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
CROWN LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2300995
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
6780 Caballo Street
Las Vegas, Nevada 89119
(Address of principal executive (Zip Code)
offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
to be so registered on which each class
- ------------------- is to be registered
-------------------
Preferred Stock Purchase Rights Pacific Stock Exchange;
American Stock Exchange
If this Form relates to the Registration of a class of debt
securities and is effective upon filing pursuant to General
Instruction A.(c)(1), please check the following box. [ ].
If this Form relates to the registration of a class of debt
securities and is to become effective simultaneously with the
effectiveness of a concurrent registration statement under the
Securities Act of 1933 pursuant to General Instruction A.(c)(2),
please check the following box. [ ].
Securities to be registered pursuant to Section 12(g) of the
Act:
None
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Item 1. Description of Securities to be Registered.
On May 5, 1997, the Board of Directors of Crown
Laboratories, Inc. (the "Corporation") declared a dividend
distribution of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value $0.001 per
share (the "Common Shares"), of the Corporation. The dividend is
payable to the stockholders of record on May 16, 1997 (the
"Record Date"), and with respect to Common Shares issued
thereafter, until the Distribution Date (as defined below) and,
in certain circumstances, with respect to Common Shares issued
after the Distribution Date. Except as set forth below, each
Right, when it becomes exercisable, entitles the registered
holder to purchase from the Corporation one one-thousandth of a
share of Series F Junior Participating Preferred Stock, $.001 par
value (the "Preferred Shares"), of the Corporation at a price of
$12.00 per one one-thousandth of a Preferred Share (the "Purchase
Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Corporation and Securities Transfer
Corporation, as Rights Agent (the "Rights Agent"), dated as of
May 5, 1997.
Initially, the Rights will be attached to all certificates
representing Common Shares then outstanding, and no separate
Right Certificates will be distributed. The Rights will separate
from the Common Shares upon the earliest to occur of (i) the date
of a public announcement that, without the prior consent of a
majority of the Disinterested Directors (as defined below), a
person or group of affiliated or associated persons having
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10 days (or such later date as the
Board may determine) following the commencement or announcement
of an intention to make a tender or exchange offer, the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person." The
date that a person or group announces publicly that it has become
an Acquiring Person is the "Shares Acquisition Date."
"Disinterested Directors" are directors who are not officers or
employees of the Company and who are not Acquiring Persons or
their Affiliates, Associates or representatives of any of them,
or any person who was directly or indirectly proposed or
nominated as a director of the Company by a Transaction Person
(as defined below).
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or
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earlier redemption or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding as
of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain
Common Shares issued after the Distribution Date), and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on May 15, 2007, unless
earlier redeemed by the Corporation as described below.
In the event that any person becomes an Acquiring Person
(except pursuant to a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms which a
majority of the Disinterested Directors determines to be adequate
and in the best interests of the Corporation and its
stockholders, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer")), each holder of a Right
will thereafter have the right (the "Flip-In Right") to receive
upon exercise one one-thousandth of a share of Preferred Shares
(or, in certain circumstances, other securities of the
Corporation) having a value (immediately prior to such triggering
event) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation consolidates with, or
merges into, an Acquiring Person, or an Affiliate or Associate
thereof, or any person or entity in which such Acquiring Person,
Affiliate or Associate has an interest or which is acting in
concert with such Acquiring Person, Affiliate or Associate (an
"Interested Stockholder"), or any other entity (if all holders of
Common Shares are not treated alike in such transaction), (ii) an
Interested Stockholder or any other entity (if all holders of
Common Shares are not treated alike in such transaction)
consolidates with, or mergers into the Company (other than, in
the case of either transaction described in (i) and (ii) above,
certain reorganization transactions), or (iii) the Corporation
sells or otherwise transfers (in one transaction or a series of
transactions) 50% or more of the assets or earning power of the
Corporation to an Interested Stockholder or to any other entity
(if all holders of Common Shares are not treated alike in such
transaction), proper provision shall be made so that each holder
of a Right (except Rights which previously have been voided as
set forth below) shall
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thereafter have the right (the "Flip-Over Right") to receive,
upon exercise, common shares of the acquiring or surviving
company (or, in the event there is more than one acquiring
company, the acquiring company receiving the greatest portion of
the assets or earning power transferred) having a value equal to
two times the exercise price of the Right.
The Purchase Price payable, and the number of Preferred
Shares, Common Shares or other securities issuable, upon exercise
of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the Purchase Price
payable are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations
or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to
a minimum preferential quarterly dividend payment of $1.00 per
share but, if greater, will be entitled to an aggregate dividend
per share of 1,000 times the dividend declared per Common Share.
In the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of
$1,000 per share; thereafter, and after the holders of the Common
Shares receive a liquidation payment of $1.00 per share, the
holders of the Preferred Shares and the holders of the Common
Shares will share the remaining assets in the ratio of 1,000 to 1
(as adjusted) for each Preferred Share and Capital Share so held,
respectively. Finally, in the event of any merger, consolidation
or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the
amount received per Common Share. These rights are protected by
customary antidilution provisions. In the event that the amount
of accrued and unpaid dividends on the Preferred Shares is
equivalent to six full quarterly dividends or more, the holders
of the Preferred Shares shall have the right, voting as a class,
to elect two directors in addition to the directors elected by
the holders of the Common Shares until all cumulative dividends
on the Preferred Shares have been paid through the last quarterly
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dividend payment date or until non-cumulative dividends have been
paid regularly for at least one year.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
one one-thousandth or integral multiples of one one-thousandth of
a Preferred Share, which may, at the election of the Corporation,
be evidenced by depository receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of
exercise.
At any time after a person becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more
of the Common Shares, the Board of Directors of the Company may
exchange the Rights (other than the Rights owned by the Acquiring
Person or its Associates and Affiliates, which shall have become
void) at an exchange ratio of one Common Share per Right (subject
to Adjustment).
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the
Rights, and under certain other circumstances, the Corporation
may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors.
Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
combination transaction or series of transactions involving the
Corporation in which all holders of Common Shares are treated
alike but not involving an Acquiring Person or its affiliates or
associates and provided further that this redemption right shall
not exist for 180 days following the Shares Acquisition Date
under certain circumstances.
All of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Corporation prior to the
Distribution Date. After the Distribution Date, the provisions
of the Rights Agreement may be amended by the Board in order to
cure any ambiguity, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or, subject to
certain limitations, to shorten or lengthen any time period under
the Rights Agreement.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Corporation,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders of the Corporation, stockholders may,
depending upon the circumstances, recognize
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taxable income should the Rights become exercisable or upon the
occurrence of certain events thereafter.
Attached hereto as Exhibit 1 and incorporated herein by
reference are a copy of the Rights Agreement, dated May 5, 1997,
between the Corporation and Securities Transfer Corp., as Rights
Agent, specifying the terms of the Rights, and the exhibits
thereto, as follows: Exhibit A -- The Certificate of
Designation; Exhibit B -- The Form of Rights Certificate; and
Exhibit C -- The Summary of Rights to Purchase Preferred Shares.
The foregoing description of the Rights is qualified in its
entirety by reference to the Rights Agreement and the exhibits
thereto, which are herein incorporated by reference.
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Item 2. Exhibits.
1. Rights Agreement, dated as of May 5, 1997, between Crown
Laboratories, Inc. and Securities Transfer Corp., as Rights
Agent, which includes, as Exhibit A thereto, The Certificate of
Designation, as Exhibit B thereto, The Form of Rights
Certificate, and as Exhibit C thereto, The Summary of Rights to
Purchase Preferred Shares. Pursuant to the Rights Agreement,
Rights Certificates will not be mailed until after a Shares
Acquisition Date (as defined in the Rights Agreement) or ten days
after a person commences or announces its intention to commence
an offer if, upon consummation thereof, such person would become
an Acquiring Person (as defined in the Rights Agreement).
2. Press Release dated May 7, 1997 announcing the adoption of
the Rights Plan.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
CROWN LABORATORIES, INC.
By: /s/ Craig. E Nash
------------------------
Name: Craig E. Nash
Title: Chief Executive Officer
Dated: May 13, 1997
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EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
1 Rights Agreement, dated as of May 5, 1997, 10
between Crown Laboratories, Inc. and
Securities Transfer Corp., as Rights Agent,
which includes, as Exhibit A thereto, The
Certificate of Designation, as Exhibit B
thereto, The Form of Rights Certificate,
and as Exhibit C thereto, The Summary of
Rights to Purchase Preferred Shares.
Pursuant to the Rights Agreement, Rights
Certificates will not be mailed until after
a Shares Acquisition Date (as defined in
the Rights Agreement) or ten days after a
person commences or announces its intention
to commence an offer if, upon consummation
thereof, such person would become an
Acquiring Person (as defined in the Rights
Agreement).
2 Press release dated May 7, 1997 announcing 75
the adoption of the Rights Plan.
9
____________________________________________
CROWN LABORATORIES, INC.
AND
SECURITIES TRANSFER CORPORATION,
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF MAY 5, 1997
_____________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions..................... 1
Section 2. Appointment of Rights Agent ............ 6
Section 3. Issuance of Right Certificates.......... 6
Section 4. Form of Right Certificate............... 8
Section 5. Countersignature and Registration....... 9
Section 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right
Certificate............................. 9
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights............... 10
Section 8. Cancellation and Destruction of Right
Certificates............................ 13
Section 9. Reservation and Availability of Preferred
Shares.................................. 13
Section 10. Preferred Shares Record Date............ 14
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights...... 14
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares........................ 22
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.............. 22
Section 14. Fractional Rights and Fractional Shares. 25
Section 15. Rights of Action........................ 27
Section 16. Agreement of Right Holders.............. 27
Section 17. Right Certificate Holder Not Deemed a
Stockholder............................. 28
Section 18. Concerning the Rights Agent............. 28
Section 19. Merger or Consolidation or Change of Name
of Rights Agent......................... 29
Section 20. Duties of Rights Agent.................. 29
Section 21. Change of Rights Agent.................. 32
Section 22. Issuance of New Right Certificates...... 33
Section 23. Redemption and Termination.............. 33
Section 24. Exchange................................ 35
Section 25. Notice of Certain Events................ 36
Section 26. Notices................................. 37
Section 27. Supplements and Amendments.............. 38
Section 28. Determination and Actions by the Board of
Directors, etc.......................... 39
Section 29. Successors.............................. 39
Section 30. Benefits of this Agreement.............. 40
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Section 31. Severability............................ 40
Section 32. Governing Law........................... 40
Section 33. Counterparts............................ 40
Section 34. Descriptive Headings.................... 40
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DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person.....................................Section 1(a)
Act................................................. Section 1(b)
Adjustment Shares...............................Section 11(a)(ii)
Adjusted Number of Shares......................Section 11(a)(ill)
Adjusted Purchase Price........................Section 11(a)(iii)
Affiliate............................................Section 1(c)
Agreement.................................................Preface
Appointment of Rights Agent.............................Section 2
Associate............................................Section 1(c)
Beneficial Owner.....................................Section 1(d)
Beneficially Own.....................................Section 1(d)
Business Day.........................................Section 1(e)
Capital Stock Equivalent.......................Section 11(a)(iii)
Close of Business....................................Section 1(f)
Common Shares........................................Section 1(g)
Corporation...............................................Preface
Current Per Market Price............................Section 11(d)
Current Per Share Market Price...................Section 11(d)(1)
Distribution Date....................................Section 3(a)
Equivalent Preferred Shares.........................Section 11(b)
Exchange Act.........................................Section 1(c)
Exchange Ratio......................................Section 24(a)
Final Expiration Date................................Section 7(a)
Interested Stockholder...............................Section (10)
Permitted Offer......................................Section 1(k)
Person...............................................Section 1(l)
Preferred Shares.....................................Section 1(m)
Principal Party.....................................Section 13(b)
Proration Factor...............................Section 11(a)(iii)
Purchase Price.......................................Section 4(a)
Record Date...............................................Preface
Redemption Date......................................Section 7(a)
Redemption Price.......................................Section 23
Right.....................................................Preface
Right Certificate....................................Section 3(a)
Rights Agent..............................................Preface
Rights Agreement........................................Section 3
Section 11(a)(ii) Event..............................Section 1(o)
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Section 13 Event.....................................Section 1(p)
Security.........................................Section 11(d)(i)
Shares Acquisition Date..............................Section 1(q)
Subsidiary...........................................Section 1(r)
Summary of Rights....................................Section 3(b)
Then Outstanding................................Section 1(d)(iii)
Trading Day......................................Section 11(d)(1)
Transaction..........................................Section 1(s)
Transaction Person...................................Section 1(t)
Triggering Event.....................................Section 1(u)
Voting Securities...................................Section 13(a)
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 5, 1997 (the "Agreement"),
between Crown Laboratories, Inc., a Delaware corporation (the
"Corporation"), and Securities Transfer Corporation (the "Rights
Agent").
The Board of Directors of the Corporation has authorized and
declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Corporation outstanding at the close of business on May 16, 1997
(the "Record Date"), each Right representing the right to
purchase one one-thousandth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed 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 or the Final Expiration
Date (as such terms are hereinafter defined); provided, however,
that Rights may be issued with respect to Common Shares that
shall become outstanding after the Distribution Date and prior to
the earlier of the Redemption Date and the Final Expiration Date
in accordance with the provisions of Section 22 of this
Agreement.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person,
without the prior approval of at least a majority of the
Disinterested Directors (as hereinafter defined), shall be the
Beneficial Owner of 15% or more of the then outstanding Common
Shares (other than as a result of a Permitted Offer (as
hereinafter defined)) or was such a Beneficial Owner at any time
after the date hereof, whether or not such person continues to be
the Beneficial Owner of 15% or more of the then outstanding
Common Shares. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Corporation, (ii)
any Subsidiary of the Corporation, (iii) any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation,
(iv) any Person or entity organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan,
(v) any Grandfathered Stockholder; provided, however, that if,
without the prior approval of at least a majority of the
Disinterested Directors, any Grandfathered Stockholder acquires
additional Common Shares (other than Common Shares acquired
directly, or options to acquire
<PAGE>
Common Shares directly from the Corporation) after the date
hereof such that immediately following that acquisition such
Grandfathered Stockholder's Beneficial Ownership of Common Shares
(excluding any Common Shares beneficially owned by the other
Grandfathered Stockholder which might be deemed attributable to
the acquiring Grandfathered Stockholder) exceeds 30% of the
Common Shares then outstanding, such Grandfathered Stockholder
shall become an Acquiring Person; and provided, further, that if,
without the prior approval of at least a majority of the
Disinterested Directors, any Grandfathered Stockholder acquires
additional Common Shares (other than Common Shares acquired
directly, or options to acquire Common Shares directly, from the
Corporation) after the date hereof such that immediately
following that acquisition all the Grandfathered Stockholders'
aggregate Beneficial Ownership of Common Shares exceeds 49% of
the Common Shares then outstanding, such Grandfathered
Stockholder shall become an Acquiring Person; or (vi) any Person,
who or which together with all Affiliates and Associates of such
Person becomes the Beneficial Owner of 15% or more of the then
outstanding Common Shares as a result of the acquisition of
Common Shares directly from the Corporation, and (B) no Person
shall be deemed to be an "Acquiring Person" either (X) as a
result of the acquisition of Common Shares by the Corporation
which, by reducing the number of Common Shares outstanding,
increases the proportional number of shares beneficially owned by
such Person together with all Affiliates and Associates of such
Person; except that if (i) a Person would become an Acquiring
Person (but for the operation of this subclause (X) as a result
of the acquisition of Common Shares by the Corporation, and (ii)
after such share acquisition by the Corporation, such Person, or
an Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (Y) if (i) within 5 business days
after such Person would otherwise have become an Acquiring Person
(but for the operation of this subclause Y), such Person notifies
the Board of Directors that such Person did so inadvertently and
(ii) within 2 Business Days after such notification, such Person
is the Beneficial Owner of less than 15% of the outstanding
Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") provided that the limited partners
of a limited partnership shall not be deemed to be Associates of
such limited partnership solely by virtue of their limited
partnership interest.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
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(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, 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, 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 (B) the
right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under 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) relating to the acquisition, holding,
voting (except to the extent contemplated by the proviso to
Section l(d)(ii)(B)) or disposing of any securities of the
Corporation.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of
securities of the Corporation, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or U.S. federal holiday.
(f) "Close of business" on any given date shall mean 5:00
P.M., New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York
time, on the next succeeding Business Day.
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(g) "Common Shares" when used with reference to the
Corporation shall mean the shares of Common Stock, par value
$0.001 per share, of the Corporation or, in the event of a
subdivision, combination or consolidation with respect to such
shares of Common Stock, the shares of Common Stock resulting from
such subdivision, combination or consolidation. "Common Shares"
when used with reference to any Person other than the Corporation
shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof
(i) "Disinterested Directors" shall mean the members of the
Board of Directors who are not (i) officers or employees of the
Corporation, (ii) Acquiring Persons or their Affiliates or
Associates or representatives of any of them, or (iii) any Person
who was directly or indirectly proposed or nominated as a
director of the Corporation by an Acquiring Person or a
Transaction Person.
(j) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(k) "Grandfathered Stockholder" shall mean each of (i) Craig
E. Nash and his Affiliates and Associates and (ii) Scott O. Nash
and his Affiliates and Associates.
(l) "Interested Stockholder" shall mean any Acquiring Person
or any Affiliate or Associate of an Acquiring Person or any other
Person in which any such Acquiring Person, Affiliate or Associate
has an interest, or any other Person acting directly or
indirectly on behalf of or in concert with any such Acquiring
Person, Affiliate or Associate.
(m) "Permitted Offer" shall mean a tender or exchange offer
which is for all outstanding Common Shares at a price and on
terms determined, prior to the purchase of shares under such
tender or exchange offer, by at least a majority of the
Disinterested Directors, to be adequate (taking into account all
factors that such Disinterested Directors deem relevant
including, without limitation, prices that could reasonably be
achieved if the Corporation or its assets were sold on an orderly
basis designed to realize maximum value) and otherwise in the
best interests of the Corporation and its stockholders (other
than the Person or any Affiliate or Associate thereof on whose
basis the offer is being made) taking into account all factors
that such Disinterested Directors may deem relevant.
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(n) "Person" shall mean any individual, firm, partnership,
corporation, trust, association, joint venture or other entity,
and shall include any successor (by merger or otherwise) of such
entity.
(o) "Preferred Shares" shall mean shares of Series F Junior
Participating Preferred Stock, with a par value of $0.001 per
share of the Corporation having the relative rights, preferences
and limitations set forth in the Form of Certificate of
Designation of Series F Junior Participating Preferred Stock
attached to this Agreement as Exhibit A.
(p) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(q) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(r) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(s) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to the
Exchange Act) by the Corporation or an Acquiring Person that an
Acquiring Person has become such; provided, that, if such Person
is determined not to have become an Acquiring Person pursuant to
Section l(a)(Y) hereof, then no Shares Acquisition Date shall be
deemed to have occurred.
(t) "Subsidiary" of any Person shall mean any corporation or
other Person of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
(u) "Transaction" shall mean any merger, consolidation or
sale of assets described in Section 13(a) hereof or any
acquisition of shares of Common Stock of the Company which would
result in a Person becoming a Transaction Person.
(v) "Transaction Person" with respect to a Transaction shall
mean (x) any Person who (i) is or will become an Acquiring Person
if the Transaction were to be consummated and (ii) directly or
indirectly proposed or nominated a director of the Corporation
which director is in office at the time of consideration of the
Transaction, or (y) an Affiliate or Associate of such a Person.
(w) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
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Section 2. Appointment of Rights Agent. The Corporation
hereby appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates. (a) Until the
earlier of (i) the Shares Acquisition Date, or (ii) the close of
business on the tenth day (or such later date as may be
determined by action of the Corporation's Board of Directors)
after the date of the commencement by any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee
benefit plan of the Corporation or of any Subsidiary of the
Corporation or any Person or entity organized, appointed or
established by the Corporation for or pursuant to the terms of
any such plan) of, or of the first public announcement of the
intention of any Person (other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the
Corporation or of any Subsidiary of the Corporation or any Person
or entity organized, appointed or established by the Corporation
for or pursuant to the terms of any such plan) to commence (which
intention to commence remains in effect for five Business Days
after such announcement), a tender or exchange offer the
consummation of which would result in any Person becoming an
Acquiring Person (including, in the case of both (i) and (ii),
any such date which is after the date of this Agreement and prior
to the issuance of the Rights), the earliest of such dates being
herein referred to as the "Distribution Date," (x) the Rights
will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the
Corporation); provided, however, that if a tender offer is
terminated prior to the occurrence of a Distribution Date, then
no Distribution Date shall occur as a result of such tender
offer. As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will
countersign, and the Corporation will send or cause to be sent 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
Corporation, a Right Certificate, substantially in the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right
for each Common Share so held. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the
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form of Exhibit C hereto (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 Corporation.
With respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with such Common Shares.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred
to in the last sentence of this paragraph (c)) 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 bear the following
legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between Crown Laboratories, Inc.
and Securities Transfer Corporation, dated as of
May 5, 1997 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference
and a copy of which is on file at the principal
executive offices of Crown Laboratories, 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. Crown Laboratories,
Inc. will mail to the holder of this certificate a
copy of the Rights Agreement without charge after
receipt of a written request therefor. Under
certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person
who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as defined in the
Rights Agreement) and certain related persons,
whether currently held by or on behalf of such
Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation 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
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Corporation shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificate. (a) The Right
Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Corporation may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one-thousandths of a
Preferred Share as shall be set forth therein at the price per
one one-thousandth of a Preferred Share set forth therein (the
"Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and void
pursuant to Section 7(e) of this Agreement and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall contain (to
the extent feasible) the following legend:
The Rights represented by this Right Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented
hereby are null and void.
Provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any
such Right Certificate.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Corporation by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the
Corporation, either manually or by facsimile signature. The
Right Certificates shall be countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In
case any officer of the Corporation who shall have signed any of the
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Right Certificates shall cease to be such officer of the
Corporation before countersignature by the Rights Agent and
issuance and delivery by the Corporation, such Right Certificates
may nevertheless be countersigned by the Rights Agent and issued
and delivered by the Corporation with the same force and effect
as though the person who signed such Right Certificates had not
ceased to be such officer of the Corporation; and any Right
Certificate may be signed on behalf of the Corporation by any
person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Corporation to sign
such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated
as the appropriate place for surrender of such Right Certificate
or transfer, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the certificate number 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
Certificate. Subject to the provisions of Section 4(b), Section
7(e) and Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close
of business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may
be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-thousandth of a
Preferred Share (or, following a Triggering Event, other
securities, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office or offices of
the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Corporation shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered
Right Certificate 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 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 Corporation shall reasonably
request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver
to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The
Corporation may require payment
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of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Corporation 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 Corporation's request,
reimbursement to the Corporation 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 Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Subject to Section 7(e) hereof, 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 the
certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one one-
thousandth of a Preferred Share (or other securities, as the case
may be) as to which such surrendered Rights are exercised, at or
prior to the earliest of (i) the close of business on May 15,
2007 (the "Final Expiration Date"), or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date") or (iii) the time at which the Rights are
exchanged pursuant to Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a
Preferred Share pursuant to the exercise of a Right shall
initially be $12.00, shall be subject to adjustment from time to
time as provided in the next sentence and in Sections 11 and
13(a) hereof and shall be payable in accordance with paragraph
(c) below. Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of
this Agreement and prior to the Distribution Date, the
Corporation shall (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares,
then in any such case, each Common Share outstanding following
such subdivision, combination or consolidation shall continue to
have a Right associated therewith and the Purchase Price
following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price
immediately prior to such event by a fraction the numerator of
which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be
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<PAGE>
the total number of Common Shares outstanding immediately
following the occurrence of such event. The adjustment provided
for in the preceding sentence shall be made successively whenever
such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment of the Purchase
Price for the Preferred Shares (or other securities, as the case
may be) 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 6 hereof by certified
check, cashier's check or money order payable to the order of the
Corporation, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares (or
make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased
and the Corporation hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the
Corporation, in its sole discretion, shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary
agent depositary receipts representing such number of one one-
thousandth of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Corporation will direct the depositary
agent to comply with such requests, (ii) when appropriate,
requisition from the Corporation the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section
14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, and (iv)
when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right
Certificate. In the event that the Corporation is obligated to
issue other securities (including Common Shares) of the
Corporation pursuant to Section 11 (a) hereof, the Corporation
will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if
and when appropriate.
In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11 (a)(ii), the Rights Agent shall
return such Right Certificate to the registered holder thereof
after imprinting, stamping or otherwise indicating thereon that
the rights represented by such Right Certificate no longer
include the rights provided by Section 11(a)(ii) of the Rights
Agreement and if less than all the Rights represented by such
Right Certificate were so exercised, the Rights Agent shall
indicate on the Right Certificate the number of Rights
represented thereby which continue to include the rights provided
by Section 11(a)(ii).
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(d) In case the registered holder of any Right Certificate
shall exercise (except pursuant to Section 11(a)(ii)) less than
all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14
hereof, or the Rights Agent shall place an appropriate notation
on the Right Certificate with respect to those Rights exercised.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Affiliate or Associate thereof) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Corporation has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The
Corporation shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Corporation shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise
(other than a partial exercise), transfer, split up, combination
or exchange shall, if surrendered to the Corporation or to any of
its agents, be delivered to the Rights Agent for cancellation or
in cancelled form,
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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 Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Corporation otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Right Certificates to
the Corporation, or shall, at the written request of the
Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to
the Corporation.
Section 9. Reservation and Availability of Preferred Shares.
The Corporation covenants and agrees that at all times prior to
the occurrence of a Section 11(a)(ii) Event it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares, or any authorized and issued Preferred Shares
held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of a Section 11(a)(ii) Event,
shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in full
of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the occurrence of a
Section 11(a)(ii) Event, Common Shares or any other securities)
issuable upon the exercise of the Rights may be listed on any
national securities exchange, the Corporation shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares (or other securities) reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
The Corporation covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
(or Common Shares and/or other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares or other securities (subject
to payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and non-assessable shares or
securities.
The Corporation further covenants and agrees that it will pay
when due and payable any and all U.S. 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 Preferred Shares
(or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights. The Corporation 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 or
depositary receipts for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) in a name other than that
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of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise, or to issue or to deliver any
certificates or depositary receipts for Preferred Shares (or
Common Shares and/or other securities, as the case may be) 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 Corporation's reasonable satisfaction that no
such tax is due.
The Corporation shall use its best efforts to (i) file, as soon
as practicable following the Shares Acquisition Date, a
registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act and
the rules and regulations thereunder) until the date of the
expiration of the rights provided by Section 11(a)(ii). The
Corporation will also take such action as may be appropriate
under the blue sky laws of the various states.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for Preferred Shares (or Common Shares
and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the Preferred
Shares (or Common Shares and/or other securities, as the case may
be) transfer books of the Corporation are closed, such person
shall be deemed to have become the record holder of such shares
on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares (or Common Shares
and/or other securities, as the case may be) transfer books of
the Corporation are open.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and
kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after
the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the
Corporation is the continuing or
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surviving corporation), except as otherwise provided in this
Section 11 (a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Shares
transfer books of the Corporation were open, such holder would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Corporation issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then
proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall, for
a period of 60 days after the later of the occurrence of any such
event or the effective date of an appropriate registration
statement under the Act pursuant to Section 9 hereof, have a
right to receive, upon exercise thereof at a price equal to the
then current Purchase Price, in accordance with the terms of this
Agreement, such number of Common Shares (or, in the discretion of
the Board of Directors, one one-thousandth of a Preferred Share)
as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandths
of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and dividing that product by (y) 50% of the then current
per share market price of the Corporation's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of such
first occurrence (such number of shares being referred to as 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 hereof, then only
the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved)
Common Shares to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) and the Rights
become so exercisable (and the Board has determined to make the
Rights exercisable into fractions of a Preferred Share),
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law, each Right
shall thereafter represent the right to receive,
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upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, (x) a number of (or
fractions of) Common Shares (up to the maximum number of Common
Shares which may permissibly be issued) and (y) one one-
thousandth of a Preferred Share or a number of, or fractions of
other equity securities of the Corporation (or, in the discretion
of the Board of Directors, debt) which the Board of Directors of
the Corporation has determined to have the same aggregate current
market value (determined pursuant to Section 11(d)(i) and (ii)
hereof, to the extent applicable,) as one Common Share (such
number of, or fractions of, Preferred Shares, debt, or other
equity securities or debt of the Corporation) being referred to
as a "capital stock equivalent"), equal in the aggregate to the
number of Adjustment Shares; provided, however, if sufficient
Common Shares and/or capital stock equivalents are unavailable,
then the Corporation shall, to the extent permitted by applicable
law, take all such action as may be necessary to authorize
additional Common Shares or capital stock equivalents for
issuance upon exercise of the Rights, including the calling of a
meeting of stockholders; and provided, further, that if the
Corporation is unable to cause sufficient Common Shares and/or
capital stock equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter
represent the right to receive the Adjusted Number of Shares upon
exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined). As used herein, the term "Adjusted Number
of Shares" shall be equal to that number of (or fractions of)
Common Shares (and/or capital stock equivalents) equal to the
product of (x) the number of Adjustment Shares and (y) a
fraction, the numerator of which is the number of Common Shares
(and/or capital stock equivalents) available for issuance upon
exercise of the Rights and the denominator of which is the
aggregate number of Adjustment Shares otherwise issuable upon
exercise in full of all Rights (assuming there were a sufficient
number of Common Shares available) (such fraction being referred
to as the "Proration Factor"). The "Adjusted Purchase Price"
shall mean the product of the Purchase Price and the Proration
Factor. The Board of Directors may, but shall not be required
to, establish procedures to allocate the right to receive Common
Shares and capital stock equivalents upon exercise of the Rights
among holders of Rights.
(b) In case the Corporation shall fix a record date for the
issuance of rights (other than the Rights), options or warrants
to all holders of Preferred Shares entitling them (for a period
expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per
Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record date,
the Purchase Price to be in effect after such record date shall
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be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current per share market price, and the denominator of which
shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Corporation issuable upon exercise of one
Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be determined in good
faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. Preferred
Shares owned by or held for the account of the Corporation shall
not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Corporation is the
continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof),
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 then current per share market
price (as determined pursuant to Section 11(d) hereof) of the
Preferred Shares on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one Preferred Share and the denominator
of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Corporation to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution
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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.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security"
for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the 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 Security is determined during a period
following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B)
any subdivision, combination or reclassification of such Security
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
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the
Board of Directors of the Corporation. If on any such date no
such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by
the Board of Directors of the Corporation shall be used. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business
or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly
traded, the "current
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per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of
the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof),
multiplied by one hundred. If neither the Common Shares nor the
Preferred Shares are publicly held or 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 Corporation, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1%
in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-thousandth of a
Preferred Share or one ten-thousandth of any other share or
security as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years
from the date of the transaction which mandates such adjustment
or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Corporation other than Preferred
Shares, thereafter the number of 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 Preferred Shares contained
in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Corporation
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) The Corporation may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-thousandths of
a Preferred Share purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths
of a Preferred Share for which a Right
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was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Corporation 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(h), the Corporation 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 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Corporation, 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
Corporation, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(i) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one one-
thousandths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of
the number of one one-thousandths of a Preferred Share, Common
Shares or other securities issuable upon exercise of the Rights,
the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue such number of fully
paid and non-assessable one one-thousandths of a Preferred Share,
Common Shares or other securities at such adjusted Purchase
Price.
(k) 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 Corporation may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the
Preferred Shares, Common Shares or other
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<PAGE>
securities of the Corporation, if any, issuable upon such
exercise over and above the Preferred Shares, Common Shares or
other securities of the Corporation, if any, issuable upon
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Corporation 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.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Corporation 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 (i) any consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred
Shares at less than the current market price, (iii) issuance
wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares,
(iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the
Corporation to holders of its Preferred Shares shall not be
taxable to such stockholders.
(m) The Corporation covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Corporation in a
transaction which does not violate Section I I (n) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of
the Corporation in a transaction which does not violate
Section 11(n) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its
Subsidiaries in one or more transactions each of which does not
violate Section 11(n) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or
agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with
or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Corporation and such other
Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
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(n) The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action the purpose of which is to, or if at the time such action
is taken it is reasonably foreseeable that the effect of such
action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the
extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Rights Agreement, including
the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in
Sections 11 or 13 hereof, the Corporation shall promptly (a)
prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed
to have knowledge of such adjustment unless and until it shall
have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power. (a) In the event that, on or following the
Shares Acquisition Date, directly or indirectly, (x) the
Corporation shall consolidate with, or merge with and into, any
Interested Stockholder or, if in such merger or consolidation all
holders of Common Stock are not treated alike, any other Person,
(y) the Corporation shall consolidate with, or merge with, any
Interested Stockholder or, if in such merger or consolidation all
holders of Common Stock are not treated alike, any other Person,
and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a
case of any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities
generally entitled to vote in the election of directors ("voting
securities") of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into securities of the surviving entity)
all of the voting securities of the Corporation or such surviving
entity outstanding immediately after such merger or consolidation
and the holders of such securities not having changed as a result
of such merger or consolidation), or (z) the Corporation shall
sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any Interested Stockholder
or Stockholders or, if in such transaction all holders of Common
Stock are not treated alike, any other Person
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(other than the Corporation or any Subsidiary of the Corporation
in one or more transactions each of which does not violate
Sections 11(m) or 11(n) hereof), then, and in each such case
(except as provided in Section 13(d) hereof), proper provision
shall be made so that (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the
then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of freely
tradable Common Shares of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result
obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which
a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii)) and
dividing that product by (B) 50% of the then current per share
market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of
consummation of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the
Corporation pursuant to this Agreement; (iii) the term
"Corporation" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with the consummation
of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which Common Shares of the
Corporation are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party
to such merger or consolidation (including, if applicable, the
Corporation if it is the surviving corporation); and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any of the foregoing cases, (1) if the
Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, "Principal
Party" shall refer to such other Person; (2) in case such Person is a
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Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest
aggregate market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to
each of the chains of ownership having an interest in such joint
venture as if such party were a "Subsidiary" of both or all of
such joint venturers and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person
bear to the total of such interests.
(c) The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized Common
Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Corporation and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense
shall:
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use
its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary
or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all material
respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
The rights under this Section 13 shall be in addition to the
rights to exercise Rights and adjustments under Section 11
(a)(ii) and shall survive any exercise thereof
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(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if (i)
such transaction is consummated with a Person or Persons who
acquired Common Shares pursuant to a Permitted Offer (or a wholly
owned Subsidiary of any such Person or Persons); (ii) the price
per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose
shares were purchased pursuant to such Permitted Offer; and (iii)
the form of consideration offered in such transaction is the same
as the form of consideration paid pursuant to such Permitted
Offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The
Corporation 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(a),
the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the
date on which such Fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted 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 Corporation. 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 Corporation shall
be used.
(b) The Corporation shall not be required to issue fractions
of Preferred Shares (other than fractions which are one one-
thousandth or integral multiples of one one-thousandth of a
Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other
than fractions which are one one-thousandth or integral multiples
of one one-thousandth of a Preferred Share). Fractions of
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Preferred Shares in integral multiples of one one-thousandth of a
Preferred Share may, at the election of the Corporation, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Corporation and a depositary selected by
it; provided that such agreement shall provide that the holders
of such depositary receipts shall have the rights, privileges and
preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In
lieu of fractional Preferred Shares that are not one one-
thousandth or integral multiples of one one-thousandth of a
Preferred Share, the Corporation shall pay to the registered
holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For
the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share
(as determined pursuant to Section I I (d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to
receive Common Shares, capital stock equivalents (other than
Preferred Shares) or other securities upon the exercise of a
Right, the Corporation shall not be required to issue fractions
of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractions of such Common
Shares, capital stock equivalents or other securities. In lieu
of Fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Corporation may pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a share or
unit of such Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent is
not traded, each such capital stock equivalent shall have the
value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional share upon exercise of a Right (except as provided
above).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own
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behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Corporation
to enforce, or otherwise 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 Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any
Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the
Corporation and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights
Agent designated for such purpose, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate form
fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the
Corporation 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 Certificate or the associated Common Shares certificate
made by anyone other than the Corporation or the Rights Agent)
for all purposes whatsoever, and neither the Corporation nor the
Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have
any liability to any holder of a Right or a beneficial interest
in a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided,
however, the Corporation must use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as
soon as possible.
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Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder
of the Preferred Shares or any other securities of the
Corporation 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 Corporation or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or other
distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with
the e 1 provisions hereof.
Section 18. Concerning the Rights Agent. The Corporation
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Corporation also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises. The indemnity provided for herein shall survive
the expiration of the Rights and the termination of this
Agreement.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of, any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for Common Shares or for other securities of the Corporation,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 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
stock transfer or all or substantially all of the corporate trust
business of the Rights Agent or any successor Rights Agent, shall
be the
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successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part
of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created
by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a 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 or in
the name of the successor Rights Agent; an d in all such cases
such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes only those duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Corporation and the holders of Right Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Corporation), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the
identity of an Acquiring Person and the determination of the
current market price of any Security) be proved or established by
the Corporation 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, the Chief Executive
Officer, the President , any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent;
and such certificate shall be full
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authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature on such Right Certificates) or be required to
verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Corporation of any covenant
or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 7(e) hereof) or any adjustment required under
the provisions of Section 11 or Section 13 hereof or responsible
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of the certificate
described in Section 12 hereof); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares or
Common Shares to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Preferred Shares or Common
Shares will, when issued, be validly authorized and issued, fully
paid and non-assessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Corporation, and to apply to
such officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered
by it in good faith or lack of action in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent
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for written instructions from the Corporation may, at the option
of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Rights
Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application
(which date shall not be less than five Business Days after the
date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instruction in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Corporation or become
pecuniarily interested in any transaction in which the
Corporation may be interested, or contract with or lend money to
the Corporation or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has not been completed, the Rights
Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the
Corporation.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30)
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days' notice in writing mailed to the Corporation and to each
transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. The Corporation may remove the
Rights Agent or any successor Rights Agent upon sixty (60) 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 or Preferred Shares by registered or certified
mail, and to 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 Corporation shall
appoint a successor to the Rights Agent. If the Corporation
shall fail to make such appointment within a period of sixty (60)
days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), 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
Corporation or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any
state of the United States in good standing which is authorized
under such laws to exercise corporate trust or stock transfer
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
$100,000,000. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Corporation shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation 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
Agreement.
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In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date, the
Corporation (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, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the
Corporation, and (b) may, in any other case, if deemed necessary
or appropriate by the Board of Directors of the Corporation,
issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that (i) the Corporation shall not be obligated to issue
any such Right Certificates if, and to the extent that, the
Corporation shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to
the Corporation or the Person to whom such Right Certificate
would be issued, and (ii) no Right Certificate shall be issued
if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) The Board of Directors of the Corporation may, at its
option, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount
may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the
"Redemption Price"), at any time prior to the earlier of (x) the
occurrence of a Section 11 (a)(ii) Event, or (y) the Final
Expiration Date. The Corporation may, at its option, pay the
Redemption Price either in Common Shares, (based on the "current
per share market price," as defined in Section 11(d) hereof, of
the Common Shares at the time of redemption) or cash; provided
that if the Corporation elects to pay the Redemption Price in
Common Shares, the Corporation shall not be required to issue any
fractional Common Shares and the number of Common Shares issuable
to each holder of Rights shall be rounded down to the next whole
share.
(ii) In addition, the Board of Directors of the
Corporation may, at its option, at any time following the
occurrence of a Section 11(a)(ii) Event and the expiration of any
period during which the holder of Rights may exercise the rights
under Section 11(a)(ii) but prior to any Section 13 Event redeem
all but not less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger, consolidation
or sale or other transfer (in one transaction or in a series of
related transactions) of assets or earning power aggregating 50%
or more of the assets or earning power of the Corporation and its
subsidiaries (taken as a whole) in which all holders of Common
Shares are treated alike and not involving (other than as a
holder of Common Shares being treated like all other such
holders) an Interested Stockholder or a Transaction Person or
(y)(aa) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 15% of the
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Common Shares, and (bb) at the time of redemption no other
Persons are Acquiring Persons.
(iii) Notwithstanding anything to the contrary in this
Agreement, including, without limitation, the provisions of
Section 23(a)(i) and (ii), in the event that a majority of the
Board of Directors of the Corporation is comprised of (i) persons
elected at a meeting or by written consent of stockholders who
were not nominated by the Board of Directors in office
immediately prior to such meeting or action by written consent,
and/or (ii) successors of such persons elected to the Board of
Directors for the purpose of either facilitating a Transaction
with a Transaction Person or circumventing directly or indirectly
the provisions of this Section 23(a)(iii), then (I) the Rights
may not be redeemed for a period of 180 days following the
effectiveness of such election if such redemption is reasonably
likely to have the purpose or effect of facilitating a
Transaction with a Transaction Person and (II) the Rights may not
be redeemed following such 180 day period if (x) such redemption
is reasonably likely to have the purpose of facilitating a
Transaction with a Transaction Person and (y) during such 180 day
period, the Corporation enters into any agreement, arrangement or
understanding with any Transaction Person which is reasonably
likely to have the purpose or effect of facilitating a
Transaction with any Transaction Person.
(b) In the case of a redemption permitted under Section
23(a)(i) and not prohibited by Section 23(a)(iii), immediately
upon the date for redemption set forth (or determined in the
manner specified in) in a resolution of the Board of Directors of
the Corporation ordering the redemption of the Rights, evidence
of which shall have been filed with the Rights Agent, and without
any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. In the case of a redemption permitted only
under Section 23(a)(ii) and not prohibited by Section 23(a)(iii),
evidence of which shall have been filed with the Rights Agent,
the right to exercise the Rights will terminate and represent
only the right to receive the Redemption Price upon the later of
ten Business Days following the giving of such notice or the
expiration of any period during which the rights under
Section 11(a)(ii) may be exercised. The Corporation shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within
ten (10) days after such date for redemption set forth in a
resolution of the Board of Directors ordering the redemption of
the Rights, the Corporation shall mail a notice of redemption to
all the holders of the then outstanding Rights 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
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payment of the Redemption Price will be made. Neither the
Corporation 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
and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
(c) The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press
release announcing the manner of redemption of the Rights in
accordance with this Agreement and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent of the Common Shares, and upon such
action, all outstanding Rights and Right Certificates shall be
null and void without any further action by the Corporation.
Section 24. Exchange. (a) The Board of Directors of the
Corporation may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Sections 7(e) and 11(a)(ii) hereof) for Common Shares of the
Corporation at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after
any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or any
such Subsidiary, any entity holding Common Shares for or pursuant
to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Corporation ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such rights shall
terminate and the only 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 Ratio. The Corporation 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 Corporation 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
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Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void
pursuant to the provisions of Sections 7(e) and 11(a)(ii) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Corporation, at its option, may substitute Preferred Shares (or
equivalent preferred shares, as such term is defined in
Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one-thousandth of
a Preferred Share (or equivalent preferred share) for each Common
Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as
one Common Share.
(d) In the event that there shall not be sufficient Common
Shares or Preferred Shares issued but not outstanding or
authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Corporation
shall take such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon
exchange of the Rights.
Section 25. Notice of Certain Events. (a) In case the
Corporation shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to
make any other distribution to the holders of its Preferred
Shares (other than a regularly quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants
to subscribe for or to purchase any additional Preferred Shares
or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with any other Person (other than
a Subsidiary of the Corporation in a transaction which does not
violate Section 11(n) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer) in one or more transactions, of 50%
or more of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Corporation and/or any of its Subsidiaries in one
or more transactions each of which does not violate Section 11(n)
hereof, or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation
shall give to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of such proposed action to the
extent feasible and file a certificate with the Rights Agent to
that effect, which shall specify the record date for the purposes
of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the
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holders of the Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days
prior to record date for determining holders of the Preferred
Shares for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the Preferred Shares, whichever shall
be the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the
Corporation shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph (a) to Preferred Shares
shall be deemed thereafter to refer also to Common Shares and/or,
if appropriate, other securities of the Corporation.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Corporation 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:
Crown Laboratories, Inc.
6780 Caballo Street
Las Vegas, Nevada 89119
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Corporation 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 Corporation) as follows:
Securities Transfer Corporation
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
Attention: Kevin V. Halter, President
Notices or demands authorized by this Agreement to be given or
made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares shall be
sufficiently given
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<PAGE>
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 Corporation.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Corporation and the Rights Agent shall, if
the Corporation so directs, supplement or amend any provision of
this Agreement without the approval of any holders of
certificates representing Common Shares. From and after the
Distribution Date, the Corporation and the Rights Agent shall, if
the Corporation so directs, supplement or amend this Agreement
without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the
Corporation may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or Section 20 of this
Agreement. 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. Notwithstanding anything
contained in this Rights Agreement to the contrary, in the event
that a majority of the Board of Directors of the Corporation is
comprised of (i) persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board of
Directors in office immediately prior to such meeting or written
consent, and/or (ii) successors of such persons elected to the
Board of Directors for the purpose of either facilitating a
Transaction with a Transaction Person or circumventing directly
or indirectly the provisions of this Section 27, then for a
period of 180 days following the effectiveness of such action,
this Rights Agreement shall not be amended or supplemented in any
manner reasonably likely to have the purpose or effect of
facilitating a Transaction with a Transaction Person.
Section 28. Determination and Actions by the Board of
Directors, etc. The Board of Directors of the Corporation shall
have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically
granted to the Board, or the Corporation, or as may be necessary
or advisable in the administration of this
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<PAGE>
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (II) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation,
a determination to redeem or not redeem the Rights or to amend
the Agreement and whether any proposed amendment adversely
affects the interests of the holders of Right Certificates). For
all purposes of this Agreement, any calculation of the number of
Common Shares or other securities outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding Common Shares or any other
securities of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Corporation,
the Rights Agent, the holders of the Right Certificates and all
other parties, and (y) not subject the Board to any liability to
the holders of the Right Certificates.
Section 29. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Corporation or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Corporation, the Rights Agent
and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement, each Right and each
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.
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<PAGE>
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction
of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
CROWN LABORATORIES, INC.
Attest:
By_________________________ By_______________________________
Name: Name:
Title: Title:
SECURITIES TRANSFER CORPORATION
Attest:
By________________________ By_______________________________
Name: Name:
Title: Title:
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<PAGE>
Exhibit A
Certificate of Designation
of
Series F Junior Participating Preferred Stock
of
Crown Laboratories, Inc.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Crown Laboratories, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the
"Corporation") hereby certifies that the following resolution was
duly adopted by the Board of Directors of the Corporation as
required by Section 151 of the General Corporation Law of the
State of Delaware at a meeting duly called and held on May 5,
1997.
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation in accordance with
the provisions of the Corrected, Restated Certificate of
Incorporation, the Board of Directors hereby creates a series of
Series F Junior Participating Preferred Stock, with a par value
of $0.001 per share, of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights,
preferences and limitations thereof (in addition to the
provisions set forth in the Corrected, Restated Certificate of
Incorporation which are applicable to the Preferred Stock of all
classes and series) as follows:
Series F Junior Participating Preferred Stock
Section 1. Designation, Par Value and Amount. The shares of
such series shall be designated as "Series F Junior Participating
Preferred Stock" (hereinafter referred to as "Series F Preferred
Stock"), the shares of such series shall be with par value of
$0.001 per share, and the number of shares constituting such
series shall be 500,000; provided, however, that, if more than a
total of 500,000 shares of Series F Preferred Stock shall be
issuable upon the exercise of Rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of May 5, 1997 between
the Corporation and Securities Transfer Corporation, as Rights
Agent (as amended from time to time) (the "Rights Agreement"),
the Board of Directors of the Corporation, pursuant to Section
151 of the General Corporation Law of the State of Delaware,
shall direct by resolution or resolutions that a certificate be
properly executed, acknowledged and filed providing for the total
number of shares of Series F Preferred Stock authorized to be
issued to be increased (to the extent that the Corrected,
Restated Certificate of Incorporation then permits) to the
largest
A-1
<PAGE>
number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of the Rights.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series F Preferred Stock with respect
to dividends, the holders of shares of Series F Preferred Stock
shall be entitled to receive, when, as and if declared by the
Board of Directors out of assets legally available for the
purpose, quarterly dividends payable in cash on the first
business day of November, February, May and August in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series F Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $ 1.00
or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common
Stock, par value $0.001 per share, of the Corporation (the
"Common Stock") or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction
of a share of Series F Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such
case the amount to which holders of shares of Series F Preferred
Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(b) The Corporation shall declare a dividend or distribution
on the Series F Preferred Stock as provided in paragraph (a)
above immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of
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<PAGE>
$1.00 per share on the Series F Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series F Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series F Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders
of shares of Series F Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series F Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series F Preferred
Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series F
Preferred Stock shall have the following voting rights:
(a) Except as provided in paragraph C of this Section 3 and
subject to the provision for adjustment hereinafter set forth,
each share of Series F Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series F
Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the
holders of shares of Series F Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
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<PAGE>
(c) (i) If, on the date used to determine stockholders of
record for any meeting of stockholders for the election of
directors, a default in preference dividends (as defined in
subparagraph (v) below) on the Series F Preferred Stock shall
exist, the holders of the Series F Preferred Stock shall have the
right, voting as a class as described subparagraph (ii) below, to
elect two directors (in addition to the directors elected by
holders of Common Stock of the Corporation). Such right may be
exercised (a) at any meeting of stockholders for the election of
directors or (b) at a meeting of the holders of shares of Voting
Preferred Stock (as hereinafter defined), called for the purpose
in accordance with the By-laws of the Corporation, until all such
cumulative dividends (referred to above) shall have been paid in
full or until non-cumulative dividends have been paid regularly
for at least one year.
(ii) The right of the holders of Series F Preferred Stock
to elect two directors, as described above, shall be exercised as
a class concurrently with the rights of holders of any other
series of Preferred Stock upon which voting rights to elect such
directors have been conferred and are then exercisable. The
Series F Preferred Stock and any additional series of Preferred
Stock which the Corporation may issue and which may provide for
the right to vote with the foregoing series of Preferred Stock
are collectively referred to herein as "Voting Preferred Stock."
(iii) Each director elected by the holders of shares of
Voting Preferred Stock shall be referred to herein as a
"Preferred Director." A Preferred Director so elected shall
continue to serve as such director for one year, except that upon
any termination of the right of all of such holders to vote as a
class for Preferred Directors, the term of office of such
directors shall terminate. Any Preferred Director may be removed
by, and shall not be removed except by, the vote of the holders
of record of a majority of the outstanding shares of Voting
Preferred Stock then entitled to vote for the election of
directors, present (in person or by proxy) and voting together as
a single class (a) at a meeting of the stockholders, or (b) at a
meeting of the holders of shares of such Voting Preferred Stock,
called for the purpose in accordance with the By-laws of the
Corporation, or (c) by written consent signed by the holders of a
majority of the then outstanding shares of Voting Preferred Stock
then entitled to vote for the election of directors, taken
together as a single class.
(iv) So long as a default in any preference dividends on
the Series F Preferred Stock shall exist or the holders of any
other series of Voting Preferred Stock shall be entitled to elect
Preferred Directors, (a) any vacancy in the office of a Preferred
Director may be filled (except as provided in the following
clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in the
case of the removal of any Preferred Director, the vacancy may be
filled by the vote or
A-4
<PAGE>
written consent of the holders of a majority of the outstanding
shares of Voting Preferred Stock then entitled to vote for the
election of directors, present (in person or by proxy) and voting
together as a single class, at such time as the removal shall be
effected. Each director appointed as aforesaid by the remaining
Preferred Director shall be deemed, for all purposes hereof, to
be a Preferred Director. Whenever (x) no default in preference
dividends on the Series F Preferred Stock shall exist and (y) the
holders of other series of Voting Preferred Stock shall no longer
be entitled to elect such Preferred Directors, then the number of
directors constituting the Board of Directors of the Corporation
shall be reduced by two.
(v) For purposes hereof, a "default in preference
dividends" on the Series F Preferred Stock shall be deemed to
have occurred whenever the amount of cumulative and unpaid
dividends on the Series F Preferred Stock shall be equivalent to
six full quarterly dividends or more (whether or not
consecutive), and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all cumulative
dividends on all shares of the Series F Preferred Stock then
outstanding shall have been paid through the last Quarterly
Dividend Payment Date or until, but only until, non-cumulative
dividends have been paid regularly for at least one year.
(d) Except as set forth herein (or as otherwise required by
applicable law), holders of Series F Preferred Stock shall have
no general or special voting rights and their consent shall not
be required for taking any corporate action.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series F Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series F Preferred Stock outstanding shall
have been paid in full, the Corporation shall not
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series F Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series F Preferred Stock, except dividends paid ratably
on the Series F Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
A-5
<PAGE>
(iii) redeem or purchase or otherwise acquire for
consideration (except as provided in (iv) below) shares of any
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series F Preferred Stock,
provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to
the Series F Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series F Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series F
Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (a) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series F
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein, in the Corrected,
Restated Certificate of Incorporation, in any other Certificate
of Amendment creating a series of Preferred Stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Subject to the prior and superior rights of holders of
any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series F Preferred Stock with respect
to rights upon liquidation, dissolution or winding up (voluntary
or otherwise), no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series F Preferred
Stock unless, prior thereto, the holders of shares of Series F
Preferred Stock shall have received $1,000 per share, plus an
amount equal to accrued and unpaid dividends and distributions
A-6
<PAGE>
thereon, whether or not declared, to the date of such payment
(the "Series F Liquidation Preference"). Following the payment
of the full amount of the Series F Liquidation Preference, no
additional distributions shall be made to the holders of shares
of Series F Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share
(the "Capital Adjustment") equal to the quotient obtained by
dividing (i) the Series F Liquidation Preference by (ii) 1,000
(such number in clause (ii), the "Adjustment Number"). Following
the payment of the full amount of the Series F Liquidation
Preference and the Capital Adjustment in respect of all
outstanding shares of Series F Preferred Stock and Common Stock,
respectively, holders of Series F Preferred Stock and holders of
Common Stock shall receive their ratable and proportionate share
of the remaining assets to be distributed in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and
Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series F
Liquidation Preference and the liquidation preferences of all
other series of preferred stock, if any, which rank on a parity
with the Series F Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of Series F Preferred
Stock and the holders of such parity shares in proportion to
their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment
in full of the Capital Adjustment then such remaining assets
shall be distributed ratably to the holders of Common Stock.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Series F Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to
1,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of
shares of Series F Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
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<PAGE>
Section 8. No Redemption. The shares of Series F Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series F Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in
any manner which would materially alter or change the powers,
preferences or special rights of the Series F Preferred Stock so
as to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding shares of Series
F Preferred Stock, voting separately as a class.
IN WITNESS WHEREOF, this Certificate of Designation is executed
on behalf of the Corporation by its Chairman of the Board and
attested by its Chief Financial Officer as of the __ day of May,
1997.
_____________________________
Name:
Title: Chief Executive Officer
Attest:
________________________________
Name:
Title: Chief Financial Officer
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<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- ________________ Rights
NOT EXERCISABLE AFTER MAY 15, 2007 OR EARLIER IF REDEEMED BY THE
CORPORATION. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
Crown Laboratories, 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
May 5, 1997 (the "Rights Agreement"), between Crown Laboratories,
Inc., a Delaware corporation (the "Corporation"), and Securities
Transfer Corporation (the "Rights Agent"), to purchase from the
Corporation at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., New
York time, on May 15, 2007, unless the Rights evidenced hereby
shall have been previously redeemed by the Corporation, at the
principal office or offices of the Rights Agent designated for
such purpose, or at the office of its successor as Rights Agent,
one one-thousandth of a fully paid non-assessable share of Series
F Junior Participating Preferred Stock, $.001 par value per share
(the "Preferred Shares"), of the Corporation, at a purchase price
of $12.00 per one one-thousandth of Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
May 5, 1997, based on the Preferred Shares as constituted at such
date.
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by
this Right Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate
who becomes a transferee after the Acquiring Person becomes such,
or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person, Associate
or Affiliate who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such, such Rights shall become
null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
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<PAGE>
As provided in the Rights Agreement, the Purchase Price and the
number of one one-thousandth of a Preferred Share or other
securities which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights
Agreement).
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 Corporation and the holders of
the Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal
executive offices of the Corporation and the principal office or
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Corporation
at a redemption price of $.01 per Right (subject to adjustment as
provided in the Rights Agreement) payable in cash.
No fractional Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions
which are one one-thousandth or integral multiples of one one-
thousandth of a Preferred Share, which may, at the election of
the Corporation, be evidenced by depository receipts), but in
lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of
the Preferred Shares or of any other securities of the
Corporation 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 Corporation or any
right to vote
B-2
<PAGE>
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 other
distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of _____________.
[SEAL]
ATTEST:
CROWN LABORATORIES, INC.
By___________________________ By__________________________
Name: Name:
Title: Title:
Countersigned:
______________________
By:__________________________
Authorized Signatory
Name:
Title:
B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________ hereby sells, assigns
and transfers unto
_________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ___________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Corporation,
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.
- -----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being sold, assigned or
transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due
inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement).
________________________________
Signature
B-4
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to
purchase the Preferred Shares, Common Shares or other securities
issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares, Common Shares or other
securities 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
B-5
<PAGE>
Form of Reverse Side of Right Certificate -- continued.
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
- -----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights evidenced by
this Right Certificate are not being exercised by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and (2) after due inquiry and to the best knowledge of
the undersigned, the undersigned did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or
was an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement).
_______________________________
Signature
- -----------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment and Election
and certificates 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 the Form of Election to Purchase, as the case may
be, is not completed, the Corporation and the Rights Agent will
deem the Beneficial Owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not
be honored.
B-6
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On May 5, 1997, the Board of Directors of Crown Laboratories,
Inc. (the "Corporation") declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding
share of Common Stock, par value $0.001 per share (the "Common
Shares"), of the Corporation. The dividend is payable to the
stockholders of record on May 16, 1997 (the "Record Date"), and
with respect to Common Shares issued thereafter, until the
Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Shares issued after the
Distribution Date. Except as set forth below, each Right, when
it becomes exercisable, entitles the registered holder to
purchase from the Corporation one one-thousandth of a share of
Series F Junior Participating Preferred Stock, $.001 par value
(the "Preferred Shares"), of the Corporation at a price of $12.00
per one one-thousandth of a Preferred Share (the "Purchase
Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Corporation and Securities Transfer
Corporation, as Rights Agent (the "Rights Agent"), dated as of
May 5, 1997.
Initially, the Rights will be attached to all certificates
representing Common Shares then outstanding, and no separate
Right Certificates will be distributed. The Rights will separate
from the Common Shares upon the earliest to occur of (i) the date
of a public announcement that, without the prior consent of a
majority of the Disinterested Directors (as defined below), a
person or group of affiliated or associated persons having
acquired beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined), or (ii) 10 days (or such later date as the
Board may determine) following the commencement or announcement
of an intention to make a tender or exchange offer, the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "Acquiring Person." The
date that a person or group announces publicly that it has become
an Acquiring Person is the "Shares Acquisition Date."
"Disinterested Directors" are directors who are not officers or
employees of the Company and who are not Acquiring Persons or
their Affiliates, Associates or representatives of any of them,
or any person who was directly or indirectly proposed or
nominated as a director of the Company by a Transaction Person
(as defined below).
<PAGE>
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or
a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate
certificates evidencing 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 to each initial record
holder of certain Common Shares issued after the Distribution
Date), and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on May 15, 2007, unless
earlier redeemed by the Corporation as described below.
In the event that any person becomes an Acquiring Person
(except pursuant to a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms which a
majority of the Disinterested Directors determines to be adequate
and in the best interests of the Corporation and its
stockholders, other than such Acquiring Person, its affiliates
and associates (a "Permitted Offer")), each holder of a Right
will thereafter have the right (the "Flip-In Right") to receive
upon exercise one one-thousandth of a share of Preferred Shares
(or, in certain circumstances, other securities of the
Corporation) having a value (immediately prior to such triggering
event) equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or
associate thereof will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Corporation consolidates with, or
merges into, an Acquiring Person, or an Affiliate or Associate
thereof, or any person or entity in which such Acquiring Person,
Affiliate or Associate has an interest or which is acting in
concert with such Acquiring Person, Affiliate or Associate (an
"Interested Stockholder"), or any other entity (if all holders of
Common Shares are not treated alike in such transaction), (ii) an
Interested Stockholder or any other entity (if all holders of
Common Shares are not treated alike in such transaction)
consolidates with, or mergers into the Company (other than, in
the case of either transaction described in (i) and (ii) above,
certain reorganization transactions), or
<PAGE>
(iii) the Corporation sells or otherwise transfers (in one
transaction or a series of transactions) 50% or more of the
assets or earning power of the Corporation to an Interested
Stockholder or to any other entity (if all holders of Common
Shares are not treated alike in such transaction), proper
provision shall be made so that each holder of a Right (except
Rights which previously have been voided as set forth below)
shall thereafter have the right (the "Flip-Over Right") to
receive, upon exercise, common shares of the acquiring or
surviving company (or, in the event there is more than one
acquiring company, the acquiring company receiving the greatest
portion of the assets or earning power transferred) having a
value equal to two times the exercise price of the Right.
The Purchase Price payable, and the number of Preferred Shares,
Common Shares or other securities issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred
Shares with a conversion price, less than the then current market
price of the Preferred Shares, or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the Purchase Price payable
are also subject to adjustment in the event of a stock split of
the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled to a
minimum preferential quarterly dividend payment of $1.00 per
share but, if greater, will be entitled to an aggregate dividend
per share of 1,000 times the dividend declared per Common Share.
In the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of
$1,000 per share; thereafter, and after the holders of the Common
Shares receive a liquidation payment of $1.00 per share, the
holders of the Preferred Shares and the holders of the Common
Shares will share the remaining assets in the ratio of 1,000 to 1
(as adjusted) for each Preferred Share and Capital Share so held,
respectively. Finally, in the event of any merger, consolidation
or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the
amount received per Common Share. These rights are protected by
customary antidilution provisions. In the event that the amount
of accrued and unpaid dividends on the Preferred
<PAGE>
Shares is equivalent to six full quarterly dividends or more, the
holders of the Preferred Shares shall have the right, voting as a
class, to elect two directors in addition to the directors
elected by the holders of the Common Shares until all cumulative
dividends on the Preferred Shares have been paid through the last
quarterly dividend payment date or until non-cumulative dividends
have been paid regularly for at least one year.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Preferred Shares will be issued (other than fractions which are
one one-thousandth or integral multiples of one one-thousandth of
a Preferred Share, which may, at the election of the Corporation,
be evidenced by depository receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of
exercise.
At any time after a person becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more
of the Common Shares, the Board of Directors of the Company may
exchange the Rights (other than the Rights owned by the Acquiring
Person or its Associates and Affiliates, which shall have become
void) at an exchange ratio of one Common Share per Right (subject
to Adjustment).
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the
Rights, and under certain other circumstances, the Corporation
may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors.
Additionally, following the Shares Acquisition Date, the
Corporation may redeem the then outstanding Rights in whole, but
not in part, at the Redemption Price, provided that such
redemption is in connection with a merger or other business
combination transaction or series of transactions involving the
Corporation in which all holders of Common Shares are treated
alike but not involving an Acquiring Person or its affiliates or
associates and provided further that this redemption right shall
not exist for 180 days following the Shares Acquisition Date
under certain circumstances.
All of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Corporation prior to the
Distribution Date. After the Distribution Date, the provisions
of the Rights Agreement may be amended by the Board in order to
cure any ambiguity, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or, subject to
certain limitations, to shorten or lengthen any time period under
the Rights Agreement.
<PAGE>
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Corporation, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders of the Corporation, stockholders may, depending upon
the circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events
thereafter.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to Form 8-A,
dated May 13, 1997. A copy of the Rights Agreement is available
free of charge from the Corporation. 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
hereby incorporated herein by reference.
CROWN LABORATORIES, INC.
PRESS RELEASE
May 7, 1997
Crown Laboratories,Inc. (PSE/AMEX: CLL) ("Company") announced
today that its Board of Directors has adopted a Shareholder
Rights Plan ("Plan") designed to protect shareholders from
various abusive takeover tactics, including attempts to acquire
control of the Company at an inadequate price.
The Plan is designed to assure that any acquisition of the
Company and/or any acquisition of control of the Company would
take place under circumstances in which the Board of Directors
can secure the best available transaction for all of the
Company's stockholders. Under the Plan, each stockholder will
receive a dividend of one Right for each share of the Company's
outstanding Common Stock. Craig Nash, President of the Company
said: "The Rights are designed to protect the Company and its
stockholders against market accumulation programs and other
abusive takeover tactics and are not aimed at preventing a
takeover but rather are intended to encourage a potential buyer
to negotiate appropriately with the Board prior to attempting a
takeover."
Initially, the Rights are attached to the Company's Common
Stock and are not exercisable. They become detached from the
Common Stock and become immediately exercisable after any person
or group that is not a "grandfathered stockholder" becomes the
beneficial owner of 15% or more of the Company's Common Stock or
10 days after any person or group announces a tender or exchange
offer that would result in that same beneficial ownership level,
subject only to certain "Permitted Offers."
If a buyer who is not a "grandfathered stockholder" becomes a
15% owner in the Company, all Rights holders, except the buyer,
will be entitled to purchase Preferred Stock in the Company at a
price discounted from the then market price. In addition, if the
Company is acquired in a merger after such an acquisition, all
Rights holders except the buyer will also be entitled to purchase
stock in the buyer at a discount in accordance with the Plan.
The distribution of Rights will be made to common stockholders
of record on May 16, 1997, and shares of common stock that are
newly-issued after that date will also carry Rights until the
Rights become detached from the common stock. The Rights will
expire on May 16, 2007. The Company may redeem the Rights for
$0.01 each at any time before a buyer acquires a 15% position in
the Company, and under certain other circumstances. The Rights
distribution is not taxable to stockholders.
Details of the Plan are included with a letter which will be
mailed to all of the Company's stockholders.
