<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Beverly Enterprises, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-4100309
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(State of incorporation (IRS Employer
or organization) Identification No.)
5111 Rogers Avenue, Suite 40-A, Fort Smith, Arkansas 72919
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(Address of principal executive offices) (Zip Code)
</TABLE>
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Common Stock Purchase Rights New York Stock Exchange, Inc.
Pacific Stock Exchange
</TABLE>
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 September 29, 1994 the Board of Directors of Beverly Enterprises,
Inc. (the "Company") declared a dividend of one common stock purchase right
(the "Rights") for each share of common stock, $.10 par value per share (the
"Common Shares"), of the Company outstanding at the close of business on
November 2, 1994 (the "Record Date"). Each Right entitles the registered
holder thereof, after the Rights become exercisable and until September 28,
2004 (or the earlier redemption, exchange or termination of the Rights), to
purchase from the Company one Common Share at a price of $70 per share, subject
to certain antidilution adjustments (the "Purchase Price"). The Rights will be
represented by the Common Share certificates and will not be exercisable or
transferable apart from the Common Shares until the earlier to occur of (i) ten
(10) days following a public announcement that a Person or group of affiliated
or associated Persons has become an Acquiring Person (a Person or group of
affiliated or associated Persons who has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the Common Shares), or (ii) ten
(10) days after a Person or group commences, or announces an intention to
commence, a tender or exchange offer, the consummation of which would result in
the beneficial ownership by a Person or group of 15% or more of the Common
Shares (the earlier of (i) and (ii) being called the "Distribution Date,"
whether or not either such date occurs prior to the Record Date). The Board of
Directors has the power, under certain circumstances, to postpone the
Distribution Date. Separate certificates representing the Rights will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date. The Rights will first become exercisable on the
Distribution Date, unless earlier redeemed or exchanged, and may then begin
trading separately from the Common Shares. The Rights will at no time have any
voting rights.
In the event that a Person becomes an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Shares approved by
the Board of Directors of the Company) or if the Company were the surviving
corporation in a merger with an Acquiring Person or any affiliate or associate
of an Acquiring Person and the Common Shares were not changed or exchanged,
each holder of a Right, other than Rights that are or were acquired or
beneficially owned by the Acquiring Person (which Rights will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the then current Purchase
Price of one Right. In the event that, following the first date of public
announcement that a Person or group has become an Acquiring Person, the Company
were acquired in a merger or other business combination transaction or more
than 50% of its assets or earning power were sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value of two times the then current
Purchase Price of one Right.
At any time after a Person becomes an Acquiring Person and prior to
the acquisition by such Acquiring Person of 50% or more of the then outstanding
Common Shares, the Board of Directors may cause the Company to acquire the
Rights (other than Rights owned by an Acquiring Person which have become void),
in whole or in part, in exchange for that number of Common Shares having an
aggregate value equal to the Spread (the excess of the value of the Common
Shares issuable upon exercise of a Right after a Person becomes an Acquiring
Person over the Purchase Price) per Right (subject to adjustment).
2
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The Rights may be redeemed in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") by the Board of Directors at any time
prior to the close of business on the tenth day following the first date of
public announcement that a Person or group has become an Acquiring Person. The
Board of Directors has the power, under certain circumstances, to extend the
ten-day redemption period. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem or to lengthen or shorten the redemption
period shall require the concurrence of a majority of the Continuing Directors
(as defined below). Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights, the Company shall make an
announcement thereof, and upon such election, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The Rights will expire on September 28, 2004 (unless earlier redeemed
or exchanged). The Bank of New York is the Rights Agent.
The Purchase Price payable, and the number of Common 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 Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights
or warrants to subscribe for or purchase Common Shares or convertible
securities at less than the current market price of the Common Shares or (iii)
upon the distribution to holders of the Common Shares of evidences of
indebtedness, securities or assets (excluding regular periodic cash dividends
at a rate not in excess of 125% of the rate of the last regular periodic cash
dividend theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income
per share of the Company for the four quarters ended immediately prior to the
payment of such dividend, or dividends payable in Common Shares (which
dividends will be subject to the adjustment described in clause (i) above)) or
of subscription rights or warrants (other than those referred to above).
No adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No
fractional shares will be issued and in lieu thereof, a payment in cash will be
made based on the market price of the Common Shares on the last trading date
prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company beyond those as an existing stockholder,
including, without limitation, the right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the Company and the Rights Agent may amend or supplement the
Rights Agreement without the approval of any holders of Right Certificates to
cure any ambiguity, to correct or supplement any provision contained therein
which may be defective or inconsistent with any other provisions therein, to
shorten or lengthen any time period under the Rights Agreement (so long as,
under certain circumstances, a majority of Continuing Directors (as defined
below) approve such shortening or lengthening), or so long as the interests of
the holders of Right Certificates (other than an Acquiring Person or an
affiliate or associate of an Acquiring Person) are not adversely affected
thereby, to make any other provisions in regard to matters or questions arising
thereunder
3
<PAGE> 4
which the Company and the Rights Agent may deem necessary or desirable,
including but not limited to extending the Final Expiration Date. The Company
may at any time prior to such time as any Person becomes an Acquiring Person
amend the Rights Agreement to lower the thresholds described above to not less
than the greater of (i) any percentage greater than the largest percentage of
the outstanding Common Shares then known by the Company to be beneficially
owned by any person or group of affiliated or associated persons and (ii) 10%.
The term "Continuing Directors" means any member of the Board of
Directors of the Company who was a member of the Board prior to the time that
any Person becomes an Acquiring Person, and any person who is subsequently
elected to the Board if such person is recommended or approved by a majority of
the Continuing Directors. Continuing Directors do not include an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or any
representative of the foregoing.
As of October 14, 1994, there were 85,576,361 Common Shares
outstanding and 8,407,081 shares were reserved for distribution under the
Company's various employee stock option and other benefit plans, 5,303,933
shares were reserved for issuance upon conversion of the Company's convertible
indebtedness and 11,252,813 shares were reserved for issuance upon conversion
of the Company's $2.75 Cumulative Convertible Exchangeable Preferred Stock.
One Right will be distributed to stockholders of the Company for each Common
Share owned of record by them on November 2, 1994. As long as the Rights are
attached to the Common Shares, the Company will issue one Right with each new
Common Share so that all such shares will have attached Rights. Approximately
110,540,188 Common Shares have been reserved for issuance upon exercise of the
Rights.
The Rights will cause substantial dilution to a person or group that
acquires 15% or more of the Company's stock on terms not approved by the
Company's Board of Directors, except pursuant to an offer conditioned on a
substantial number of Rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board of
Directors prior to ten days after the time that a Person or group has become an
Acquiring Person as the Rights may be redeemed by the Company at $.01 per Right
prior to such time.
Certain provisions of the Company's Restated Certificate of
Incorporation and Amended Bylaws summarized below may be deemed to have
anti-takeover effects and may delay or defer a tender offer or takeover attempt
that a stockholder might consider to be in such stockholder's best interest.
Article XI of the Company's Restated Certificate of Incorporation requires,
under certain circumstances, an affirmative vote of 80% or more of the Voting
Stock of the Company on Business Combinations involving an Interested
Shareholder (each as defined below). The Restated Certificate of Incorporation
defines an "Interested Shareholder" as a person (other than the Company or any
of its subsidiaries) who beneficially owns 10% or more of the stock of the
Company entitled to vote for the election of directors ("Voting Stock") and
certain defined Affiliates. A "Business Combination" includes a merger,
consolidation, asset sale, liquidation, recapitalization and certain other
business transactions, including the issuance of stock of the Company. The
Restated Certificate of Incorporation provides that all Business Combinations
involving an Interested Shareholder must be approved by the holders of 80% or
more of the Voting Stock, unless (i) the Interested Shareholder holds 80% or
more of the Voting Stock, (ii) the Business Combination is approved by a
majority of the Disinterested Directors (as defined below) or (iii) a minimum
price is received by all shareholders.
4
<PAGE> 5
Pursuant to Article XI of the Company's Restated Certificate of
Incorporation, the members of the Board of Directors who were directors prior
to the time the Interested Shareholder became an Interested Shareholder, and
directors who were recommended for election by such directors ("Disinterested
Directors"), will determine by a majority vote the fair market value of the
consideration to be received or retained and whether the price meets a minimum
price criteria. To meet the minimum price criteria, the shareholders must
receive consideration in or retain value per share after the transaction which
is not less than the highest price per share paid by the Interested Shareholder
in acquiring any shares of stock of the Company within the two-year period
prior to the Business Combination. In addition, the Interested Shareholder
must not have received (other than proportionately as a shareholder) the
benefit of any financial assistance from the Company. The provisions of
Article XI of the Company's Restated Certificate of Incorporation may have the
effect of delaying or deferring a tender offer or takeover attempt that is not
approved by a majority of the Disinterested Directors.
In addition, the Company's Restated Certificate of Incorporation
authorizes the issuance of up to 25,000,000 shares of preferred stock, in one
or more series and with such rights, preferences, privileges and restrictions,
including voting rights, redemption provisions (including sinking fund
provisions), dividend rights, dividend rates, liquidation rates, liquidation
preferences and conversion rights, as the Board of Directors of the Company may
determine without further action by the holders of the Company's common stock.
As of October 14, 1994, 3,000,000 shares of the Company's preferred stock were
issued and outstanding. The issuance of additional shares or series of
preferred stock under certain circumstances could have the effect of delaying a
change of control of the Company or other corporate action. The Company's
Restated Certificate of Incorporation and Amended Bylaws provide that special
meetings of the stockholders of the Company may be called only by a majority of
the Board of Directors, the Chairman of the Board or the President of the
Company, and the Restated Certificate of Incorporation prohibits stockholder
action by written consent without a meeting. Such provisions may have the
effect of delaying consideration of a stockholder proposal unless and until
either an annual or special meeting is held.
The Rights Agreement, dated as of September 29, 1994, between the
Company and the Rights Agent specifying the terms of the Rights, the text of
the press release announcing the declaration of the Rights, and the form of a
letter to be sent to the holders of the Company's Common Stock, dated November
2, 1994, explaining the Rights, are attached hereto as exhibits and are
incorporated herein by reference. The foregoing description of the Rights is
qualified in its entirety by reference to such exhibits.
5
<PAGE> 6
Item 2. Exhibits.
1. Rights Agreement, dated as of September 29, 1994, between
Beverly Enterprises, Inc. and The Bank of New York, which
includes the form of Right Certificate as Exhibit A and the
Summary of Rights to Purchase Common Shares as Exhibit B.
2. Text of Press Release, dated September 30, 1994.
3. Form of Letter to the holders of Beverly Enterprises, Inc.
Common Stock, dated November 2, 1994.
6
<PAGE> 7
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: October 18, 1994
BEVERLY ENTERPRISES, INC.
By: \s\ Robert W. Pommerville
--------------------------------------
Name: Robert W. Pommerville
Title: Senior Vice President,
General Counsel and Secretary
7
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EXHIBIT INDEX
1. Rights Agreement, dated as of September 29, 1994, between
Beverly Enterprises, Inc., and The Bank of New York, which
includes the form of Right Certificate as Exhibit A and the
Summary of Rights to Purchase Common Shares as Exhibit B.
2. Text of Press Release dated September 30, 1994.
3. Form of Letter to the holders of Beverly Enterprises, Inc.
Common Stock dated November 2, 1994.
8
<PAGE> 1
EXHIBIT 1
EXECUTION COPY
================================================================================
BEVERLY ENTERPRISES, INC.
and
THE BANK OF NEW YORK
as Rights Agent
Rights Agreement
Dated as of September 29, 1994
================================================================================
<PAGE> 2
RIGHTS AGREEMENT
Agreement, dated as of September 29, 1994 between Beverly
Enterprises, Inc., a Delaware corporation (the "Company"), and The Bank of New
York, a New York corporation, as Rights Agent (the "Rights Agent").
RECITALS
The Board of Directors of the Company has authorized and
declared a dividend of one right (a "Right") for each Common Share (as defined
in Section 1.6) of the Company outstanding at the close of business on November
2, 1994 (the "Record Date") and has 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 3.1 and 7.1), each
Right initially representing the right to purchase one Common Share.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
1.1 "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 of the Company then outstanding but shall not include 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 shares of
capital stock of the Company for or pursuant to the terms of any such plan, in
its capacity as an agent or trustee for any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares of the Company then
outstanding; PROVIDED, HOWEVER, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Shares of the Company then outstanding
solely by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be deemed to be an "Acquiring
Person." Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
Section 1.1, has become such inadvertently, and such Person divests as promptly
as practicable a sufficient number of Common Shares so that such Person would
no longer be an Acquiring Person, as defined pursuant to the foregoing
provisions of this Section 1.1, then such Person shall not be deemed to be an
"Acquiring Person" at any time for any purposes of this Agreement.
1.2 "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations, as in effect on the date of this Rights Agreement, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
1.3 A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
1
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(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly (as
determined pursuant to 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, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately, or only after
the passage of time, compliance with regulatory requirements,
fulfillment of a condition or otherwise) pursuant to any agreement,
arrangement or understanding, whether or not in writing (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 the Rights), warrants or options, or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, (1) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange or (2) securities which such Person
or any of such Person's Affiliates or Associates may acquire, does or
do acquire or may be deemed to have the right to acquire, pursuant to
any merger or other acquisition agreement between the Company and such
Person (or one or more of his Affiliates or Associates) if such
agreement has been approved by the Board of Directors of the Company
prior to such Person's becoming an Acquiring Person; or (B) the right
to vote pursuant to any agreement, arrangement or understanding
(whether or not in writing); PROVIDED, HOWEVER, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any
security under this clause (B) 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 (or any Affiliate or Associate
thereof) with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities),
whether or not in writing, for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the
proviso to Section 1.3(ii)(B)) or disposing of any securities of the
Company.
1.4 "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
1.5 "close of business" on any given date shall mean 5:00
p.m., New York City time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
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1.6 "Common Shares" when used with reference to the
Company shall mean the shares of common stock, par value $.10 per share, of the
Company. "Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock with the greatest voting power, or the
equity securities or other equity interest having power to control or direct
the management, of such other Person or, if such Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person, and which has issued and outstanding such capital
stock, equity securities or equity interest.
1.7 "Continuing Director" shall mean (i) any member of
the Board of Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or an employee, director, representative, nominee or designee
of any Acquiring Person or of any such Affiliate or Associate, and was a member
of the Board prior to the time that any Person becomes an Acquiring Person or
(ii) any Person (during such period in which such Person is a member of the
Board) who, after the time that any Person becomes an Acquiring Person, becomes
a member of the Board and who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or an employee, director, representative,
nominee or designee of an Acquiring Person or of any such Affiliate or
Associate, if such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors.
1.8 "Person" shall mean any individual, partnership,
joint venture, limited liability company, firm, corporation, unassociated
association, trust or other entity, and shall include any successor (by merger
or otherwise) of such entity.
1.9 "Shares Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this definition, shall include,
without limitation, the filing of a report pursuant to Section 13(d) of the
Exchange Act or pursuant to a comparable successor statute) by the Company or
an Acquiring Person that an Acquiring Person has become such or that discloses
information which reveals the existence of an Acquiring Person.
1.10 "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, of record or beneficially, directly or
indirectly, by such Person.
1.11 A "Trigger Event" shall be deemed to have occurred
upon any Person becoming an Acquiring Person. Notwithstanding the foregoing, a
Trigger Event shall not be deemed to have occurred if the event causing the 15%
ownership threshold to be crossed is an acquisition of Common Shares made
pursuant to a cash tender offer made pursuant to the rules and regulations
under the Exchange Act and filed with the Securities and Exchange Commission on
Schedule 14D-1 (or any successor form) for all outstanding Common Shares not
beneficially owned by the Person making such offer (or by its Affiliates or
Associates) so long as the Board of Directors of the Company determines, after
receiving advice from one or more investment banking firms, that such offer is
(i) at a price and on terms which are fair to stockholders (taking into account
all factors which such members of the Board deem relevant, including without
limitation, prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and
(ii) otherwise in the best interests of the Company and its stockholders;
PROVIDED, HOWEVER, that there must be Continuing Directors then in office and
any such determination shall require the concurrence of a majority of such
Continuing Directors.
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1.12 The following terms shall have the meanings defined
for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
Distribution Date 3.1
Exchange Act 1.2
Exchange Consideration 27
Final Expiration Date 7.1
NASDAQ 9
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4
</TABLE>
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, 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. In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agent shall be as the Company shall determine. Contemporaneously with such
appointment, if any, the Company shall notify the Rights Agent thereof.
Section 3. Issuance of Right Certificates.
3.1 Rights Evidenced by Share Certificates. Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth day after the date of the commencement of, or first public announcement
of the intent of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding shares of capital stock of the Company for or
pursuant to the terms of any such plan, in its capacity as an agent or trustee
for any such plan) to commence, a tender or exchange offer the consummation of
which would result in any Person becoming the Beneficial Owner of Common Shares
aggregating 15% or more of the then outstanding Common Shares of the Company
(the earlier of (i) and (ii) being herein referred to as the "Distribution
Date," whether or not either such date occurs prior to the Record Date), (x)
the Rights (unless earlier expired, redeemed or terminated) will be evidenced
(subject to the provisions of Section 3.2) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates for
Common Shares shall also be deemed to be Right Certificates) and not by
separate
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certificates, and (y) the Rights (and the right to receive certificates
therefor) will be transferable only in connection with the transfer of the
underlying Common Shares. The preceding sentence notwithstanding, prior to the
Distribution Date specified therein (or such later Distribution Date as the
Board of Directors of the Company may select pursuant to this sentence), the
Board of Directors of the Company may postpone, one or more times, the
Distribution Date beyond the earlier of the dates set forth in such preceding
sentence; PROVIDED, HOWEVER, that there must be Continuing Directors then in
office and any such postponement shall require the approval of at least a
majority of such Continuing Directors. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first-class, 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 certificate for Rights, in substantially the form of Exhibit A
hereto (a "Right Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3.2 Summary of Rights. On the Record Date or as soon as
practicable thereafter, the Company will send or cause to be sent a copy of a
Summary of Rights to Purchase Common Shares, in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of business on the
Record Date at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the close of
business on the Record Date, until the Distribution Date (or the earlier
Redemption Date or Final Expiration Date), the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders thereof
together with a copy of the Summary of Rights and the registered holders of the
Common Shares shall also be registered holders of the associated 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 at the close of business on the Record Date, with or without a copy
of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
3.3 New Certificates After Record Date. Certificates for
Common Shares which become outstanding (whether upon issuance out of authorized
but unissued Common Shares, issuance out of treasury or transfer or exchange of
outstanding Common Shares) after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date, shall
be deemed also to be certificates for Rights, and shall have impressed,
printed, stamped, written or otherwise affixed onto them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Beverly
Enterprises, Inc. and The Bank of New York, dated as of September 29,
1994, as the same may be amended from time to time (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 Beverly Enterprises, Inc. 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. Beverly Enterprises, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. As described in the Rights
Agreement, Rights which are held by or have been held by Acquiring
Persons or Associates or Affiliates thereof (as defined in the Rights
Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier Redemption Date or Final Expiration Date),
the Rights associated with the Common Shares represented
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by such certificates shall be evidenced by such certificates and the surrender
for transfer of any such certificates shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby. In the event
that the Company purchases or 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.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares, certification and
assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Rights 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 trading system on which the Rights may from
time to time be listed or quoted, or to conform to usage. Subject to the terms
and conditions hereof, the Right Certificates, whenever issued, shall be dated
as of the Record Date, and shall show the date of countersignature by the
Rights Agent, and on their face shall entitle the holders thereof to purchase
such number of Common Shares as shall be set forth therein at the price per
share set forth therein (the "Purchase Price"), but the number and kind of such
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 Chairman of the
Board of Directors, the Chief Executive Officer, President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by
the Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
an authorized signatory of the Rights Agent, but it shall not be necessary for
the same signatory to countersign all of the Right Certificates hereunder. No
Right Certificate shall 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 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 one of its offices in New York, 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, the
number of the Right Certificates and the date 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 11.1.2 and Section 14, 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 or the Final Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11.1.2 or that
have been exchanged pursuant to Section 27) may be transferred, split up or
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<PAGE> 8
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up or
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender, together with any required
form of assignment and certificate duly completed, the Right Certificate or
Right Certificates to be transferred, split up or combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate or Right
Certificates until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall 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 from the holders of Right
Certificates of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up or combination or
exchange of such 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 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
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
7.1 Exercise of Rights. Subject to Section 11.1.3, the
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each Common Share
as to which the Rights are exercised, at or prior to the earliest of (i) the
close of business on September 28, 2004 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 (the
"Redemption Date"), (iii) the closing of any merger or other acquisition
transaction involving the Company pursuant to an agreement of the type
described in Section 1.3(ii)(A)(2), at which time the Rights are deemed
terminated, or (iv) the time at which the Rights are exchanged as provided in
Section 27.
7.2 Purchase Price. The Purchase Price for each Common
Share pursuant to the exercise of a Right shall initially be $70, shall be
subject to adjustment from time to time as provided in Sections 11, 13 and 26
and shall be payable in lawful money of the United States of America in
accordance with paragraph 7.3.
7.3 Payment Procedures. Upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase and certification 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, by certified or cashier's check or
money order payable to the order of the Company, the Rights Agent shall
thereupon
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promptly (i) requisition from any transfer agent of the Common Shares (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of Common Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with Section 14, (iii)
promptly after receipt of such certificates, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and (iv)
when appropriate, after receipt, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. In the event that
the Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11.1.3, the Company will
make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
7.4 Partial Exercise. 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.
7.5 Full Information Concerning Ownership.
Notwithstanding anything in this Rights Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise shall have been duly completed and signed by the
registered holder thereof and the Company shall have been provided with such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of 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
retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate 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 Common Shares.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Common Shares, or any authorized
and issued Common Shares held in its treasury, the number of Common Shares that
will be sufficient to permit the exercise in full of all outstanding Rights.
So long as the Common Shares issuable upon the exercise of
Rights may be listed on any national securities exchange or traded in the
over-the-counter market and quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), 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 so traded in such over-the-counter market, upon official notice of
issuance upon such exercise.
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<PAGE> 10
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all Federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Common Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Common 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 for Common
Shares in a name other than that of the registered holder 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 established to the Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in whose
name any certificate for Common Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common 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 Common 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 Common Shares transfer books of the Company are open.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
11.1 Post Execution Events.
11.1.1 Corporate Dividends, Reclassifications, Etc. In the
event the Company shall at any time after the date of this Rights Agreement (A)
declare a dividend on the Common Shares payable in Common Shares, (B) subdivide
the outstanding Common Shares, (C) combine the outstanding Common Shares into a
smaller number of shares or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11.1, 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 Common Shares transfer
books of the Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both Section 11.1.1 and Section 11.1.2, the adjustment provided for in this
Section 11.1.1 shall be in addition to, and shall be made prior to, the
adjustment required pursuant to, Section 11.1.2.
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11.1.2 Acquiring Person Events; Triggering Events. Subject
to Sections 23.1 and 27 of this Agreement, in the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this
Rights Agreement, directly or indirectly, shall merge into the Company
or otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or combination and
the Common Shares of the Company shall remain outstanding and not
changed into or exchanged for stock or other securities of any other
Person or the Company or cash or any other property, or
(B) that a Trigger Event occurs,
then, promptly following the occurrence of each such event listed in this
Section 11.1.2, proper provision shall be made so that each holder of a Right,
except as provided below, shall thereafter have a right to receive, upon
exercise thereof in accordance with the terms of this Rights Agreement, such
number of Common Shares as shall equal the result obtained by (x) multiplying
the then-current Purchase Price by the then-number of Common Shares for which
a Right is then exercisable and (y) dividing that product by 50% of the current
per share market price of the Common Shares (determined pursuant to Section
11.4) on the first of the date of the occurrence of, or the date of the first
public announcement of, one of the events listed above in this Section 11.1.2
(the "Adjustment Shares"); PROVIDED, HOWEVER, that if the transaction that
would otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of Section 13 shall apply
and no adjustment shall be made pursuant to this Section 11.1.2; and PROVIDED,
FURTHER, that nothing contained in this Section 11.1.2 shall limit or otherwise
diminish the power of the Board of Directors (or, if applicable, the Continuing
Directors) to postpone the Distribution Date pursuant to Section 3.1 or to
extend the period during which the Rights may be redeemed pursuant to Section
23.1. Notwithstanding the foregoing, upon the occurrence of either of the
events listed above in this Section 11.1.2, any Rights that are or were
acquired or beneficially owned by an Acquiring Person or any Associate or
Affiliate of the Acquiring Person shall become void and any holder (whether or
not such holder is an Acquiring Person or an Associate or Affiliate of an
Acquiring Person) of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Rights Agreement or otherwise. The
Company shall not enter into any transaction of the type described in this
Section 11.1.2 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any arrangements which, as a
result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. Any
Right Certificate issued pursuant to Section 3 or Section 22 that represents
Rights beneficially owned by: (1) an Acquiring Person or any Associate or
Affiliate thereof, (2) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (3) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of this Section 11.1.2 and
any Right Certificate issued pursuant to Section 6, 7.4 or 22 or this Section
11 upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following legend
(PROVIDED, HOWEVER, that the Rights Agent shall not be responsible for affixing
such legend unless it has actual knowledge as to the foregoing circumstances or
the Company has notified the Rights Agent in writing thereof):
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THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE HELD OR
HAVE BEEN HELD BY A PERSON WHO IS OR WAS AN ACQUIRING PERSON
OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON OR A
NOMINEE THEREOF. THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY HAVE BECOME NULL AND VOID AS SPECIFIED IN
SECTION 11.1.2 OF THE RIGHTS AGREEMENT.
The Company shall use all reasonable efforts to insure that
the provisions of this Section 11.1.2 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 any Acquiring Person or
its Affiliates, Associates or transferees hereunder.
11.1.3 Insufficient Shares. In the event that upon the
occurrence of one or more of the events listed in Section 11.1.2 above there
shall not be sufficient Common Shares authorized but unissued, or held by the
Company as treasury shares, to permit the exercise in full of the Rights in
accordance with the foregoing Section 11.1.2, the Company shall take all such
action as may be necessary to authorize additional Common Shares for issuance
upon exercise of the Rights, PROVIDED, HOWEVER, that if the Company determines
that it is unable to cause the authorization of a sufficient number of
additional Common Shares, then, in the event the Rights become exercisable, the
Company, with respect to each Right and to the extent necessary and permitted
by applicable law and any agreements or instruments in effect on the date
hereof to which it is a party, shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value"), over (2) the Purchase Price (such excess, the "Spread") and
(B) with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) Common Shares or other equity securities
of the Company (including, without limitation, shares, or units of shares, of
preferred stock which the Board of Directors of the Company has deemed to have
the same value as Common Shares) (each such share of preferred stock
constituting a "common stock equivalent")), (4) debt securities of the Company,
(5) other assets or (6) any combination of the foregoing having an aggregate
value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of
Directors of the Company; PROVIDED, HOWEVER, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the first occurrence of one of the events listed in
Section 11.1.2 above, then the Company shall be obligated to deliver, 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, cash,
which in the aggregate are equal to the Spread. If the Board of Directors of
the Company shall determine in good faith that it is unlikely that sufficient
additional Common Shares could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended and
re-extended to the extent necessary, but not more than ninety (90) days
following the first occurrence of one of the events listed in Section 11.1.2
above, in order that the Company may seek stockholder approval for the
authorization of such additional shares (such period as may be extended, the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11.1.3, the Company (x) shall provide that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11.1.3, the
value of a Common Share shall be the current per share
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market price (as determined pursuant to Section 11.4) on the date of the first
occurrence of one of the events listed in Section 11.1.2 above and the value of
any "common stock equivalent" shall be deemed to have the same value as the
Common Shares on such date.
11.2 Dilutive Rights Offering. In case the Company shall fix
a record date for the issuance of rights or warrants to all holders of Common
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per Common Share (or having a
conversion price per Common Share, if a security convertible into Common
Shares) less than the current per share market price of the Common Shares (as
defined in Section 11.4) 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 Common Shares outstanding on such
record date plus the number of Common Shares which the aggregate offering price
of the total number of Common Shares to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of Common Shares outstanding on such record date plus the number of
additional Common 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 than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Common Shares owned by or held for the account of the Company or any Subsidiary
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustments 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.
11.3 Distributions. In case the Company shall fix a record
date for the making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness, securities or assets (other than a regular periodic
cash dividend at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or, in case regular periodic cash
dividends have not theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four quarters ended
immediately prior to the payment of such dividend, or a dividend payable in
Common Shares (which dividend, for purposes of this Agreement, shall be subject
to the provisions of Section 11.1.1(A) hereof)) or subscription rights or
warrants (excluding those referred to in Section 11.2), 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
Common Shares (as defined in Section 11.4) 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, securities or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Common Share and the denominator of which shall be such
current per share market price of the Common Shares. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
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11.4 Current Per Share Market Value. For the purpose of any
computation hereunder, the "current per share market price" of the Common
Shares on any date shall be deemed to be the average of the daily closing
prices per share of such Common Shares for the thirty (30) consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
PROVIDED, HOWEVER, that in the event that the current per share market price of
the Common Shares is determined during any period following the announcement by
the issuer of such Common Shares of (i) a dividend or distribution on such
Common Shares payable in such Common Shares or securities convertible into such
Common Shares or (ii) any subdivision, combination or reclassification of such
Common Shares, and prior to the expiration of thirty (30) Trading Days after
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the "current per share market price" shall be appropriately adjusted to reflect
the current market price per Common Share equivalent. 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 Common Shares are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use, or, if on any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Shares selected by the
Board of Directors of the Company. If on any such date no such market maker is
making a market in the Common Shares, the fair value of the Common Shares on
such date as determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Shares are listed or admitted
to trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Shares are not publicly held or not so listed or
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 or, if at the
time of such determination there is an Acquiring Person, by a majority of the
Continuing Directors then in office, or if there are no Continuing Directors,
by a nationally recognized investment banking firm selected by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent.
11.5 Insignificant Changes. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least 1% in such price. Any adjustments which by reason of this
Section 11.5 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
share as the case may be.
11.6 Shares Other Than Common Shares. If as a result of an
adjustment made pursuant to Section 11.1, the holder of any right thereafter
exercised shall become entitled to receive any shares of capital stock of the
Company other than Common Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Shares contained in Sections 11.1 through
11.3, inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to
the Common Shares shall apply on like terms to any such other shares.
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11.7 Rights Issued Prior to Adjustment. 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 Common Shares purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
11.8 Effect of Adjustments. Unless the Company shall have
exercised its election as provided in Section 11.9, upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11.1, 11.2 and
11.3, 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 shares (calculated to the nearest ten-thousandth)
obtained by (i) multiplying (x) the number of shares covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
11.9 Adjustment in Number of Rights. 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 Common
Shares issuable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercised for the number
of Common Shares for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (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 11.9, the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, 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 may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
11.10 Right Certificates Unchanged. Irrespective of any
adjustment or change in the Purchase Price or the number of Common Shares
issuable upon the exercise of the Rights, the Right Certificates theretofore
and thereafter issued may continue to express the Purchase Price per share and
the number of shares which were expressed in the initial Right Certificates
issued hereunder.
11.11 Par Value Limitations. Before taking any action that
would cause an adjustment reducing the Purchase Price below the then par value,
if any, of the Common 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 Common Shares at such adjusted Purchase Price.
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11.12 Deferred Issuance. In any case in which this Section
11 shall require that an adjustment in the Purchase Price be made effective as
of a record date for a specified event, the Company may elect to defer until
the occurrence of such event the issuing to the holder of any Right exercised
after such record date the Common Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the Common
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.
11.12 Reduction in Purchase Price. 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 be advisable in order that any consolidation or
subdivision of the Common Shares, issuance wholly for cash of any of the Common
Shares at less than the current market price, issuance wholly for cash of
Common Shares or securities which by their terms are convertible into or
exchangeable for Common Shares, stock dividends or issuance of rights, options
or warrants referred to hereinabove in this Section 11, hereafter made by the
Company to holders of its Common Shares shall not be taxable to such
stockholders.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13,
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 a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
13.1 General. In the event that, following the Shares
Acquisition Date, directly or indirectly, (A) the Company shall consolidate
with, or merge with and into, any other Person and the Company shall not be the
continuing or surviving corporation, (B) 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 Common Shares shall be changed into or exchanged for
stock or other securities of the Company or any other Person or cash or any
other property, or (C) the Company shall sell, exchange, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, exchange, mortgage or
otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons, then, and in
each such case, proper provision shall be made so that (i) each holder of a
Right (except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Rights Agreement, such number of Common
Shares of such other Person (including the Company as successor thereto or as
the surviving corporation) as shall be equal to the result obtained by (x)
multiplying the then-current Purchase Price by the then-number of Common Shares
for which a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11.1.2) and (y) dividing that
product by 50% of the current per share market price of the Common Shares of
such other Person (determined pursuant to Section 11.4)
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on the date of consummation of such consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such issuer; and (iv)
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) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights. The Company shall not enter into any transaction
of the kind referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to
be afforded by the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or other
transfers.
13.2 Approved Acquisitions. Notwithstanding anything
contained herein to the contrary, in the event of any merger or other
acquisition transaction involving the Company pursuant to a merger or other
acquisition agreement between the Company and any Person (or one or more of
such Person's Affiliates or Associates) which agreement has been approved by
the Board of Directors of the Company prior to any Person becoming an Acquiring
Person, this Rights Agreement and the rights of holders of Rights hereunder
shall be terminated in accordance with Section 7.1.
Section 14. Fractional Rights and Fractional Shares.
14.1 Cash in Lieu of Fractional Rights. The Company shall
not be required to issue 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 14.1, 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 price or, if not so quoted, the average of the high
bid and low asked prices in the over-the- counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
14.2 Cash in Lieu of Fractional Shares. The Company shall
not be required to issue fractions of shares upon exercise of the Rights or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company may pay to the registered holders of Right Certificates
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<PAGE> 18
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 Common Share.
For purposes of this Section 14.2, the current market value of a Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11.4) for the Trading Day immediately prior to the
date of such exercise.
14.3 Waiver of Right to Receive Fractional Rights or Shares.
The holder of a Right by the acceptance of the Rights expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise
of a Right.
Section 15. Rights of Action. All rights of action in
respect of this Rights Agreement, except the rights of action given to the
Rights Agent under Section 18, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce this Rights Agreement, and may
institute and maintain any suit, action or proceeding against the Company to
enforce this Rights Agreement, or otherwise enforce or act in respect of his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights 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 Rights Agreement and shall be
entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of, the obligations of any
Person (including, without limitation, the Company) subject to this Rights
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) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer with all required
certifications completed; 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
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 Common
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
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submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24), 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 in accordance with a fee schedule to be mutually agreed upon and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Rights 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 Rights 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 Rights Agreement in reliance upon
any Right Certificate or certificate for the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights 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. In case at the time such successor Rights Agent
shall succeed to the agency created by this Rights 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 Rights Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right 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 Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Rights 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:
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20.1 Legal Counsel. The Rights Agent may consult with legal
counsel selected by it (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion.
20.2 Certificates as to Facts or Matters. Whenever in the
performance of its duties under this Rights 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 deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors, the
Chief Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
20.3 Standard of Care. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.
20.4 Reliance on Rights Agreement and Right Certificates.
The Rights Agent shall not be liable for or by reason of any of the statements
of fact or recitals contained in this Rights Agreement or in the Right
Certificates (except as to 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.
20.5 No Responsibility as to Certain Matters. The Rights
Agent shall not be under any responsibility in respect of the validity of this
Rights 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 Rights Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11.1.2) or any adjustment required
under the provisions of Sections 3, 11, 13, 23 or 27 or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Common Shares to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any Common Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
20.6 Further Assurance by Company. 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 Rights Agreement.
20.7 Authorized Company Officers. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Chairman of the Board of Directors,
the Chief Executive Officer, the President, the Chief Financial Officer, any
Vice President, the Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties
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<PAGE> 21
under this Rights Agreement, 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 or for any delay in acting while waiting for these instructions.
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 with respect to its duties
or obligations under this Rights Agreement and the date on and/or after which
such action shall be taken or omitted. The Rights Agent shall not be liable to
the Company for any action taken or omitted in accordance with a proposal
included in any such application on or after the date specified therein (which
date shall not be less than three business days after the date any such officer
actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking of any such
action (or the effective date in the case of omission), the Rights Agent shall
have received written instructions in response to such application specifying
the action to be taken or omitted.
20.8 Freedom to Trade in Company Securities. The Rights
Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Rights
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
20.9 Reliance on Attorneys and Agents. The Rights Agent may
execute and exercise any of the rights or powers hereby vested in it or perform
any duty hereunder either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, omission, default, neglect or
misconduct, PROVIDED that reasonable care was exercised in the selection and
continued employment thereof.
20.10 Rights Holders List. At any time and from time to time
after the Distribution Date, upon the request of the Company, the Rights Agent
shall promptly deliver to the Company a list, as of the most recent practicable
date (or as of such earlier date as may be specified by the Company), of the
holders of record of Rights.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Shares by registered or certified
mail. The Company shall promptly notify the holders of the Right Certificates
by first-class mail of any such resignation. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (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 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 resigning, removed, or incapacitated Rights Agent shall remit to
the Company, or to any successor Rights Agent designated by the Company, all
books, records, funds, certificates or other documents or instruments of any
kind then in its possession which were acquired by such resigning, removed or
incapacitated Rights Agent in connection with its services as Rights Agent
hereunder, and shall thereafter be discharged from all duties and obligations
hereunder. Following notice of such removal, resignation or incapacity, the
Company shall appoint a successor to such Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (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
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<PAGE> 22
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 organized and doing business under the laws of the
United States or of the State of New York (or any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of New York) in good standing, having a principal
office in the State of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $10 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 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 Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price 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 Rights Agreement.
In addition, in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the redemption, exchange, termination or
expiration of the Rights, the Company (a) shall, with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of the Distribution Date,
or upon exercise, conversion or exchange of securities hereinafter issued by
the Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Company, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that (i) no such Right Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued, (ii) no
such Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof and
(iii) at the time of a determination by the Board of Directors to cause the
Company to issue a Right Certificate under clause (b) above, there must be
Continuing Directors then in office and any such determination shall require
the approval of at least a majority of such Continuing Directors.
Section 23. Redemption.
23.1 Right to Redeem. The Board of Directors of the Company
may, at its option, at any time prior to the close of business on the tenth day
following the Shares Acquisition Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend, recapitalization or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price"), PROVIDED, HOWEVER,
that if the Board of Directors of the Company authorizes redemption of the
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<PAGE> 23
Rights after the time a person becomes an Acquiring Person, then there must be
Continuing Directors then in office and such authorization shall require the
approval of at least a majority of such Continuing Directors. The preceding
sentence notwithstanding, prior to the expiration of the period during which
the Rights may be redeemed as specified therein (or such longer period as the
Board of Directors of the Company may select pursuant to this sentence), the
Board of Directors of the Company may extend, one or more times, the period
during which the Rights may be redeemed beyond the close of business on the
tenth day following the Shares Acquisition Date; PROVIDED, HOWEVER, that there
must be Continuing Directors then in office and any such extension shall
require the approval of at least a majority of such Continuing Directors.
Anything contained in this Rights Agreement to the contrary notwithstanding,
the Rights shall not be exercisable following a transaction or event described
in Section 11.1.2 prior to the expiration of the Company's right of redemption
hereunder.
23.2 Redemption Procedures. Immediately upon the action of
the Board of Directors of the Company ordering the redemption of the Rights,
and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. Within ten (10) days after
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give, or cause the Rights Agent to give, notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the 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 notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 27, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of Common Shares or to make any other distribution to the holders of
Common Shares (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last regular periodic cash dividend
theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income
per share of the Company for the four quarters ended immediately prior to the
payment of such dividends, or a stock dividend on, or a subdivision,
combination or reclassification of the Common Shares) or (b) to offer to the
holders of Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common Shares), or (d) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any other Person (other than
pursuant to a merger or other acquisition agreement of the type described in
Section 1.3(ii)(A)(2)), or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and to each holder of a Right Certificate, in accordance with
Section 25, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common 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 ten (10) days prior to the
record date
22
<PAGE> 24
for determining holders of the Common Shares for purposes of such action, and
in the case of any such other action, at least ten (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, whichever shall be the earlier.
In case any event set forth in Section 11.1.2 of this Rights
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25, a notice of the occurrence of such
event, which notice shall describe the event and the consequences of the event
to holders of Rights under Section 11.1.2.
Notwithstanding anything in this Rights Agreement to the
contrary, prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient notice to the
holders of securities of the Company, including the Rights, for purposes of
this Rights Agreement and no other notice need be given.
Section 25. Notices. Notices or demands authorized by this
Rights 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:
Beverly Enterprises, Inc.
5111 Rogers Avenue, Suite 40-A
Fort Smith, Arkansas 72919
Attention: Chairman of the Board or President
Subject to the provisions of Section 21, any notice or demand authorized by
this Rights 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:
The Bank of New York
101 Barclay Street, 12W
New York, New York 10286
Attention: Stock Transfer Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of 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 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the last sentence of this Section 26, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Rights Agreement without the approval of any
holders of certificates representing Common Shares. From and after the
Distribution Date and subject to the last sentence of this Section 26, the
Company and the Rights Agent may from time to time supplement or amend this
Rights Agreement without the approval of any holders of Right Certificates
(i) to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(ii) to shorten or lengthen any time period hereunder (which shortening or
lengthening, following the Shares Acquisition Date, shall be effective only if
there are
23
<PAGE> 25
Continuing Directors and shall require the approval of at least a majority of
such Continuing Directors) or (iii) so long as the interests of the holders of
the Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person) are not adversely affected thereby, to make
any other changes or provisions in regard to matters or questions arising
hereunder which the Company and the Rights Agent may deem necessary or
desirable, including but not limited to extending the Final Expiration Date;
PROVIDED, HOWEVER, that the right of the Board of Directors to extend the
Distribution Date or Redemption Date shall not require any amendment or
supplement hereunder. Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the Rights Agent shall
execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares. Without limiting the foregoing, at
any time prior to such time as any Person becomes an Acquiring Person, the
Company and the Rights Agent may amend this Agreement to lower the thresholds
set forth in Sections 1.1 and 3.1 to not less than the greater of (i) any
percentage greater than the largest percentage of the outstanding Common Shares
then known by the Company to be beneficially owned by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan) and (ii) 10%.
Section 27. Exchange.
27.1 Exchange of Common Shares for Rights. The Board of
Directors of the Company may, at its option, at any time after the occurrence
of a Trigger Event, exchange Common Shares for 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 11.1.2) by exchanging that
number of Common Shares having an aggregate value equal to the Spread (with
such value being based on the current per share market price (as determined
pursuant to Section 11.4) on the date of the occurrence of a Trigger Event) per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such amount per Right
being hereinafter referred to as the "Exchange Consideration").
Notwithstanding the foregoing, (i) the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding and (ii) the Board shall not be empowered to
effect an exchange for more than that number of Rights for which there are
sufficient Common Shares authorized but unissued, or held by the Company as
treasury shares, to permit the exchange for Rights.
27.2 Exchange Procedures. Immediately upon the action of the
Board of Directors of the Company ordering the exchange for any Rights pursuant
to Section 27.1 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right 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
Consideration. 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
24
<PAGE> 26
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 than the Rights which have become void pursuant to the
provisions of Section 11.1.2) held by each holder of Rights.
27.3 No Fractional Shares Upon Exchange. The Company shall
not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such
fractional Common Shares, the Company shall pay to the registered holders of
the Right Certificates, with regard to which such fractional Common Shares
would otherwise be issuable, in an amount in cash equal to the same fraction of
the current market value of a whole Common Share. For the purposes of this
Section 27.3, the current market value of a whole Common Share shall be the
current per share market value (as determined pursuant to Section 11.4) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
27.
Section 28. Successors. All the covenants and provisions of
this Rights 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. Benefits of this Rights Agreement. Nothing in
this Rights Agreement shall be construed to give to any person or corporation
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 Rights Agreement; but this
Rights 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 30. Severability. If any term, provision, covenant
or restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware 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, except that Sections 18, 19,
20 and 21 hereof only shall be governed by and construed in accordance with the
laws of the State of New York without regard to the conflicts of laws
provisions thereof.
Section 32. Counterparts. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 33. Descriptive Heading. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
25
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
BEVERLY ENTERPRISES, INC.
By \s\ Robert W. Pommerville
---------------------------------------
Name: Robert W. Pommerville
Title: Senior Vice President,
General Counsel and Secretary
[SEAL]
THE BANK OF NEW YORK
By \s\ John I. Sivertsen
--------------------------------------
Name: John I. Sivertsen
Title: Vice President
[SEAL]
S-1
<PAGE> 28
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 28, 2004 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN OR IF THE COMPANY IS MERGED OR
ACQUIRED PURSUANT TO AN AGREEMENT OF THE TYPE DESCRIBED IN SECTION
1.3(ii)(A)(2) OF THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
(SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON, OR ITS AFFILIATES OR
ASSOCIATES, OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE HELD OR
HAVE BEEN HELD BY A PERSON WHO IS OR WAS AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR A NOMINEE THEREOF.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE BECOME
NULL AND VOID AS SPECIFIED IN SECTION 11.1.2 OF THE RIGHTS AGREEMENT.]
Right Certificate
BEVERLY ENTERPRISES, INC.
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 September 29, 1994, as the same
may be amended from time to time (the "Rights Agreement"), between Beverly
Enterprises, Inc., a Delaware corporation (the "Company"), and The Bank of New
York, a New York corporation, as Rights Agent (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date and prior to 5:00 P.M.
(New York City time) on September 28, 2004, at the offices of the Rights Agent,
or its successors as Rights Agent, designated for such purpose, one fully paid,
nonassessable common share (the "Common Shares") of the Company, at a purchase
price of $70 per share (the "Purchase Price"), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase and
certification duly executed. The number of Rights evidenced by this Right
Certificate (and the number of 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 November 2, 1994 based on the Common Shares as
constituted at such date. Capitalized terms used in this Right Certificate
without definition shall have the meanings ascribed to them in the Rights
Agreement. As provided in the Rights Agreement, the Purchase Price and the
number of Common Shares 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.
A-1
<PAGE> 29
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
offices of the Company and the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the offices of the Rights Agent designated for
such purpose, 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 Common 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 Board
of Directors may, at its option, (i) redeem the Rights evidenced by this Right
Certificate at a redemption price of $.01 per Right at any time prior to ten
(10) days after the Shares Acquisition Date or (ii) exchange Common Shares for
the Rights evidenced by this Certificate, in whole or in part, after the
occurrence of a Trigger Event. The period during which redemption of the
Rights is permitted may be extended by the Board of Directors of the Company,
but such an extension shall require the concurrence of a majority of the
Continuing Directors. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority
of the Continuing Directors.
No fractional Common Shares will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of the Common 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.
If any term, provision, covenant or restriction of the Rights
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 the Rights Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
This Right Certificate shall not be valid or binding for any
purpose until it shall have been countersigned by the Rights Agent.
A-2
<PAGE> 30
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______________.
Attest: BEVERLY ENTERPRISES, INC.
By ______________________ By ___________________________
Title: Title:
Countersigned:
THE BANK OF NEW YORK
By ______________________
Authorized Signature
A-3
<PAGE> 31
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _________________________________________
hereby sells, assigns and transfers unto_______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name and address
of transferee)
this Right Certificate and the Rights evidenced thereby, 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.
A-4
<PAGE> 32
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ]
are [ ] are not beneficially owned by an Acquiring Person or an Affiliate or
an Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] 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 thereof.
Dated: __________________
__________________________________
Signature
A-5
<PAGE> 33
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: BEVERLY ENTERPRISES, INC.
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
____________________________________________________________
(Please print name and address)
____________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this 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 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.
A-6
<PAGE> 34
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not beneficially owned by an Acquiring Person or an Affiliate or an
Associate thereof; and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] 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 thereof.
Dated:_______________
________________________
Signature
________________________________________________________________________________
NOTICE
The signature in the foregoing Form of Assignment and Form of
Election to Purchase must conform 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 or Form of Election to Purchase 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 hereof and, in the case of
an Assignment, will affix a legend to that effect on any Right Certificates
issued in exchange for this Right Certificate.
A-7
<PAGE> 35
EXHIBIT B
As described in the Rights Agreement, Rights which are held by
or have been held by Acquiring Persons or Associates or Affiliates
thereof (as defined in the Rights Agreement) shall become null and void.
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On September 29, 1994 the Board of Directors of Beverly
Enterprises, Inc. (the "Company") declared a dividend of one Right for each
share of common stock, $.10 par value (the "Common Shares"), of the Company
outstanding at the close of business on November 2, 1994 (the "Record Date").
As long as the Rights are attached to the Common Shares, the Company will issue
one Right with each new Common Share so that all such shares will have attached
Rights. Each Right entitles the registered holder to purchase from the Company
one Common Share at a price of $70 per share, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are set forth in a
Rights Agreement, dated as of September 29, 1994, as the same may be amended
from time to time (the "Rights Agreement"), between the Company and The Bank of
New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the Common Shares or (ii) ten (10) days following
the commencement or announcement of an intention to make a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the Common Shares (the earlier
of (i) and (ii) being called the "Distribution Date," whether or not either
such date occurs prior to the Record 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 certificate together with a copy of this Summary of
Rights.
The Rights Agreement provides that the Board of Directors, with the
concurrence of a majority of the Continuing Directors (as defined below), may
postpone the Distribution Date and 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 close of business on the Record Date
upon transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange, termination or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares, with or without a
copy of this Summary of Rights, 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 28, 2004, subject to the Company's right to
extend such date (the "Final Expiration Date"), unless earlier redeemed or
exchanged by the Company or terminated.
The Purchase Price payable, and the number of Common 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 Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights
or warrants to subscribe
B-1
<PAGE> 36
for or purchase Common Shares or convertible securities at less than the
current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness, securities or assets
(excluding regular periodic cash dividends at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or, in
case regular periodic cash dividends have not theretofore been paid, at a rate
not in excess of 50% of the average net income per share of the Company for the
four quarters ended immediately prior to the payment of such dividend, or
dividends payable in Common Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription rights or
warrants (other than those referred to above).
In the event that a Person becomes an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Shares approved by
the Board) or if the Company were the surviving corporation in a merger with an
Acquiring Person or any affiliate or associate of an Acquiring Person and the
Common Shares were not changed or exchanged, each holder of a Right, other than
Rights that are or were acquired or beneficially owned by the 15% stockholder
(which Rights will thereafter be void), will thereafter have the right to
receive upon exercise that number of Common Shares having a market value of two
times the then current Purchase Price of the Right. With certain exceptions,
in the event that the Company were acquired in a merger or other business
combination transaction or more than 50% of its assets or earning power were
sold, proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the then current Purchase Price of the Right.
At any time after a Person becomes an Acquiring Person and prior to
the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors may cause the Company to acquire the
Rights (other than Rights owned by an Acquiring Person which have become void),
in whole or in part, in exchange for that number of Common Shares having an
aggregate value equal to the Spread (the excess of the value of the Common
Shares issuable upon exercise of a Right after a Person becomes an Acquiring
Person over the Purchase Price) per Right (subject to adjustment).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional shares will be issued and in lieu thereof, a payment in
cash will be made based on the market price of the Common Shares on the last
trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") by the Board of Directors at any time
until ten (10) days following the public announcement that a Person has become
an Acquiring Person. The Board of Directors, with the concurrence of a
majority of the Continuing Directors, may extend the period during which the
Rights are redeemable beyond the ten (10) days following the public
announcement that a Person has become an Acquiring Person. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors (as defined
below). Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, the Company shall make an announcement thereof,
and upon such election, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
The term "Continuing Directors" means any member of the Board of
Directors of the Company who was a member of the Board prior to the time that
any Person becomes an Acquiring Person, and any person who is subsequently
elected to the Board if such person is recommended or approved by a majority of
the Continuing Directors. Continuing Directors do not include an Acquiring
Person, or an affiliate or associate of an Acquiring Person, or any
representative of the foregoing.
B-2
<PAGE> 37
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company beyond those as an existing
stockholder, including, without limitation, the right to vote or to receive
dividends.
Any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the Company and the Rights Agent may amend or supplement
the Rights Agreement without the approval of any holders of Right Certificates
to cure any ambiguity, to correct or supplement any provision contained therein
which may be defective or inconsistent with any other provisions therein, to
shorten or lengthen any time period under the Rights Agreement (so long as,
under certain circumstances, a majority of Continuing Directors approve such
shortening or lengthening) or so long as the interests of the holders of Right
Certificates (other than an Acquiring Person or an affiliate or associate of an
Acquiring Person) are not adversely affected thereby, to make any other
provisions in regard to matters or questions arising thereunder which the
Company and the Rights Agent may deem necessary or desirable, including but not
limited to extending the Final Expiration Date. The Company may at any time
prior to such time as any Person becomes an Acquiring Person amend the Rights
Agreement to lower the thresholds described above to not less than the greater
of (i) any percentage greater than the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A.
A copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
B-3
<PAGE> 1
EXHIBIT 2
[BEVERLY ENTERPRISES LOGO]
News Release
FOR IMMEDIATE RELEASE
- ---------------------
For Further Information:
Robert W. Pommerville, Senior Vice President, General Counsel, and Secretary
Robert D. Woltil, Executive Vice President and Chief Financial Officer
(FORT SMITH, ARKANSAS, September 30, 1994) The Board of Directors of
Beverly Enterprises Inc., yesterday declared a dividend distribution of one
Common Stock Purchase Right on each outstanding share of its common stock. Each
Right will entitle stockholders to buy one newly-issued share of its common
stock at an exercise price of $70. The Rights will be exercisable if a person
or group acquires 15% or more of Beverly's common stock or announces a tender
offer for 15% or more of the common stock. Beverly's Board will be entitled to
redeem the Rights at one cent per Right at any time prior to ten (10) days
after a person or group has acquired 15% or more of the outstanding common
stock.
The Rights are not being distributed in response to any specific effort
to acquire control of the Company. The Rights are designed to assure that all
Beverly stockholders receive fair and equal treatment in the event of any
proposed takeover of the Company and to guard against partial tender offers,
open market accumulations and other abusive tactics to gain control of Beverly
without paying all stockholders a control premium.
If a person or group acquires 15% or more of the outstanding common
stock of Beverly, each Right will entitle its holder to purchase, at the
Right's exercise price, a number of common shares of Beverly having a market
value at that time of twice the Right's exercise price. Rights held by the 15%
holder will become void and will not be exercisable to purchase shares at the
bargain purchase price. If Beverly is acquired in a merger or other business
combination transaction which has not been approved by the Board of Directors,
each Right will entitle its holder to purchase, at the Rights then-current
exercise price, a number of the acquiring company's common shares having a
market value at that time of twice the Right's exercise price.
-MORE-
<PAGE> 2
Beverly Enterprises, Inc.
Page 2
"The Rights are intended to enable all Beverly stockholders to realize
the long-term value of their investment in the Company. They do not prevent a
takeover, but should encourage anyone seeking to acquire the Company to
negotiate with the Board of Directors prior to attempting a takeover," said
David R. Banks, Chairman, C.E.O. and President of Beverly Enterprises.
The dividend distribution will be payable to stockholders of record on
November 2, 1994. The Rights expire in ten (10) years. Distribution of the
Rights is not taxable to stockholders.
Beverly Enterprises, Inc., is a long-term health care company operating
nursing facilities, institutional pharmacies, retirement living centers and
home health centers. Its mission is to be the provider and employer of choice
in the communities where it operates, by delivering high quality health care
services that meet the unique needs of each of those communities.
####
<PAGE> 1
EXHIBIT 3
[Company Letterhead]
November 2, 1994
To Our Stockholders:
On September 29, 1994, the Board of Directors of Beverly
Enterprises, Inc. ("Beverly") adopted a Stockholder Rights Plan that is
intended to protect your interests in the event you and Beverly are confronted
with coercive takeover tactics.
The Plan provides for a dividend distribution of rights (the
"Rights") to purchase shares of Beverly Common Stock. Under certain
circumstances, the Rights could become exercisable to purchase Beverly Common
Stock, or securities of an acquiring entity, at one-half market value. The
Rights may be exercised only if certain events occur. You are now the owner
of one Right for each share of Beverly Common Stock you own. The Plan has
been adopted in order to strengthen the ability of the Board to protect your
interests.
We are attaching a summary description that outlines the
principal features of the Plan, and we urge you to read the summary carefully.
This letter reviews our reasons for issuing the Rights.
NO ACTION BY STOCKHOLDERS IS REQUIRED OR PERMITTED AT THIS
TIME, AND NO MONEY SHOULD BE SENT TO BEVERLY ENTERPRISES. THE RIGHTS WILL
AUTOMATICALLY ATTACH TO THE COMMON SHARES YOU HOLD AND WILL TRADE WITH THEM.
SEPARATE RIGHTS CERTIFICATES WILL BE SENT TO STOCKHOLDERS ONLY IF A PERSON OR
GROUP ACQUIRES 15% OR MORE OF BEVERLY'S OUTSTANDING COMMON STOCK OR MAKES A
TENDER OFFER FOR 15% OR MORE OF THE COMMON STOCK. BEVERLY COMMON STOCK
CERTIFICATES ISSUED AFTER NOVEMBER 2, 1994 WILL CONTAIN A REFERENCE TO THE
RIGHTS PLAN, BUT THERE IS NO NEED TO SEND IN YOUR CERTIFICATES TO HAVE THIS
REFERENCE ADDED.
The Rights are not being distributed in response to any
specific effort to acquire control of the Company. The Rights are designed to
protect stockholders in the event of an unsolicited attempt to acquire the
Company, including through an accumulation of Common Stock in the open market,
a partial, two-tier or inadequate tender offer that does not treat all
stockholders equally and other abusive takeover tactics which the Board of
Directors believes are not in the best interests of stockholders. These
tactics unfairly pressure stockholders, squeeze them out of their investment
without giving them any real choice and deprive them of the full value of their
Common Stock. We consider these Rights to be a valuable means of protecting
both your right to retain your equity investment in the Company and the full
value of that investment, while not foreclosing a fair acquisition bid for the
Company.
The Rights are not intended to prevent a takeover of Beverly
and will not do so. They are designed to deal with the possibility of
unilateral actions by hostile acquirors that could deprive the Board of
Directors and stockholders of Beverly of their ability to determine the
Company's destiny and to obtain the highest price for their Common Stock.
<PAGE> 2
November 2, 1994
Page 2
Adoption of the Plan should not by itself affect any
prospective acquiror who is willing to make an all-cash offer at a full and
fair price or who is willing to negotiate with the Company's Board of
Directors. The Plan certainly will not interfere with a merger or other
business combination transaction approved by the Board of Directors.
The issuance of the Rights has no dilutive effect, will not
affect reported earnings per share and is not taxable to the Company or to you.
Stockholders may, under certain circumstances, recognize taxable income if the
Rights become exercisable.
Our overriding objective is to continue building value for
Beverly's stockholders, and we feel that the Plan will assist in that effort.
Sincerely,
David R. Banks
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
As described in the Rights Agreement, Rights which are held by
or have been held by Acquiring Persons or Associates or Affiliates
thereof (as defined in the Rights Agreement) shall become null and void.
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On September 29, 1994 the Board of Directors of Beverly
Enterprises, Inc. (the "Company") declared a dividend of one Right for each
share of common stock, $.10 par value (the "Common Shares"), of the Company
outstanding at the close of business on November 2, 1994 (the "Record Date").
As long as the Rights are attached to the Common Shares, the Company will issue
one Right with each new Common Share so that all such shares will have attached
Rights. Each Right entitles the registered holder to purchase from the Company
one Common Share at a price of $70 per share, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are set forth in a
Rights Agreement, dated as of September 29, 1994, as the same may be amended
from time to time (the "Rights Agreement"), between the Company and The Bank of
New York, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the Common Shares or (ii) ten (10) days
following the commencement or announcement of an intention to make a tender
offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 15% or more of the Common Shares
(the earlier of (i) and (ii) being called the "Distribution Date," whether or
not either such date occurs prior to the Record 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 certificate together with a copy of
this Summary of Rights.
The Rights Agreement provides that the Board of Directors,
with the concurrence of a majority of the Continuing Directors (as defined
below), may postpone the Distribution Date and 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 close of business on
the Record Date upon transfer or new issuance of the Common Shares will contain
a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange, termination or expiration
of the Rights), the surrender for transfer of any certificates for Common
Shares, with or without a copy of this Summary of Rights, 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 28, 2004, subject to the Company's right to
extend such date (the "Final Expiration Date"), unless earlier redeemed or
exchanged by the Company or terminated.
The Purchase Price payable, and the number of Common 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 Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights
or warrants to
1
<PAGE> 4
subscribe for or purchase Common Shares or convertible securities at less than
the current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness, securities or assets
(excluding regular periodic cash dividends at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or, in
case regular periodic cash dividends have not theretofore been paid, at a rate
not in excess of 50% of the average net income per share of the Company for the
four quarters ended immediately prior to the payment of such dividend, or
dividends payable in Common Shares (which dividends will be subject to the
adjustment described in clause (i) above)) or of subscription rights or
warrants (other than those referred to above).
In the event that a Person becomes an Acquiring Person (except
pursuant to certain cash offers for all outstanding Common Shares approved by
the Board) or if the Company were the surviving corporation in a merger with an
Acquiring Person or any affiliate or associate of an Acquiring Person and the
Common Shares were not changed or exchanged, each holder of a Right, other than
Rights that are or were acquired or beneficially owned by the 15% stockholder
(which Rights will thereafter be void), will thereafter have the right to
receive upon exercise that number of Common Shares having a market value of two
times the then current Purchase Price of the Right. With certain exceptions,
in the event that the Company were acquired in a merger or other business
combination transaction or more than 50% of its assets or earning power were
sold, proper provision shall be made so that each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the then current Purchase Price of the Right.
At any time after a Person becomes an Acquiring Person and
prior to the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors may cause the Company to
acquire the Rights (other than Rights owned by an Acquiring Person which have
become void), in whole or in part, in exchange for that number of Common Shares
having an aggregate value equal to the Spread (the excess of the value of the
Common Shares issuable upon exercise of a Right after a Person becomes an
Acquiring Person over the Purchase Price) per Right (subject to adjustment).
No adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional shares will be issued and in lieu thereof, a payment in
cash will be made based on the market price of the Common Shares on the last
trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price") by the Board of Directors at
any time until ten (10) days following the public announcement that a Person
has become an Acquiring Person. The Board of Directors, with the concurrence
of a majority of the Continuing Directors, may extend the period during which
the Rights are redeemable beyond the ten (10) days following the public
announcement that a Person has become an Acquiring Person. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors (as defined
below). Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, the Company shall make an announcement thereof,
and upon such election, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
The term "Continuing Directors" means any member of the Board
of Directors of the Company who was a member of the Board prior to the time
that any Person becomes an Acquiring Person, and any person who is subsequently
elected to the Board if such person is recommended or
2
<PAGE> 5
approved by a majority of the Continuing Directors. Continuing Directors do
not include an Acquiring Person, or an affiliate or associate of an Acquiring
Person, or any representative of the foregoing.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company beyond those as an existing
stockholder, including, without limitation, the right to vote or to receive
dividends.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the Company and the Rights Agent may amend or supplement
the Rights Agreement without the approval of any holders of Right Certificates
to cure any ambiguity, to correct or supplement any provision contained therein
which may be defective or inconsistent with any other provisions therein, to
shorten or lengthen any time period under the Rights Agreement (so long as,
under certain circumstances, a majority of Continuing Directors approve such
shortening or lengthening) or so long as the interests of the holders of Right
Certificates (other than an Acquiring Person or an affiliate or associate of an
Acquiring Person) are not adversely affected thereby, to make any other
provisions in regard to matters or questions arising thereunder which the
Company and the Rights Agent may deem necessary or desirable, including but not
limited to extending the Final Expiration Date. The Company may at any time
prior to such time as any Person becomes an Acquiring Person amend the Rights
Agreement to lower the thresholds described above to not less than the greater
of (i) any percentage greater than the largest percentage of the outstanding
Common Shares then known by the Company to be beneficially owned by any person
or group of affiliated or associated persons and (ii) 10%.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
3
