SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A2
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
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(State of incorporation or (I.R.S. Employer
organization) Identification No.)
6780 Caballo Street
Las Vegas, Nevada 89119
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(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
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PREFERRED STOCK PURCHASE RIGHTS AMERICAN STOCK EXCHANGE,
INC./EMERGING COMPANY
MARKETPLACE; PACIFIC
EXCHANGE, INC.
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
<PAGE>
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
<PAGE>
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 is 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.
<PAGE>
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.
<PAGE>
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: June 3, 1997
<PAGE>
EXHIBIT INDEX
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Exhibit Description Page
- ------- ----------- ----
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.
____________________________________________
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 Right 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)(iii)
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 1(l)
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
<PAGE>
acquire 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
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<PAGE>
basis the offer is being made) taking into account all factors
that such Disinterested Directors may deem relevant.
(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
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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.
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"),
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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 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.
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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
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.
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<PAGE>
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 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
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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 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
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<PAGE>
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 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.
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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).
(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
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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, 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.
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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 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.
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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 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
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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, 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
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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
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
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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 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
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<PAGE>
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 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
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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 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
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<PAGE>
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 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
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<PAGE>
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).
(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
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<PAGE>
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 (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
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(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 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
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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
(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
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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
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
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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 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
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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.
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
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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 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
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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 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
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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 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
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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) 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
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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.
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,
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(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 up 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 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
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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
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
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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 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
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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 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:
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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 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
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<PAGE>
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 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.
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<PAGE>
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.
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
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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
A-4
<PAGE>
or 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
A-6
<PAGE>
shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions 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
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<PAGE>
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
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
B-2
<PAGE>
vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
the Rights Agreement), or to receive dividends or 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).
C-1
<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
C-2
<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
C-3
<PAGE>
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 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.
C-4
<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.
C-5
EXHIBIT 2
---------
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.
