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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
LONGS DRUG STORES CORPORATION
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(Exact name of registrant as specified in its charter)
MARYLAND 68-0048627
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(State of incorporation or organization) (IRS Employer Identification No.)
141 North Civic Drive
WALNUT CREEK, CALIFORNIA 94596
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. [ ]
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On August 20, 1996 the Board of Directors of Longs Drug Stores
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.50 per
share (the "Common Shares"), of the Company. The dividend is payable on
September 16, 1996 (the "Record Date") to stockholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of a Series A Junior Participating Preferred Stock, par
value $.50 per share, of the Company (the "Preferred Shares") at a price of
$130 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company, as Rights
Agent (the "Rights Agent"), dated as of August 20, 1996.
An Acquiring Person is defined as any person or group of affiliated or
associated persons, other than certain designated members of the Long family and
employee benefit plans of the Company, that has obtained beneficial ownership of
15% of the outstanding Common Shares. Until the earlier to occur of (i) a
public announcement by the Company or an Acquiring Person that an Acquiring
Person acquired, or obtained the right to acquire, beneficial ownership of 15%
or more of the outstanding Common Shares or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person becomes an Acquiring Person) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in a person or group becoming the beneficial
owner of 15% or more of such outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificates. The Rights Agreement provides that,
until the Distribution Date, the Rights will be transferred with and only with
the Common Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued after the Record
Date upon transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for transfer
of any certificates for Common Shares outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing
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the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on September 15, 2006, unless earlier redeemed or exchanged
by the Company in each case as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or retained
earnings or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those referred to above). The number of outstanding Rights
associated with each Common Share is also subject to adjustment in the event of
a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
In the event that any person or group becomes an Acquiring Person (a
"Flip-In Event"), proper provision will be made so that each holder of a Right,
other than the Acquiring Person (whose Rights will thereafter be void), will
thereafter have the right to receive upon exercise at its then current exercise
price that number of Common Shares having a market value of two times the
exercise price of the Right (or Preferred Shares if so elected by the Board of
Directors). However, Rights are not exercisable following the occurrence of
such event until such time as the Rights are no longer redeemable by the Company
as set forth below.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision is required to be made so that each holder of a Right (other
than an Acquiring Person, whose Rights will have become void) will thereafter
have the right to receive, upon the exercise of the Right at its then current
exercise price, that number of shares of common stock of the person with whom
the Company has engaged in the foregoing transaction which at
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the time of such transaction have a market value of two times the exercise price
of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred or Common Shares will be issued
(other than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, a payment in cash will
be made based on the market price of the Preferred or Common Shares on the last
trading date prior to the date of exercise.
At any time until twenty days following the date a person or group
becomes an Acquiring Person, the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the "Redemption Price"). Under no
circumstances following the occurrence of a Flip-In Event may the Rights be
exercised prior to the expiration of the Company's right of redemption.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
At any time after any person becomes an Acquiring Person, the Board of
Directors of the Company may, at its option, exchange all or part of the then
outstanding and exercisable Rights (excluding Rights of an Acquiring Person that
have become void) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof. Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Acquiring Person becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding. In lieu of Common Shares, the Board
of Directors may elect to substitute Preferred Shares for any such exchange.
For so long as the Rights are then redeemable, the Company may amend
the Rights in any manner other than to change the Redemption Price. After the
Rights are no longer redeemable the Company may amend the Rights in any manner
that does not adversely affect the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
100 times the dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share
will have 100 votes, voting together with the Common Shares. Finally, in the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
In the event that this Form 8-A has not been declared effective by the
Securities and Exchange Commission on or before the Record Date, the Record Date
will be extended to two business days after this Form 8-A has become effective.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the form of
Right Certificate, is attached hereto as an exhibit and is incorporated herein
by reference. The foregoing description of the Rights is qualified by
reference to the form of Rights Agreement.
ITEM 2. EXHIBITS.
1. Form of Right Certificate (included as Exhibit B to Exhibit 2).
2. Form of Rights Agreement dated as of August 20, 1996 between
Longs Drug Stores Corporation and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company, as
Rights Agent.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
Dated: August 22, 1996 LONGS DRUG STORES CORPORATION
By /s/Grover White
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Name: Grover White
Title: Vice President, Controller
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EXHIBIT INDEX.
Sequential
Page
Item Number
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1. Form of Right Certificate (included as Exhibit B to Exhibit 2).
2. Form of Rights Agreement dated as of August 20, 1996
between Longs Drug Stores Corporation and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited
liability company, as Rights Agent.
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LONGS DRUG STORES CORPORATION
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
a New Jersey Limited Liability Company
Rights Agent
Rights Agreement
Dated as of August 20, 1996
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TABLE OF CONTENTS
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PAGE
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Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 8
Section 4. Form of Right Certificates 11
Section 5. Countersignature and Registration 12
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates 13
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights;
Nullification of Rights 15
Section 8. Cancellation and Destruction of Right Certificates 18
Section 9. Reservation and Availability of Preferred Shares 19
Section 10. Preferred Shares Record Date 21
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights 22
Section 12. Certificate of Adjusted Purchase Price or Number of Shares 40
Section 13. Consolidation, Merger, Share Exchange or Sale or Transfer of
Assets or Earning Power 40
Section 14. Fractional Rights and Fractional Shares 49
Section 15. Rights of Action 51
Section 16. Agreement of Right Holders 52
Section 17. Right Certificate Holder Not Deemed a Stockholder 53
Section 18. Concerning the Rights Agent 54
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PAGE
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Section 19. Merger or Consolidation or Change of Name of Rights Agent 55
Section 20. Duties of Rights Agent 56
Section 21. Change of Rights Agent 61
Section 22. Issuance of New Right Certificates 62
Section 23. Redemption 63
Section 24. Exchange 65
Section 25. Notice of Certain Events 68
Section 26. Notices 69
Section 27. Supplements and Amendments 70
Section 28. Successors 72
Section 29. Determinations and Actions by the Board of Directors, etc. 72
Section 30. Benefits of this Agreement 73
Section 31. Severability 73
Section 32. Governing Law 73
Section 33. Counterparts 74
Section 34. Descriptive Headings 74
Exhibit A ARTICLES SUPPLEMENTARY
Exhibit B FORM OF RIGHT CERTIFICATE
Exhibit C SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
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RIGHTS AGREEMENT
AGREEMENT, dated as of August 20, 1996, between LONGS DRUG STORES
CORPORATION, a Maryland corporation (the "Company"), and CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., a New Jersey limited liability company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Company outstanding on the Record Date (as
hereinafter defined), each Right representing the right to purchase one one-
hundredth of a share of Series A Junior Participating Preferred Stock, par value
$.50 per share, of the Company having the rights and preferences set forth in
the form of Articles Supplementary attached hereto as Exhibit A, upon the terms
and subject to the conditions herein set forth, and has further authorized the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are defined in
Sections 3 and 7 hereof).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 15% or more
of the Common Shares then outstanding, but shall not include (i) (A) the
Company, (B) any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary, or an entity holding Common Shares for or
pursuant to the terms of any such plan, (C) the Long Family Members (as
such term is hereinafter defined), (D) any of the Long Family Members
acting as trustee, personal representative, attorney-in-fact, proxyholder
or other representative or agent, or (E) any trustee, personal
representative, attorney-in-fact, proxyholder or other representative or
agent acting for the person or the estate of one or more of the Long Family
Members, or (ii) any such Person who has become such a Beneficial Owner
solely because (A) of a reduction in the aggregate number of Common Shares
outstanding or (B) it acquired such Beneficial Ownership in the good faith
belief that such acquisition would not (x) cause such Beneficial Ownership
to exceed 15% of
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the Common Shares then outstanding and such Person relied in good faith in
computing the percentage of its Beneficial Ownership on publicly filed
reports or documents of the Company which are inaccurate or out-of-date or
(y) otherwise cause a Distribution Date or the adjustment provided for in
Section 11(a)(ii) to occur. Notwithstanding clause (ii) of the prior
sentence, if any Person that is not an Acquiring Person due to such clause
(ii) does not reduce its percentage of Beneficial Ownership of Common
Shares to less than 15% by the Close of business on the fifth Business Day
after notice from the Company (the date of notice being the first day) that
such Person's Beneficial Ownership of Common Shares so exceeds 15%, such
Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (ii) shall no longer apply to such
Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board
of Directors of the Company.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
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(c) A person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as
in effect on the date of this Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase; or (B) the right to vote pursuant to any
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agreement, arrangement or understanding; PROVIDED FURTHER, HOWEVER,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) or
understanding for the purpose of acquiring, holding, voting (except to
the extent permitted by subparagraph (ii)(B) of this paragraph (c)) or
disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in
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the State of California 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., San
Francisco time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., San Francisco time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company shall
mean shares of Common Stock, par value $.50 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or, in the case of an unincorporated entity, the equivalent
equity interest) with the greatest voting power of such Person or, if such
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(i) "Long Family Members" means V.M. Long and R.M. Long.
(j) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, association, trust, unincorporated
organization, or other
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entity, and shall include any successor (by merger or otherwise) of such entity.
(k) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.50 per share, of the Company.
(l) "Purchase Price" shall have the meaning set forth in Section 7
hereof.
(m) "Record Date" shall mean September 16, 1996, or, if on such date
the Form 8-A filed by the Company with the Securities and Exchange Commission to
register the Rights has not been declared effective, two Business Days following
the effective date of such Form 8-A.
(n) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(o) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(p) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(q) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(r) "Trading Day" shall have the meaning set forth in Section 11
hereof.
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Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) 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 (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights Agents). In
the event the Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agents shall be as the Company
shall determine.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Share Acquisition Date and (ii) the
tenth business day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any person becomes an
Acquiring Person) after the date of the commencement of, or first public
announcement of the intention of any Person to commence, a tender or exchange
offer the consummation of which would result in beneficial ownership by a Person
(other than the Company, any Subsidiary of the Company or any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or
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pursuant to the terms of any such plan) of 15% or more of the Common Shares then
outstanding (including any such date that is after the date of this Agreement
and prior to the issuance of the Rights; the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of Common Shares. As
soon as practicable after the Distribution Date, the Rights Agent will send, by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto, evidencing one Right for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder
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of Common Shares as of the close of business on the Record Date at the address
of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof (together with a copy of the Summary of
Rights). Until the Distribution Date (or the earlier Redemption Date or Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares issued after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Longs Drug Stores Corporation and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability
company, dated as of August 20, 1996 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Longs Drug Stores Corporation. 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.
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Longs Drug Stores Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly
following receipt of a written request therefor. Rights owned by or
transferred to any Person who becomes an Acquiring Person (as defined
in the Rights Agreement) and certain transferees thereof will become
null and void and will no longer be transferrable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or otherwise acquires any Common Shares
after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase Preferred Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and
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such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time
be listed, or to conform to usage. Subject to the provisions of Sections 11 and
22 hereof, the Right Certificates, shall entitle the holders thereof to purchase
such number of Preferred Shares as shall be set forth therein at the price per
one one-hundredth of a Preferred Share set forth therein (the "Purchase Price"),
but the number of such Preferred Shares and the Purchase Price shall be subject
to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chief Executive Officer,
either manually or by facsimile signature, and 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 Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the
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Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal offices, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date and
certificate number of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 14 hereof, at any time after the Close of business
on the Distribution Date, and at or prior to the Close of business on the
earlier of the Redemption Date and the Final
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Expiration Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to Section 27 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
Preferred Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office or agency of the Rights Agent designated for such purpose. Thereupon the
Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split-
up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security
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reasonably satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Notwithstanding any other provision hereof, the Company and the Rights
Agent may amend this Rights Agreement to provide for uncertificated Rights in
addition to or in place of Rights evidenced by Right Certificates.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS; NULLIFICATION OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date and thereafter a registered holder of any
Right Certificate may exercise the Rights evidenced thereby in whole or in part
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a Preferred Share as
to which the Rights are exercised, at or prior to the earliest of (i) the close
of business on September 15, 2006 (the "Final Expiration Date"),
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(ii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date") or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred
Share pursuant to the exercise of a Right shall initially be $130, shall be
subject to adjustment from time to time as provided in Sections 11 and 13 hereof
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall
thereupon promptly (i)(A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Preferred Shares are then represented by depository
receipts, requisition from the depositary agent depositary receipts representing
such number of one one-hundredths of a Preferred Share as are to be
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purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional interests in shares in accordance
with Section 14 hereof, (iii) promptly after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) In the event that the Company is obligated to issue other
securities (including Common Shares) 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
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and/or other property are available for distribution by the Rights Agent, if and
when appropriate.
(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 or the transfer of any surrendered
Rights Certificates under Section 6, unless and until such registered holder
shall have (i) completed and signed (A) in the case of a Section 7 exercise, a
form of election or (B) in the case of a Section 6 transfer, a form of
assignment, as set forth on the reverse side of the Rights Certificate, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and
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retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares,
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the Preferred Shares issuable upon the exercise of
Rights may be listed on any national securities exchange or automated quotation
system, 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 or automated quotation system upon official notice of
issuance upon such exercise.
(c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts to, if
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then necessary to permit the issuance of Preferred Shares (and following the
time that a Person first becomes an Acquiring Person, Common Shares and other
securities) upon the exercise of Rights, register and qualify such Preferred
Shares (and following the time that a Person first becomes an Acquiring Person,
Common Shares and other securities) under the Securities Act and any applicable
state securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date.
The Company may temporarily suspend, for a period of time not to exceed 90 days,
the exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
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
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and until a registration statement under the Securities Act (if required) shall
have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares 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 Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been
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established to the Company's satisfaction that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred 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 OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the
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number of Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation,
merger or statutory share exchange 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 capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, the holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that in
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no event shall the consideration to be paid upon the exercise of one Right be
less that the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person becomes an Acquiring Person, then
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company (or at the option
of the Company, such number of one one-hundredths of Preferred Shares) as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event. Notwithstanding
anything in this Agreement to the contrary, however, from and after the time
(the "invalidation time") when any Person first becomes
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an Acquiring Person, any Rights that are beneficially owned by (x) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (y) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the invalidation time or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the invalidation time pursuant to either (I) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be void without any further action and any
holder of such Rights shall thereafter have no rights whatsoever with respect to
such Rights under any provision of this Agreement. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the invalidation time, no Right Certificate shall be
issued pursuant to Section 3 or Section 6 hereof that
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represents Rights that are or have become void pursuant to the provisions of
this paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the provisions of
this paragraph shall be cancelled. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exercised pursuant to this Section 11(a)(ii) shall thereafter be exercisable
only in accordance with Section 13 and not pursuant to this Section 11(a)(ii).
(iii) The Company may at its option substitute for a Common Share
issuable upon the exercise of Rights in accordance with the foregoing
subparagraph (ii) such number or fractions of Preferred Shares having an
aggregate current market value equal to the current per share market price of a
Common Share. In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the Board
of Directors shall, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, (A) determine the
excess of (1) the value of the Common Shares issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the "Current Value")
over (2) the then current Purchase Price multiplied by the number of one
one-hundredths of
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Preferred Shares for which a Right was exercisable immediately prior to the time
that the Acquiring Person became such (such excess, the "Spread"), and (B) with
respect to each Right (other than Rights which have become void pursuant to
Section 11(a)(ii)), make adequate provision to substitute for the Common Shares
issuable in accordance with subparagraph (ii) upon exercise of the Right and
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Preferred Shares or other equity securities of the Company
(including, without limitation, one or more shares or fractions of shares of
preferred stock, provided that if the Board of Directors determines in good
faith that a unit of one or more such shares or fractions of shares of preferred
stock has, by virtue of the dividend, voting and liquidation rights of such
preferred stock, substantially the same per share value as one share of Common
Stock, such unit will be referred to herein as a "Common Share equivalent"),
(4) debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having a value which, when added to the value of the Common
Shares actually issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the Board of
Directors upon the advice of a nationally recognized investment banking firm
selected in good faith by the Board of Directors;
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PROVIDED, HOWEVER, if the Company shall not make adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the Share
Acquisition Date, then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares (to the extent
available), and then, if necessary, such number or fractions of Preferred Shares
(to the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If, upon the date any Person
becomes an Acquiring Person, the Board of Directors shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, then, if the Board
of Directors so elects, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days after the
Share Acquisition Date, in order that the Company may seek shareholder approval
for the authorization of such additional shares (such thirty (30) day period, as
it may be extended, is herein called the "Substitution Period"). To the extent
that the Company determines that some action need be taken pursuant to the
second and/or third sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 11(a)(ii) hereof and the last sentence of
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this Section 11(a)(iii) 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 second 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 Shares
shall be the current per share market price (as determined pursuant to Section
11(d)(i)) on the Share Acquisition Date and the per share or fractional value of
any "Common Share equivalent" shall be deemed to equal the current per share
market price of the Common Shares on the Share Acquisition Date. The Board of
Directors of the Company may, but shall not be required to, establish procedures
to allocate the right to receive Common Shares upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
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subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current per share
market price of the Preferred Shares (as defined in Section 11(d)) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration part or all of which shall be in a form other
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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. Preferred Shares owned by or held
for the account of the Company or any subsidiary thereof shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation, merger or statutory share
exchange in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the current per share market price of the
Preferred Shares (as defined in Section 11(d))
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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 assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share and the denominator of which shall be
such current per share market price of the Preferred Shares; PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price that would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purposes of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; PROVIDED,
HOWEVER, that in the event that the current per share market price of the
Security is determined during a period following the
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announcement by the issuer of such Security of (1) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (2) any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current market
price shall be appropriately adjusted. 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 Security is 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 Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if not so quoted, the average of the
closing bid and asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on
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any such date the Security is 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 Security selected by the Board of Directors of the
Company, or, if on any such Trading Day no market maker is making a market in
such Security, the closing price of such Security shall be deemed to be the fair
value of such Security as determined in good faith by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, if the
Preferred Shares are publicly traded, the "current per share market price" of
the Preferred Shares shall be determined in the manner set forth above in clause
(i) of this Section 11(d). If the Preferred Shares are not publicly traded but
the Common Shares are publicly traded, the "current per share market price" of
the Preferred Shares shall be conclusively deemed to be the current per share
market price of the Common Shares as determined in the manner set forth in
clause (i) of this Section 11(d), multiplied by one hundred (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after
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the date hereof). If neither the Common Shares nor the Preferred Shares are
publicly traded, "current per share market price" 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.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; PROVIDED, HOWEVER, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a Common Share or other share or one-millionth of a Preferred Share as the case
may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) one year from the date of the transaction that requires such adjustment
or (ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon
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exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a)(i), 11(b), 11(c), and 11(i),
and the provisions of Sections 7, 9, 10 and 13 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase
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Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be
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distributed to holders of record of Right Certificates on such record date Right
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 Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-hundredth of a share and the number of shares which
were expressed in the initial Right Certificates issued hereunder but they shall
be deemed to represent the Purchase Price and number of one one-hundredths of a
Preferred Share as adjusted from time to time hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-
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hundredth of the then par value, if any, of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
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be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any of Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in subsection (b) of this
Section 11, hereafter made by the Company to holders of its Preferred Shares
shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case the
number of Rights associated with each Common Share then outstanding or issued or
delivered thereafter shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction, the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence
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of the event, and the denominator of which shall be the total number of Common
Shares outstanding immediately following the occurrence of such event. The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(o) The Company agrees that after the Distribution Date it will not,
except as permitted by Sections 23, 24 or 27 hereof, take (or permit any
Subsidiary to take) any action if immediately before the time such action would
otherwise be taken it is reasonably foreseeable that such action would diminish
substantially or eliminate the benefits intended to be afforded by the Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares or the Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 26 hereof.
Section 13. CONSOLIDATION, MERGER, SHARE EXCHANGE OR SALE OR TRANSFER
OF ASSETS OR EARNING POWER.
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(a) In the event, directly or indirectly at any time after any person
has become an Acquiring Person, (i) the Company shall consolidate with, or merge
with and into, any other Person, (ii) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Company's Common Shares shall be changed into or
exchanged for stock or other securities of any other Person (or of the Company)
or cash or any other property, (iii) the Company shall engage in any statutory
share exchange whereby the Company's Common Shares are converted into any stock,
securities or any other property of any other Person or cash or any other
property, (iv) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than the Company or one or more of its wholly owned Subsidiaries, then upon the
first occurrence of such event, proper provision shall be made so that (A) each
holder of a Right (other than Rights that have become void pursuant to
11(a)(ii)) shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right
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was exercisable immediately prior to the time that any Person first became an
Acquiring Person (as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c) and 11(i)), in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of validly issued, fully
paid and non-assessable and freely tradeable Common Shares of the Principal
Party (as defined herein) 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 one one-
hundredths of a Preferred Share for which a Right was exercisable immediately
prior to the time that any Person first became an Acquiring Person (as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c) and
11(i)) and (2) dividing that product by 50% of the then current per share market
price of the Common Shares of such Principal Party (determined pursuant to
Section 11(d)(i) hereof) on the date of consummation of such consolidation,
merger, statutory share exchange, sale or transfer; PROVIDED that the Purchase
Price and the number of Common Shares of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in Section 11(f) of
this Agreement to reflect any events occurring in respect of such Principal
Party after the date of the such consolidation, merger, statutory share
exchange, sale or transfer; (B) such Principal Party shall thereafter be liable
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for, and shall assume, by virtue of such consolidation, merger, statutory share
exchange, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall thereafter be deemed to
refer to such Principal Party; and (D) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights; provided that, upon the subsequent occurrence of any consolidation,
merger, statutory share exchange, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Shares of the Principal Party purchasable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in
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accordance with the terms hereof for such cash, shares, rights, warrants and
other property.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (i), (ii) or
(iii) of the first sentence of Section 13(a) hereof: (A) the Person that
is the issuer of the securities into which Common Shares are converted in
such merger, consolidation or statutory share exchange, or, if there is
more than one such issuer, the issuer the Common Shares of which have the
greatest aggregate market value of shares outstanding or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger or statutory share exchange, if such Person survives said merger or
statutory share exchange, or, if there is more than one such Person, the
Person the Common Shares of which have the greatest aggregate market value
of shares outstanding or (y) if the Person that is the other party to the
merger or statutory share exchange does not survive the merger or statutory
share exchange, the Person that does survive the merger or statutory share
exchange (including the Company if it survives) or (z) the Person resulting
from the consolidation; and
(ii) in the case of any transaction described in (iv) of the
first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion
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of the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets
or earning power cannot be determined, whichever of such Persons is the
issuer of Common Shares having the greatest aggregate market value of
shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), (1) if the Common Shares of such Person are not at such time
or have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, the term "Principal Party" shall refer to such other Person, or
(2) if such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of all of which are and have been so registered, the
term "Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Shares having the greatest aggregate market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in clauses (1) and (2) above
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shall apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations
set forth in this Section 13 in the same ratio as its interest in such Person
bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger,
statutory share exchange, sale or transfer referred to in Section 13(a) hereof
unless prior thereto the Company and the Principal Party involved therein shall
have executed and delivered to the Rights Agent an agreement confirming that the
requirements of Sections 13(a) and (b) hereof shall promptly be performed in
accordance with their terms and that such consolidation, merger, statutory share
exchange, sale or transfer of assets shall not result in a default by the
Principal Party under this Agreement as the same shall have been assumed by the
Principal Party pursuant to Sections 13(a) and (b) hereof and providing that, as
soon as practicable after executing such agreement pursuant to this Section 13,
the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its
best efforts to cause such registration statement to become effective as
soon as practicable after such filing and
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use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with
applicable state securities laws;
(ii) use its best efforts, if the Common Shares of the Principal
Party shall be listed or admitted to trading on any national securities
exchange or quoted on any automated quotation system, to list or admit to
trading (or continue the listing or trading of) the Rights and the
securities purchasable upon exercise of the Rights on such national
securities exchange or have the Rights or such securities quoted on such
automated quotation system and, if the Common Shares of the Principal Party
shall not be listed or admitted to trading on any national securities
exchange or quoted on any automated quotation system, to cause the Rights
and the securities purchasable upon exercise of the Rights to be listed or
admitted to trading on a national securities exchange or quoted in an
automated quotation system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
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(iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Shares of the Principal Party subject to
purchase upon exercise of outstanding Rights.
(d) Furthermore, in case the Principal Party which is to be a party
to a transaction referred to in this Section 13 has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, Common Shares
of such Principal Party at less than the then current market price per share
(determined pursuant to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Shares of such Principal Party at less than such then
current market price, or (ii) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Shares of such
Principal Party pursuant to the provisions of Section 13, then, in such event,
the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the
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provision in question of such Principal Party shall have been cancelled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time
after a Person first becomes an Acquiring Person, enter into any transaction of
the type contemplated by (i) - (iv) of Section 13(a) hereof if (x) at the time
of or immediately after such consolidation, merger, statutory share exchange,
sale, transfer or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (y) prior to, simultaneously with or immediately after
such consolidation, merger, statutory share exchange, sale, transfer or other
transaction, the stockholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates or Associates or (z) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue
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fractions of Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to
the registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 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 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 sale price or, if not so
quoted, the average of the closing bid and closing asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
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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 Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share) upon exercise of the Rights or to issue certificates which
evidence fractions of Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company shall
pay to the registered holders of
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Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Preferred Share. For purposes of this Section 14(b) hereof, the current market
value of a Preferred Share shall be the closing price of a Preferred Share (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
(except as provided above) upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights
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evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any
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notations of ownership or writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
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reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights
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Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right
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Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be
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deemed to be conclusively proved and established by a certificate signed by any
one of the Chief Executive Officer, the President, any Vice President, or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability
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of the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, the President, any Vice President or the
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Secretary 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. Any 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 under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five Business Days after
the date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have 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
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lend money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or 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
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notice in writing mailed to the Secretary of the Company and to each transfer
agent of the Common Shares and Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation or a limited liability company organized, in good standing, and
doing business under the laws of the United States or of any State of the United
States that is authorized under such laws to
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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 $20 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares and
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 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 RIGHT CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
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adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Shares following the Distribution
Date and prior to the earlier of the Redemption Date and the Expiration Date,
the Company may with respect to Common Shares so issued or sold pursuant to
(i) the exercise of stock options, (ii) any employee plan or arrangement,
(iii) the exercise, conversion or exchange of notes, debentures or other
securities issued by the Company or (iv) any other contractual obligation of the
Company, in each case existing prior to the Distribution Date, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale.
Section 23. REDEMPTION.
(a) The Board of Directors of the Company may at any time prior to
the close of business on the earlier of (i) the twentieth day following the
Share Acquisition Date, or (ii) the Final Expiration Date redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights may be made effective
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at such time, on such basis and with such conditions as the Board of Directors
in its sole discretion may establish. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable pursuant to
Section 11(a)(ii) prior to the expiration of the Company's right of redemption
hereunder.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or such later time as the Board
of Directors may establish for the effectiveness of such redemption), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; PROVIDED, HOWEVER, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such
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notice of redemption will state the method by which the payment of the
Redemption Price will be made. In any case, failure to give such notice by
mail, or any defect in the notice, to any particular holder of Rights shall not
affect the sufficiency of the notice to other holders of Rights.
Section 24. EXCHANGE.
(a) Subject to any limitations of applicable law, the Board of
Directors of the Company may, at its option, 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 the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any wholly-owned Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary, any entity holding Common Shares for or
pursuant to the terms of any such plan, the Long Family Members, any of the Long
Family Members acting as trustee, personal representative, attorney-in-fact,
proxyholder or other representative or agent, or any trustee, personal
representative or agent
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acting for the person or the estate of one or more of the Long Family Members),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only rights thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other
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than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company may, in
its discretion, take such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights. In the event
that the Company shall determine not to take such action or shall, after good
faith effort, be unable to take such action as may be necessary to authorize
such additional shares of Common Stock, the Company shall substitute, to the
extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of Preferred Shares or
fractions thereof (or equivalent preferred shares as such term is defined in
Section 11(b)), having an aggregate value equal to the current per share market
price of one share of Common Stock (determined pursuant to Section 11(d) hereof)
as of the date of issuance of such Preferred Shares or fractions thereof (or
equivalent preferred shares).
(d) The Company shall not, in connection with any exchange pursuant
to this Section 24, be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares. In lieu of
such
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fractional Common Shares, the Company shall pay to the registered holder of the
Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For the purposes of this
subsection (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Share Acquisition Date propose (a) to pay any dividend
payable in stock of any class to the holders of the Preferred Shares or to make
any other distribution to the holders of the Preferred Shares (other than a
regular quarterly cash dividend) or (b) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (d) to effect the liquidation, dissolution or winding up of the
Company, or (e) to declare or pay any dividend on the Common Shares
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payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the Common Shares
and/or Preferred Shares, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (a) or (b) above at
least 10 days prior to the record date for determining holders of the Preferred
Shares for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) or
Section 13 of this Agreement shall occur, then, in any such case, the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate (or if occurring prior to the Distribution Date, the holders of
Common Shares), in accordance with Section 26
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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 Section 13.
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 Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Longs Drug Stores Corporation
141 North Civic Drive
P.O. Box 5222
Walnut Creek, California
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
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability company
50 California Street
10th Floor
San Francisco, California 94111
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of
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any Right Certificate shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Subject to the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable, the
Company may in its sole and absolute discretion, 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 the Rights. At any time when the Rights
are no longer redeemable, subject to the penultimate sentence of this
Section 27, the Company may, 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 which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable; PROVIDED that no such
amendment or supplement shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
any Acquiring Person) and no such amendment or supplement may cause the Rights
again to become redeemable or cause this
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Agreement again to be amendable other than in accordance with this sentence.
Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made which changes the Redemption Price.
Upon the delivery of a certificate signed by the Chief Executive Officer of the
Company and by the Secretary, or an Assistant Secretary, of the Company, which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
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, except as explicitly otherwise
provided in this Agreement, the Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the
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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
of Directors in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board of Directors to any liability to the holders of the
Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 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
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shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Maryland and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 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 much 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
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the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
LONGS DRUG STORES
CORPORATION
By
--------------------------------------
Title: R.M. Long,
Chief Executive
Officer
And By
----------------------------------
Title: O.D. Jones,
Secretary
Attest: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., a New
Jersey limited liability
company
By By
--------------------------------- --------------------------------------
Title:
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EXHIBIT A
---------
ARTICLES SUPPLEMENTARY
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
---------------------------------------------
OF
LONGS DRUG STORES CORPORATION
Longs Drug Stores Corporation, a Maryland corporation, having its
principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Article Seventh of the Charter of the
Corporation, the Board of Directors has duly reclassified the Series A Junior
Participating Preferred Stock of the Corporation by deleting in their entirety
the terms of the Series A Junior Participating Preferred Stock as set forth in
the Articles Supplementary of the Corporation dated August 29, 1986, as amended
on December 2, 1988, and replacing them with the terms set forth in Article
THIRD below.
SECOND: The number of shares classified as Series A Junior
Participating Preferred Stock is 300,000.
THIRD: The terms of the Series A Junior
Participating Preferred Stock as set by the Board of Directors are as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting such series shall
initially be 300,000, subject to increase or decrease by action of the Board of
Directors effectuated by further Articles Supplementary.
2. DIVIDENDS AND DISTRIBUTIONS.
(i) The holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock and of any other junior stock, shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
on the 15th day of January, April, July and October in each year (each such date
being referred to herein
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as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to, subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock of
the Corporation or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time after September 16, 1996 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(ii) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in subparagraph (i) of this paragraph
2 immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(iii) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Preferred Stock in
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an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the date fixed
for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the date
hereof declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(ii) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(iii) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock and any other capital stock of the Corporation having general
voting rights as set forth herein) for taking any corporate action.
4. CERTAIN RESTRICTIONS.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred
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Stock as provided in paragraph 2 of this Section are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(a) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(b) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred
Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(c) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(d) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under
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subparagraph (i) of this paragraph 4, purchase or otherwise acquire such shares
at such time and in such manner.
5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be classified again and reissued as part of a new series
or class of Preferred Stock to be created by the Board of Directors pursuant to
its power contained in the Charter, subject to the conditions and restrictions
on issuance set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(a) to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received one hundred dollars ($100.00) per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Stock, or (b) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time after
the date hereof declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount of which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (a) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
A-5
<PAGE>
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination, statutory share exchange or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case the shares of Series A Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the date hereof
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
8. NO REDEMPTION. The shares of Series A Preferred Stock shall not
be redeemable.
9. RANK. The Series A Preferred Stock shall rank junior with
respect to payment of dividends and on liquidation to all other Preferred Stock
of the Corporation unless the terms of any other Preferred Stock specifically
provide that it shall rank junior to, or on a parity with, the Series A
Preferred Stock.
10. AMENDMENT. The Charter of the Corporation shall not be amended
in any manner that would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a single class.
A-6
<PAGE>
IN WITNESS WHEREOF, Longs Drug Stores Corporation has caused these
presents to be signed in its name and on its behalf by its President and
witnessed by its Secretary on ___________, 1996.
WITNESS: LONGS DRUG STORES CORPORATION
By
- ------------------------ --------------------------
Orlo D. Jones, Secretary R.M. Long, Chief Executive
Officer
THE UNDERSIGNED, Chief Executive Officer of Longs Drug Stores
Corporation, who executed on behalf of the Corporation Articles Supplementary of
which this Certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that the matters and
facts set forth herein with respect to the authorization and approval thereof
are true in all material respects under the penalties of perjury.
---------------------------
R.M. Long,
Chief Executive Officer
A-7
<PAGE>
EXHIBIT B
[FORM OF RIGHT CERTIFICATE]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 15, 2006 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. RIGHTS OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING
PERSON (AS EACH ARE DEFINED IN THE RIGHTS AGREEMENT), AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS, MAY BE OR BECOME NULL AND VOID.
Right Certificate
LONGS DRUG STORES CORPORATION
This certifies that ______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of August 20, 1996, as amended (the "Rights Agreement")
between Longs Drug Stores Corporation, a Maryland corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M. San Francisco time on September 15, 2006 at the principal office of
the Rights Agent in San Francisco, California, or at the office of its
successors as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $.50 per share
(the "Preferred Shares"), of the Company, at a purchase price of $___.00 per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of Preferred Shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of ______________ __, ____, based on the Preferred Shares as
constituted at such date.
Upon the occurrence of an event described in Section 11(a)(ii) of the
Rights Agreement, all Rights evidenced by his Rights Certificate which are
beneficially
B-1
<PAGE>
owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who
concurrently with or after such transfer, became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, shall become null and void and no
such holder hereof shall have any right with respect to such Rights from and
after the occurrence of such event.
As provided in the Rights Agreement, the Purchase Price and the number
of Preferred Shares or other securities which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may, but are not required to be (i) redeemed by
the Company at a redemption price of $.01 per Right or (ii) exchanged in whole
or in part for Preferred Shares or shares of the Company's Common Stock, par
value $.50 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other
B-2
<PAGE>
than fractional shares which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ___________ ___, ____.
ATTEST: LONGS DRUG STORES CORPORATION
By
- -------------------------- ---------------------------
Secretary Chief Executive Officer
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., a New
Jersey limited liability
company
By
--------------------------
Authorized Signature
B-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED________________________________________________
hereby sells, assigns and transfers unto___________________________________
___________________________________________________________________________
___________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated ___________________, ____
-----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- -------------------------------------------------------------------------------
B-4
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
CERTIFICATION FOR TRANSFER
(To be executed in connection with any
transfer of the Right Certificate.)
The undersigned hereby certifies that: (1) this Right Certificate is
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it did not
acquire the Rights evidenced by this Right Certificate from any Person who is,
was, or subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated ___________________, ____
-----------------------------
Signature
- -------------------------------------------------------------------------------
B-5
<PAGE>
[Form of Reverse Side of Right Certificate--continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: LONGS DRUG STORES CORPORATION
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by the Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
Dated ___________________, ____
-----------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate in every
particular, without alteration
or enlargement or any change
whatsoever)
B-6
<PAGE>
[Form of Reverse Side of Right Certificate--continued]
Signature Guaranteed
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
- -------------------------------------------------------------------------------
CERTIFICATION FOR ELECTION TO PURCHASE
The undersigned hereby certifies that: (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it did not
acquire the Rights evidenced by this Right Certificate from any Person who is,
was or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated ___________________, ____
-----------------------------
Signature
- -------------------------------------------------------------------------------
NOTICE
The signatures in the foregoing Forms of Assignment and Election must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment and Election is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and such Assignment or Election will not be honored.
B-7
<PAGE>
EXHIBIT C
LONGS DRUG STORES CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On August 20, 1996 the Board of Directors of Longs Drug Stores
Corporation (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.50 per
share (the "Common Shares"), of the Company. The dividend is payable on
September 16, 1996 (the "Record Date") to stockholders of record at the close of
business on that date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of a Series A Junior Participating
Preferred Stock, par value $.50 per share, of the Company (the "Preferred
Shares") at a price of $130 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company, as Rights Agent (the "Rights Agent"), dated as of August 20,
1996.
An Acquiring Person is defined as any person or group of affiliated or
associated persons, other than certain designated members of the Long family and
employee benefit plans of the Company, that has obtained beneficial ownership of
15% of the outstanding Common Shares. Until the earlier to occur of (i) a
public announcement by the Company or an Acquiring Person that an Acquiring
Person acquired, or obtained the right to acquire, beneficial ownership of 15%
or more of the outstanding Common Shares or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person becomes an Acquiring Person) following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in a person or group becoming the beneficial
owner of 15% or more of such outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificates with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date, the Rights will
be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued
C-1
<PAGE>
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on September 15, 2006, unless earlier redeemed or exchanged
by the Company in each case as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or retained
earnings or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those referred to above). The number of outstanding Rights
associated with each Common Share is also subject to adjustment in the event of
a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.
In the event that any person or group becomes an Acquiring Person (a
"Flip-In Event"), proper provision will be made so that each holder of a Right,
other than the Acquiring Person (whose Rights will thereafter be void), will
thereafter have the right to receive upon exercise at its then current exercise
price that number of Common Shares having a market value of two times the
exercise price of the Right (or Preferred Shares if so elected by the Board of
Directors). However, Rights are not exercisable following the occurrence of
such event until such time as the Rights are no longer redeemable by the Company
as set forth below.
C-2
<PAGE>
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision is required to be made so that each holder of a Right (other
than an Acquiring Person, whose Rights will have become void) will thereafter
have the right to receive, upon the exercise of the Right at its then current
exercise price, that number of shares of common stock of the person with whom
the Company has engaged in the foregoing transaction which at the time of such
transaction have a market value of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred or Common Shares will be issued
(other than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, a payment in cash will
be made based on the market price of the Preferred or Common Shares on the last
trading date prior to the date of exercise.
At any time until twenty days following the date a person or group
becomes an Acquiring Person, the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the "Redemption Price"). Under no
circumstances following the occurrence of a Flip-In Event may the Rights be
exercised prior to the expiration of the Company's right of redemption.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
At any time after any person becomes an Acquiring Person, the Board of
Directors of the Company may, at its option, exchange all or part of the then
outstanding and exercisable Rights (excluding Rights of an Acquiring Person that
have become void) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof. Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Acquiring Person becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding. In lieu of Common Shares, the Board
of Directors may elect to substitute Series A Preferred Shares for any such
exchange.
For so long as the Rights are then redeemable, the Company may amend
the Rights in any manner other than to change
C-3
<PAGE>
the Redemption Price. After the Rights are no longer redeemable the Company may
amend the Rights in any manner that does not adversely affect the interests of
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Shares (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
100 times the dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share
will have 100 votes, voting together with the Common Shares. Finally, in the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the long-term
value of one Common Share.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Form 8-K dated September ___,
1996. A copy of the Rights Agreement is available free of charge from the
Company upon written request. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.
Dated: September __, 1996
C-4
