of
Directors to adopt, amend or repeal the bylaws of the Corporation, but (i)
any amendment changing the number of directors requires the vote of a
majority of the entire Board, (ii) any Board action amending the bylaws may
be amended by the stockholders, and (iii) any Board action amending the
bylaws requires certain notice to stockholders.
Time for Annual Meeting.
The CVS Bylaws provide that the annual meeting of the
stockholders of CVS shall be held on the second Tuesday of May of each year
or on such other day in the month of May as the Board of Directors may
determine. A similar provision in the Melville Bylaws requires that annual
meetings be held on the second Tuesday of April of each year.
Deletion of Bylaw Provisions relating to Divisions.
The Melville bylaw provisions relating to divisions (including the
organization thereof, appointment of officers of divisions and
establishment of bylaws of divisions) are not included in the CVS Bylaws,
since such provisions will not be relevant to CVS which will be principally
a chain drug company as a result of the Restructuring Program.
Other Changes to Reflect Technical Differences between Delaware Law
and New York Law.
In addition to the changes described above, certain technical
changes have been made in the CVS Charter and Bylaws from the Melville
Charter and Bylaws to reflect differences between the Delaware GCL and the
New York BCL. Such technical changes include: designation of a registered
office and registered agent in the State of Delaware; changes in the
minimum and maximum number of days applicable for giving notice of meetings
and for setting record dates; and changing references in the Bylaws to
place (for example, the place for certain meetings) or to applicable law
from New York to Delaware.
Rights of Dissenting Stockholders
Section 910 of the New York BCL sets forth the rights of
stockholders of the Corporation who object to the Merger which will take
place if the Proposal is approved. Any stockholder of the Corporation who
does not vote in favor of the Proposal or who duly revokes his or her vote
in favor of the transaction may, if the Merger is consummated, have the
right to seek to obtain payment in cash of the fair value of his shares by
strictly complying with the requirements of Section 623 of the New York BCL
("Section 623").
The dissenting stockholder must file with the Corporation before
the taking of the vote on the Proposal a written objection including a
statement of election to dissent, such stockholder's name and residence
address, the number and classes of shares of stock (Common Stock or ESOP
Preference Stock or both) as to which dissent is made (which number may not
be less than all of the shares as to which such shareholder has a right to
dissent) and a demand for payment of the fair value of such shares if the
Merger is consummated. Any such written objection should be addressed to:
Melville Corporation, One CVS Drive, Woonsocket, Rhode Island 02895,
Attention: Secretary.
Within ten days after the vote of stockholders authorizing the
Proposal, the Corporation must give written notice of such authorization to
each such dissenting stockholder. Within twenty days after the giving of
such notice, any stockholder to whom the Corporation failed to give notice
of the Special Meeting who elects to dissent from the Merger must file with
the Corporation a written notice of such election, stating such
stockholder's name and residence address, the number and classes of shares
of stock (Common Stock or ESOP Preference Stock or both) as to which
dissent is made (which number may not be less than all of the shares as to
which such shareholder has a right to dissent) and a demand for payment of
the fair value of such shares if the Merger is consummated.
At the time of filing the notice of election to dissent or within
one month thereafter, dissenting shareholders must submit certificates
representing the applicable shares to the Corporation or its transfer
agent, The Bank of New York, for notation thereon of the election to
dissent, after which such certificates will be returned to the shareholder.
Any shareholder who fails to submit his or her share certificates for such
notation shall, at the option of the Corporation exercised by written
notice to the shareholder within 45 days from the date of filing of the
notice of election to dissent, lose such shareholder's appraisal rights
unless a court, for good cause shown, shall otherwise direct.
Within 15 days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within 15
days after consummation of the Merger, whichever is later (but not later
than ninety days after the stockholders' vote authorizing the Merger), the
Corporation must make a written offer (which, if the Merger has not been
consummated, may be conditioned upon such consummation) to each stockholder
who has filed such notice of election to pay for the shares at a specified
price which the Corporation considers to be their fair value. If the
Corporation and the dissenting stockholder are unable to agree as to such
value, Section 623 provides for judicial determination of fair value. In
the event of such a disagreement, a proceeding shall be commenced by the
Corporation in the Supreme Court of the State of New York, County of New
York, or by the dissenting shareholder if the Corporation fails to commence
the proceeding within the time period required by Section 623 of the New
York BCL. The Corporation intends to commence such a proceeding in the
event of such a disagreement.
A negative vote on the Proposal does not constitute a "written
objection" filed by an objecting stockholder. Failure by a shareholder to
vote against the Proposal will not, however, constitute a waiver of rights
under Section 623 provided that a written objection has been properly filed
and such shareholder has not voted in favor of the Proposal.
The foregoing does not purport to be a complete statement of the
provisions of Section 623 and is qualified in its entirety by reference to
said Section, a copy of which is attached in full as Appendix D. Each
shareholder intending to exercise dissenter's rights should review Appendix
D carefully and consult such shareholder's counsel for a more complete and
definitive statement of the rights of a dissenting shareholder and the
proper procedure to follow to exercise such rights.
Because the Proposal does not involve any change in the nature of
the Corporation's business but only involves technical corporate matters
such as the Reincorporation, the Merger and the charter amendments
described herein, management hopes that no stockholder will exercise a
dissenter's right. Under the Merger Agreement, the Board of Directors may
abandon the Merger, even after stockholder approval, if for any reason the
Board of Directors determines that it is inadvisable to proceed with the
Merger, including considering the number of shares for which appraisal
rights have been exercised and the cost to the Corporation thereof.
Federal Income Tax Consequences
The Corporation has been advised by counsel that holders of the
Melville Common Stock and Melville ESOP Preference Stock who do not
exercise their dissenters' rights will not recognize gain or loss for
federal income tax purposes as a result of the Merger and the conversion of
their shares into shares of CVS, and no gain or loss will be recognized
therefrom by CVS or Melville. In addition, the Corporation has been
advised by counsel that the basis of the shares of CVS in the hands of each
stockholder will be the same as the basis of the holder's shares of the
Corporation, and the holding period for shares of CVS will include the
holding period for shares of the Corporation provided that the shares of
the Corporation were held as capital assets at the date of the Merger.
Stockholders who exercise their dissenters' rights to obtain payment for
their shares will recognize gain or loss.
All shareholders should consult their tax advisers as to the
particular tax consequences of the Merger to them, including the
applicability and effect of state, local and foreign tax laws.
Vote Required For Approval Of The Proposal
Approval of the Proposal will require the affirmative vote of two-
thirds of the outstanding shares of Melville Common Stock and Melville ESOP
Preference Stock entitled to vote thereon at the Special Meeting, voting as
a single class. Proxies solicited by the Board of Directors will be voted
FOR the Proposal, unless stockholders specify otherwise.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSAL.
IV. OTHER MATTERS
Management does not intend to present, and has no knowledge that
others will present, at the Special Meeting matters other than those set
forth herein. If any other matters properly come before the Special
Meeting, however, it is the intention of the persons named in the enclosed
Proxy to vote the shares represented in accordance with their judgment,
pursuant to the discretionary authority granted therein.
V. VOTING, SOLICITATION OF PROXIES AND
FUTURE SHAREHOLDER PROPOSALS
The outstanding voting securities of the Corporation are the shares
of Melville Common Stock and Melville ESOP Preference Stock. Under New York
law and the Melville Charter, each share of Melville Common Stock outstanding
on the record date is entitled to one vote at the Special Meeting of
stockholders. Under the Melville Charter, the holders of Melville ESOP
Preference Stock are entitled to vote on all matters submitted to a vote of
holders of Melville Common Stock, voting together with the Melville Common
Stock as a single class. Each share of Melville ESOP Preference Stock is
entitled to the number of votes equal to the number of shares of Melville
Common Stock into which such share of Melville ESOP Preference Stock could be
converted (the "ESOP Conversion Rate") on the record date for the applicable
meeting. Prior to giving effect to the Footstar Spinoff, the ESOP Conversion
Rate is one (and accordingly each share of Melville ESOP Preference Stock is
entitled to one vote) determined by dividing $53.45 by the "ESOP Conversion
Price", which is initially $53.45 per share. In connection with the Footstar
Spinoff, the ESOP Conversion Price (which prior to the Footstar Spinoff is
$53.45 per share), and accordingly the ESOP Conversion Rate and the number of
votes per share of Melville ESOP Preference Stock, will be adjusted by
multiplying the ESOP Conversion Price in effect immediately prior to the
Footstar Spinoff by the fraction the numerator of which is (a) the product of
(x) the number of shares of Melville Common Stock outstanding immediately
before the Footstar Spinoff by (y) the fair market value (as defined in the
Melville Charter) of a share of Melville Common Stock on the record date with
respect to the Footstar Spinoff (such product of (x) and (y) being the
"Melville Prespinoff Market Cap"), minus (b) the aggregate fair market value
(as defined in the Melville Charter) of the stock distributed in the Footstar
Spinoff, and the denominator of which is the Melville Prespinoff Market Cap.
Each participant in the ESOP instructs the Trustee of the ESOP how to
vote his or her shares. As to unallocated shares and shares with respect to
which the Trustee receives no timely voting instructions, the Trustee,
pursuant to the ESOP Trust Agreement, votes these shares in the same
proportion as it votes all of the shares with respect to which it has received
timely voting instructions.
The presence in person or by proxy of the holders of shares
entitled to cast a majority of the votes constitutes a quorum. As of
August 31, 1996, there were issued and outstanding and entitled to vote
106,069,384 shares of Melville Common Stock and 5,807,168 shares of
Melville ESOP Preference Stock.
The Proxy, if returned properly executed and not subsequently
revoked by written notice delivered to the Secretary of the Corporation or
in person at the meeting, will be voted in accordance with the choice made
by the stockholder. If no instructions are indicated but the Proxy is
executed, the Proxy will be voted "FOR" the Proposal.
Votes are tabulated by the Corporation's transfer agent using the
transfer agent's automated system. Pursuant to New York law, approval of
the Proposal requires the affirmative vote of two-thirds of all outstanding
shares entitled to vote thereon.
Abstentions are counted in determining the number of outstanding
shares entitled to vote but are not counted as votes cast for a proposal;
therefore, abstentions will have the effect of a vote against the Proposal.
Brokers holding shares in street name for beneficial owners must
vote those shares according to specific instructions they receive from the
owners. Under applicable rules, if specific instructions are not received,
however, brokers have the authority to vote the shares in their discretion
on certain "routine" matters. Absent specific instructions from the
beneficial owners in the case of "non-routine" matters, the brokers may not
vote the shares. The vote on the Proposal is considered a "non-routine"
matter on which brokers may not vote in their discretion. Broker non-votes
on the Proposal will have the effect of a vote against the Proposal.
THE ENCLOSED PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF
DIRECTORS OF THE CORPORATION IN CONNECTION WITH THE SPECIAL MEETING OF
SHAREHOLDERS OF THE CORPORATION TO BE HELD ON [DATE] AND ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF. Only shareholders of record at the close of business
on [record date] will be entitled to notice of, and to vote at, the meeting
and at any adjournment or adjournments thereof. Anyone giving a Proxy may
revoke it at any time before it is exercised by notifying the Secretary of
the Corporation in writing that the Proxy is revoked or by attending and
voting in person at the meeting.
The cost of the solicitation of Proxies will be borne by the
Corporation. The Corporation has retained Morrow & Co. to assist it in the
solicitation of Proxies for a fee of $9000.00. In addition, solicitations
may be made by mail, telephone, telegraph and personal interview, by the
directors, officers and regularly engaged employees of the Corporation,
without extra compensation.
Shareholder proposals intended for inclusion in the Proxy
Statement relating to the next annual meeting of stockholders must be
received by the Secretary of the Corporation at One CVS Drive, Woonsocket,
Rhode Island 02895, no later than November 7, 1996.
If you do not plan to attend the Special Meeting of Shareholders
on [date] in person, the Corporation's management urges that you show your
interest in the Corporation's affairs, whether your holdings are large or
small, by promptly signing and returning the enclosed Proxy so that your
stock may be voted. A postage paid return envelope is provided. The
giving of such Proxy will not affect your right to vote in person should
you later decide to attend the meeting.
By order of the Board of Directors.
MELVILLE CORPORATION
Stanley P. Goldstein
Chairman of the Board
MELVILLE CORPORATION
ONE CVS DRIVE
WOONSOCKET, RHODE ISLAND 02895 PROXY
..........................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MELVILLE CORPORATION (THE "CORPORATION")
The undersigned hereby appoints Stanley P. Goldstein and Thomas M. Ryan,
and each of them, the undersigned's true and lawful proxies, agents and
attorneys, each with full power to act without the others and with full
power of substitution and revocation, for and on behalf of the undersigned,
to vote all the shares of Common Stock of the Corporation which the
undersigned would be entitled to vote if present at the Special Meeting of
Shareholders of the Corporation to be held at [time], New York Time, on
[Date], at the offices of the Corporation, One CVS Drive, Woonsocket, Rhode
Island 02895, and at any adjournment or adjournments thereof.
The undersigned hereby ratifies and confirms all that said proxy may
lawfully do in the premises, and hereby revokes all proxies heretofore
given by the undersigned to vote at said meeting or any adjournment or
adjournments thereof. The undersigned acknowledges receipt of the notice
of and proxy statement for said meeting.
THE BOARD RECOMMENDS A VOTE "FOR" THE PROPOSAL.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, JUST
SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED. IF THIS PROXY IS
EXECUTED BUT NO INSTRUCTIONS ARE GIVEN AS TO ANY ITEMS SET FORTH IN THIS
PROXY, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED,
ON THE OTHER SIDE)
.........................................................................
FOLD AND DETACH HERE
Please mark
your votes as
indicated in
this example [X]
THE BOARD RECOMMENDS A VOTE "FOR" THE REINCORPORATION AND CHARTER AMENDMENT
PROPOSAL. TO VOTE IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS, JUST SIGN
BELOW; NO BOXES NEED TO BE CHECKED.
1. Approval of the Reincorporation and Charter Amendment Proposal
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies and each of them, are authorized to
vote in accordance with their judgment upon such other business as
may properly come before this meeting.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDERS.
This Proxy is solicited on behalf of the Board of Directors. Please mark,
sign, date and return this proxy card using the enclosed prepaid envelope.
This Proxy must be returned for your shares to be voted at the meeting in
accordance with your instructions if you do not plan to attend the meeting.
Please indicate any change in address.
Signature(s) _____________________________________________________
Date ________________
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
..............................................................................
FOLD AND DETACH HERE
MELVILLE CORPORATION
ONE CVS DRIVE
WOONSOCKET, RHODE ISLAND 02895 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MELVILLE CORPORATION (THE "CORPORATION")
The undersigned hereby instructs The Bank of New York, as trustee*, to vote
all the shares of Series One Convertible ESOP Preference Stock (the "ESOP
Preference Stock") of the Corporation which the undersigned would be entitled
to vote at the Special Meeting of Shareholders of the Corporation to be held
at [time], New York Time, on [date], at the offices of the Corporation, One
CVS Drive, Woonsocket, Rhode Island 02895, and at any adjournment or
adjournments thereof.
The undersigned hereby ratifies and confirms all that said proxy may lawfully
do in the premises, and hereby revokes all proxies heretofore given by the
undersigned to vote at said meeting or any adjournment or adjournments
thereof. The undersigned acknowledges receipt of the notice of and proxy
statement for said meeting.
THE BOARD RECOMMENDS A VOTE "FOR" THE REINCORPORATION AND CHARTER AMENDMENT
PROPOSAL.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, JUST SIGN
THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED. IF THIS PROXY IS EXECUTED BUT
NO INSTRUCTIONS ARE GIVEN AS TO ANY ITEMS SET FORTH IN THIS PROXY, THIS PROXY
WILL BE VOTED FOR THE REINCORPORATION AND CHARTER AMENDMENT PROPOSAL.
* THE BANK OF NEW YORK, AS TRUSTEE, HAS APPOINTED CHASEMELLON SHAREHOLDER
SERVICES, LLC AS AGENT TO TALLY THE VOTES.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED,
ON THE OTHER SIDE)
..............................................................................
FOLD AND DETACH HERE
Please mark
your votes as
indicted in
this example [X]
THE BOARD RECOMMENDS A VOTE "FOR" THE REINCORPORATION AND CHARTER AMENDMENT
PROPOSAL. TO VOTE IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS, JUST SIGN
BELOW; NO BOXES NEED TO BE CHECKED.
1. Approval of the Reincorporation and Charter Amendment Proposal
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In its discretion, The Bank of New York, as trustee, is authorized to
vote in accordance with its judgment upon such other business as may
properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDERS.
This Proxy is solicited on behalf of the Board of Directors. Please mark,
sign, date and return this proxy card using the enclosed prepaid envelope.
This Proxy must be returned for your shares to be voted at the meeting in
accordance with your instructions if you do not plan to attend the meeting.
Please indicate any change in address.
Signature(s) __________________________________________________ Date
__________________
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
..............................................................................
FOLD AND DETACH HERE
Appendix A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of ____________, 1996
among Melville Corporation, a New York corporation ("Melville"), CVS
Corporation, a Delaware corporation ("CVS"), and CVS New York, Inc., a New
York corporation and a wholly owned subsidiary of CVS ("Merger
Subsidiary").
Whereas, Melville is a New York Stock Exchange-listed public
company incorporated in New York, and the Board of Directors considers it to
be in the best interests of Melville and its shareholders that Melville be
reincorporated in Delaware (the "Reincorporation");
Whereas, this Agreement and Plan of Merger is being entered
into in order to implement the Reincorporation, as a result of which Melville
will become a wholly-owned subsidiary of CVS;
Whereas, there are issued and outstanding as of the date
hereof: (i) as to Melville, [_____] shares of Melville Common Stock (as
defined below), and [_____] shares of Melville ESOP Preference Stock (as
defined below), and (ii) as to Merger Subsidiary, [____] shares of common
stock, $.01 par value per share;
Whereas, (i) as to Melville, this Agreement and Plan of Merger
will be submitted for approval by holders of Melville Common Stock and
Melville ESOP Preference Stock, voting as a single class, and (ii) as to
Merger Subsidiary, this Agreement and Plan of Merger will be submitted for
approval by CVS, the sole holder of its common stock;
WHEREAS, Melville and Merger Subsidiary, and the respective
Boards of Directors thereof, deem it advisable and to the advantage, welfare,
and best interests of said corporations and their respective shareholders to
merge Merger Subsidiary with and into Melville pursuant to the provisions of
the New York Business Corporation Law ("New York Law") upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements of the parties hereto contained herein, the
parties hereto agree as follows:
Section 1. The Merger. (a) At the Effective Time (as defined
below), Merger Subsidiary shall be merged (the "Merger") with and into
Melville in accordance with New York Law, whereupon the separate existence of
Merger Subsidiary shall cease, and Melville shall be the surviving corporation
(the "Surviving Corporation"). Surviving Corporation shall continue to
exist pursuant to the provisions of the New York Business Corporation Law,
except that its name will be changed from "Melville Corporation" to "CVS
Corporation" The separate existence of Merger Subsidiary, which is
sometimes hereinafter referred to as the "terminating corporation", shall
cease at the Effective Time in accordance with the provisions of New York
Law.
(b) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises
and be subject to all of the restrictions, disabilities and duties of Melville
and Merger Subsidiary, all as provided under New York Law.
Section 2. Conversion of Shares; Stock Options.
At the Effective Time (subject to Section 3):
(a) Each share of common stock, par value $1 per share
("Melville Common Stock"), of Melville issued and outstanding, or held in the
treasury of Melville, shall be converted (without the surrender of stock
certificates or any other action) into one fully paid and non-assessable share
of common stock, par value $.01 per share ("CVS Common Stock"), of CVS,
issued and outstanding or held in the treasury of CVS, as the case may be
(with the same rights, powers and privileges as the shares so converted).
(b) Each share of Series One ESOP Convertible Preference Stock,
par value $1 per share ("Melville ESOP Preference Stock"), of Melville issued
and outstanding shall be converted (without the surrender of stock
certificates or any other action) into one fully paid and non-assessable share
of Series One ESOP Convertible Preference Stock, par value $1 per share ("CVS
ESOP Preference Stock"), of CVS issued and outstanding (with the same rights,
powers and privileges as the shares so converted).
(c) Each share of common stock of Merger Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into
and become one share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(d) Each option (a "Melville Option") to purchase shares of
Melville Common Stock which has been granted pursuant to any employee stock
option or compensation plan or arrangement of Melville shall, without any
action on the part of the optionee, be converted into an option to purchase
the same number of shares of CVS Common Stock on the same terms and with the
same exercise price as were applicable with respect to such Melville Option
immediately prior to the Effective Time.
Section 3. Dissenting Shares. Notwithstanding Section 2, to
the extent that, under Sections 910 and 623 of the New York Business
Corporation Law, a shareholder of Melville has any right to receive payment of
the fair value of his Melville shares in connection with the Merger
("appraisal rights") and such shareholder, by complying with said Section 623,
enforces such rights, the shares of Melville capital stock held by such
shareholder shall not be converted pursuant to Section 2, unless such holder
fails to perfect or withdraws or otherwise loses such appraisal rights. If
after the Effective Time such holder fails to perfect or withdraws or loses
his appraisal rights, such holder's shares of Melville capital stock shall be
treated as if they had been converted as of the Effective Time pursuant to
Section 2.
Section 4. Certificate of Incorporation and Bylaws; Directors
and Officers. (a) The certificate of incorporation of Merger Subsidiary in
effect at the Effective Time shall be the certificate of incorporation of the
Surviving Corporation until amended in accordance with applicable law.
(b) The bylaws of Merger Subsidiary in effect at the Effective
Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
(c) The certificate of incorporation and bylaws of CVS in
effect at the Effective Time shall be in the forms attached as Appendices B
and C, respectively, to the related Proxy Statement mailed to Melville
shareholders, until amended in accordance with applicable law.
(d) From and after the Effective Time, until successors are
duly elected or appointed and qualified in accordance with applicable law, (i)
the directors of Merger Subsidiary at the Effective Time shall be the
directors of the Surviving Corporation, and (ii) the officers of Merger
Subsidiary at the Effective Time shall be the officers of the Surviving
Corporation.
(e) From and after the Effective Time, until successors are
duly elected or appointed and qualified in accordance with applicable law, (i)
the directors of Melville at the Effective Time shall be the directors of CVS,
and (ii) the officers of Melville at the Effective Time shall be the officers
of CVS.
Section 5. Procedures Regarding Stock Certificates. From and
after the Effective Time, (i) each outstanding share certificate theretofore
representing shares of Melville Common Stock shall represent the same number
of shares of CVS Common Stock, (ii) each outstanding share certificate
theretofore representing shares of Melville Series B Preferred Stock shall
represent the same number of shares of CVS Series B Preferred Stock and (iii)
each outstanding share certificate theretofore representing shares of Melville
ESOP Preference Stock shall represent the same number of shares of CVS ESOP
Preference Stock. Each holder of a certificate or certificates theretofore
representing shares of capital stock of Melville may, but shall not be
required to, surrender the same to CVS for cancellation and exchange or
transfer, and each such holder or his transferee shall be entitled to receive
certificates representing one share of the corresponding capital stock (as
provided in the first sentence of this Section 5) of CVS for each share of
capital stock of Melville represented by the certificates surrendered. Until
so surrendered for cancellation and exchange or transfer each outstanding
certificate which, prior to the Effective Time, represented shares of capital
stock of Melville, shall be deemed and treated for all purposes to represent
the ownership of the same number of shares of the corresponding capital stock
(as provided in the first sentence of this Section 5) of CVS as though such
surrender had taken place.
Section 6. Submission to Shareholders for Approval; Effective
Time. This Agreement shall be submitted for approval to the shareholders of
Melville (and to the shareholder of Merger Subsidiary) at meetings which shall
be convened on or prior to ________, 1996, or such other dates as may be
agreed on by the parties, as provided by New York Law. If this Agreement is
duly authorized and adopted by the requisite approval of shareholders of
Melville and of the shareholder of Merger Subsidiary and this Agreement is
not terminated pursuant to the provisions of Section 7 hereof, Melville and
Merger Subsidiary will file a certificate of merger with the Secretary of
State of the State of New York and make all other filings or recordings
required by New York Law in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is duly filed
with the Secretary of State of the State of New York or at such later time
as is specified in the certificate of merger (the "Effective Time").
Section 7. Termination. (a) At any time prior to the filing
of the certificate of merger with the Secretary of State of the State of New
York, this Agreement may be terminated by the Board of Directors of either
Melville or Merger Subsidiary, notwithstanding the approval of this Agreement
by either or both the shareholders of Melville and the shareholder of Merger
Subsidiary, if for any reason the board of directors of Melville or Merger
Subsidiary determines that it is inadvisable to proceed with the Merger,
including, without limitation, giving consideration to the number of shares
for which appraisal rights have been exercised and the cost to Melville
thereof.
(b) In the event of the termination and abandonment of this
Agreement pursuant to the provisions of Section 7(a), this Agreement shall
become null and void and have no effect, without any liability on the part of
either Melville or Merger Subsidiary or any of their respective shareholders,
directors or officers.
Section 8. Miscellaneous. (a) This Agreement shall be
construed in accordance with and governed by the laws of the State of New
York.
(b) This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, this Agreement and Plan of Merger is hereby
executed upon behalf of each of the constituent corporations parties thereto.
CVS NEW YORK, INC.,
a New York corporation
By: _______________________
Name:
Title:
Attest:
______________________
[Name], Secretary
MELVILLE CORPORATION,
a New York corporation
By: _______________________
Name:
Title:
Attest:
______________________
[Name], Secretary
CVS CORPORATION,
a Delaware corporation
By: _______________________
Name:
Title:
Attest:
______________________
[Name], Secretary
Appendix B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CVS CORPORATION
CVS Corporation, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as
follows:
1. The name of the Corporation is "CVS Corporation" and the name
under which the Corporation was originally formed is "CVS Corporation." The
original Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on ___________, 1996.
2. This Amended and Restated Certificate of Incorporation
(this "Restated Certificate") has been duly adopted by the Board of Directors
of the Corporation in accordance with Sections 241 and 245 of the General
Corporation Law of the State of Delaware.
3. Pursuant to Sections 241 and 245 of the General Corporation
Law of the State of Delaware, this Amended and Restated Certificate of
Incorporation restates and integrates and further amends the provisions of the
Certificate of Incorporation of the Corporation.
4. The text of the Certificate of Incorporation as heretofore
amended is hereby restated and further amended to read in its entirety as
hereinafter set forth:
FIRST: The name of the Corporation is "CVS Corporation."
SECOND: The address of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name of its registered agent at
such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended ("Delaware Law").
FOURTH: The authorized capital stock of the Corporation
consists of (i) 300,000,000 shares of Common Stock, par value $.01 per share
("Common Stock"), (ii) 120,619 shares of Cumulative Preferred Stock, par value
$.01 per share ("Preferred Stock"), and (iii) 50,000,000 shares of Preference
Stock, par value $1 per share ("Preference Stock").
All the designations, preferences, privileges and voting powers
of the shares of each class, and the restrictions or qualifications thereof,
shall be as follows:
I. Provisions Generally Applicable to Capital Stock
I.A. Voting Rights of Common Stock
Each holder of Common Stock shall be entitled to one vote for
each share thereof held of record by such holder.
I.B. Ranking of Capital Stock
The Preferred Stock shall be senior to the Preference Stock and
the Common Stock, and the Preference Stock and the Common Stock shall be
subject to all the rights and preferences of the Preferred Stock as hereafter
set forth. The Preference Stock shall be senior to the Common Stock, and the
Common Stock shall be subject to all the rights and preferences of the
Preference Stock as hereafter set forth.
I.C. No Preemptive Rights
No stockholder of the Corporation shall be entitled as such, as
a matter of right, to subscribe for or purchase any part of any new or
additional issue of stock of any class or series whatsoever, any rights or
options to purchase stock of any class or series whatsoever, whether now or
hereafter authorized and whether issued for cash or other consideration or by
way of dividend.
I.D. Fractional Interests
In case any person shall become entitled to a fractional
interest in a share of Preferred Stock, of Preference Stock or of Common
Stock, the Corporation may deliver a scrip certificate representing such
fractional interest, which together with other similar scrip certificates
aggregating a whole share, may be surrendered in exchange for a stock
certificate representing one full share of Preferred Stock, Preference Stock
or Common Stock as the case may be; provided, however, that the rights of the
holders of such scrip certificates shall be subject to any conditions and
limitations prescribed by the Board of Directors, which may include a
provision that after a specified date the scrip certificate shall become
absolutely void.
II. Preferred Stock
II.A. Provisions Generally Applicable to Preferred Stock
II.A.(i) The Preferred Stock may be issued from time to time
in one or more series, the shares of each series to have such designations,
preferences, privileges, and voting powers, and the restrictions or
qualifications thereof, as are stated and expressed herein or in a resolution
or resolutions providing for the issue of such series adopted by the Board of
Directors as hereafter provided.
II.A.(ii) Authority is hereby expressly granted to the Board
of Directors, subject to the provisions of this Certificate and Delaware Law,
to authorize the issue of one or more series of Preferred Stock and with
respect to each such series to fix by resolution or resolutions providing for
the issue of such series:
(1) The number of shares of Preferred Stock which shall
comprise such series and the distinctive designation thereof;
(2) The dividend rate on the shares of such series (not
exceeding $6 a share per annum) and the date or dates from which
dividends shall accumulate;
(3) Whether or not the shares of such series shall be
subject to purchase and to redemption and the amount of premium, if
any (not exceeding $7 a share), which the holders of shares of such
series shall be entitled to receive over and above $100 a share and
any accrued dividends thereon upon the redemption thereof or upon the
voluntary liquidation, dissolution or winding up of the Corporation;
(4) Whether or not the shares of such series shall be
subject to the operation of a sinking fund to be applied to the
purchase or redemption of the shares of such series for retirement
and, if such sinking fund be established, the terms and provisions
relative to the operation thereof;
(5) Whether or not the shares of such series shall be
made convertible into or exchangeable for any other class or classes
or for 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 rates of exchange at which such conversion or exchange may
be made and the method, if any, of adjusting the same;
(6) the restrictions, if any, on the payment of
dividends upon, and the making of distributions to, any class of
stock ranking junior to the shares of Preferred Stock, and the
restrictions, if any, on the purchase or redemption of the shares of
any such junior class; and
(7) The voting rights, if any, of the shares of such
series other than those voting rights provided for in Section
II.A.(viii) of this Article Fourth.
II.A.(iii) All shares of any one series of Preferred Stock
shall be identical with each other in all respects except that shares of any
one series issued at different times may differ as to the dates from which
dividends thereon shall accumulate; and all series shall rank equally and be
identical in all respects except as permitted in the foregoing provisions of
Section II.A.(ii) of this Article Fourth.
II.A.(iv) The holders of shares of Preferred Stock of each
series shall be entitled to receive, when and as declared by the Board of
Directors, dividends payable in cash in, but not exceeding, the amount fixed
for such series. Such dividends shall be cumulative, so that if dividends on
all outstanding Preferred Stock of each series in the amount fixed therefor
shall not have been paid or declared and set apart for payment for all past
dividend periods, and for the dividend period current at the time, the
deficiency shall be fully paid, or dividends equal thereto declared and set
apart for payment, but without interest thereon, before any dividends on any
class of stock of the Corporation junior to the Preferred Stock shall be paid
or declared and set apart for payment.
Dividends shall not be declared or paid on the Preferred Stock
of any one series for any dividend period unless dividends have been or are
contemporaneously paid or declared and set apart for payment on the Preferred
Stock of all series for the dividend periods terminating on the same and all
earlier dates.
Any dividend paid in an amount less than full cumulative
dividends accrued or in arrears on all Preferred Stock then outstanding shall
be divided between the outstanding Preferred Stock in proportion to the
amounts which would be distributable per share to the Preferred Stock if
full cumulative dividends were declared and paid thereon.
After full cumulative dividends as aforesaid upon the Preferred
Stock of all series then outstanding shall have been paid for all past
dividend periods, and full dividends on the Preferred Stock then outstanding
for the current dividend period shall have been declared and paid or set apart
for payment, and after complying with all the provisions with respect to any
sinking fund or funds for any one or more series of Preferred Stock, then, and
not otherwise, dividends may be declared and paid upon any class of stock of
the Corporation junior to the Preferred Stock.
II.A.(v) In the event of any liquidation, dissolution or
winding up of the Corporation the Preferred Stock shall be preferred as to
assets as well as dividends and upon any such dissolution, liquidation or
winding up, the holders of the Preferred Stock of each series shall be
entitled to receive and be paid for each share thereof out of the assets of
the Corporation (whether capital or surplus) $100, together with an amount
equal to the accrued and unpaid dividends thereon computed to the date of
payment, plus a premium of such additional amount per share as shall have been
fixed for such series in the event the dissolution, liquidation or winding up
is voluntary, before any distribution of the assets shall be made to the
holders of any class of stock of the Corporation junior to the Preferred
Stock. All assets remaining after such distribution to the Preferred Stock
shall then be distributed exclusively among the holders of any class or
classes of stock of the Corporation junior to the Preferred Stock. If, upon
any such dissolution, liquidation or winding up, the assets of the Corporation
distributable among the holders of Preferred Stock shall be insufficient to
pay in full the preferential amount aforesaid, then such assets or the
proceeds thereof shall be distributed ratably among the holders of Preferred
Stock then outstanding until there shall have been paid in full and in order,
first, the sum of $100 in respect of each share; second, an amount ratably in
proportion to the amounts to which they are respectively entitled by reason of
accrued and unpaid dividends computed to the date of distribution; and third,
the balance ratably in proportion to the amounts to which they are
respectively entitled by way of premium.
II.A.(vi) The Corporation, at its option to be exercised by
its Board of Directors, may redeem the whole or any part of any series of
Preferred Stock which by its terms is subject to redemption, at the time or
times provided in the terms of such series, at a redemption price per share
for each series thereof, equal to: $100 plus a premium, if any, of such
additional amount as shall have been fixed as payable in case of redemption in
respect of each share of such series and an amount equal to any accrued and
unpaid dividends thereon computed to the date of redemption. If at any time
less than all of the Preferred Stock then outstanding and subject to
redemption shall be called for redemption, the Board of Directors may select
the series of such Preferred Stock to be redeemed and if less than all the
Preferred Stock of any series is to be called for redemption, the shares to be
redeemed may be selected by lot or by such other equitable method as the Board
of Directors in its discretion may determine. Notice of every such
redemption, stating the redemption date, the redemption price, and the place
of payment thereof, shall be given by mailing a copy of such notice at least
thirty (30) days and not more than sixty (60) days prior to the date fixed for
redemption to the holders of record of the Preferred Stock to be redeemed at
their respective addresses as the same appear on the books of the Corporation.
A similar notice shall be published at least once in a daily newspaper printed
in the English language and published and of general circulation in the
Borough of Manhattan, the City of New York. At any time after notice of
redemption has been given in the manner prescribed by the Board of Directors
to the holders of stock so to be redeemed the Corporation may deposit with a
bank or trust company having capital, surplus and undivided profits of at
least $5,000,000 named in such notice, the redemption price, in trust, for
payment on or before the date fixed for redemption, as aforesaid, to the
respective orders of the holders of the shares so to be redeemed, on such
endorsement to the Corporation or its nominee or otherwise, as may be
required, and upon surrender of the certificates for such shares. Upon the
deposit of the said redemption price as aforesaid, or, if no such deposit is
made, upon the said redemption date (unless the Corporation shall default in
making payment of the redemption price as set forth in such notice), such
holders shall cease to be stockholders with respect to the said shares, and
from and after the making of the said deposit, or, if no such deposit is made,
after the redemption date (the Corporation not having defaulted in making
payment of the redemption price as set forth in such notice), the said shares
shall no longer be transferable on the books of the Corporation, and the said
holders shall have no interest in or claim against the Corporation with
respect to the said shares but shall be entitled only to such conversion
rights (if any) on or before the date fixed for redemption as may be
provided with respect to such shares or to receive payment of the
redemption price without interest thereon, upon endorsement; provided, that
any funds so deposited by the Corporation and unclaimed at the end of one
year from the date fixed for such redemption shall be repaid to the
Corporation upon its request, after which repayment the holders of such
shares so called for redemption shall look only to the Corporation for the
payment of the redemption price thereof. Any funds so deposited, which
shall not be required for such redemption because of the exercise of any
right of conversion or otherwise subsequently to the date of such deposit,
shall be returned to the Corporation forthwith. Any interest accrued on
any funds so deposited shall belong to the Corporation and shall be paid to
it from time to time.
In order to facilitate the redemption of any shares of
Preferred Stock, the Board of Directors is authorized to cause the transfer
books of the Corporation to be closed as to the shares to be redeemed.
The Corporation shall have the right, provided full cumulative
dividends on the Preferred Stock shall have been paid for past dividend
periods and the Corporation shall not then be in default as to any payment
required for any sinking fund created with respect to any series of Preferred
Stock, to purchase Preferred Stock of any series which is subject to purchase
by the terms of such series, at prices not in excess of the then redemption
price thereof, either for the purpose of redemption or retirement or to be
held, used and disposed of as treasury shares.
II.A.(vii) If at any time the Corporation shall have failed to
pay dividends in full on the Preferred Stock, thereafter and until dividends
in full, including all accrued and unpaid dividends, on Preferred Stock
outstanding shall have been paid, or declared and set aside for payment, the
Corporation shall not redeem any Preferred Stock except as a whole and shall
not purchase any 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 the Preferred Stock upon the same terms as to any series, and
shall not purchase or redeem any other shares of any class ranking on a parity
with or junior to the Preferred Stock as to dividends or as to assets.
II.A.(viii) Special Voting Rights of Preferred Stock
(1) The Corporation shall not, without the affirmative vote at
a meeting, or the written consent with or without a meeting, of the holders of
at least two-thirds of the then outstanding Preferred Stock of all series:
(a) Change the express terms and provisions applicable to all
series of the Preferred Stock in any material respect prejudicial to
the holders thereof; or
(b) Create any class of stock which shall be preferred as to
dividends or as to assets over the Preferred Stock.
(2) The Corporation shall not, without the affirmative vote at
a meeting, or the written consent with or without a meeting, of the holders of
at least two-thirds of the outstanding Preferred Stock of any particular
series, change the express terms of the special provisions for such series as
provided in this Certificate or in the resolution or resolutions of the Board
of Directors providing for the issue of such series in any material respect
prejudicial to the holders of shares of such series.
(3) The Corporation shall not without the affirmative vote at a
meeting, or the written consent with or without a meeting, of the holders of
at least a majority of the then outstanding Preferred Stock of all series,
increase the authorized number of shares of Preferred Stock or create any
class of stock which shall rank on a parity with the Preferred Stock as to
dividends or as to assets.
(4) If the Corporation shall have failed to pay dividends upon
the Preferred Stock in an aggregate amount equal to four full quarterly
dividends on any series of the Preferred Stock at the time outstanding, the
holders of Preferred Stock shall have the right, voting separately as a class
at the annual meeting of stockholders, to elect one-third (or the nearest
number thereto) of the members of the Board of Directors of the Corporation
until such time as all dividends accumulated on the Preferred Stock shall have
been paid in full; and upon such payment in full of all dividends accumulated
on the Preferred Stock, such special voting rights of holders thereof shall
cease, subject to re-vesting in the event of each and every subsequent default
of the character above mentioned.
III. Preference Stock
III.A. Provisions Generally Applicable to Preference Stock
III.A.(i) The Preference Stock may be issued from time to time by
the Board of Directors as shares of one or more series. Subject to the
provisions hereof and the limitations prescribed by law, the Board of
Directors is expressly authorized, prior to issuance, by adopting resolutions
providing for the issuance of shares of any particular series and, if and to
the extent from time to time required by law, by filing a certificate pursuant
to the Delaware Law (or other laws hereafter in effect relating to the same or
substantially similar subject matter), to establish the number of shares to be
included in each such series and to fix the designations, relative rights,
preferences and limitations of the shares of each such series. The authority
of the Board of Directors with respect to each series shall include, but not
be limited to, determination of the following:
(1) the distinctive serial designation of such series and the number
of shares constituting such series (provided that the aggregate number of
shares constituting all series of Preference Stock shall not exceed
50,000,000);
(2) the dividend rate, or basis for determining such rate, if any,
on shares of such series, whether dividends shall be cumulative and, if so,
from which date or dates;
(3) whether the shares of each series shall be redeemable and, if
so, the terms and conditions of such redemption, including the date or
dates upon and after which such shares shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(4) the obligation, if any, of the Corporation to retire shares of
such series pursuant to a sinking fund;
(5) whether shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or classes or any
other series of the same class of stock and, if so, the terms and
conditions of such conversion or exchange, including the price or prices or
the rate or rates of conversion or exchange and the terms of adjustment, if
any;
(6) whether the shares of such series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of
such voting rights;
(7) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(8) the restrictions, if any, on the payment of dividends upon, and
the making of distributions to, any class of stock ranking junior to the
shares of Preference Stock, and the restrictions, if any, on the purchase
or redemption of the shares of any such junior class; and
(9) any other designations, relative rights, preferences and
limitations of such series.
III.B. Series One ESOP Convertible Preference Stock
The number of shares, the designation, the relative rights, the
preferences and the limitations of the Series One ESOP Convertible Preference
Stock of the Corporation are as follows:
III.B.(i) Designation and Amount; Special Purpose
Restricted Transfer Issue
(1) The shares of this series of Preference Stock shall be
designated as Series One ESOP Convertible Preference Stock ("Series One
Preference Stock") and the number of shares constituting such series shall be
6,688,494.
(2) Shares of Series One Preference Stock shall be issued only to a
trustee acting on behalf of an employee stock ownership plan or other employee
benefit plan of the Corporation. In the event of any transfer of shares of
Series One Preference Stock to any person other than (a) the issuance of
Series One Preference Stock to any such plan trustee or (b) a distribution of
Series One Preference Stock by any such plan trustee to a participant in any
such plan in satisfaction of the distribution requirements of any such plan or
any investment elections provided to participants pursuant to any such plan,
the shares of Series One Preference Stock so transferred, upon such transfer
and without any further action by the Corporation or the holder, shall be
automatically converted into shares of Common Stock on the terms otherwise
provided for the conversion of shares of Series One Preference Stock into
shares of Common Stock pursuant to Section III.B.(v) hereof and no such
transferee shall have any of the voting powers, preferences and relative,
participating, optional or special rights ascribed to shares of Series One
Preference Stock hereunder but, rather, only the powers and rights pertaining
to the Common Stock into which such shares of Series One Preference Stock
shall be so converted. Certificates representing shares of Series One
Preference Stock shall be legended to reflect such restrictions on transfer.
Notwithstanding the foregoing provisions of this Section III.B.(i)(2), shares
of Series One Preference Stock (a) may be converted into shares of Common
Stock as provided by Section III.B.(v) hereof and the shares of Common Stock
issued upon such conversion may be transferred by the holder thereof as
permitted by law and (b) shall be redeemable by the Corporation upon the terms
and conditions provided by Sections III.B.(vi), (vii) and (viii) hereof.
III.B.(ii) Dividends and Distributions
(1) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series One Preference Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, cash dividends ("Preference Dividends") in an
amount per share equal to the greater of (a) the sum of the aggregate amounts
of regular cash dividends paid during the periods ending on December 31, 1989,
October 31, 1990, October 31, 1991, October 31, 1992 and December 31, 1993 in
each year thereafter (each a "Dividend Payment Date") on the number of shares
of Common Stock into which one share of Series One Preference Stock could be
converted pursuant to Section III.B.(v) hereof, calculated on the basis of the
Conversion Price (as defined in Section III.B.(v) hereof and as adjusted from
time to time pursuant to Section III.B.(ix) hereof) in effect on each record
date for any such regular quarterly cash dividends on Common Stock paid during
such one year period, and (b) $3.90 per share per annum, and no more; provided
that the first dividend on the Series One Preference Stock shall be $3.63.
For purposes of this Section III.B.(ii)(1), "regular cash dividends" on the
Common Stock shall mean any cash dividends on the Common Stock which are not
"Extraordinary Distributions" as defined in Section III.B.(ix)(7). Preference
Dividends shall be payable annually, on each Dividend Payment Date, commencing
on the Dividend Payment Date in 1989, to holders of record at the start of
business on such Dividend Payment Date. Preference Dividends shall begin to
accrue on outstanding shares of Series One Preference Stock from the date of
issuance of such shares of Series One Preference Stock. The amount of
Preference Dividends accrued as of any date on each share of Series One
Preference Stock shall be equal to the greater of (x) the sum of the aggregate
amounts of regular cash dividends paid during the period beginning on the most
current previous Dividend Payment Date and ending on the date as of which
accrual is being determined on the number of shares of Common Stock into which
one share of Series One Preference Stock could be converted pursuant to
Section III.B.(v) hereof, calculated as provided in clause (a) above, and (y)
$3.90 per annum accrued on a daily basis (whether or not the Corporation shall
have surplus at the time) for the period beginning on the most recent previous
Dividend Payment Date and ending on the date as of which accrual is being
determined, computed for any period less than a full annual period between
Dividend Payment Dates on the basis of a 360 day year of 30 day months;
provided that a total dividend payment of $3.63 per share shall accrue for the
period from the date of issuance of the Series One Preference Stock until
December 31, 1989. Accumulated but unpaid Preference Dividends shall cumulate
as of the Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated but unpaid Preference Dividends.
(2) So long as any Series One Preference Stock shall be
outstanding, no dividend shall be declared or paid or set apart for payment on
any other series of stock ranking on a parity with the Series One Preference
Stock as to dividends, unless there shall also be or have been declared and
paid or set apart for payment on the Series One Preference Stock, like
dividends for all dividend payment periods of the Series One Preference Stock
ending on or before the dividend payment date of such parity stock, ratably in
proportion to the respective amounts of dividends accumulated and unpaid
through such dividend payment period on the Series One Preference Stock and
accumulated and unpaid or payable on such parity stock through the dividend
payment period on such parity stock next preceding such dividend payment date.
In the event that full cumulative dividends on the Series One Preference Stock
have not been declared and paid or set apart for payment when due, the
Corporation shall not declare or pay or set apart for payment any dividends or
make any other distributions on, or make any payment on account of the
purchase, redemption or other retirement of any other class of stock or series
thereof of the Corporation ranking, as to dividends or as to distributions in
the event of a liquidation, dissolution or winding-up of the Corporation,
junior to the Series One Preference Stock until full cumulative dividends on
the Series One Preference Stock shall have been paid or declared and provided
for; provided, however, that the foregoing shall not apply to (a) any dividend
payable solely in any shares of any stock ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or winding-up of the
Corporation, junior to the Series One Preference Stock, or (b) the acquisition
of shares of any stock ranking, as to dividends or as to distributions in the
event of a liquidation, dissolution or winding-up of the Corporation, junior
to the Series One Preference Stock either (x) pursuant to any employee or
director incentive or benefit plan or arrangement (including any employment,
severance or consulting agreement) of the Corporation or any subsidiary of the
Corporation heretofore or hereafter adopted or (y) in exchange solely for
shares of any other stock ranking junior to the Series One Preference Stock.
III.B.(iii) Voting Rights
The holders of shares of Series One Preference Stock shall have the
following voting rights:
(1) The holders of Series One Preference Stock shall be entitled to
vote on all matters submitted to a vote of the holders of Common Stock of the
Corporation, voting together with the holders of Common Stock as one class.
Each share of the Series One Preference Stock shall be entitled to the number
of votes equal to the number of shares of Common Stock into which such share
of Series One Preference Stock could be converted on the record date for
determining the stockholders entitled to vote, rounded to the nearest
one-tenth of a vote; it being understood that whenever the "Conversion Price"
(as defined in Section III.B.(v) hereof) is adjusted as provided in Section
III.B.(ix) hereof, the voting rights of the Series One Preference Stock shall
also be similarly adjusted.
(2) Except as otherwise required by law or set forth herein, holders
of Series One Preference Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for the taking of any
corporate action; provided, however, that the vote of at least 66-2/3% of the
outstanding shares of Series One Preference Stock, voting separately as a
series, shall be necessary to adopt any alteration, amendment or repeal of any
provision of the Certificate of Incorporation of the Corporation, as amended
(including any such alteration, amendment or repeal effected by any merger or
consolidation in which the Corporation is the surviving or resulting
corporation), if such amendment, alteration or repeal would alter or change
the powers, preferences or special rights of the shares of Series One
Preference Stock so as to affect them adversely. The authorization or
issuance of additional Common Stock, Preference Stock or Preferred Stock shall
be deemed not to affect the powers, preferences and special rights of the
Series One Preference Stock adversely for purposes of the preceding sentence.
III.B.(iv) Liquidation, Dissolution or Winding Up
(1) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of Series One Preference Stock
shall be entitled to receive out of assets of the Corporation which remain
after satisfaction in full of all valid claims of creditors of the Corporation
and which are available for payment to stockholders and subject to the rights
of the holders of any stock of the Corporation ranking senior to or on a
parity with the Series One Preference Stock in respect of distributions upon
liquidation, dissolution or winding up of the Corporation, before any amount
shall be paid or distributed among the holders of Common Stock or any other
shares ranking junior to the Series One Preference Stock in respect of
distributions upon liquidation, dissolution or winding up of the Corporation,
liquidating distributions in the amount of $53.45 per share, plus an amount
equal to all accrued and unpaid dividends thereon to the date fixed for
distribution, and no more. If upon any liquidation, dissolution or winding up
of the Corporation, the amounts payable with respect to the Series One
Preference Stock and any other stock ranking as to any such distribution on a
parity with the Series One Preference Stock are not paid in full, the holders
of the Series One Preference Stock and such other stock shall share ratably in
any distribution of assets in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount to which
they are entitled as provided by the foregoing provisions of Section
III.B.(iv)(1), the holders of shares of Series One Preference Stock shall not
be entitled to any further right or claim to any of the remaining assets of
the Corporation.
(2) Neither the merger or consolidation of the Corporation with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Corporation, nor the sale, transfer or lease of
all or any portion of the assets of the Corporation, shall be deemed to be a
dissolution, liquidation or winding up of the affairs of the Corporation for
purposes of this Section III.B.(iv), but the holders of Series One Preference
Stock shall nevertheless be entitled in the event of any such merger or
consolidation to the rights provided by Section III.B.(viii) hereof.
(3) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, stating the payment date or
dates when, and the place or places where, the amounts distributable to
holders of Series One Preference Stock in such circumstances shall be payable,
shall be given by first-class mail, postage prepaid, mailed not less than
twenty (20) days prior to any payment date stated therein, to the holders of
Series One Preference Stock, at the address shown on the books of the
Corporation or any transfer agent for the Series One Preference Stock.
III.B.(v) Conversion into Common Stock.
(1) A holder of shares of Series One Preference Stock shall be
entitled, at any time prior to the close of business on the date fixed for
redemption of such shares pursuant to Sections III.B.(vi), (vii) or (viii)
hereof, to cause any or all of such shares to be converted into shares of
Common Stock, initially at a conversion rate equal to the ratio of $53.45 to
the amount which initially shall be $53.45 and which shall be adjusted as
hereinafter provided (and, as so adjusted, is hereinafter sometimes referred
to as the "Conversion Price") (that is, a conversion rate initially
equivalent to one share of Common Stock for each share of Series One
Preference Stock so converted but that is subject to adjustment as the
Conversion Price is adjusted as hereinafter provided).
(2) Any holder of shares of Series One Preference Stock desiring to
convert such shares into shares of Common Stock shall surrender the
certificate or certificates representing the shares of Series One Preference
Stock being converted, duly assigned or endorsed for transfer to the
Corporation (or accompanied by duly executed stock powers relating thereto),
at the principal executive office of the Corporation or the offices of the
transfer agent for the Series One Preference Stock or such office or offices
in the continental United States of an agent for conversion as may from time
to time be designated by notice to the holders of the Series One Preference
Stock by the Corporation or the transfer agent for the Series One Preference
Stock, accompanied by written notice of conversion. Such notice of conversion
shall specify (a) the number of shares of Series One Preference Stock to be
converted and the name or names in which such holder wishes the certificate or
certificates for Common Stock and for any shares of Series One Preference
Stock not to be so converted to be issued, and (b) the address to which such
holder wishes delivery to be made of such new certificates to be issued upon
such conversion.
(3) Upon surrender of a certificate representing a share or shares
of Series One Preference Stock for conversion, the Corporation shall prepare
and send by hand delivery (with receipt to be acknowledged) or by first class
mail, postage prepaid, to the holder thereof or to such holder's designee, at
the address designated by such holder, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled upon
conversion. In the event that there shall have been surrendered a certificate
or certificates representing shares of Series One Preference Stock, only part
of which are to be converted, the Corporation shall issue and deliver to such
holder or such holder's designee a new certificate or certificates
representing the number of shares of Series One Preference Stock which shall
not have been converted.
(4) The conversion into Common Stock of shares of Series One
Preference Stock at the option of the holder thereof shall be effective as of
the earlier of (a) the delivery to such holder or such holder's designee of
the certificates representing the shares of Common Stock deliverable upon
conversion thereof or (b) the commencement of business on the second business
day after the surrender of the certificate or certificates for the shares of
Series One Preference Stock to be converted, duly assigned or endorsed for
transfer to the Corporation (or accompanied by duly executed stock powers
relating thereto) as provided by this Section III.B(v). On and after the
effective day of conversion, the person or persons entitled to receive the
Common Stock deliverable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock, but
no allowance or adjustment shall be made in respect of dividends payable to
holders of Common Stock in respect of any period prior to such effective date.
The Corporation shall not be obligated to pay any dividends which shall have
been declared and shall be payable to holders of shares of Series One
Preference Stock on a Dividend Payment Date if such Dividend Payment Date for
such dividend shall coincide with or be on or subsequent to the effective date
of conversion of such shares.
(5) The Corporation shall not be obligated to deliver to holders of
Series One Preference Stock any fractional share or shares of Common Stock
deliverable upon any conversion of such shares of Series One Preference Stock,
but in lieu thereof may make a cash payment in respect thereof in any manner
permitted by law.
(6) The Corporation shall at all times reserve and keep available
out of its authorized and unissued Common Stock, or out of Common Stock
held in its treasury, solely for delivery upon the conversion of shares of
Series One Preference Stock as herein provided, free from any preemptive
rights, such number of shares of Common Stock as shall from time to time be
deliverable upon the conversion of all the shares of Series One Preference
Stock then outstanding. The Corporation shall prepare and shall use its
best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply
with all requirements as to registration or qualification of the Common
Stock, in order to enable the Corporation lawfully to deliver to each
holder of record of Series One Preference Stock such number of shares of
its Common Stock as shall from time to time be sufficient to effect the
conversion of all shares of Series One Preference Stock then outstanding
and convertible into shares of Common Stock.
III.B.(vi) Redemption At the Option of the Corporation
(1) The Series One Preference Stock shall be redeemable, in
whole or in part, at the option of the Corporation at any time at the
following redemption prices per share, except that no such redemption at the
option of the corporation may be made prior to June 23, 1991 unless the Fair
Market Value of the Common Stock as of the date on which notice of redemption
is first mailed pursuant to Section III.B.(vi)(2) below shall be at least 130%
of the then current Conversion Price. The Fair Market Value of the Common
Stock shall be determined as provided in Section III.B.(ix)(7), except that
for purposes of this Section III.B.(vi)(1) the Adjustment Period used in
calculating such Fair Market Value shall be deemed to be the twenty (20)
consecutive trading days ending upon but excluding, the date on which notice
of redemption is first mailed:
During the Twelve-Month Price Per
Period Beginning June 23 Share
------------------------ ---------
1989 $57.35
1990 $56.96
1991 $56.57
1992 $56.18
1993 $55.79
1994 $55.40
1995 $55.01
1996 $54.62
1997 $54.23
1998 $53.84
and thereafter at $53.45 per share, plus, in each case, an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption.
Payment of the redemption price shall be made by the Corporation in cash or
shares of Common Stock, or a combination thereof, as permitted by Section
III.B.(vi)(4). From and after the date fixed for redemption, dividends on
shares of Series One Preference Stock called for redemption will cease to
accrue, such shares will no longer be deemed to be outstanding and all rights
in respect of such shares of the Corporation shall cease, except the right to
receive the redemption price. If less than all of the outstanding shares of
Series One Preference Stock are to be redeemed, the Corporation shall either
redeem a portion of the shares of each holder determined pro rata based on the
number of shares held by each holder or shall select the shares to be redeemed
by lot, as may be determined by the Board of Directors of the Corporation.
(2) Unless otherwise required by law, notice of redemption
will be sent to the holders of Series One Preference Stock at the address
shown on the books of the Corporation or any transfer agent for the Series One
Preference Stock by first class mail, postage prepaid, mailed not less than
twenty (20) days nor more than sixty (60) days prior to the redemption date.
Each such notice shall state: (a) the redemption date; (b) the total number
of shares of the Series One Preference Stock to be redeemed and, if fewer than
all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (c) the redemption price and the form
of payment thereof; (d) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; (e) that dividends
on the shares to be redeemed will cease to accrue on such redemption date; and
(f) the conversion rights of the shares to be redeemed, the period within
which conversion rights may be exercised, and the Conversion Price and number
of shares of Common Stock issuable upon conversion of a share of Series One
Preference Stock at the time. Upon surrender of the certificates for any
shares so called for redemption and not previously converted (properly
endorsed or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the date fixed for redemption and at the
redemption price set forth in this Section III.B.(vi).
(3) Notwithstanding anything to the contrary contained in
Section III.B.(vi)(1), the Corporation may from time to time, in its sole
discretion, elect to redeem, upon notice as required in Section III.B.(vi)(2),
all or part of the shares of Series One Preference Stock at a price equal to
the amount payable in respect of such shares upon liquidation of the
Corporation pursuant to Section III.B.(iv) hereof (except that any redemption
pursuant to clause (d) below shall be at a price equal to the price payable
upon redemption at the option of the Corporation pursuant to Section
III.B.(vi)(1) plus all accrued and unpaid dividends to the date fixed for
redemption) upon any of the following:
(a) In the event of a change in the federal tax law of the
United States of America which has the effect of precluding
the Corporation from claiming any of the tax deductions for
dividends paid on the Series One Preference Stock when such
dividends are used as provided under Section 404(k)(2) of
the Internal Revenue code of 1986, as amended (the "Code")
and in effect on the date the shares of Series One
Preference Stock are initially issued; provided that notice
of any redemption pursuant to this clause (a) shall be given
not more than 90 days following the later of the
effectiveness or the adoption of any such change in the
federal tax law of the United States of America; or
(b) In the event of a determination by the Internal Revenue
Service that the Melville Corporation and Subsidiaries Employee
Stock Ownership Plan, dated as of January 1, 1989, as amended,
or any successor plan ("the Plan"), as the same may be amended,
is not qualified within the meaning of Section 401(a) or is not
an employee stock ownership plan within the meaning of Section
4975(e)(7) of the Code; or
(c) If the exclusion of interest received by any lender on
any borrowings by the trustee of the Plan from the lender's
income pursuant to Section 133 or any successor provision of
the Code is reduced to a percentage amount less than fifty
percent (50%); provided that notice of any redemption pursuant
to this clause (c) shall be given not more than 90 days
following the later of the effectiveness or the adoption of any
such reduction; or
(d) If the corporation terminates the Plan or terminates
future contributions to the Plan; or
(e) If any shares of Series One Preference Stock are
transferred to a participant in the Plan, but only any such
shares so transferred may be redeemed pursuant to this clause
(e); or
(f) In the event and to the extent that redemption of Series
One Preference Stock is necessary or appropriate to provide for
satisfaction of any investment election provided to
participants in accordance with the Plan; or
(g) In the event and to the extent that redemption of Series
One Preference Stock is necessary or appropriate to provide for
distributions to be made to participants under the Plan.
(4) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of Series One Preference
Stock pursuant to Section III.B.(vi)(1) above or clauses (a) through (f) of
Section III.B.(vi)(3) above in cash or in shares of Common Stock, or in a
combination of such shares and cash. The Corporation shall make payment of
the redemption price required upon redemption of shares of Series One
Preference Stock pursuant to clause (g) of Section III.B.(vi)(3) above in
shares of Common Stock, except that cash shall be paid in lieu of delivery of
fractional shares. Any shares of Common Stock delivered in payment of the
redemption price pursuant to this Section III.B.(vi) shall be valued for such
purpose at their Fair Market Value (as defined in Section III.B.(ix)(7)
hereof, provided, however, that in calculating their Fair Market Value the
Adjustment Period shall be deemed to be the five (5) consecutive trading days
ending with, and including, the date of redemption).
III.B.(vii) Other Redemption Rights
Shares of Series One Preference Stock shall be called for
redemption by the Corporation, through notice as required by Section
III.B.(vi)(2), for cash or, if the Corporation so elects, in shares of Common
Stock, or a combination of such shares and cash, any such shares of Common
Stock to be valued for such purpose as provided by Section III.B.(vi)(4), at a
redemption price of $53.45 per share plus accrued and unpaid dividends thereon
to the date fixed for redemption, at any time and from time to time when and
to the extent necessary to provide for payment of principal, interest or
premium due and payable (whether as scheduled or upon acceleration) on the
8.60% ESOP Notes Due 2008 of the trust under the Plan or any indebtedness
incurred by the trustee for the benefit of the Plan.
III.B.(viii) Consolidation, Merger, etc
(1) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant to
which the outstanding shares of Common Stock are by operation of law exchanged
solely for or changed, reclassified or converted solely into stock of any
successor or resulting corporation (including the Corporation) that
constitutes "qualifying employer securities" with respect to a holder of
Series One Preference Stock within the meaning of Section 409(l) of the Code
and Section 407(c)(5) of the Employee Retirement Income Security Act of 1974,
as amended, or any successor provisions of law, and, if applicable, for a cash
payment in lieu of fractional shares, if any, the shares of Series One
Preference Stock of such holder shall be assumed by and shall become preferred
stock of such successor or resulting corporation, having in respect of such
corporation insofar as possible the same powers, preferences and relative,
participating, optional or other special rights (including the redemption
rights provided by Sections III.B.(vi), (vii) and (viii) hereof), and the
qualifications, limitations or restrictions thereon, that the Series One
Preference Stock had immediately prior to such transaction, except that after
such transaction each share of the Series One Preference Stock shall be
convertible, otherwise on the terms and conditions provided by Section
III.B.(v) hereof, into the qualifying employer securities so receivable by a
holder of the number of shares of Common Stock into which such shares of
Series One Preference Stock could have been converted immediately prior to
such transaction if such holder of Common Stock failed to exercise any rights
of election to receive any kind or amount of stock, securities, cash or other
property (other than such qualifying employer securities and a cash payment,
if applicable, in lieu of fractional shares) receivable upon such transaction
(provided that, if the kind or amount of qualifying employer securities
receivable upon such transaction is not the same for each non-electing
share, then the kind and amount of qualifying employer securities
receivable upon such transaction for each non-electing share shall be the
kind and amount so receivable per share by a plurality of the non-electing
shares). The rights of the Series One Preference Stock as preferred stock
of such successor or resulting company shall successively be subject to
adjustments pursuant to Section III.B.(ix) hereof after any such
transaction as nearly as possible equivalent to the adjustments provided
for by such section prior to such transaction. The Corporation shall not
consummate any such merger, consolidation or similar transaction unless all
then outstanding shares of the Series One Preference Stock shall be assumed
and authorized by the successor or resulting company as aforesaid.
(2) In the event that the Corporation shall consummate any
consolidation or merger or similar transaction, however named, pursuant to
which the outstanding shares of Common Stock are by operation of law exchanged
for or changed, reclassified or converted into other stock or securities or
cash or any other property, or any combination thereof, other than any such
consideration which is constituted solely of qualifying employer securities
(as referred to in Section III.B.(viii)(1)) and cash payments, if applicable,
in lieu of fractional shares, then the Corporation shall, at least twenty (20)
days before consummation of such transaction, give notice of such agreement
and the material terms thereof to each holder of Series One Preference
Stock and the Corporation shall simultaneously call for redemption, through
notice as required by Section III.B.(vi)(2), for cash at a redemption price
equal to the amount payable in respect of such shares upon liquidation of
the Corporation pursuant to Section III.B.(iv), all of the then outstanding
shares of Series One Preferred Stock.
III.B.(ix) Anti-dilution Adjustments
(1) In the event the Corporation shall, at any time or from
time to time while any of the shares of the Series One Preference Stock are
outstanding, (a) pay a dividend or make a distribution in respect of the
Common Stock in shares of Common Stock, (b) subdivide the outstanding
shares of Common Stock, or (c) combine the outstanding shares of Common
Stock into a smaller number of shares, in each case whether by
reclassification of shares, recapitalization of the Corporation (including
a recapitalization effected by a merger or consolidation to which Section
III.B.(viii) hereof does not apply) or otherwise, the Conversion Price in
effect immediately prior to such action shall be adjusted by multiplying
such Conversion Price by the fraction the numerator of which is the number
of shares of Common Stock outstanding immediately before such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this Section
III.B.(ix)(1) shall be given effect, upon payment of such a dividend or
distribution, as of the record date for the determination of stockholders
entitled to receive such dividend or distribution (on a retroactive basis)
and in the case of a subdivision or combination shall become effective
immediately as of the effective date thereof.
(2) In the event that the Corporation shall, at any time or
from time to time while any of the shares of Series One Preference Stock are
outstanding, issue to holders of shares of Common Stock as a dividend or
distribution, including by way of a reclassification of shares or a
recapitalization of the Corporation, any right or warrant to purchase shares
of Common Stock (but not including as such a right or warrant any security
convertible into or exchangeable for shares of Common Stock) at a purchase
price per share less than the Fair Market Value (as hereinafter defined) of a
share of Common Stock on the date of issuance of such right or warrant, then,
subject to the provisions of Sections III.B.(ix)(5) and III.B.(ix)(6), the
Conversion Price shall be adjusted by multiplying such Conversion Price by the
fraction the numerator of which shall be the number of shares of Common Stock
outstanding immediately before such issuance of rights or warrants plus the
number of shares of Common Stock which could be purchased at the Fair Market
Value of a share of Common Stock at the time of such issuance for the maximum
aggregate consideration payable upon exercise in full of all such rights or
warrants and the denominator of which shall be the number of shares of Common
Stock outstanding immediately before such issuance of rights or warrants plus
the maximum number of shares of Common Stock that could be acquired upon
exercise in full of all such rights and warrants.
(3) In the event the Corporation shall, at any time or from
time to time while any of the shares of Series One Preference Stock are
outstanding, issue, sell or exchange shares of Common Stock (other than
pursuant to any right or warrant to purchase or acquire shares of Common Stock
(including as such a right or warrant any security convertible into or
exchangeable for shares of Common Stock) and other than pursuant to any
employee or director incentive or benefit plan or arrangement, including any
employment, severance or consulting agreement, of the Corporation or any
subsidiary of the Corporation heretofore or hereafter adopted) for a
consideration having a Fair Market Value on the date of such issuance, sale or
exchange less than the Fair Market Value of such shares on the date of such
issuance, sale or exchange, then, subject to the provisions of Sections
III.B.(ix)(5) and III.B.(ix)(6), the Conversion Price shall be adjusted by
multiplying such Conversion Price by the fraction the numerator of which shall
be the sum of (a) the Fair Market Value of all the shares of Common Stock
outstanding on the day immediately preceding the first public announcement of
such issuance, sale or exchange plus (b) the Fair Market Value of the
consideration received by the Corporation in respect of such issuance, sale or
exchange of shares of Common Stock, and the denominator of which shall be the
product of (a) the Fair Market Value of a share of Common Stock on the day
immediately preceding the first public announcement of such issuance, sale or
exchange multiplied by (b) the sum of the number of shares of Common Stock
outstanding on such day plus the number of shares of Common Stock so issued,
sold or exchanged by the Corporation. In the event the Corporation shall, at
any time or from time to time while any shares of Series One Preference Stock
are outstanding, issue, sell or exchange any right or warrant to purchase or
acquire shares of Common Stock (including as such a right or warrant any
security convertible into or exchangeable for shares of Common Stock), other
than any such issuance to holders of shares of Common Stock as a dividend or
distribution (including by way of a reclassification of shares or a
recapitalization of the Corporation) and other than pursuant to any employee
or director incentive or benefit plan or arrangement (including any
employment, severance or consulting agreement) of the Corporation or any
subsidiary of the Corporation heretofore or hereafter adopted, for a
consideration having a Fair Market Value on the date of such issuance, sale or
exchange less than the Non-Dilutive Amount (as hereinafter defined), then,
subject to the provisions of Sections III.B.(ix)(5) and III.B.(ix)(6), the
Conversion Price shall be adjusted by multiplying such Conversion Price by a
fraction the numerator of which shall be the sum of (a) the Fair Market Value
of all the shares of Common Stock outstanding on the day immediately preceding
the first public announcement of such issuance, sale or exchange plus (b) the
Fair Market Value of the consideration received by the Corporation in respect
of such issuance, sale or exchange of such right or warrant plus (c) the Fair
Market Value at the time of such issuance of the consideration which the
Corporation would receive upon exercise in full of all such rights or
warrants, and the denominator of which shall be the product of (a) the Fair
Market Value of a share of Common Stock on the day immediately preceding the
first public announcement of such issuance, sale or exchange multiplied by (b)
the sum of the number of shares of Common Stock outstanding on such day plus
the maximum number of shares of Common Stock which could be acquired pursuant
to such right or warrant at the time of the issuance, sale or exchange of such
right or warrant (assuming shares of Common Stock could be acquired pursuant
to such right or warrant at such time).
(4) In the event the Corporation shall, at any time or from
time to time while any of the shares of Series One Preference Stock are
outstanding, make an Extraordinary Distribution (as hereinafter defined) in
respect of the Common Stock, whether by dividend, distribution,
reclassification of shares or recapitalization of the Corporation (including a
recapitalization or reclassification effected by a merger or consolidation to
which Section III.B.(viii) hereof does not apply) or effect a Pro Rata
Repurchase (as hereinafter defined) of Common Stock, the Conversion Price in
effect immediately prior to such Extraordinary Distribution or Pro Rata
Repurchase shall, subject to Sections III.B.(ix)(5) and III.B.(ix)(6), be
adjusted by multiplying such Conversion Price by the fraction the numerator of
which is (a) the product of (x) the number of shares of Common Stock
outstanding immediately before such Extraordinary Distribution or Pro Rata
Repurchase multiplied by (y) the Fair Market Value (as herein defined) of a
share of Common Stock on the record date with respect to an Extraordinary
Distribution, or on the applicable expiration date (including all extensions
thereof) of any tender offer which is a Pro Rata Repurchase, or on the date of
purchase with respect to any Pro Rata Repurchase which is not a tender offer,
as the case may be, minus (b) the Fair Market Value of the Extraordinary
Distribution or the aggregate purchase price of the Pro Rata Repurchase, as
the case may be, and the denominator of which shall be the product of (x) the
number of shares of Common Stock outstanding immediately before such
Extraordinary Dividend or Pro Rata Repurchase minus, in the case of a Pro Rata
Repurchase, the number of shares of Common Stock repurchased by the
Corporation multiplied by (y) the Fair Market Value of a share of Common Stock
on the record date with respect to an Extraordinary Distribution or on the
applicable expiration date (including all extensions thereof) of any tender
offer which is a Pro Rata Repurchase or on the date of purchase with respect
to any Pro Rata Repurchase which is not a tender offer, as the case may be.
The Corporation shall send each holder of Series One Preference Stock (a)
notice of its intent to make any dividend or distribution and (b) notice of
any offer by the Corporation to make a Pro Rata Repurchase, in each case at
the same time as, or as soon as practicable after, such offer is first
communicated (including by announcement of a record date in accordance with
the rules of any stock exchange on which the Common Stock is listed or
admitted to trading) to holders of Common Stock. Such notice shall indicate
the intended record date and the amount and nature of such dividend or
distribution, or the number of shares subject to such offer for a Pro Rata
Repurchase and the purchase price payable by the Corporation pursuant to such
offer, as well as the Conversion Price and the number of shares of Common
Stock into which a share of Series One Preference Stock may be converted at
such time.
(5) Notwithstanding any other provisions of this Section
III.B.(ix), the Corporation shall not be required to make any adjustment of
the Conversion Price unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Conversion Price. Any lesser
adjustment shall be carried forward and shall be made no later than the time
of, and together with, the next subsequent adjustment which, together with any
adjustment or adjustments so carried forward, shall amount to an increase or
decrease of at least one percent (1%) in the Conversion Price.
(6) If the Corporation shall make any dividend or distribution
on the Common Stock or issue any Common Stock, other capital stock or other
security of the Corporation or any rights or warrants to purchase or acquire
any such security, which transaction does not result in an adjustment to the
Conversion Price pursuant to the foregoing provisions of this Section
III.B.(ix), the Board of Directors of the Corporation shall consider whether
such action is of such a nature that an adjustment to the Conversion Price
should equitably be made in respect of such transaction. If in such case the
Board of Directors of the Corporation determines that an adjustment to the
Conversion Price should be made, an adjustment shall be made effective as of
such date as is determined by the Board of Directors of the Corporation. The
determination of the Board of Directors of the Corporation as to whether an
adjustment to the Conversion Price should be made pursuant to the foregoing
provisions of this Section III.B.(ix)(6), and, if so, as to what adjustment
should be made and when, shall be final and binding on the Corporation and all
stockholders of the Corporation. The Corporation shall be entitled to make
such additional adjustments in the Conversion Price, in addition to those
required by the foregoing provisions of this Section III.B.(ix), as shall be
necessary in order that any dividend or distribution in shares of capital
stock of the Corporation, subdivision, reclassification or combination of
shares of stock of the Corporation or any recapitalization of the Corporation
shall not be taxable to holders of the Common Stock.
(7) For purposes of this Section III.B.(ix), the following
definitions shall apply:
"Extraordinary Distribution" shall mean any dividend or other
distribution (effected while any of the shares of Series One Preference Stock
are outstanding) (a) of cash, where the aggregate amount of such cash dividend
or distribution together with the amount of all cash dividends and
distributions made during the preceding period of 12 months, when combined
with the aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such Pro Rata
Repurchase which is in excess of the Fair Market Value of the Common Stock
repurchased as determined on the applicable expiration date (including all
extensions thereof) of any tender offer or exchange offer which is a Pro Rata
Repurchase, or the date of purchase with respect to any other Pro Rata
Repurchase which is not a tender offer or exchange offer made during such
period), exceeds twelve and one-half percent (12-1/2%) of the aggregate Fair
Market Value of all shares of Common Stock outstanding on the record date for
determining the stockholders entitled to receive such Extraordinary
Distribution and (b) of any shares of capital stock of the Corporation (other
than shares of Common Stock), other securities of the Corporation (other than
securities of the type referred to in Section III.B.(ix)(2)), evidences of
indebtedness of the Corporation or any other person or any other property
(including shares of any subsidiary of the Corporation), or any combination
thereof. The Fair Market Value of an Extraordinary Distribution for purposes
of Section III.B.(ix)(4) shall be the sum of the Fair Market Value of such
Extraordinary Distribution plus the amount of any cash dividends which are not
Extraordinary Distributions made during such twelve month period and not
previously included in the calculation of an adjustment pursuant to Section
III.B.(ix)(4).
"Fair Market Value" shall mean, as to shares of Common Stock or
any other class of capital stock or securities of the Corporation or any other
issuer which are publicly traded, the average of the Current Market Prices (as
hereinafter defined) of such shares or securities for each day of the
Adjustment Period (as hereinafter defined). "Current Market Price" of
publicly traded shares of Common Stock or any other class of capital stock or
other security of the Corporation or any other issuer for a day shall mean the
last reported sales price, regular way, or, in case no sale takes place on
such day, the average of the reported closing bid and asked prices, regular
way, in either case as reported on the New York Stock Exchange Composite Tape
or, if such security is not listed or admitted to trading on the New York
Stock Exchange, on the principal national securities exchange on which such
security is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the NASDAQ National Market
System or, if such security is not quoted on such National Market System, the
average of the closing bid and asked prices on each such day in the
over-the-counter market as reported by NASDAQ or, if bid and asked prices for
such security on each such day shall not have been reported through NASDAQ,
the average of the bid and asked prices for such day as furnished by any New
York Stock Exchange member firm regularly making a market in such security
selected for such purpose by the Board of Directors of the Corporation or a
committee thereof on each trading day during the Adjustment Period.
"Adjustment Period" shall mean the period of five (5) consecutive trading
days, selected by the Board of Directors of the Corporation or a committee
thereof, during the 20 trading days ending with, and including, the date as of
which the Fair Market Value of a security is to be determined; provided that
such period of five consecutive trading days shall end prior to the date on
which such security begins to trade "ex dividend" with respect to any dividend
or distribution giving rise to an adjustment under this Section III.B.(ix).
The "Fair Market Value" of any security which is not publicly traded or of any
other property shall mean the fair value thereof as determined by an
independent investment banking or appraisal firm experienced in the valuation
of such securities or property selected in good faith by the Board of
Directors of the Corporation or a committee thereof, or, if no such investment
banking or appraisal firm is in the good faith judgment of the Board of
Directors or such committee available to make such determination, as
determined in good faith by the Board of Directors of the Corporation or such
committee.
"Non-Dilutive Amount" in respect of an issuance, sale or
exchange by the Corporation of any right or warrant to purchase or acquire
shares of Common Stock (including any security convertible into or
exchangeable for shares of Common Stock) shall mean the remainder of (a) the
product of the Fair Market Value of a share of Common Stock on the day
preceding the first public announcement of such issuance, sale or exchange
multiplied by the maximum number of shares of Common Stock which could be
acquired on such date upon the exercise in full of such rights and warrants
(including upon the conversion or exchange of all such convertible or
exchangeable securities), whether or not exercisable (or convertible or
exchangeable) at such date, minus (b) the aggregate amount payable pursuant to
such right or warrant to purchase or acquire such maximum number of shares of
Common Stock; provided, however, that in no event shall the Non-Dilutive
Amount be less than zero. For purposes of the foregoing sentence, in the case
of a security convertible into or exchangeable for shares of Common Stock, the
amount payable pursuant to a right or warrant to purchase or acquire shares of
Common Stock shall be the Fair Market Value of such security on the date of
the issuance, sale or exchange of such security by the Corporation.
"Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof, whether for cash,
shares of capital stock of the Corporation, other securities of the
Corporation, evidences of indebtedness of the Corporation or any other person
or any other property (including shares of a subsidiary of the Corporation),
or any combination thereof, effected while any of the shares of Series One
Preference Stock are outstanding, pursuant to any tender offer or exchange
offer subject to Section 13(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor provision of law, or pursuant
to any other offer available to substantially all holders of Common Stock;
provided, however, that no purchase of shares by the Corporation or any
subsidiary thereof shall be deemed a Pro Rata Repurchase if made (a) in open
market transactions or (b) pursuant to a single tender offer subject to
Section 13(e) of the Securities Exchange Act commenced prior to December 31,
1989, but any purchase made in such a tender offer shall only be deemed not to
be a Pro Rata Repurchase to the extent that the aggregate amount used to
purchase Common Stock in such tender offer does not exceed $357,500,000. For
purposes of this subsection (ix)(7), shares shall be deemed to have been
purchased by the Corporation or any subsidiary thereof "in open market
transactions" if they have been purchased substantially in accordance with the
requirements of Rule 10b-18 as in effect under the Exchange Act, on the date
shares of Series One Preference Stock are initially issued by the Corporation
or on such other terms and conditions as the Board of Directors of the
Corporation or a committee thereof shall have determined are reasonably
designed to prevent such purchases from having a material effect on the
trading market for the Common Stock.
(8) Whenever an adjustment to the Conversion Price and the
related voting rights of the Series One Preference Stock is required pursuant
to this Section III.B.(ix), the Corporation shall forthwith place on file with
the transfer agent for the Common Stock and the Series One Preference Stock if
there be one, and with the Secretary of the Corporation, a statement signed by
two officers of the Corporation stating the adjusted Conversion Price
determined as provided herein and the resulting conversion ratio, and the
voting rights (as appropriately adjusted), of the Series One Preference Stock.
Such statement shall set forth in reasonable detail such facts as shall be
necessary to show the reason and the manner of computing such adjustment,
including any determination of Fair Market Value involved in such computation.
Promptly after each adjustment to the Conversion Price and the related voting
rights of the Series One Preference Stock, the Corporation shall mail a notice
thereof and of the then prevailing conversion ratio to each holder of shares
of the Series One Preference Stock.
III.B.(x) Ranking; Retirement of Shares
(1) The Series One Preference Stock shall rank senior to the
Common Stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution and winding up of the Corporation. The Series One
Preference Stock shall rank on a parity with all other series of the
Corporation's Preference Stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution and winding up of the
Corporation. Unless otherwise provided in the Certificate of Incorporation of
the Corporation, as amended, the Series One Preference Stock shall rank junior
to all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution or
winding up of the Corporation.
(2) Any shares of Series One Preference Stock acquired by the
Corporation by reason of the conversion or redemption of such shares as
provided by this Section III.B., or otherwise so acquired, shall be retired as
shares of Series One Preference Stock and restored to the status of authorized
but unissued shares of preference stock, $1.00 par value, of the Corporation,
undesignated as to series, and may thereafter be reissued as part of a new
series of such Preference Stock as permitted by law.
III.B.(xi) Miscellaneous
(1) All notices referred to herein shall be in writing, and
all notices hereunder shall be deemed to have been given upon the earlier
of receipt thereof or three (3) business days after the mailing thereof if
sent by registered mail (unless first-class mail shall be specifically
permitted for such notice under the terms of this Resolution) with postage
prepaid, addressed: (a) if to the Corporation, to its office as specified
in its most recent Annual Report on Form 10-K (or any successor report or
form) or to the transfer agent for the Series One Preference Stock, or
other agent of the Corporation designated as permitted by this Section
III.B. or (b) if to any holder of the Series One Preference Stock or Common
Stock, as the case may be, to such holder at the address of such holder as
listed in the stock record books of the Corporation (which may include the
records of any transfer agent for the Series One Preference Stock or Common
Stock, as the case may be) or (c) to such other address as the Corporation
or any such holder, as the case may be, shall have designated by notice
similarly given.
(2) The term "Common Stock" as used in this Section III.B.
means the Corporation's Common Stock of par value $.01, as the same exists at
the date of filing of this Certificate of Amendment of the Certificate of
Incorporation of the Corporation relating to Series One Preference Stock or
any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
In the event that, at any time as a result of an adjustment made pursuant to
Section III.B.(ix), the holder of any shares of the Series One Preference
Stock upon thereafter surrendering such shares for conversion shall become
entitled to receive any shares or other securities of the Corporation other
than shares of Common Stock, the Conversion Price in respect of such other
shares or securities so receivable upon conversion of shares of Series One
Preference Stock shall thereafter be adjusted, and shall be subject to further
adjustment from time to time, in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
Section III.B.(ix) hereof, and the provisions of Sections (i) through (viii)
and (x) and (xi) of this Article Fourth.III.B. with respect to the Common
Stock shall apply on like or similar terms to any such other shares or
securities.
(3) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series One Preference Stock or shares of Common Stock or
other securities issued on account of Series One Preference Stock pursuant
hereto or certificates representing such shares or securities. The
Corporation shall not, however, be required to pay any such tax which may be
payable in respect of any transfer involved in the issuance or delivery of
shares of Series One Preference Stock or Common Stock or other securities in a
name other than that in which the shares of Series One Preference Stock with
respect to which such shares or other securities are issued or delivered were
registered, or in respect of any payment to any person with respect to any
such shares or securities other than a payment to the registered holder
thereof, and shall not be required to make any such issuance, delivery or
payment unless and until the person otherwise entitled to such issuance,
delivery or payment has paid to the Corporation the amount of any such tax or
has established, to the satisfaction of the Corporation, that such tax has
been paid or is not payable.
(4) In the event that a holder of shares of Series One
Preference Stock shall not by written notice designate the name in which
shares of Common Stock to be issued upon conversion of such shares should be
registered or to whom payment upon redemption of shares of Series One
Preference Stock should be made or the address to which the certificate or
certificates representing such shares, or such payment, should be sent, the
Corporation shall be entitled to register such shares, and make such payment,
in the name of the holder of such Series One Preference Stock as shown on the
records of the Corporation and to send the certificate or certificates
representing such shares, or such payment, to the address of such holder shown
on the records of the Corporation.
(5) Unless otherwise provided in the Certificate of
Incorporation, as amended, of the Corporation, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation
or winding-up or otherwise made upon the shares of Series One Preference Stock
and any other stock ranking on a parity with the Series One Preference Stock
with respect to such dividend or distribution shall be made pro rata, so that
amounts paid per share on the Series One Preference Stock and such other stock
shall in all cases bear to each other the same ratio that the required
dividends, distributions or payments, as the case may be, then payable per
share on the shares of the Series One Preference Stock and such other stock
bear to each other.
(6) The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series One Preference Stock.
Upon any such appointment or discharge of a transfer agent, the Corporation
shall send notice thereof by first-class mail, postage prepaid, to each holder
of record of Series One Preference Stock.
FIFTH: (i) In addition to any affirmative vote required by law
or otherwise, the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of Voting Stock, voting together as a single class, held by
stockholders other than a Related Person shall be required for the approval,
authorization or effectuation directly or indirectly, of any Business
Combination with such Related Person (such affirmative vote being required
notwithstanding the fact that no vote may be required or that a lesser
percentage may be specified by law, this Certificate of Incorporation, any
resolution or resolutions adopted by the Board of Directors pursuant to this
Certificate of Incorporation, any agreement with any national securities
exchange or otherwise); provided, however, that such voting requirement shall
not be applicable if:
(1) The Continuing Directors, by at least 66 2/3% vote of such
Continuing Directors, have expressly approved such Business Combination either
in advance of or subsequent to such Related Person's having become a Related
Person; or
(2) All of the following conditions shall have been satisfied:
(a) The Fair Market Value as of the date of consummation of
the Business Combination of the consideration to be received per
share by holders of shares of each class or series of Capital Stock
(regardless of whether or not such Related Person is the Beneficial
Owner of shares of any such class or series of Capital Stock) in the
Business Combination is not less than the Highest Per Share Price;
(b) The form of consideration to be received by holders of
shares of each class or series of Capital Stock in the Business
Combination shall be United States currency or the form of
consideration used by such Related Person in acquiring the largest
aggregate number of shares of the Capital Stock which such Related
Person has previously acquired;
(c) After such Related Person shall have first become a
Related person and prior to the consummation of such Business
Combination:
(x) Except as approved by at least 66 2/3% of the Continuing
Directors, there shall not have been any failure to declare and
pay at the regular dates therefor the full amount of all
dividends (whether or not cumulative) payable on the Preferred
Stock, the Preference Stock or any other class or series of
stock having a preference over the Common Stock as to dividends
or upon liquidation;
(y) There shall not have been (A) any reduction in the annual
rate of dividends paid on the Common Stock (except as necessary
to reflect any subdivision of the Common Stock) except as
approved by at least 66 2/3% of the Continuing Directors or (B)
any failure to increase such annual rate of dividends, to the
extent necessary to prevent any such reduction, in the event of
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 Common Stock, unless the failure so to increase such
annual rate shall have been approved by at least 66 2/3% of the
Continuing Directors; and
(z) Such Related Person shall not have become the Beneficial
Owner of additional shares of Voting Stock, except as part of
the transaction that results in such Related Person becoming a
Related Person and except in a transaction that, giving effect
thereto, would not result in any increase in the percentage of
Voting Stock of which such Related Person is the Beneficial
Owner; and
(d) A proxy statement describing the proposed Business
Combination and complying with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any acts, rules or regulations that at least 66
2/3% of the Continuing Directors determine are successors thereof,
shall (whether or not such a proxy statement is required to be
mailed pursuant to such acts, rules or regulations) have been
mailed to all holders of Voting Stock at least 30 days prior to
the date of the meeting called to consider such Business
Combination and such statement shall have contained, at the front
thereof, in a prominent place such recommendations and other
information concerning the Business Combination as at least 66
2/3% of the Continuing Directors may determine so to include.
(ii) For purposes of this Article:
(1) The terms "Affiliate" and "Associate" shall have the same
meaning as in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on the date of this
Restated Certificate (the term "registrant" in said Rule 12b-2 meaning in this
case the Corporation), and shall include any Person that, giving effect to a
Business Combination, would become such an Affiliate or Associate.
(2) The term "Beneficial Owner" shall mean any Person which
beneficially owns any Capital Stock within the meaning ascribed in Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, as in effect on the date of this Restated Certificate, or
who has the right to acquire any such beneficial ownership (whether or not
such right is exercisable immediately, with the passage of time or subject to
any condition) pursuant to any agreement, contract, arrangement or
understanding or upon the exercise of any conversion, exchange or other right,
warrant or option, or otherwise. A Person shall be deemed the Beneficial
Owner of all Capital Stock of which any Affiliate or Associate of such Person
is the Beneficial Owner.
(3) The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a Subsidiary with or into a Related
Person, (b) any sale, lease, exchange, transfer or other disposition,
including without limitation by way of a mortgage or any other security
device, of any Substantial Amount of the assets of the Corporation, one or
more Subsidiaries or the Corporation and one or more Subsidiaries to a Related
Person, (c) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any Related Person,
(d) any sale, lease, exchange, transfer or other disposition, including
without limitation by way of a mortgage or any other security device, of any
Substantial Amount of the assets of a Related Person to the Corporation, one
or more Subsidiaries, or the Corporation and one or more Subsidiaries, (e) the
issuance of any securities of the Corporation, one or more Subsidiaries or the
Corporation and one or more Subsidiaries to a Related Person or to a Person
that giving effect thereto, would be a Related Person other than the issuance
on a pro rata basis to all holders of stock of the same class pursuant to a
stock split or stock dividend, (f) any reclassification of securities,
recapitalization of the Corporation, or any merger or consolidation of the
Corporation with or into one or more Subsidiaries or any other transaction
that would have the effect, directly or indirectly, of increasing the voting
power or other equity interest of a Related Person in the Corporation, (g) any
loan, advance, guaranty, pledge or other financial assistance by the
Corporation, one or more Subsidiaries or the Corporation and one or more
Subsidiaries to or for the benefit, directly or indirectly (except
proportionately as a stockholder), of a Related Person, (h) any agreement,
contract or other arrangement providing for any Business Combination and (i)
any series of transactions that a majority of Continuing Directors determines
are related and that, taken together, would constitute a Business Combination.
(4) For the purposes of Section (i)(2) of this Article FIFTH, the
term "consideration to be received" shall include, without limitation, Capital
Stock of the Corporation retained by its existing stockholders other than
Related Persons in the event of a Business Combination that is a merger and in
which the Corporation is the surviving corporation.
(5) The term "Continuing Director" shall mean a Director of the
Corporation who is not the Related Person, or an Affiliate or Associate of the
Related Person (or a representative or nominee of the Related Person or such
Affiliate or Associate), that is involved in the relevant Business Combination
and (a) who was a member of the Board of Directors of the Corporation
immediately prior to the time that such Related Person became a Related Person
or (b) whose initial election as a Director of the Corporation was recommended
by the affirmative vote of a least 66 2/3% of the Continuing Directors then in
office, provided that, in either such case, such Continuing Director has
continued in office after becoming a Continuing Director.
(6) The term "Fair Market Value" shall mean (a) in the case of
United States currency, the amount thereof, (b) in the case of stock, (x) the
closing sale price per share thereof on the last trading day preceding the
date as of which the determination thereof is to be made, or the highest
closing sale price per share thereof during the specified period, on the
Composite Tape for New York Stock Exchange -- Listed Stocks or, if such stock
is not quoted on the Composite Tape, on the New York Stock Exchange, or if
such stock is not listed on such exchange, on the United States securities
exchange registered as a national securities exchange under the Securities
Exchange Act of 1934, as amended, on which such stock is listed or principally
traded, (y) if such stock is not so listed, the closing bid quotation per
share thereof on the last trading day preceding the date as of which the
determination thereof is to be made, or the highest closing bid quotation per
share thereof during the specified period, on the National Association of
Securities Dealers Inc. Automated Quotation System, or any system then in use
or (z) if no such quotations are then available, the fair market value
thereof, as of the date of which the determination thereof is to be made, as
determined by at least 66 2/3% of the Continuing Directors and (c) in the case
of securities, property or assets other than such currency or stock, the fair
market value thereof, as of the date of which the determination thereof is to
be made, as determined by at least 66 2/3% of the Continuing Directors.
(7) The term "Highest Per Share Price" shall mean with respect to
any class or series of Capital Stock the highest of (a) the highest price per
share that can be determined to have been paid at any time by the Related
Person involved in the relevant Business Combination for any share or
shares of such class or series of Capital Stock, or if such Related Person
has not acquired any Capital Stock of such class or series, the highest
equivalent, as determined by at least 66 2/3% of the Continuing Directors
for a share of such class or series of such highest price for any other
class or series of Capital Stock, (b) the highest preferential amount, if
any, per share payable with respect to shares of such class or series of
Capital Stock in the event of a voluntary or involuntary liquidation of the
Corporation, or the highest redemption price, if any, to which the holders
of shares of such class or series of Capital Stock would be entitled,
whichever is higher, and (c) the Fair Market Value per share of such
Capital Stock during the period of twenty (20) trading days immediately
preceding the time the relevant Business Combination is first publicly
announced, or during the period of twenty (20) trading days immediately
preceding the time at which the Related Person became a Related Person,
whichever is higher. In determining the Highest Per Share Price, (x) all
purchases by the Related Person shall be taken into account regardless of
whether the shares were purchased before or after the Related Person became
a Related Person and (y) the Highest Per Share Price shall include any
brokerage commissions, transfer taxes and soliciting dealers' fees or other
value paid in connection with such purchases.
A Related Person shall be deemed to have acquired a share of Capital Stock at
the time when such Related Person became the Beneficial Owner thereof. The
price deemed to have been paid by a Related Person for Capital Stock of which
an Affiliate or Associate is the Beneficial Owner shall be the price that is
the highest of (a) the price paid upon the acquisition thereof by the relevant
Affiliate or Associate (if any, and whether or not such Affiliate or Associate
was an Affiliate or Associate at the time of such acquisition), and (b) the
Fair Market Value per share of such Capital Stock during the period of 20
trading days immediately preceding the time when the Related Person became the
Beneficial Owner thereof.
In any determination of the price or prices paid or deemed to have been paid
by any Person, and in any determination of the Highest Per Share Price or Fair
Market Value, appropriate adjustment shall be made to reflect the relevant
effect of any stock dividends, splits and distributions and any combination or
reclassification of Capital Stock.
(8) The Term "Related Person" shall mean (a) any Person (other than
the Corporation or any wholly owned Subsidiary) that, alone or together with
any Affiliates and Associates, is or becomes the Beneficial Owner of an
aggregate of 10% or more of the outstanding Voting Stock, and (b) any
Affiliate or Associate of any such Person, provided, however, that the term
"Related Person" shall not include (x) a Person whose acquisition of such
aggregate percentage of Voting Stock was approved in advance by at least 66
2/3% of the Continuing Directors or (y) any pension, profit sharing, employee
stock ownership or other employee benefit plan of the Corporation or any
Subsidiary, all of the capital stock of or equity interest in which Subsidiary
is owned by the Corporation, one or more Subsidiaries or the Corporation and
one or more Subsidiaries, or any trustee or fiduciary when acting in such
capacity with respect to any such plan. The term "Person" shall mean any
individual, corporation, partnership or other entity, including, any group
comprised of any person and any other Person, or any Affiliate or Associate
thereof, with whom such Person, or any Affiliate or Associate thereof, has
any agreement, arrangement or understanding, directly or indirectly, for
the purpose of acquiring, holding, voting or disposing of Voting Stock and
each Person, and any Affiliate or Associate thereof, that is a member of
such group.
(9) The term "Subsidiary" shall mean any Person a majority of the
capital stock of or other equity interest in which is owned by the
Corporation, one or more Subsidiaries or the Corporation and one or more
Subsidiaries.
(10) The term "Substantial Amount" shall mean an amount of stock,
securities or other property having a Fair Market Value equal to 10% or more
of the Fair Market Value of the total consolidated assets of the Corporation
and its Subsidiaries taken as a whole, as of the end of the Corporation's most
recent fiscal year ended prior to the time as of which the determination is
being made.
(11) The term "Voting Stock" shall mean all outstanding Common Stock
and all other outstanding Capital Stock of the Corporation, if any, entitled
to vote on each matter on which the holders of record of Common Stock shall be
entitled to vote, and each reference to a proportion of shares of Voting Stock
shall refer to such proportion of the votes entitled to be cast by the holders
of such Common Stock and other Capital Stock, if any, and the term "Capital
Stock" shall mean all outstanding capital stock of the Corporation issued
pursuant to this Certificate of Incorporation or any resolution or resolutions
of the Board of Directors of the Corporation adopted pursuant to this
Certificate of Incorporation.
(12) The Continuing Directors by at least a 66 2/3% vote, shall have
the power to make any and all determinations provided for in this Article
FIFTH and to interpret the provisions and definitions in this Article FIFTH,
which determinations and interpretations shall, to the fullest extent
permitted by law, be conclusive.
(iii) In addition to the requirements of law and any other
provisions of this Certificate of Incorporation or any resolution or
resolutions of the Board of Directors adopted pursuant to this Certificate of
Incorporation (and notwithstanding the fact that a lesser percentage may be
specified by law, this Certificate of Incorporation, any such resolution or
resolutions or otherwise), the affirmative vote of the holders of at least 66
2/3% of the outstanding shares of Voting Stock held by stockholders other than
any Related Person shall be required to amend, alter or repeal, or adopt any
provision inconsistent with the provisions of this Article FIFTH.
SIXTH: The number of directors of the Corporation shall not be
less than three nor more than eighteen.
SEVENTH: (i) A director of the Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director to the fullest extent permitted by Delaware Law.
(ii)(1) Each person (and the heirs, executors or administrators
of such person) who was or is a party or is threatened to be made a party to,
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, shall be indemnified and held harmless by the Corporation
to the fullest extent permitted by Delaware Law. The right to indemnification
conferred in this ARTICLE SEVENTH shall also include the right to be paid by
the Corporation the expenses incurred in connection with any such proceeding
in advance of its final disposition to the fullest extent authorized by
Delaware Law. The right to indemnification conferred in this ARTICLE SEVENTH
shall be a contract right.
(2) The Corporation may, by action of its Board of Directors,
provide indemnification to such of the employees and agents of the Corporation
to such extent and to such effect as the Board of Directors shall determine to
be appropriate and authorized by Delaware Law.
(iii) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss incurred by such person in any such capacity or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under Delaware Law.
(iv) The rights and authority conferred in this ARTICLE SEVENTH
shall not be exclusive of any other right which any person may otherwise have
or hereafter acquire.
(v) Neither the amendment nor repeal of this ARTICLE SEVENTH,
nor the adoption of any provision of this Certificate of Incorporation or the
bylaws of the Corporation, nor, to the fullest extent permitted by Delaware
Law, any modification of law, shall eliminate or reduce the effect of this
ARTICLE SEVENTH in respect of any acts or omissions occurring prior to such
amendment, repeal, adoption or modification.
EIGHTH: Any action required or permitted to be taken at any
annual or special meeting of stockholders may be taken without a meeting on
written consent, setting forth the holders of all outstanding shares
entitled to vote thereon. Written consent thus given by the holders of all
outstanding shares entitled to vote shall have the same effect as a
unanimous vote of stockholders.
NINTH: Special meetings of the stockholders may be called by
the Board of Directors, the Chairman of the Board of Directors or the
President of the Corporation and may not be called by any other person.
Notwithstanding the foregoing, whenever holders of one or more classes or
series of Preferred Stock and Preference Stock shall have the right, voting
separately as a class or series, to elect directors, such holders may call, to
the extent provided in Article FOURTH (or pursuant to the terms of the
resolution or resolutions adopted by the Board of Directors pursuant to
ARTICLE FOURTH hereof), special meetings of holders of such Preferred Stock
and Preference Stock.
TENTH: The Corporation's bylaws or any of them, may be
altered, amended or repealed, or new bylaws may be made, by the stockholders
entitled to vote thereon at any annual or special meeting thereof or by the
Board of Directors.
ELEVENTH: The Corporation reserves the right to amend this
Certificate of Incorporation in any manner permitted by Delaware Law and, with
the sole exception of those rights and powers conferred under the above
ARTICLE SEVENTH, all rights and powers conferred herein on stockholders,
directors and officers, if any, are subject to this reserved power.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate to be executed by its Chief Executive Officer and attested by its
Secretary on this __ day of _______, 1996.
CVS Corporation
By:________________
Name:
Title:
Attest:__________________
Name:
Secretary
Appendix C
BY-LAWS OF
CVS CORPORATION
BY-LAWS
OF
CVS CORPORATION
______________
ARTICLE I
STOCKHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the
stockholders of the corporation, for the purpose of electing directors and for
the transaction of such other business as may be brought before the meeting,
shall be held at the principal office of the corporation, or at such other
place within or without the State of Delaware stated in the notice of the
meeting as the Board of Directors may determine, on the second Tuesday of May
of each year (unless such day shall be a legal holiday, in which case the
annual meeting shall be held on the next succeeding day not a legal holiday),
or on such other day in the month of May as the Board of Directors may
determine, at 10:00 o'clock in the forenoon, New York time, or at such other
hour stated in the notice of the meeting as the Board of Directors may
determine.
Section 2. SPECIAL MEETINGS. Special meetings of stockholders
may be called by the Board of Directors, the Chairman of the Board of
Directors or the President and may not be called by any other person.
Special meetings shall be held at such place within or without
the State of Delaware as is specified in the call thereof.
Section 3. NOTICE OF MEETING; WAIVER. Unless otherwise
required by statute, the notice of every meeting of the stockholders shall be
in writing and signed by the Chairman of the Board of Directors or the
President (or a Vice-President or the Secretary or an Assistant Secretary, in
each case acting at the direction of the Chairman or the President) and shall
state the time when and the place where it is to be held, and a copy thereof
shall be served, either personally or by mail, upon each stockholder of record
entitled to vote at such meeting, not less than ten nor more than sixty days
before the meeting. If the meeting to be held is other than the annual
meeting of stockholders, the notice shall also state the purpose or purposes
for which the meeting is called and shall indicate that it is being issued by
or at the direction of the person or persons calling the meeting. If, at any
meeting, action is proposed to be taken which would, if taken, entitle
stockholders to receive payment for their shares pursuant to Section 262 of
the General Corporation Law of the State of Delaware, the notice of such
meeting shall include a statement of that purpose and to that effect. If the
notice is mailed, it shall be directed to a stockholder at his address as it
appears on the record of stockholders unless he shall have filed with the
Secretary of the corporation a written request that notices intended for him
be mailed to some other address, in which case it shall be mailed to the
address designated in such request.
Notice of a meeting need not be given to any stockholder who
submits a signed waiver of notice, in person or by proxy, whether before or
after the meeting. The attendance of a stockholder at a meeting, in person or
by proxy, without protesting prior to the conclusion of the meeting the lack
of notice of such meeting, shall constitute a waiver of notice by him.
Section 4. QUORUM. At any meeting of the stockholders the
holders of a majority of the shares entitled to vote and being present in
person or represented by proxy shall constitute a quorum for all purposes,
unless the representation of a different number shall be required by law or by
another provision of these by-laws, and in that case the representation of the
number so required shall constitute a quorum.
If the holders of the amount of shares necessary to constitute
a quorum shall fail to attend in person or by proxy, the holders of a majority
of the shares present in person or represented by proxy at the meeting may
adjourn from time to time without further notice other than by an announcement
made at the meeting. At any such adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at
the meeting as originally called.
Section 5. ORGANIZATION. The Chairman of the Board of
Directors or, in his absence, the President or, in his absence, any Executive
Vice President, Senior Vice President or Vice President in the order of their
seniority or in such other order as may be designated by the Board of
Directors, shall call meetings of the stockholders to order and shall act as
chairman of such meetings. The Board of Directors or the Executive Committee
may appoint any stockholder to act as chairman of any meeting in the absence
of any of such officers and in the event of such absence and the failure of
such board or committee to appoint a chairman, the stockholders present at
such meeting may nominate and appoint any stockholder to act as chairman.
The Secretary of the corporation, or, in his absence, an
Assistant Secretary, shall act as secretary of all meetings of stockholders,
but, in the absence of said officers, the chairman of the meeting may appoint
any person to act as secretary of the meeting.
Section 6. VOTING. At each meeting of the stockholders every
stockholder of record having the right to vote shall be entitled to vote
either in person or by proxy.
Section 7. ACTION BY WRITTEN CONSENT. Any action required
or permitted to be taken at any annual or special meeting of stockholders
may be taken without a meeting on written consent, setting forth the action
so taken, signed by the holders of all outstanding shares entitled to vote
thereon. Written consent thus given by the holders of all outstanding
shares entitled to vote shall have the same effect as a unanimous vote of
the stockholders.
Section 8. INSPECTORS OF ELECTION. The Board of Directors, in
advance of any stockholders' meeting, may appoint one or more inspectors to
act at the meeting or any adjournment thereof. If inspectors are not so
appointed, the person presiding at a stockholders' meeting may, and on the
request of any stockholder entitled to vote thereat, shall appoint one or more
inspectors. In case any person appointed fails to appear or act, the vacancy
may be filled by appointment made by the Board in advance of the meeting or at
the meeting by the person presiding thereat. Inspectors shall be sworn.
Section 9. CONDUCT OF ELECTION. At each meeting of the
stockholders, votes, proxies, consents and ballots shall be received, and all
questions touching the qualification of voters, the validity of proxies and
the acceptance or rejection of votes, shall be decided by the Inspectors of
Election.
ARTICLE II
BOARD OF DIRECTORS
Section 1. NUMBER OF DIRECTORS. The number of directors of
the Corporation shall be not less than three nor more than eighteen.
Section 2. TERM AND VACANCIES. Directors shall be elected at
the annual meeting of stockholders to hold office until the next annual
meeting and until their respective successors have been duly elected and have
qualified.
Vacancies in the Board of Directors occurring between annual
meetings, from any cause whatsoever including vacancies created by an increase
in the number of directors, shall be filled by the vote of a majority of the
remaining directors, though less than a quorum.
Directors need not be stockholders.
Section 3. GENERAL POWERS OF DIRECTORS. The business of the
corporation shall be managed under the direction of its Board of Directors
subject to the restrictions imposed by law, by the corporation's certificate
of incorporation and amendments thereto, or by these by-laws.
Section 4. MEETINGS OF DIRECTORS. The directors may hold
their meetings and may keep an office and maintain the books of the
corporation, except as otherwise provided by statute, in such place or places
in the State of Delaware or outside the State of Delaware as the Board may,
from time to time, determine.
Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting if all of the directors consent in
writing to the adoption of a resolution authorizing the action, and in such
event the resolution and the written consent of all directors thereto shall be
filed with the minutes of the proceedings of the Board of Directors.
Any one or more directors may participate in a meeting of the
Board of Directors by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time, and participation by such means shall
constitute presence in person at a meeting.
Section 5. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at the principal office of the corporation in the
County of Providence, Town of Woonsocket, State of Rhode Island, or at such
other place within or without the State of Delaware as shall be designated in
the notice of the meeting as follows: One meeting shall be held
immediately following the annual meeting of stockholders and further
meetings shall be held at such intervals or on such dates as may from time
to time be fixed by the directors, all of which meetings shall be held upon
not less than four days' notice served upon each director by mailing such
notice to him at his address as the same appears upon the records of the
corporation, except the meeting which shall be held immediately following
the annual meeting of stockholders which meeting shall be held without
notice.
Section 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by the direction of the Chairman of
the Board of Directors, or of the President of the corporation, or of
one-third of the directors at the time in office. The Secretary shall give
notice of each special meeting by mailing such notice not less than four days,
or by telegraphing or telecopying such notice not less than two days, before
the date set for a special meeting, to each director.
Section 7. WAIVER. Notice of a meeting need not be given to
any director who submits a signed waiver of notice whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at
its commencement, the lack of notice to him.
Section 8. QUORUM. One-third of the total number of directors
shall constitute a quorum for the transaction of business, but if at any
meeting of the Board there be less than a quorum present, the majority of
those present may adjourn the meeting from time to time.
Section 9. ORDER OF BUSINESS. At meetings of the Board of
Directors business shall be transacted in such order as the Board may fix and
determine.
At all meetings of the Board of Directors, the Chairman of the
Board of Directors, or in his absence, the President, or in the absence of
both, the Executive Vice-President or any Vice-President (provided such person
be a member of the Board) shall preside.
Section 10. ELECTION OF CHAIRMAN, OFFICERS AND COMMITTEES. At
the first regular meeting of the Board of Directors in each year, at which a
quorum shall be present, held next after the annual meeting of the
stockholders, the Board of Directors shall proceed to the election of a
Chairman of the Board, of the executive officers of the corporation and of the
Executive Committee, if the Board of Directors shall provide for such
committee under the provisions of Article III hereof.
The Board of Directors from time to time may fill any vacancies
among the executive officers, members of the Executive Committee and members
of other committees, and may appoint additional executive officers and
additional members of such Executive Committee or other committees.
Section 11. COMPENSATION. Directors who are not officers or
employees of the corporation or any of its subsidiaries may receive such
remuneration as the Board may fix, in addition to a fixed sum for attendance
at each regular or special meeting of the Board or a Committee of the Board;
provided, however, that nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity or
receiving compensation therefor. In addition, each director shall be entitled
to reimbursement for expenses incurred in attending any meeting of the Board
or Committee thereof.
ARTICLE III
Committees
Section 1. EXECUTIVE COMMITTEE. The Board of Directors by
resolution adopted by a majority of the entire Board, may designate from the
Directors an Executive Committee consisting of three or more, to serve at the
pleasure of the Board. At all times when the Board of Directors is not in
session, the Executive Committee so designated shall have and exercise the
powers of the Board of Directors, except that such committee shall have no
authority as to the matters set out in Section 3 of this Article III.
Meetings of the Executive Committee shall be called by any
member of the same, on three days' mailed notice, or one day's telegraphed
or telecopied notice to each of the other members, stating therein the
purpose for which such meeting is to be held. Notice of meeting may be
waived, in writing, by any member of the Executive Committee.
All action by the Executive Committee shall be recorded in its
minutes and reported from time to time to the Board of Directors.
The Executive Committee shall fix its own rules of procedure
and shall meet where and as provided by such rules or by resolution of the
Board of Directors.
Any action required or permitted to be taken by the Executive
Committee may be taken without a meeting if all of the members of the
Executive Committee consent in writing to the adoption of a resolution
authorizing the action, and in such event the resolution and the written
consent of all members of the Executive Committee thereto shall be filed with
the minutes of the proceedings of the Executive Committee.
Any one or more members of the Executive Committee may
participate in a meeting of the Executive Committee by means of a conference
telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time, and
participation by such means shall constitute presence in person at a meeting.
Section 2. OTHER COMMITTEES. The Board of Directors may
appoint such other committees, of three or more, as the Board shall, from time
to time, deem advisable, which committees shall have and may exercise such
powers as shall be prescribed, from time to time, by resolution of the Board
of Directors, except that such committees shall have no authority as to the
matters set out in Section 3 hereof.
Actions and recommendations by each committee which shall be
appointed pursuant to this section shall be recorded and reported from time to
time to the Board of Directors.
Each such committee shall fix its own rules of procedure and
shall meet where and as provided by such rules or by resolution of the Board
of Directors.
Any action required or permitted to be taken by any such
committee may be taken without a meeting if all of the members of such
committee consent in writing to the adoption of a resolution authorizing
the action, and in such event the resolution and the written consent of all
members of such committee thereto shall be filed with the minutes of the
proceedings of such committee.
Any one or more members of any such committee may participate
in a meeting of such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time, and participation by such means shall
constitute presence in person at a meeting.
Section 3. LIMITATIONS. No committee shall have authority as
to the following matters:
(1) The submission to stockholders of any action that needs
stockholders' authorization.
(2) The filling of vacancies in the Board of Directors or in
any committee.
(3) The fixing of compensation of the directors for serving
on the Board or on any committee.
(4) The amendment or repeal of the by-laws, or the adoption
of new by-laws.
(5) The amendment or repeal of any resolution of the Board
which by its terms shall not be so amendable or repealable.
Section 4. ALTERNATES. The Board may designate one or more
directors as alternate members of any such committees, who may replace any
absent member or members at any meeting of such committees.
Section 5. COMPENSATION. Members of special or standing
committees may receive such salary for their services as the Board of
Directors may determine; provided, however, that nothing herein contained
shall be construed to preclude any member of any such committee from serving
the corporation in any other capacity or receiving compensation therefor.
ARTICLE IV
OFFICERS
Section 1. TITLES AND TERMS OF OFFICE. The executive officers
of the corporation shall be the Chairman of the Board of Directors, a Vice
Chairman, a President, each of whom shall be a member of the Board of
Directors, such number of Executive Vice Presidents, Senior Vice Presidents
and Vice Presidents as the Board of Directors shall determine, a Controller, a
Treasurer and a Secretary, all of whom shall be chosen by the Board of
Directors.
The Board of Directors may also appoint one or more Assistant
Secretaries and one or more Assistant Treasurers, and such other junior
officers as it shall deem necessary, who shall have such authority and shall
perform such duties as from time to time may be prescribed by the Board of
Directors.
One person may hold more than one of the above offices except
the offices of President and Secretary.
The officers of the Corporation shall each hold office for one
year and until their successors are chosen and qualified, and shall be subject
to removal at any time by the affirmative vote of the majority of the entire
Board of Directors.
Section 2. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman
of the Board of Directors shall be the chief executive officer of the
corporation. He shall have general management and control over the policy,
business and affairs of the corporation and shall have such other authority
and perform such other duties as usually appertain to a chief executive
officer of a business corporation. He shall preside at meetings of the
Board of Directors and of the stockholders.
Section 3. VICE CHAIRMAN. The Vice Chairman shall have such
authority and perform such duties as the Board of Directors, the Executive
Committee, or the Chairman of the Board of Directors may from time to time
determine.
Section 4. PRESIDENT. The President shall have such authority
and shall perform such duties as the Board of Directors, the Executive
Committee, or the Chairman of the Board of Directors may from time to time
determine. He shall exercise the powers of the Chairman of the Board of
Directors during his absence or inability to act.
Section 5. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS
AND VICE PRESIDENTS. The Executive Vice Presidents, Senior Vice Presidents
and Vice Presidents, if any, shall be designated and shall have such powers
and perform such duties as may be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board of Directors
or the President. They shall, in order of their seniority or in such other
order as may be designated by the Board of Directors, the Executive
Committee, the Chairman of the Board of Directors or the President exercise
the powers of the Chairman of the Board of Directors during the absence or
inability to act of the Chairman of the Board of Directors and the
President.
Section 6. PRINCIPAL FINANCIAL OFFICER. An officer designated
by the Board of Directors shall be the principal financial officer of the
Corporation. He shall render to the Board of Directors, whenever the Board
may require, an account of the financial condition of the corporation, and
shall do and perform such other duties as from time to time may be assigned
to him by the Board of Directors, the Executive Committee, the Chairman of
the Board of Directors or the President.
Section 7. CONTROLLER AND PRINCIPAL ACCOUNTING OFFICER. The
Controller shall be the principal accounting officer and subject to the
direction of the principal financial officer, he shall have supervision over
all the accounts and account books of the corporation. He shall have such
other powers and perform such other duties as from time to time may be
assigned to him by the principal financial officer, and shall exercise the
powers of the principal financial officer during his absence or inability to
act.
Section 8. TREASURER. The Treasurer shall have custody of the
funds and securities of the corporation which come into his hands. When
necessary or proper, he may endorse on behalf of the corporation for
collection, checks, notes, and other instruments and obligations and shall
deposit the same to the credit of the corporation in such bank or banks or
depositaries as the Board of Directors or the Executive Committee shall
designate; whenever required by the Board of Directors or the Executive
Committee, he shall render a statement of his cash account; he shall keep, or
cause to be kept, books of account, in which shall be entered and kept full
and accurate accounts of all monies received and paid out on account of the
corporation; he shall perform all acts incident to the position of Treasurer,
subject to the control of the Board of Directors, the Executive Committee, the
Chairman of the Board of Directors, the President and the principal financial
officer; he shall give bond for the faithful discharge of his duties, if, as,
and when the Board of Directors or the Executive Committee may require. He
shall perform such other duties as from time to time may be assigned to him by
the Board of Directors, the Executive Committee, the Chairman of the Board of
Directors, the President or the principal financial officer.
Section 9. ASSISTANT TREASURER. Each Assistant Treasurer
shall have such powers and perform such duties as may be delegated to him, and
the Assistant Treasurers shall, in the order of their seniority, or in such
other order as may be designated by the Board of Directors, the Executive
Committee, the Chairman of the Board of Directors, the President or the
principal financial officer, exercise the powers of the Treasurer during his
absence or inability to act.
Section 10. SECRETARY. The Secretary shall keep the minutes
of all meetings of the Board of Directors and the minutes of all meetings of
the stockholders and of the Executive Committee, in books provided for that
purpose; he shall attend to the giving and serving of all notices of the
corporation; and he shall have charge of the certificate books, transfer books
and records of stockholders and such other books and records as the Board of
Directors or Executive Committee may direct, all of which shall at all
reasonable times be open to the inspection of any director upon application
during the usual business hours.
He shall keep at the office of the corporation, or at the
office of the transfer agent or registrar of the corporation's capital stock,
a record containing the names, alphabetically arranged, of all persons who are
stockholders of the corporation, showing their places of residence, the number
of shares held by them, respectively, the time when they respectively became
the owners thereof, and the amount paid thereon, and such record shall be open
for inspection as prescribed by Section 220 of the General Corporate Law of
the State of Delaware. He shall in general perform all the duties incident to
the office of Secretary, subject to the control of the Board of Directors, the
Executive Committee, the Chairman of the Board of Directors and the President.
Section 11. ASSISTANT SECRETARIES. Each Assistant Secretary
shall have such powers and perform such duties as may be delegated to him, and
the Assistant Secretaries shall, in the order of their seniority, or in such
other order as may be designated by the Board of Directors, the Executive
Committee, the Chairman of the Board of Directors or the President, exercise
the powers of the Secretary during his absence or inability to act.
Section 12. VOTING UPON STOCKS. Unless otherwise ordered by
the Board of Directors or by the Executive Committee, the Chairman of the
Board of Directors of the corporation, or one designated in a proxy executed
by him, and in the absence of either, the President, or a person designated in
a proxy executed by him, and in the absence of all such, the Executive
Vice-Presidents or the Vice-Presidents of the corporation in the order of
their seniority, shall have full power and authority on behalf of the
corporation to attend, and to act, and to vote at meetings of stockholders
of any corporation in which this corporation may hold stock, and each such
officer of the corporation shall have power to sign a proxy deputizing
others to vote the same; and all such who shall be so authorized to vote
shall possess and may exercise any and all rights and powers incident to
the ownership of such stock and which, as the owner thereof, the
corporation might have possessed and exercised, if present.
The Board of Directors or the Executive Committee may, by
resolution from time to time, confer like powers on any other person or
persons which shall supersede the powers of those designated in the foregoing
paragraph.
Section 13. EXECUTION OF CHECKS, ETC. All checks, notes,
drafts or other instruments for the payment of money shall be signed on behalf
of this corporation by such person or persons and in such manner as the Board
of Directors or Executive Committee may prescribe by resolution from time to
time.
ARTICLE V
STOCK; RECORD DATE
Section 1. CERTIFICATES FOR STOCK. The certificates for
shares of the stock of the corporation shall be in such form, [not
inconsistent with the certificate filed according to law,] as shall be proper
or approved by the Board of Directors. Each certificate shall state (i) that
the corporation is formed under the laws of the State of Delaware, (ii) the
name of the person or persons to whom issued, (iii) the number and class of
shares and the designation of the series, if any, which such certificate
represents and (iv) the par value, if any, of each share represented by such
certificate. Each certificate shall be signed by the Chairman of the Board of
Directors, the President, an Executive Vice-President or a Vice-President, and
also by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary and sealed with the corporation's seal; provided, however,
that if such certificates are signed by a transfer agent or transfer clerk and
by a registrar the signature of the Chairman of the Board of Directors, the
President, the Executive Vice President, Vice-President, Treasurer, Assistant
Treasurer, Secretary and Assistant Secretary and the seal of the corporation
upon such certificates may be facsimiles, engraved or printed.
Section 2. TRANSFER OF SHARES. Shares of the stock of the
corporation may be transferred on the record of stockholders of the
corporation by the holder thereof in person or by his duly authorized attorney
upon surrender of a certificate therefor properly endorsed.
Section 3. AUTHORITY FOR ADDITIONAL RULES REGARDING TRANSFER.
The Board of Directors and the Executive Committee shall have power and
authority to make all such rules and regulations as respectively they may deem
expedient concerning the issue, transfer and registration of such certificates
for shares of the stock of the corporation as well as for the issuance of new
certificates in lieu of those which may be lost or destroyed, and may require
of any stockholder requesting replacement of lost or destroyed certificates,
bond in such amount and in such form as they may deem expedient to indemnify
the corporation, and/or the transfer agents, and/or the registrars of its
stock against any claims arising in connection therewith.
Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of
Directors or Executive Committee may appoint one or more transfer agents and
one or more registrars of transfer and may require all stock certificates to
be countersigned by such transfer agent and registered by such registrar of
transfers. One person or organization may serve as both transfer agent and
registrar.
Section 5. RECORD DATE. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to or dissent from any
proposal without a meeting, or for the purpose of determining stockholders
entitled to receive payment of any dividend or the allotment of any rights, or
for the purpose of any other action, the Board of Directors shall fix in
advance a date as the record date for any such determination of stockholders.
Such date shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action.
Section 6. LIST OF STOCKHOLDERS AS OF RECORD DATE. The
Secretary of the corporation or the transfer agent of its stock shall make and
certify a list of the stockholders as of the record date and number of shares
of each class of stock of record in the name of each stockholder and such list
shall be present at every meeting of stockholders. If the right to vote at
any meeting is challenged, the inspectors of elections, or person presiding
thereat, shall require such list of stockholders to be produced as evidence of
the right of the persons challenged to vote at such meeting, and all persons
who appear from such list to be stockholders entitled to vote thereat, may
vote at such meeting.
Section 7. DIVIDENDS. Dividends may be declared and paid out
of the surplus of the corporation as often and at such times and to such
extent as the Board of Directors may determine, consistent with the provisions
of the certificate of incorporation of the corporation [or other certificate
of the corporation filed pursuant to law].
ARTICLE VI
CORPORATE SEAL
The Board of Directors shall provide a suitable seal containing
the name of the corporation and of the state under the laws of which the
corporation was incorporated; and the Secretary shall have the custody
thereof.
ARTICLE VII
AMENDMENTS
Section 1. These by-laws or any of them, may be altered,
amended or repealed, or new bylaws may be made by the stockholders entitled to
vote thereon at any annual or special meeting thereof or by the Board of
Directors.
Appendix D
TEXT OF SECTION 623 OF THE NEW YORK BUSINESS CORPORATION
LAW - PROCEDURE TO ENFORCE SHARHEHOLDER'S RIGHT TO RECEIVE PAYMENT
(a) A shareholder intending to enforce his right under a section
of this chapter to receive payment for his shares if the proposed corporate
action referred to therein is taken shall file with the corporation, before
the meeting of shareholders at which the action is submitted to a vote, or at
such meeting but before the vote, written objection to the action. The
objection shall include a notice of his election to dissent, his name and
residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares if the action is
taken. Such objection is not required from any shareholder to whom the
corporation did not give notice of such meeting in accordance with this
chapter or where the proposed action is authorized by written consent of
shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date,
which term as used in this section means the date on which the shareholders'
vote authorizing such action was taken, or the date on which such consent
without a meeting was obtained from the requisite shareholders, the
corporation shall give written notice of such authorization or consent by
registered mail to each shareholder who filed written objection or from whom
written objection was not required, excepting any shareholder who voted for or
consented in writing to the proposed action and who thereby is deemed to have
elected not to enforce his right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects to
dissent shall file with the corporation a written notice of such election,
stating his name and residence address, the number and classes of shares as to
which his dissents and a demand for payment of the fair value of his shares.
Any shareholder who elects to dissent from a merger under section 905 (Merger
of subsidiary corporation) or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations) or from a share exchange
under paragraph (g) of Section 913 (Share exchanges) shall file a written
notice of such election to dissent within twenty days after the giving to him
of a copy of the plan of merger or exchange or an outline of the material
features thereof under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the
shares, as to which he has a right to dissent, held by him of record, that he
owns beneficially. A nominee of fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder
shall cease to have any of the rights of a shareholder except the right to be
paid the fair value of his shares and any other rights under this section. A
notice of election may be withdrawn by the shareholder at any time prior to
his acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer
is made. Upon expiration of such time, withdrawal of a notice of election
shall require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder as
provided in paragraph (g). If a notice of election is withdrawn, or the
corporate action is rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenters' rights, he shall not have
the right to receive payment for his shares and he shall be reinstated to
all his rights as a shareholder as of the consummation of the corporate
action, including any intervening preemptive rights and the right to
payment of any intervening dividend or other distribution or, if any such
rights have expired or any such dividend or distribution other than in cash
has been completed, in lieu thereof, at the election of the corporation,
the fair value thereof in cash as determined by the board as of the time of
such expiration or completion, but without prejudice otherwise to any
corporate proceedings that may have been taken in the interim.
(f) At the time of filing the notice of election to dissent or
within one month thereafter the shareholder of shares represented by
certificates shall submit the certificates representing his shares to the
corporation, or to its transfer agent, which shall forthwith note
conspicuously thereon that a notice of election has been filed and shall
return the certificates to the shareholder or other person who submitted them
on his behalf. Any shareholder of shares represented by certificates who
fails to submit his certificates for such notation as herein specified shall,
at the option of the corporation exercised by written notice to him within
forty-five days from the date of filing of such notice of election to dissent,
lose his dissenter's rights unless a court, for good cause shown, shall
otherwise direct. Upon transfer of a certificate bearing such notation, each
new certificate issued therefor shall bear a similar notation together with
the name of the original dissenting holder of the shares and a transferee
shall acquire no rights in the corporation except those which the original
dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within
which shareholders may file their notices of election to dissent, or within
fifteen days after the proposed corporate action is consummated, whichever is
later (but in no case later than ninety days from the shareholders'
authorization date), the corporation or, in the case of a merger or
consolidation, the surviving or new corporation, shall make a written offer by
registered mail to each shareholder who has filed such notice of election to
pay for his shares at a specified price which the corporation considers to be
their fair value. Such offer shall be accompanied by a statement setting
forth the aggregate number of shares with respect to which notices of election
to dissent have been received and the aggregate number of holders of such
shares. If the corporate action has been consummated, such offer shall
also be accompanied by (1) advance payment to each such shareholder who has
submitted the certificates representing his shares to the corporation, as
provided in paragraph (f), of an amount equal to eighty percent of the
amount of such offer, or (2) as to each shareholder who has not yet
submitted his certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will be made by
the corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of the
offer, such advance payment or statement as to advance payment shall be
sent to each shareholder entitled thereto forthwith upon consummation of
the corporate action. Every advance payment or statement as to advance
payment shall include advice to the shareholder to the effect that
acceptance of such payment does not constitute a waiver of any dissenters'
rights. If the corporate action has not been consummated upon the
expiration of the ninety day period after the shareholders' authorization
date, the offer may be conditioned upon the consummation of such action.
Such offer shall be made at the same price per share to all dissenting
shareholders of the same class, or if divided into series, of the same
series and shall be accompanied by a balance sheet of the corporation whose
shares the dissenting shareholder holds as of the latest available date,
which shall not be earlier than twelve months before the making of such
offer, and a profit and loss statement or statements for not less than a
twelve-month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for
the portion thereof during which it was in existence. Notwithstanding the
foregoing, the corporation shall not be required to furnish a balance sheet
or profit and loss statement or statements to any shareholder to whom such
balance sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the shareholders'
authorization for or consent to the proposed corporate action the
shareholders were furnished with a proxy or information statement, which
included financial statements, pursuant to Regulation 14A or Regulation 14C
of the United States Securities and Exchange Commission. If within thirty
days after the making of such offer, the corporation making the offer and
any shareholder agree upon the price to be paid for his shares, payment
therefor shall be made within sixty days after the making of such offer or
the consummation of the proposed corporate action, whichever is later, upon
the surrender of the certificates for any such shares represented by
certificates.
(h) The following procedure shall apply if the corporation fails
to make such offer within such period of fifteen days, or if it makes the
offer and any dissenting shareholder or shareholders fail to agree with it
within the period of thirty days thereafter upon the price to be paid for
their shares:
(1) The corporation shall, within twenty days after the
expiration of whichever is applicable of the two periods last
mentioned, institute a special proceeding in the supreme court in
the judicial district in which the office of the corporation is
located to determine the rights of dissenting shareholders and to
fix the fair value of their shares. If, in the case of merger or
consolidation, the surviving or new corporation is a foreign
corporation without an office in this state, such proceeding shall
be brought in the county where the office of the domestic
corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding
within such period of twenty days, any dissenting shareholder may
institute such proceeding for the same purpose not later than
thirty days after the expiration of such twenty day period. If
such proceeding is not instituted within such thirty day period,
all dissenter's rights shall be lost unless the supreme court, for
good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as
provided in paragraph (g), have agreed with the corporation upon
the price to be paid for their shares, shall be made parties to
such proceeding, which shall have the effect of an action quasi in
rem against their shares. The corporation shall serve a copy of
the petition in such proceeding upon each dissenting shareholder
who is a resident of this state in the manner provided by law for
the service of a summons, and upon each nonresident dissenting
shareholder either by registered mail and publication, or in such
other manner as is permitted by law. The jurisdiction of the
court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting
shareholder, as to whom the corporation requests the court to make
such determination, is entitled to receive payment for his shares.
If the corporation does not request any such determination or if
the court finds that any dissenting shareholder is so entitled, it
shall proceed to fix the value of the shares, which, for the
purposes of this section, shall be the fair value as of the close
of business on the day prior to the shareholders' authorization
date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the
shareholder's right to receive payment for shares and its effects
on the corporation and its shareholders, the concepts and methods
then customary in the relevant securities and financial markets
for determining fair value of shares of a corporation engaging in
a similar transaction under comparable circumstances and all other
relevant factors. The court shall determine the fair value of the
shares without a jury and without referral to an appraiser or
referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in
its discretion, permit pretrial disclosure, including, but not
limited to, disclosure of any expert's reports relating to the
fair value of the shares whether or not intended for use at the
trial in the proceeding and notwithstanding subdivision (d) of
section 3101 of the civil practice laws and rules.
(5) The final order in the proceeding shall be entered
against the corporation in favor of each dissenting shareholder
who is a party to the proceeding and is entitled thereto for
the value of his shares so determined.
(6) The final order shall include an allowance for
interest at such rate as the court finds to be equitable, from
the date the corporate action was consummated to the date of
payment. In determining the rate of interest, the court shall
consider all relevant factors, including the rate of interest
which the corporation would have had to pay to borrow money
during the pendency of the proceeding. If the court finds that
the refusal of any shareholder to accept the corporate offer of
payment for his shares was arbitrary, vexatious or otherwise
not in good faith, no interest shall be allowed to him.
(7) Each party to such proceeding shall bear its own
costs and expenses, including the fees and expenses of its
counsel and of any experts employed by it. Notwithstanding the
foregoing, the court may, in its discretion, apportion and
assess all or any part of the costs, expenses and fees incurred
by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any
who have withdrawn their notices of election as provided in
paragraph (e), if the court finds that their refusal to accept
the corporate offer was arbitrary, vexatious or otherwise not
in good faith. The court may, in its discretion, apportion and
assess all or any part of the costs, expenses and fees incurred
by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if the court finds any
of the following: (A) that the fair value of the shares as
determined materially exceeds the amount which the corporation
offered to pay; (B) that no offer or required advance payment
was made by the corporation; (C) that the corporation failed
to institute the special proceeding within the period specified
therefor; or (D) that the action of the corporation in
complying with its obligations as provided in this section was
arbitrary, vexatious or otherwise not in good faith. In making
any determination as provided in clause (A), the court may
consider the dollar amount or the percentage, or both, by which
the fair value of the shares as determined exceeds the
corporate offer.
(8) Within sixty days after final determination of the
proceeding, the corporation shall pay to each dissenting
shareholder the amount found to be due him, upon surrender of the
certificates for any such shares represented by certificates.
(i) Shares acquired by the corporation upon the payment of the
agreed value therefor or of the amount due under the final order, as provided
in this section, shall become treasury shares or be cancelled as provided in
section 515 (Reacquired shares), except that, in the case of a merger or
consolidation, they may be held and disposed of as the plan of merger or
consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under
this section at a time when the corporation is insolvent or when such
payment would make it insolvent. In such event, the dissenting shareholder
shall, at his option:
(1) Withdraw his notice of election, which shall in such
event be deemed withdrawn with the written consent of the
corporation; or
(2) Retain his status as a claimant against the corporation
and, if it is liquidated, be subordinated to the rights of
creditors of the corporation, but have rights superior to the
non-dissenting shareholders, and if it is not liquidated, retain
his right to be paid for his shares, which right the corporation
shall be obliged to satisfy when the restrictions of this
paragraph do not apply.
(3) The dissenting shareholder shall exercise such option
under subparagraph (1) or (2) by written notice filed with the
corporation within thirty days after the corporation has given
him written notice that payment for his shares cannot be made
because of the restrictions of this paragraph. If the
dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written
notice given to him within twenty days after the expiration of
such period of thirty days,
(k) The enforcement by a shareholder of his right to receive
payment for his shares in the manner provided herein shall exclude the
enforcement by such shareholder of any other right to which he might otherwise
be entitled by virtue of share ownership, except as provided in paragraph (e),
and except that this section shall not exclude the right of such shareholder
to bring or maintain an appropriate action to obtain relief on the ground that
such corporate action will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any
notice to be given by a corporation to a shareholder under this section shall
be given in the manner provided in section 605 (Notice of meetings of
shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e)(2) of section 907 (Merger or consolidation of
domestic and foreign corporations). (Last amended by L. 1986, Ch 117, Section
3.)
