UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to
Commission file number 1-9810
OWENS & MINOR, INC.
(Exact name of Registrant as specified in its charter)
Virginia 54-1701843
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4800 Cox Road, Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 747-9794
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
The number of shares of the Company's Common Stock outstanding as of August
8, 1995 was 30,833,847 shares.
Owens & Minor, Inc. and Subsidiaries
Index
Part I. Financial Information
Consolidated Balance Sheets - June 30, 1995 and
December 31, 1994
Consolidated Statements of Income - Three Months and Six Months
Ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Part II. Other Information
Part I. Financial Information
Item 1. Financial Statements
Owens & Minor, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share data)
<TABLE>
<S> <C> <C>
June 30, December 31,
1995 1994
Assets
Current assets
Cash and cash equivalents $ 253 $ 513
Accounts and notes receivable, net 300,862 290,240
Merchandise inventories 341,030 323,851
Other current assets 28,846 26,222
Total current assets 670,991 640,826
Property and equipment, net 39,260 38,620
Excess of purchase price over net
assets acquired, net 173,870 175,956
Other assets 19,040 13,158
Total assets $ 903,161 $ 868,560
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 3,560 $ 236
Accounts payable 226,308 296,878
Accrued payroll and related liabilities 7,181 11,294
Other accrued liabilities 36,480 50,630
Total current liabilities 273,529 359,038
Long-term debt 365,655 248,427
Other liabilities 6,089 4,919
Total liabilities 645,273 612,384
Shareholders' equity
Preferred stock, par value $100 per share;
authorized - 10,000 shares
Series A; Participating Cumulative
Preferred Stock; none issued - -
Series B; Cumulative Preferred
Stock; 4 1/2%, convertible;
issued - 1,150 shares 115,000 115,000
Common stock, par value $2 per share;
authorized - 200,000 shares; issued -
30,834 shares in 1995 and 30,764 in 1994 61,668 61,528
Paid-in capital 1,840 1,207
Retained earnings 79,380 78,441
Total shareholders' equity 257,888 256,176
Total liabilities and shareholders'
equity $ 903,161 $ 868,560
</TABLE>
See Notes to Consolidated Financial Statements.
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share data)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Net sales $ 743,718 $581,763 $1,490,813 $972,557
Cost of sales 673,217 524,954 1,347,404 876,622
Gross margin 70,501 56,809 143,409 95,935
Selling, general and administrative 54,074 40,752 107,635 69,125
Depreciation and amortization 3,713 3,297 7,229 5,599
Interest expense, net 5,730 2,220 11,121 2,988
Nonrecurring restructuring expenses 4,114 18,617 6,775 18,617
Total expenses 67,631 64,886 132,760 96,329
Income (loss) before income taxes 2,870 (8,077) 10,649 (394)
Income tax provision (benefit) 1,182 (2,952) 4,348 (25)
Net income (loss) 1,688 (5,125) 6,301 (369)
Dividends on preferred stock 1,294 727 2,588 727
Net income (loss) attributable to c$ 394 $ (5,852) $ 3,713 $ (1,096)
Net income (loss) per common share $ 0.01 $ (0.19) $ 0.12 $ (0.04)
Cash dividends per common share $ 0.045 $ 0.045 $ 0.090 $ 0.080
Weighted average common shares
and common share equivalents 31,077 30,948 31,082 31,040
</TABLE>
See Notes to Consolidated Financial Statements.
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended
(In thousands) June 30,
<TABLE>
<S> <C> <C>
1995 1994
Operating Activities
Net income (loss) $ 6,301 $ (369)
Noncash charges to income (loss)
Depreciation and amortization 7,229 5,599
Provision for losses on accounts and
notes receivable 222 379
Provision for LIFO reserve 1,662 858
Other, net 1,124 409
Cash provided by net income (loss) and noncash 16,538 6,876
Change in operating assets and liabilities
Accounts and notes receivable (10,844) (95,091)
Merchandise inventories (18,841) (56,669)
Accounts payable (92,805) 29,548
Net change in other current assets
and current liabilities (19,566) 8,562
Other, net (3,019) (41)
Cash used for operating activities (128,537) (106,815)
Investing Activities
Business acquisitions, net of cash acquired - (38,622)
Additions to property and equipment (5,359) (1,376)
Other, net (3,543) (199)
Cash used for investing activities (8,902) (40,197)
Financing Activities
Additions to long-term debt 120,166 215,550
Reductions of long-term debt (119) (72,422)
Other short-term financing, net 22,235 5,580
Cash dividends paid (5,362) (2,450)
Exercise of options 259 644
Cash provided by financing activities 137,179 146,902
Net decrease in cash and cash equivalents (260) (110)
Cash and cash equivalents at beginning of year 513 2,048
Cash and cash equivalents at end of period $ 253 $ 1,938
</TABLE>
See Notes to Consolidated Financial Statements.
Owens & Minor, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Accounting Policies
In the opinion of management, the accompanying
unaudited consolidated financial statements contain all
adjustments (which are comprised only of normal
recurring accruals and the use of estimates) necessary
to present fairly the consolidated financial position
of Owens & Minor, Inc. and subsidiaries (the Company)
as of June 30, 1995 and the results of operations for
the three and six month periods and cash flows for the
six month periods ended June 30, 1995 and 1994.
2. Interim Results of Operations
The results of operations for interim periods are not
necessarily indicative of the results to be expected
for the full year.
3. Interim Gross Margin Reporting
In general, the Company uses estimated gross margin
rates to determine the cost of sales during interim
periods. To improve the accuracy of its estimated
gross margins for interim reporting purposes, the
Company takes physical inventories at selected
distribution centers, and reported results of
operations for the quarter reflect the results of such
inventories, if materially different. Management will
continue a program of interim physical inventories at
selected distribution centers to the extent it deems
appropriate to ensure the accuracy of interim reporting
and to minimize year-end adjustments.
4. Nonrecurring Restructuring Expenses
During the second quarter and the first six months of
1995, the Company incurred $4.1 million and $6.8
million, respectively, of nonrecurring restructuring
expenses. During the second quarter and the first six
months of 1994, the Company incurred $18.6 million of
nonrecurring restructuring expenses. These expenses
were related to the Company's restructuring plan
developed in connection with the Company's May 1994
combination with Stuart Medical, Inc. and its
related decision to contract out the management and
operation of its mainframe computer system. All
facility and system consolidations are expected to be
completed during 1995 with total 1995 restructuring
expenses approximating $14.0 million. At June 30,
1995, accrued restructuring expenses were $1.0 million.
Item 2.
Owens & Minor, Inc. and Subsidiaries
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Net Sales
During the second quarter of 1995, net sales increased 27.8%
to $743.7 million from $581.8 million in the second quarter
of 1994. For the first six months of 1995, net sales
increased 53.3% to $1.5 billion from $972.6 million in the
first six months of 1994. Assuming the Stuart Medical, Inc.
(Stuart) combination had occurred January 1, 1994, the
increase would have been approximately 10.4% for the second
quarter and 13.4% for the first six months. This "same
store" sales increase for the second quarter and the first
six months is due primarily to new contracts with large
healthcare providers including Columbia/HCA Healthcare Corp.,
Premier Health Alliance and the Department of Defense; a new
distribution agreement with VHA, the Company's largest
contract; increased volume with other large healthcare
providers; and the continued product line expansion by the
Company.
During 1995, members of VHA were given the opportunity to
choose one of four medical/surgical supply distributors as
their authorized distribution agent (ADA). In addition to
Owens & Minor, the distribution choices were Shared Service
Systems of Nebraska, the Burrows Company and newly-added
Baxter distribution. Under terms of an agreement reached
between VHA and Baxter manufacturing, all ADAs are authorized
to distribute a select group of Baxter self-manufactured
products to VHA healthcare organizations. With the
completion of the selection process, the Company anticipates
maintaining approximately 85% of its previous VHA volume, and
the Company anticipates that the loss of volume will be
offset by the gain in distributing Baxter's self-manufactured
products to VHA hospitals and by increasing market share
within VHA facilities as a result of the expanded volume
commitment of non-traditional products by these accounts.
Non-traditional products, in this case, are products that
have historically been sold directly to hospitals by
manufacturers, but are now beginning to come through
distribution, or products that have been sold through other
channels of distribution that are being consolidated through
one distributor. With VHA's expanded membership of
healthcare providers and their increased potential, which
includes for the first time a select group of Baxter's self-
manufactured products, the Company expects to service
approximately two-thirds of VHA's total medical/surgical
volume.
Gross Margin
Gross margin as a percentage of net sales declined to 9.5% in
the second quarter of 1995 from 9.8% in the second quarter of
1994. Gross margin also declined to 9.6% for the first six
months in 1995 from 9.9% in the first six months of 1994.
The decrease was a result of the increase in sales from large
lower margin contracts. As the healthcare industry
consolidates, gross margin as a percent of net sales
continues to be under pressure. However, the Company expects
to continue to be able to offset decreases in gross margin
percentages with an increase in sales volume, producing an
increase in gross margin dollars. This increase in gross
margin dollars was 24.1% for the second quarter of 1995 and
49.5% for the first six months of 1995.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses as a
percentage of net sales increased from 7.0% in the second
quarter of 1994 to 7.3% in the second quarter of 1995. SG&A
expenses also increased from 7.1% for the first six months of
1994 to 7.2% in the first six months of 1995. This increase
is primarily due to incremental costs associated with the VHA
sign-up period, facility relocations, upgrading of existing
facilities (including computer enhancements) and the handling
of additional inventory. The additional inventory has been
obtained to ensure product availability to customers during
the distribution center combination process and the start-up
of new contracts.
Depreciation and Amortization
Depreciation and amortization increased by 12.6% in the
second quarter of 1995 compared to the second quarter of 1994
and 29.1% for the first six months of 1995 compared to the
first six months of 1994. This increase is due primarily to
the goodwill amortization and depreciation expenses related
to the Stuart combination and the depreciation of the
Company's continued investment in new and improved
technology.
Interest Expense, Net
Interest expense, net of interest income, increased from $2.2
million in the second quarter of 1994 to $5.7 million in the
second quarter of 1995 and from $3.0 million for the first
six months of 1994 to $11.1 million in the first six months
of 1995. The increase was the result of increased borrowings
to finance the Stuart combination, the unfavorable trend in
interest rates and to finance its technology initiatives and
inventory increases.
Nonrecurring Restructuring Expenses
During the second quarter of 1995 and the first six months of
1995, the Company incurred $4.1 million and $6.8 million,
respectively, of nonrecurring restructuring expenses related
to the Company's restructuring plan developed in connection
with the Company's May 1994 combination with Stuart and its
related decision to contract out the management and operation
of its mainframe computer system. The restructuring expenses
incurred during the second quarter of 1995 relate primarily
to duplicate facilities and duplicate systems costs. All
consolidations are expected to be completed during 1995, with
total 1995 restructuring expenses approximating $14.0
million.
Net Income (Loss)
During the second quarter of 1995, the Company recorded net
income of $.4 million compared to a net loss of $5.9 million
in 1994. During the first six months of 1995, the Company
recorded net income of $3.7 million compared to a net loss of
$1.1 million in 1994. The increase is due to the lower
restructuring charges recorded during the second quarter of
1995 as previously discussed. Without these nonrecurring
expenses and the related tax benefit, the Company earned
approximately $4.2 million or $.09 per common share for the
second quarter and $10.4 million or $.25 per common share for
the first six months.
Financial Condition
With the decrease in gross margin percentages and increases
in SG&A and interest expense percentages as discussed,
return on common equity decreased. In 1995, the Company
increased its long-term debt to finance its technology
initiatives and inventory increases. As a result, the
current ratio and capitalization ratio have increased and
inventory turnover has decreased. Debt is expected to
decline as inventory levels are reduced with the completion
of the consolidation of distribution centers.
<TABLE>
<S> <C> <C> <C>
Six Months Twelve Months Six Months
June 30, 1995 December 31,1994 June 30, 1994
Return on Common Equity* 14.4% 16.2% 15.6%
Current Ratio 2.5 1.8 2.0
Inventory Turnover 8.3 8.8 8.5
Accounts Receivable
Days Sales 33.8 35.9 35.3
Capitalization Ratio 58.7% 49.2% 49.6%
</TABLE>
* Excludes impact of nonrecurring restructuring expenses and
related tax benefit.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Shareholders
The following matters were submitted to a vote of the
Company's shareholders at its annual meeting held on May 2,
1995 with the voting results designated below each such
matter:
(1) Election of James B. Farinholt, Jr, E. Morgan Massey
and Anne Marie Whittemore as directors of the Company
for a three-year term.
<TABLE>
<S>
<C> <C> <C> <C> <C>
Votes Against Broker
Directors Votes For or Withheld Abstentions Non-Votes
James B. Farinholt 34,559,162 511,258 0 0
E. Morgan Massey 34,554,549 515,871 0 0
Anne Marie Whittemore 34,570,605 499,815 0 0
</TABLE>
(2) Ratification of the appointment of KPMG Peat Marwick
LLP as the Company's independent accountants.
<TABLE>
<S> <C> <C> <C>
Votes Against Broker
Votes For or Withheld Abstentions Non-Votes
34,614,870 35,207 420,343 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4. Amended and Restated Rights Agreement Dated as
of May 10, 1994 between Owens & Minor, Inc. and
Wachovia Bank of North Carolina, N.A., Rights
Agent.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K
dated June 16, 1995, Items 5 and 7, with respect
to the issuance of a press release relating to
preliminary second quarter earnings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
OWENS & MINOR, INC.
(Registrant)
Date August 10, 1995 /s/ Glenn J. Dozier
Glenn J. Dozier
Senior Vice President, Finance,
Chief Financial Officer
</TABLE>
Owens & Minor, Inc.
and
Wachovia Bank of North Carolina, N.A.
Rights Agent
_______________
Amended and Restated
Rights Agreement
Dated as of May 10, 1994
<PAGE>
Table of Contents
Page
Section 1. Certain Definitions . . . . . . . . . . . . .3
Section 2. Appointment of Rights Agent . . . . . . . . 10
Section 3. Issue of Rights and Rights Certificates . . 10
Section 4. Form of Rights Certificates . . . . . . . . 13
Section 5. Countersignature and Registration . . . . . 15
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . 16
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights; Restriction on
Transfer of Rights. . . . . . . . . . . . . 18
Section 8. Cancellation and Destruction of Rights
Certificates. . . . . . . . . . . . . . . . 22
Section 9. Reservation and Availability of Preferred
Stock . . . . . . . . . . . . . . . . . . . 22
Section 10. Preferred Stock Record Date . . . . . . . . 25
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. . . . . 25
Section 12. Certificates of Adjusted Purchase Price or
Number of Shares. . . . . . . . . . . . . . 42
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . 42
Section 14. Fractional Rights and Fractional Shares . . 47
Section 15. Rights of Action. . . . . . . . . . . . . . 49
Section 16. Agreement of Rights Holders . . . . . . . . 49
Section 17. Rights Certificate Holder Not Deemed a
Shareholder . . . . . . . . . . . . . . . . 51
Section 18. Concerning the Rights Agent . . . . . . . . 52
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. . . . . . . . . . . . . . . . 53
Section 20. Duties of Rights Agent. . . . . . . . . . . 54
Section 21. Change of Rights Agent. . . . . . . . . . . 58
Section 22. Issuance of New Rights Certificates . . . . 60
Section 23. Redemption and Termination. . . . . . . . . 60
Section 24. Exchange. . . . . . . . . . . . . . . . . . 63
Section 25. Notice of Certain Events. . . . . . . . . . 65
Section 26. Notices . . . . . . . . . . . . . . . . . . 67
Section 27. Supplements and Amendments. . . . . . . . . 68
Section 28. Successors. . . . . . . . . . . . . . . . . 69
Section 29. Determinations and Actions by the Board of
Directors, etc. . . . . . . . . . . . . . . 69
Section 30. Benefits of this Agreement. . . . . . . . . 70
Section 31. Severability. . . . . . . . . . . . . . . . 70
Section 32. Governing Law . . . . . . . . . . . . . . . 71
Section 33. Counterparts. . . . . . . . . . . . . . . . 71
Section 34. Descriptive Headings. . . . . . . . . . . . 71
Exhibit A -- Form of Preferred Stock Provisions
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
AMENDED AND RESTATED RIGHTS AGREEMENT
This Agreement, dated as of May 10, 1994 (the
"Agreement"), between OWENS & MINOR, INC., a Virginia
corporation (the "Company"), and WACHOVIA BANK OF NORTH
CAROLINA, N.A., a national banking corporation (the "Rights
Agent"), provides as follows:
W I T N E S S E T H
WHEREAS, on June 22, 1988, Owens & Minor Medical, Inc.
(then named Owens & Minor, Inc.), the predecessor of the
Company (the "Predecessor Company") entered into a Rights
Agreement (the "Predecessor Agreement");
WHEREAS, pursuant to the Predecessor Agreement on June
22, 1988, the Board of Directors of the Predecessor Company
authorized and declared a dividend distribution of one right
to purchase certain securities of the Predecessor Company or
of another entity (the "Predecessor Company Rights") for each
share of common stock, $2.00 par value per share, of the
Predecessor Company ("Predecessor Company Common Stock")
outstanding at the close of business on July 5, 1988, and
authorized the issuance of one Predecessor Company Right
(subject to adjustment pursuant to the provisions of the
Predecessor Agreement) for each share of Predecessor Company
Common Stock issued thereafter until the earliest of the
Distribution Date and the Expiration Date (as such terms were
defined in the Predecessor Agreement);
WHEREAS, in order to give effect to 3-for-2 stock splits
declared with respect to Predecessor Company Common Stock on
July 16, 1991, and March 22, 1993, adjustments were made in
the number of Predecessor Company Rights attached to each
share of Predecessor Company Common Stock with the result
that, immediately before the effective time of the Plan of
Exchange (as hereinafter defined), each share of Predecessor
Company Common Stock also represented 4/9 of one Predecessor
Company Right;
WHEREAS, pursuant to a plan of exchange made effective
as of the date hereof (the "Plan of Exchange"): (i) each
outstanding share of Predecessor Company Common Stock is being
converted into and exchanged for one share of Common Stock (as
hereinafter defined); and (ii) each outstanding Predecessor
Company Right is being converted into and exchanged for a
Right (as hereinafter defined) to acquire a share of Preferred
Stock (or other securities or property of the Company or of
another entity);
WHEREAS, the Predecessor Company and the Company have
agreed that the Company would assume the Predecessor Company's
rights and obligations under the Predecessor Agreement, as
amended and restated to the effective time of the Plan of
Exchange; and
WHEREAS, the Company does hereby assume such rights and
obligations all on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as
hereinafter defined) who or which, together with all
Affiliates and Associates (as hereinafter defined) of such
Person, shall at any time become the Beneficial Owner (as
hereinafter defined) of either or both of (i) 20% or more of
the shares of Common Stock then outstanding or (ii) 20% or
more of the Rights then outstanding, but shall not include the
Company, any Subsidiary (as hereinafter defined) of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and as in effect on the date
of this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) that such Person or any of such
Person's Affiliates or Associates owns, directly or
indirectly;
(ii) that such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however,
that a Person shall not be deemed to be the "Beneficial
Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted
for purchase or exchange or (B) securities issuable upon
exercise of these Rights.
(iii) that such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote, including pursuant to
any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph
(iii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act, and (B) is not also
then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) that are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (iii) of this
paragraph (c)) or disposing of any voting securities of
the Company; provided, however, that notwithstanding any
provision of this Section 1(c), any Person engaged in
business as an underwriter of securities who acquires
any securities of the Company through such Person's
participation in good faith in a firm commitment
underwriting registered under the Securities Act of
1933, as amended (the "Act"), shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," such
securities until the expiration of 40 days after the
date of acquisition; and provided, further, that in no
case shall an officer or director of the Company be
deemed (x) the beneficial owner of any securities
beneficially owned by another officer or director of the
Company solely by reason of actions undertaken by such
persons in their capacity as officers or directors of
the Company; or (y) the beneficial owner of securities
held of record by the trustee of any employee benefit
plan of the Company or any Subsidiary of the Company for
the benefit of any employee of the Company or any
Subsidiary of the Company, other than the officer or
director, by reason of any influence that such officer
or director may have over the voting of the securities
held in the plan.
(d) "Business Day" shall mean any day other than
a Saturday, Sunday or a day on which banking institutions in
the States of North Carolina or New York or the Commonwealth
of Virginia are authorized or obligated by law or executive
order to close.
(e) "Close of business" on any given date shall
mean 5:00 P.M., Richmond, Virginia time, on such date;
provided, however, that if such date is not a Business Day it
shall mean 5:00 P.M., Richmond, Virginia time, on the next
succeeding Business Day.
(f) "Common Stock" shall mean the common stock,
par value $2.00 per share, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other
equity interest having power to control or direct the
management, of such Person.
(g) "Continuing Director" shall mean any member
of the Board of Directors of the Company, while a member of
the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and
(i) who was a member of the Board prior to the date of this
Agreement, or (ii) whose subsequent nomination for election or
election to the Board was recommended or approved by a
majority of the Continuing Directors.
(h) "Distribution Date" shall mean the earlier
of (i) the close of business on the tenth day after the Stock
Acquisition Date (as hereinafter defined), or (ii) the close
of business on the tenth business day after the date that a
tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule
14e-2(a) of the General Rules and Regulations under the
Exchange Act if, upon consummation thereof, such Person would
become an Acquiring Person.
(i) "Equivalent Shares" shall mean shares of
Preferred Stock (as hereinafter defined) and any other class
or series of capital stock of the Company that is entitled to
participate in dividends and other distributions, including
distributions upon the liquidation, dissolution or winding up
of the Company, on a proportional basis with the Common Stock.
In calculating the number of any class or series of Equivalent
Shares for purposes of Section 11 hereof, the number of
shares, or fractions of a share, of such class or series of
capital stock that is entitled to the same dividend or
distribution as a whole share of Common Stock shall be deemed
to be one share.
(j) "Exchange Date" shall mean the date on which
the Board of Directors authorizes the exchange of Rights for
shares of Common Stock pursuant to Section 24 hereof.
(k) "Expiration Date" shall mean the earliest of
(i) the close of business on the Final Expiration Date, or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, or (iii) the Exchange Date.
(l) "Final Expiration Date" shall mean April 30,
2004.
(m) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(n) "Predecessor Corporation" shall mean Owens
& Minor Medical, Inc., a Virginia corporation.
(o) "Preferred Stock" shall mean shares of
Series A Participating Cumulative Preferred Stock, par value
$100 per share, of the Company.
(p) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof, as adjusted in accordance with
this Agreement and as in effect from time to time.
(q) "Rights" shall mean the rights to purchase
Preferred Stock (or other securities) as provided in this
Agreement and "Rights Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(r) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii)(A) or (B) hereof.
(s) "Section 13 Event" shall mean any event
described in clause (w), (x), (y) or (z) of Section 13(a)
hereof.
(t) "Stock Acquisition Date" shall mean the
first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has
become such.
(u) "Subsidiary" shall mean, with reference to
any Person, any corporation or other entity of which an amount
of voting securities sufficient to elect a majority of the
directors or Persons having similar authority of such
corporation or other entity is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
Person.
(v) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
(w) "Unit" shall mean one one-hundredth of a
share of Preferred Stock.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be
holders of Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights and Rights Certificates.
(a) Until the Distribution Date, (x) the Rights
shall be evidenced (subject to the provisions of paragraphs
(b) and (c) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights shall be transferable only in
connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon
as practicable after the Distribution Date, the Rights Agent
shall send by first-class, insured, postage prepaid mail, to
each such record holder of shares of the Common Stock (except
for shares subject to the restriction provided for in
Section 7(e) hereof) as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in
substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In
the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(o)
hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the
Distribution Date, the Rights shall be evidenced solely by
such Rights Certificates.
(b) As promptly as practicable following the
date of this Agreement, the Company shall send a copy of a
Summary of Rights, in substantially the form attached hereto
as Exhibit C (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of the Common
Stock or the Series B Convertible Preferred Stock as of the
close of business on the date of this Agreement, at the
address of such holder shown on the records of the Company.
With respect to certificates for the Common Stock issued in
the Plan of Exchange, until the Distribution Date, the Rights
shall be evidenced by such certificates evidencing the Common
Stock (including certificates that theretofore evidenced
Predecessor Company Common Stock), and the registered holders
of such Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution
Date or the Expiration Date, the transfer of any certificates
evidencing shares of Common Stock in respect of which Rights
have been issued shall also constitute, subject to the
provisions of Section 7(e) hereof, the transfer of the Rights
associated with such shares of Common Stock.
(c) Unless the Board of Directors by resolution
adopted at or before the time of the issuance (including
pursuant to the exercise of rights under the Company's benefit
plans) of any shares of Common Stock specifies to the
contrary, Rights shall be issued in respect of (i) all shares
of Common Stock that are issued after the date of this
Agreement but prior to the earlier of the Distribution Date or
the Expiration Date, and (ii) subject to Section 7(e) hereof,
all shares of Common Stock that are issued upon conversion of
shares of Series B Convertible Preferred Stock prior to the
Expiration Date. Certificates representing such shares of
Common Stock, and certificates representing Common Stock
outstanding on the date of this Agreement that are issued upon
transfer or exchange of such Common Stock, shall also be
deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and
entitles the holder hereof to certain Rights as
set forth in the Amended and Restated Rights
Agreement between Owens & Minor, Inc. (the
"Company") and Wachovia Bank of North Carolina,
N.A. (the "Rights Agent") dated as of May 10,
1994 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a
copy of which is on file at the principal offices
of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and
will no longer be evidenced by this certificate.
The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge
promptly after receipt of a written request
therefor. Under no circumstances shall the
Rights evidenced by this certificate be
transferred, directly or indirectly, (i) to any
Person who is an Acquiring Person, or (ii) to any
Person in connection with a transaction in which
such Person becomes an Acquiring Person, or (iii)
to any Affiliate or Associate of any such Person
(as such terms are defined in the Rights
Agreement) and any such purported transfer shall
be null and void. Under certain circumstances
set forth in Section 11(a)(ii), Section 13 and
Section 24 of the Rights Agreement, Rights that
are owned or that were previously owned by an
Acquiring Person or an Affiliate or Associate of
an Acquiring Person may become null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii)
the Expiration Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by
such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights,
and the transfer of any of such certificates shall also
constitute, subject to the provisions of Section 7(e) hereof,
the transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange
on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Distribution Date, and
on their face shall entitle the holders thereof to purchase
such number of Units of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price
per Unit, being hereinafter referred to as the "Purchase
Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3 hereof or upon transfer, exchange, replacement or
adjustment that represents Rights that are subject to becoming
null and void by virtue of Section 11(a)(ii), Section 13 or
Section 24 hereof, shall contain the following legend:
The Rights represented by this Rights
Certificate were owned by a person who was
an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person. This
Rights Certificate and the Rights
represented hereby may become void in the
circumstances specified in Section
11(a)(ii), Section 13 and Section 24 of the
Rights Agreement.
The Company shall notify the Rights Agent, and, if such
notification is given orally, the Company shall confirm
promptly the same in writing, at such time as the Company has
notice that any Person constitutes an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, and until such
notice is received by the Rights Agent the Rights Agent may
conclusively presume for all purposes that the foregoing
legend need be imprinted only on Right Certificates
beneficially owned by Persons that the Company has previously
identified to the Rights Agent as constituting an Acquiring
Person or an Affiliate or Associate of an Acquiring Person and
transferees of any such Persons.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its
President or any Senior Vice President, either manually or by
facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested
by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights
Certificates shall be countersigned by an authorized signatory
of the Rights Agent but it shall not be necessary for the same
signatory to countersign all of the Rights Certificates issued
hereunder. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for
the purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and
effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company;
and any Rights Certificates may be signed on behalf of the
Company by any person who, at the actual date of the execution
of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date
of the execution of this Agreement any such person was not
such an officer.
(b) Following any purported or attempted
transfer of Rights in violation of the transfer restrictions
set forth in Section 7(e) hereof, and until the creation of
separate books for registration and transfer of Rights
Certificates pursuant to the following sentence, the Rights
Agent will keep or cause to be kept interim books for
registration and transfer of Rights that were the subject of
such purported or attempted transfer showing the names and
addresses of the Person or Persons who attempted to make such
purported or attempted transfer, the number of Rights
continued to be exercisable by such Person or Persons, and any
subsequent transfer of Rights by such Person or Persons on a
"when issued" basis that is not prohibited by the transfer
restrictions contained in Section 7(e) hereof. Following the
Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its
face by each of the Rights Certificates and the date of each
of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.
(a) Subject to the provisions of Section 7(e)
hereof and Sections 13, 14 and 23 hereof, at any time after
the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any
Rights Certificate or Certificates may be transferred, split
up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a
like number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as
the case may be) as the Rights Certificate or Certificates
surrendered then entitle such holder (or former holder in the
case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices of
the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall,
subject to Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The
Company may require payment from the holder of the Rights of
a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and,
in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the
Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights; Restriction on Transfer of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(ii),
Section 11(a)(iii), Section 13, Section 23(a), and Section 24
hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form
of election to purchase and the certificate on the reverse
side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for
such purpose, together, except as otherwise provided in
Section 11(a)(ii) hereof, with payment of the aggregate
Purchase Price with respect to the total number of Units of
Preferred Stock (or other securities or property, as the case
may be) as to which surrendered Rights are then exercisable,
at or prior to the Expiration Date.
(b) The Purchase Price for each Unit of
Preferred Stock pursuant to the exercise of a Right shall
initially be $75 and shall be subject to adjustment from time
to time as provided in Section 11 hereof and shall be payable
in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the
Purchase Price per Unit of Preferred Stock (or other
securities or property, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer
tax, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly, (i) (A) requisition from any transfer
agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares)
certificates for the total number of Units of Preferred Stock
to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if
the Company shall have elected to deposit the total number of
shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number
of Units of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as
such amount may be reduced (including to zero) pursuant to
Section 11(a)(iii) hereof) may be made in cash or by certified
bank check or bank draft payable to the order of the Company.
In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement
to the contrary, Rights, including Rights evidenced by
certificates for Common Stock, shall not at any time be
issuable or transferable, directly or indirectly, (i) to any
Person who is an Acquiring Person, or (ii) to any Person in
connection with a transaction in which such Person becomes an
Acquiring Person or (iii) to any Affiliate or Associate of a
Person referred to in either of the foregoing clauses (i) or
(ii). Any purported transfer or attempt to transfer Rights in
violation of the foregoing provisions shall be null and void
and without effect, without any further action on the part of
the Company or the Rights Agent, and any Right that has been
the subject of any such purported or attempted transfer shall
for purposes of this Agreement and the Rights Certificate be
deemed to be held beneficially by the Person who attempted to
make such purported or attempted transfer and, thereafter,
shall continue to be exercisable by such Person or, in the
case of a transfer not prohibited by the Agreement, such
Person's transferee, for shares of Preferred Stock (or other
securities, cash or other assets, as the case may be) pursuant
to this Agreement. The Company may require (or cause the
Rights Agent or any transfer agent of the Company to require)
any Person who submits a Rights Certificate (or a certificate
representing shares of Common Stock that evidences, or but for
the provisions of this Section 7(e), Section 11(a)(ii),
Section 13 or Section 24 hereof would evidence, Rights) for
transfer on the registry books or to exercise the Rights
represented thereby to establish to the reasonable
satisfaction of the Company in its sole discretion that such
purported or attempted transfer is not in violation of the
provisions of this Section 7(e). The Company shall use all
reasonable efforts to ensure that the provisions of this
Section 7(e), Section 11(a)(ii), Section 13 and Section 24
hereof are complied with, but shall have no liability to any
holder of Rights Certificates or any other Person as a result
of its failure to make any determinations with respect to an
Acquiring Person or its Affiliate or Associate hereunder.
(f) Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company
shall be obligated to undertake any action with respect to a
registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such
exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or
in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred
Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized
and unissued shares of Preferred Stock, the number of shares
of Preferred Stock that, except as provided in Section
11(a)(iii) hereof, will be sufficient from time to time to
permit the exercise in full of all outstanding Rights and all
Rights that are at the time issuable, in accordance with the
provisions of this Agreement, upon the conversion of all
outstanding shares of Series B Convertible Preferred Stock
into Common Stock.
(b) So long as the shares of Preferred Stock
(and, following the occurrence of a Triggering Event, any
other securities) issuable and deliverable upon the exercise
of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such
exchange upon official notice of issuance.
(c) The Company shall use its best efforts to
(i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on
which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law
following the Distribution Date, as the case may be, a
registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B)
the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of
the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement. Upon any such suspension, the Company
shall issue a public announcement stating, and notify the
Rights Agent, that the exercisability of the Rights has been
temporarily suspended. The Company shall also issue a public
announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it
will take all such action as may be necessary to ensure that
all shares of Preferred Stock (or other securities, as the
case may be) delivered upon exercise of the Rights shall, at
the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly
authorized, validly issued, fully paid and nonassessable.
(e) The Company further covenants and agrees
that it will pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in
respect of the issuance or delivery of the Rights Certificates
and of any certificates for shares of Preferred Stock (or
other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay
any transfer tax that may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of Units of
Preferred Stock in respect of a name other than that of, the
registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any
certificates for a number of Units of Preferred Stock in a
name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is
due.
Section 10. Preferred Stock Record Date. Each person
in whose name any certificate for a number of Units of
Preferred Stock is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record
of such fractional shares of Preferred Stock represented
thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that
if the date of such surrender and payment is a date upon which
the Preferred Stock transfer books of the Company are closed,
such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to
shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings
of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, and
the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend
on the Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind
of shares of Preferred Stock or capital stock, as the
case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock
or capital stock, as the case may be, that, if such
Right had been exercised immediately prior to such date
and at a time when the Preferred Stock transfer books of
the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.
If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event that at any time after
the date of this Agreement:
(A) any Acquiring Person or any Associate
or Affiliate of any Acquiring Person, directly or
indirectly, shall merge into the Company or otherwise
combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall
remain outstanding and unchanged or shall effect a
statutory share exchange with the Company after which
the Company is not a Subsidiary of any Acquiring Person
or any Associate or Affiliate of any Acquiring Person,
or
(B) any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such
plan), alone or together with any Affiliate or Associate
of such Person, shall become the Beneficial Owner of 20%
or more of the shares of Common Stock then outstanding,
other than pursuant to any transaction set forth in
Section 13(a) hereof;
then, upon the occurrence of any event described in
Section 11(a)(ii)(A) hereof and promptly after the date
of the occurrence of an event described in Section
11(a)(ii)(B) hereof, proper provision shall be made by
the Company so that each record holder of a Right
(except as provided below and after giving effect to the
transfer restrictions contained in Section 7(e) hereof)
shall thereafter have the right to receive, upon
exercise thereof for the Purchase Price in accordance
with terms of this Agreement, such number of Units of
Preferred Stock (or, at the option of the Company and to
the extent available, such number of shares of Common
Stock) as shall equal the result obtained by multiplying
the Purchase Price by a fraction, the numerator of which
is the number of Units of Preferred Stock for which a
Right is then exercisable and the denominator of which
is 50% of the current market price of shares of Common
Stock on the date of the occurrence of a Section
11(a)(ii) Event (such result being hereinafter referred
to as the "Adjustment Shares"). Notwithstanding the
foregoing, to the extent permitted by applicable law,
upon the occurrence of any Section 11(a)(ii) Event, any
Rights that are or were beneficially owned by the
Acquiring Person that is the subject of the Section
11(a)(ii) Event, or by any Affiliate or Associate of
such Acquiring Person, on or after such Acquiring
Person's Stock Acquisition Date, shall be null and void
without any further action, and thereafter may not be
exercised by any Person (including any subsequent
transferee) for Units of Preferred Stock or other
securities or assets pursuant to any provision hereof
and shall no longer confer any rights upon any Person.
(iii) To the extent that the number of
shares of Preferred Stock and Common Stock that are
authorized by the Company's articles of incorporation
but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of
this Section 11(a), and subject to such limitations as
are necessary to prevent a default under any agreement
for money borrowed as presently constituted to which the
Company is a party and subject to any limitations
contained in Section 13.1-653 of the Virginia Stock
Corporation Act, the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current
Value"), over (2) the Purchase Price (such excess being
hereinafter referred to as the "Spread"), and (B) with
respect to each Right, make adequate provision to
substitute for such unavailable Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) other equity
securities of the Company, (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having, together with the Adjustment Shares
issued upon exercise of such Right, an aggregate value
equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized
investment banking firm selected by the Board of
Directors of the Company; provided, however, if the
Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30
days following the first occurrence of a Section
11(a)(ii) Event, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares
of preferred stock of the Company or Common Stock (to
the extent such securities are available) and then, if
necessary, cash, which securities and/or assets in the
aggregate are equal to the Spread. If the Board of
Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of
Preferred Stock or Common Stock could be authorized for
issuance upon exercise in full of the Rights, the 30 day
period set forth above may be extended to the extent
necessary, but not more than 90 days following the first
occurrence of a Section 11(a)(ii) Event, in order that
the Company may seek shareholder approval for the
authorization of such additional shares (such period, as
it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action need
be taken pursuant to the first and/or second sentences
of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) and Section 11(a)(ii)
hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization
of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no
longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the
current market price (as determined pursuant to Section
11(d) hereof) per share of the Common Stock on the date
of the first occurrence of a Section 11(a)(ii) Event.
(b) If at any time after the date of this
Agreement the Company shall fix a record date for the
issuance of rights, options or warrants to all holders
of Common Stock or of any class or series of Equivalent
Shares entitling such holders (for a period expiring
within 45 calendar days after such record date) to
subscribe for or to purchase Common Stock or Equivalent
Shares (or securities convertible into Common Stock or
Equivalent Shares) at a price per share (or having a
conversion price per share, if a security convertible
into Common Stock or Equivalent Shares) less than the
current market price of such Common Stock or Equivalent
Shares on such record date, then, in each such case,
each Right outstanding immediately prior to such record
date shall thereafter evidence the right to purchase,
for the Purchase Price, that number of Units of
Preferred Stock obtained by multiplying the number of
Units of Preferred Stock issuable upon exercise of a
Right immediately prior to such record date by a
fraction, the numerator of which shall be the total
number of shares of Common Stock and Equivalent Shares
(if any) outstanding on such record date plus the number
of additional shares of Common Stock or Equivalent
Shares, as the case may be, to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible)
and the denominator of which shall be the total number
of shares of Common Stock and Equivalent Shares (if any)
outstanding on such record date plus the number of
shares of Common Stock or Equivalent Shares, as the case
may be, which the aggregate offering price of the total
number of shares of Common Stock or Equivalent Shares,
as the case may be, so to be offered (and/or the
aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such
current market price. In case such subscription price
may be paid in a consideration, part or all of which
shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by
the Board of Directors of the Company, whose
determination shall be described in a statement filed
with the Rights Agent. Common Stock and Equivalent
Shares owned by or held for the account of the Company
or any Subsidiary of the Company shall not be deemed
outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such
rights, options or warrants are not so issued, each
Right shall be adjusted to evidence the right to receive
that number of Units of Preferred Stock which such Right
would have entitled the holder to receive, for the
Purchase Price, if such record date had not been fixed.
(c) If at any time after the date of this
Agreement the Company shall fix a record date for the
making of a distribution to all holders of Common Stock
or of any class or series of Equivalent Shares
(including any such distribution made in connection with
a consolidation or merger in which the Company is the
continuing or surviving corporation) of cash (other than
a regular quarterly cash dividend of the Company in
compliance with Section 13.1-653 of the Virginia Stock
Corporation Act), evidences of indebtedness, assets,
securities (other than Common Stock or Preferred Stock)
or subscription rights, options or warrants (excluding
those referred to in Section 11(b) hereof), then, in
each such case, each Right outstanding immediately prior
to such record date shall thereafter evidence the right
to purchase, for the Purchase Price, that number of
Units of Preferred Stock obtained by multiplying the
number of Units of Preferred Stock issuable upon
exercise of a Right immediately prior to such record
date by a fraction, the numerator of which shall be the
current market price of a share of Common Stock or an
Equivalent Share on the record date and the denominator
of which shall be the current market price of a share of
Common Stock or an Equivalent Share on such record date
less the fair market value (as determined in good faith
by the Board of Directors of the Company, whose
determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash,
evidences of indebtedness, assets or securities so to be
distributed or of such subscription rights, options or
warrants applicable to a share of Common Stock or an
Equivalent Share, as the case may be. Such adjustments
shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not
so made, each Right shall be adjusted to evidence the
right to receive that number of Units of Preferred Stock
which such Right would have entitled the holder to
receive, for the Purchase Price, if such record date had
not been fixed.
(d)(i) For the purpose of any computation
hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the "current market price"
per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of
such Common Stock for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten
consecutive Trading Days immediately following such
date; provided, however, that in the event that the
current market price per share of the Common Stock is
determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of
such Common Stock or securities convertible into shares
of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of the
requisite 30 Trading Day or ten Trading Day period, as
set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and
in each such case, the "current market price" shall be
properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as
reported in the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting
system with respect to securities listed on the
principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on
any such date the shares of Common Stock are not quoted
by any such organization, the average of the closing bid
and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by
the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as
determined in good faith by the Board of Directors of
the Company shall be used. The term "Trading Day" shall
mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed
or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per
share as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "current market price" per share of
Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in Section
11(d)(i) hereof (other than the last sentence thereof).
If the current market price per share of Preferred Stock
cannot be determined in the manner provided above or if
the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately
adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the
Common Stock and Preferred Stock occurring after the
date of this Agreement) multiplied by the current market
price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or
so listed or traded, "current market price" per share of
the Preferred Stock shall mean the fair value per share
as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this
Agreement, the "current market price" of one one-
hundredth of a share of Preferred Stock shall be equal
to the "current market price" of one share of Preferred
Stock divided by 100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least one percent in the Purchase Price;
provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of
a share of Common Stock or other share or one-millionth of a
share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction
that mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a) or 13(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive
any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon
exercise of any Right and if required, the Purchase Price
thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j) and (l)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of Units of Preferred
Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided
herein.
(h) The Company may elect on or after the date
of any adjustment of the Purchase Price to adjust the number
of Rights, in lieu of any adjustment in the number of Units of
Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Units
of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-
ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days
later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(h), the Company
shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof,
the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(i) Irrespective of any adjustment or change in
the Purchase Price or the number of Units of Preferred Stock
issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Unit and the number of Units
that were expressed in the initial Rights Certificates issued
hereunder.
(j) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated
value, if any, of the number of Units of Preferred Stock
issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of Units of
Preferred Stock at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall
require that an adjustment be made effective as of a record
date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder
of any Right exercised after such record date of the number of
Units of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and
above the number of Units of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such
exercise before giving effect to such adjustment; provided,
however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or
otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in
order that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or
securities that by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock
dividend or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such
shareholders.
(m) The Company covenants and agrees that it
shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(n)
hereof), (ii) merge with or into any other Person (other than
a Subsidiary of the Company in a transaction that complies
with Section 11(n) hereof), (iii) effect a statutory share
exchange with any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(n)
hereof), or (iv) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(n)
hereof), if at the time of or immediately after such
consolidation, merger, statutory share exchange or sale there
are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(n) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by
Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any
time after the Rights Dividend Declaration Date and prior to
the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of
shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificates of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided
in Section 11 or Section 13 hereof, the Company shall (a)
promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with
each transfer agent for the Preferred Stock and the Common
Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance
with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (w) the Company
shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(n) hereof), and the
Company shall not be the continuing or surviving corporation
of such consolidation or merger, (x) any Person (other than a
Subsidiary of the Company in a transaction that complies with
Section 11(n) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other Person
or cash or any other property, (y) the Company shall be a
party to a statutory share exchange with any other Person
(other than a Subsidiary of the Company in a transaction that
complies with Section 11(n) hereof) after which the Company is
a Subsidiary of any other Person, or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies
with Section 11(n) hereof), then, and in each such case,
proper provision shall be made so that: (i) each record holder
of a Right, except as provided below and after giving effect
to the transfer restrictions contained in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized
and issued, fully paid, nonassessable and freely tradeable
shares of Common Stock of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to
the result obtained by (1) multiplying the then current
Purchase Price by the number of Units of Preferred Stock for
which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such Units for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence), and
dividing that product (which, following the first occurrence
of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right for all purposes of this Agreement) by
(2) 50% of the current market price (determined pursuant to
Section 11(d)(i) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13
Event; and (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such
transaction as may be necessary to ensure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
Notwithstanding the foregoing, to the extent permitted by
applicable law, upon the occurrence of any Section 13 Event,
any Rights that are or were beneficially owned by any
Acquiring Person or by any Affiliate or Associate of any
Acquiring Person on or after such Acquiring Person's Stock
Acquisition Date shall be null and void without any further
action immediately upon such occurrence, and thereafter may
not be exercised by any Person (including any subsequent
transferee) for Units of Preferred Stock or other securities
or assets pursuant to any provision hereof and shall no longer
confer any rights upon any Person.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clause (w), (x) or (y) of the first
sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which shares of Common
Stock of the Company are converted in such merger,
consolidation or statutory share exchange, and if no
securities are so issued, the Person that is the other
party to such merger, consolidation on statutory share
exchange; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section
13(a) hereof, the Person that is the party receiving the
greatest portion of the assets or earning power
transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve-month
period registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been
so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, statutory share exchange, sale or
transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock that have not
been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, statutory share exchange or sale of
assets mentioned in paragraph (a) of this Section 13, the
Principal Party will
(i) prepare and file a registration
statement under the Act with respect to the Rights and
the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become
effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to record holders of the
Rights historical financial statements for the Principal
Party and each of its Affiliates that comply in all
respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or statutory share
exchanges or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence
of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable
in the manner described in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as
provided in Section 11(o) hereof, or to distribute Rights
Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed
or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the
last quoted price, or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if
on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company.
If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions
that are integral multiples of one one-hundredth of a share of
Preferred Stock) upon exercise of the Rights or to distribute
certificates that evidence fractional shares of Preferred
Stock (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral
multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the
current market value of one one-hundredth of a share of
Preferred Stock shall be one one-hundredth of the current
market price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of
the Right expressly waives his right to receive any fractional
Right or any fractional shares upon exercise of a Right,
except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to
the Distribution Date, the registered holders of the Common
Stock in respect of which Rights have been issued); and any
registered holder of any Rights Certificate (or, prior to the
Distribution Date, of such Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of such
Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of
this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder
of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) any restriction on transfer imposed or
deemed to be imposed by this Agreement is valid and
enforceable against the holder and any transferee of the
holder in accordance with Section 13.1-649 of the Virginia
Stock Corporation Act; and
(d) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat
the person in whose name a Rights Certificate (or, prior to
the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificate or the
associated Common Stock certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company, subject to the last sentence of
Section 7(e) hereof, nor the Rights Agent shall be required to
be affected by any notice to the contrary.
(e) Notwithstanding anything in this Agreement
to the contrary, neither the Company nor the Rights Agent
shall have any liability to any holder of a Right or other
Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive
order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of Units of Preferred Stock or any
other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 24 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised
in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the
administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense incurred
without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall be protected and
shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, instruction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.
(a) Any corporation into which the Rights Agent
or any successor Rights Agent may be merged or with which it
may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either
in the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates
and in this Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates
and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary
or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or
established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, any Vice-
Chairman, the President, any Vice President, the Treasurer,
any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals
contained in this Agreement or in the Rights Certificates or
be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or responsible
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization
or reservation of any shares of Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock will, when so issued, be
duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman, the
President, any Senior Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer
of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it
in good faith in accordance with instructions of any such
officer. At any time the Rights Agent may apply to the
Company for written instructions with respect to any matter
arising in connection with the Rights Agent's duties and
obligations arising under this Agreement. Such application by
the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent
with respect to its duties or obligations under this Agreement
and the date on and/or after which such action shall be taken
and the Rights Agent shall not be liable for any action taken
or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date
shall be not less than one Business Day after the Company
receives such application, without the Company's consent)
unless, prior to taking or initiating any such action, the
Rights Agent has received written instructions in response to
such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder,
director, officer or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any
other capacity for the Company.
(i) The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in
writing mailed to the Company, and to each transfer agent of
the Common Stock and Preferred Stock, by registered or
certified mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resignating
or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United
States or of the States of North Carolina or New York or of
the Commonwealth of Virginia (or of any other state of the
United States so long as such corporation is authorized to do
business as a banking institution in the States of North
Carolina or New York or the Commonwealth of Virginia), in good
standing, having a principal office in the States of North
Carolina or New York or the Commonwealth of Virginia, that is
authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or
state authority and that has at the time of its appointment as
Rights Agent a combined capital and surplus of at least
$100,000,000. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date
of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, the
Company may, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection
with the issuance or sale of shares of Common Stock following
the Distribution Date.
Section 23. Redemption and Termination.
(a)(i) The Company may, at its option, at any time
prior to the earlier of (A) the close of business on the
tenth day following the Stock Acquisition Date, or (B)
the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of
$.01 per Right (such redemption price being hereinafter
referred to as the "Redemption Price") and the Company
may, at its option, pay the Redemption Price either in
shares of Common Stock (based on the current market
price (as determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock at the time of
redemption) or cash; provided, however, that if the
Board of Directors of the Company authorizes redemption
of the Rights in either of the circumstances set forth
in clauses (x) and (y) below, then there must be
Continuing Directors in office and such authorization
shall require the concurrence of a majority of such
Continuing Directors: (x) such authorization occurs on
or after the date a Person becomes an Acquiring Person,
or (y) such authorization occurs on or after the date of
a change (resulting from a proxy solicitation) in a
majority of the directors in office at the commencement
of such solicitation if any Person who is a participant
in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the
Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any
action that would result in such Person becoming an
Acquiring Person or that would cause the occurrence of
a Triggering Event.
(ii) In addition, if there are Continuing
Directors then in office, the Board of Directors may
redeem all but not less than all of the then outstanding
Rights at the Redemption Price with the concurrence of
a majority of such Continuing Directors, following the
occurrence of a Stock Acquisition Date and following the
expiration of the right of redemption hereunder but
prior to any Triggering Event, if either (A) (1) a
Person who is an Acquiring Person shall have transferred
or otherwise disposed of a number of shares of Common
Stock in one transaction or a series of transactions,
not directly or indirectly involving the Company or any
of its Subsidiaries, such that such Person is thereafter
a Beneficial Owner of less than 10% of the outstanding
shares of Common Stock and (2) there are no other
Persons, immediately following the occurrence of the
event described in clause (1), who are Acquiring Persons
or (B) in connection with the type of transaction
specified in Sections 11(a)(ii)(A) or 13(a) hereof in
which all holders of Common Stock are treated alike and
not involving an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or any other Person in
which such Acquiring Person, Affiliate or Associate has
any interest, or any other Person acting directly or
indirectly on behalf of or in association with any such
Acquiring Person, Affiliate or Associate.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Triggering Event until such time as the
Company's right of redemption hereunder is not exercisable.
(b) Immediately upon the action of the Board of
Directors of the Company authorizing the redemption of the
Rights pursuant to subsection (a) of this Section 23 and
without any further action and without any notice, the right
to exercise the Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the
action of the Board of Directors authorizing the redemption of
the Rights, the Company shall give notice of such redemption
to the Rights Agent and to the holders of such Rights by
mailing such notice to all such holders at each holder's last
address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice
that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of redemption shall state the method by which the
payment of the Redemption Price will be effected.
Section 24. Exchange.
(a) The Company may, at its option, by resolution
of its Board of Directors, at any time after any Person
becomes an Acquiring Person exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to this Section 24) for
shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
with respect to the Common Stock after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio").
(b) Immediately upon the action of the Board of
Directors of the Company authorizing the exchange of the
Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of Rights
held by such holder multiplied by the Exchange Ratio.
Promptly after the action of the Board of Directors
authorizing the exchange of the Rights, the Company shall give
notice of such exchange to the Rights Agent and to the holders
of such Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common
Stock. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state
the method by which the exchange of the shares of Common Stock
for Rights will be effected.
(c) In the event that there shall not be
sufficient shares of Common Stock authorized but unissued to
permit the exchange in full of such Rights in accordance with
this Section 24, the Company shall take all such action as may
be necessary to authorize additional shares of Common Stock
for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue
fractions of shares of Common Stock or to distribute
certificates that evidence fractional shares of Common Stock.
In lieu of such fractional shares of Common Stock, there shall
be paid to the registered holders of the Right Certificates
with regard to which such fractional shares of Common Stock
would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole share of
Common Stock. For the purposes of this subsection (d), the
current market value of a whole share of Common Stock shall be
the closing price of a share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the Exchange Date.
(e) In the event the Board of Directors of the
Company authorizes an exchange pursuant to Section 24(a)
hereof, to the extent permitted by applicable law, any Rights
that are or were beneficially owned by any Acquiring Person or
by any Affiliate or Associate of any Acquiring Person on or
after such Acquiring Person's Stock Acquisition Date shall be
null and void without any further action by the Company or the
Rights Agent immediately upon such authorization, and
thereafter may not be exercised by any Person (including any
subsequent transferee) for Units of Preferred Stock or other
securities or assets pursuant to any provision hereof and
shall no longer confer any rights upon any Person (including
any right to receive Common Stock upon any exchange authorized
pursuant to Section 24(a) hereof).
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any
time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred
Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend
of the Company in compliance with Section 13.1-653 of the
Virginia Stock Corporation Act), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for
or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only
the subdivision of outstanding shares of Preferred Stock), or
(iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(n) hereof), or to
effect a statutory share exchange with any Person (other than
a Subsidiary of the Company in a transaction that complies
with Section 11(n) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as
a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(n)
hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the
Company shall give to each holder of a Rights Certificate, to
the extent feasible and in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by
the holders of the shares of Preferred Stock, if any such date
is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the
shares of Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of
Preferred Stock whichever shall be the earlier.
(b) In case any of the events set forth in
Section 11(a)(ii) hereof shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and
the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed
thereafter to refer, if appropriate, not only to Preferred
Stock, but also to Common Stock or other securities.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by
the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Owens & Minor, Inc.
4800 Cox Road
Post Office Box 27626
Richmond, Virginia 23261-7626
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Rights Certificate to or on
the Rights Agent shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Wachovia Bank of North Carolina, N.A.
P.O. Box 3001
Winston-Salem, North Carolina 27102
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to
the holder of certificates representing shares of Common
Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of
this Section 27, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend any provision of
this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and
after the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder (which
lengthening or shortening, under the circumstances described
in the proviso to Section 23(a)(i) hereof, shall be effective
only if there are Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors), or
(iv) to change or supplement the provisions hereunder in any
manner that the Company may deem necessary or desirable and
that shall not adversely affect the interests of the holders
of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, that
this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (B) any other time
period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits, to the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that
states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. No supplement or
amendment shall be made that changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of
Units of Preferred Stock for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding
shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company (and,
where specifically provided for herein, the Continuing
Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and
powers specifically granted to the Board, or the Company (or,
where specifically provided for herein, the Continuing
Directors), or as may be necessary or advisable in the
administration of this Agreement, including, without
limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem
the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect
to the foregoing) which are done or made by the Board (or,
where specifically provided for herein, by the Continuing
Directors) in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the
Rights Certificates and all other parties, and (y) not subject
the Board or the Continuing Directors to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent, the registered holders
from time to time of (i) the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common
Stock), and (ii) the Series B Convertible Preferred Stock (to
the extent provided in Section 6(g)(5)(b) of the Company's
Amended and Restated Articles of Incorporation) any legal or
equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole and exclusive benefit of
the Company and the Persons specified above.
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by
such court or authority to be invalid, void or unenforceable
and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section
23 hereof shall be reinstated and shall not expire until the
close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right
and each Rights Certificate issued hereunder shall be deemed
to be a contract made under the laws of the Commonwealth of
Virginia and for all purposes shall be governed by and
construed in accordance with the laws of such Commonwealth
applicable to contracts made and to be performed entirely
within such Commonwealth.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year
first above written.
OWENS & MINOR, INC.
By ____________________________
G. Gilmer Minor, III
President
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By ____________________________
Vice President
<PAGE>
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