SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
HI-LO AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0232254
(State of Incorporation or organization) (I.R.S. Employer
Identification Number)
2575 WEST BELLFORT
HOUSTON, TEXAS 77054
(Address of principal executive offices) (Zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
RIGHTS TO PURCHASE SERIES A JUNIOR NEW YORK STOCK EXCHANGE
PARTICIPATING PREFERRED STOCK, PAR
VALUE $.01 PER SHARE
Securities to be registered pursuant to Section 12(g) of the Act: NONE
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On August 23, 1996, the Board of Directors of Hi-Lo Automotive, Inc.
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.01 per share
(the "Common Shares"), of the Company. The dividend is payable on September 3,
1996 (the "Record Date") to the stockholders of record on that date. As of
August 23, 10,756,350 Common Shares were issued and outstanding. Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $.01 per
share (the "Preferred Shares"), of the Company, at a price of $14.00 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") dated as of August 28, 1996 between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent").
DETACHMENT OF RIGHTS; EXERCISE. Initially, the Rights will attach to all
Common Share certificates representing outstanding shares and no separate Right
Certificate will be distributed. The Rights will separate from the Common Shares
and a Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding Voting Shares (as defined in the Rights
Agreement) of the Company, or (ii) 10 business days following the commencement
or announcement of an intention to commence a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Voting Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced, with respect to the Common Shares
outstanding on September 3, 1996, by the certificates representing such Common
Shares with a copy of the Summary of Rights to Purchase Preferred Shares
included as Exhibit 4 hereto (the "Summary of Rights") attached thereto, (ii)
the Rights will be transferred with and only with the Common Shares, (iii) new
Common Share certificates issued after September 3, 1996, upon transfer or new
issuance of the Common Shares, will contain a notation incorporating the Rights
Agreement by reference, and (iv) the surrender for transfer of any certificates
for Common Shares outstanding as of September 3, 1996, even without such
notation or a copy of the 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 (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 2, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
If a person or group were to acquire 15% or more of the Voting Shares of
the Company, each Right then outstanding (other than Rights beneficially owned
by the Acquiring Person which would become null and void) would become a right
to buy that number of Common Shares (or under certain circumstances, the
equivalent number of one one-thousandths of a Preferred Share) that at the time
of such acquisition would have a market value of two times the Purchase Price of
the Right.
If the Company were acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power were
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
PREFERRED SHARES. The dividend and liquidation rights, and the
non-redemption feature, of the Preferred Shares are designed so that the value
of one one-thousandth of a Preferred Share purchasable upon exercise of each
Right will approximate the value of one Common Share. The Preferred Shares
issuable upon exercise of the Rights
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will be non-redeemable and rank junior to all other series of the Company's
preferred stock. Each whole Preferred Share will be entitled to receive a
quarterly preferential dividend in an amount per share equal to the greater of
(i) $1.00 in cash, or (ii) in the aggregate, 1,000 times the dividend declared
on the Common Shares. In the event of liquidation, the holders of the Preferred
Shares will be entitled to receive a preferential liquidation payment equal to
the greater of (i) $1,000 per share, or (ii) in the aggregate, 1,000 times the
payment made on the Common Shares. In the event of any merger, consolidation or
other transaction in which Common Shares are exchanged for or changed into other
stock or securities, cash or other property, each whole Preferred Share will be
entitled to receive 1,000 times the amount received per Common Share. Each whole
Preferred Share shall be entitled to 1,000 votes on all matters submitted to a
vote of the stockholders of the Company, and Preferred Shares shall generally
vote together as one class with the Common Stock and any other capital stock on
all matters submitted to a vote of stockholders of the Company.
The offer and sale of the Preferred Shares issuable upon exercise of the
Rights will be registered with the Securities and Exchange Commission and such
registration will not be effective until the Rights become exercisable.
The Rights themselves will be listed on the New York Stock Exchange.
ANTIDILUTION AND OTHER ADJUSTMENTS. The number of one one-thousandths of
a Preferred Share or other securities or property issuable upon exercise of the
Rights, and the Purchase Price payable, are subject to customary adjustments
from time to time to prevent dilution.
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right 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.
EXCHANGE OPTION. At any time after the acquisition by a person or group
of affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding Voting Shares of the Company and before the acquisition by a
person or group of 50% or more of the outstanding Voting Shares of the Company,
the Board of Directors may, at its option, issue Common Shares in mandatory
redemption of, and in exchange for, all or part of the then outstanding and
exercisable Rights (other than Rights owned by such person or group which would
become null and void) at an exchange ratio of one Common Share (or one
one-thousandth of a Preferred Share) for each two Common Shares for which each
Right is then exercisable, subject to adjustment.
REDEMPTION OF RIGHTS. At any time prior to the first public announcement
that a person or group has become the beneficial owner of 15% or more of the
outstanding Voting Shares, the Board of Directors of the Company may redeem all
but not less than all the then outstanding Rights at a price of $0.01 per Right
(the "Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
NO RIGHTS AS STOCKHOLDER. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
AMENDMENT OF RIGHTS. The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders of the Rights,
including an amendment to extend the Final Expiration Date, and, provided a
Distribution Date has not occurred, to extend the period during which the Rights
may be redeemed, except that after the first public announcement that a person
or group has become the beneficial owner of 15% or more of the outstanding
Voting Shares, no such amendment may materially and adversely affect the
interests of the holders of the Rights.
The foregoing description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, form of
Certificate of Designation of Series A Junior Participating Preferred
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Stock, form of Right Certificate, form of the Summary of Rights and the specimen
of the legend to be placed on new Common Share certificates, filed as exhibits
hereto and incorporated by reference herein.
ITEM 2. EXHIBITS.
1. Rights Agreement, dated as of August 28, 1996, between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent, specifying the terms of the Rights, which includes the
form of Certificate of Designation of Series A Junior
Participating Preferred Stock as Exhibit A, the form of Right
Certificate as Exhibit B and the form of the Summary of Rights to
Purchase Preferred Shares as Exhibit C.
2. Form of Certificate of Designation of Series A Junior
Participating Preferred Stock (included as Exhibit A to the
Rights Agreement filed as Exhibit 1 hereto) setting forth the
terms of the Series A Junior Participating Preferred Stock, par
value $.01 per share.
3. Form of Right Certificate (included as Exhibit B to the Rights
Agreement filed as Exhibit 1 hereto). Pursuant to the Rights
Agreement, printed Right Certificates will not be delivered until
as soon as practicable after the Distribution Date.
4. Form of Summary of Rights to Purchase Preferred Shares (included
as Exhibit C to the Rights Agreement filed as Exhibit 1 hereto)
which, together with certificates representing the outstanding
Common Shares of the Company, shall represent the Rights prior to
the Distribution Date.
5. Specimen of legend to be placed, pursuant to Section 3(d) of the
Rights Agreement, on all new Common Share certificates issued by
the Company after September 3, 1996, and prior to the
Distribution Date upon transfer, exchange or new issuance.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
HI-LO AUTOMOTIVE, INC.
Date: August 30, 1996 By: /S/ T. MICHAEL YOUNG
Name: T. Michael Young
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EXHIBIT 1
HI-LO AUTOMOTIVE, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF AUGUST 28, 1996
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions................................................2
Section 2. Appointment of Rights Agent........................................7
Section 3. Issue of Right Certificates........................................7
Section 4. Form of Right Certificates.........................................9
Section 5. Execution, Authentication and Delivery............................10
Section 6. Registration, Registration of Transfer and Exchange...............10
Section 7. Mutilated, Destroyed, Lost and Stolen Right Certificates..........11
Section 8. Exercise of Rights; Purchase Price; Expiration Date of
Rights............................................................12
Section 9. Cancellation and Destruction of Right Certificates................12
Section 10. Reservation and Availability of Shares...........................13
Section 11. Record Date......................................................13
Section 12. Adjustment of Purchase Price, Number of Shares or
Number of Rights.................................................14
Section 13. Certificate of Adjusted Purchase Price or Number of Shares.......19
Section 14. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power....................................................20
Section 15. Fractional Rights and Fractional Shares..........................21
Section 16. Rights of Action.................................................22
Section 17. Agreement of Right Holders.......................................23
Section 18. Right Certificate Holder Not Deemed a Stockholder................23
Section 19. Concerning the Rights Agent......................................24
Section 20. Duties of Rights Agent...........................................24
Section 21. Merger or Consolidation or Change of Name of Rights Agent........26
Section 22. Change of Rights Agent...........................................26
Section 23. Issuance of New Right Certificates...............................27
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Section 24. Redemption.......................................................27
Section 25. Mandatory Redemption and Exchange................................28
Section 26. Notice of Certain Events.........................................29
Section 27. Securities Laws Registrations....................................29
Section 28. Notices..........................................................30
Section 29. Supplements and Amendments.......................................30
Section 30. Successors.......................................................31
Section 31. Benefits of this Agreement.......................................31
Section 32. Severability.....................................................31
Section 33. Governing Law....................................................31
Section 34. Counterparts.....................................................31
Section 35. Descriptive Headings.............................................31
EXHIBITS
Exhibit A - Certificate of Designation of Preferred Shares
Exhibit B - Right Certificate
Exhibit C - Summary of Rights
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RIGHTS AGREEMENT
This Rights Agreement, dated as of August 28, 1996, is between Hi-Lo
Automotive, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C. as Rights Agent.
WHEREAS, the Board of Directors of the Company, having determined its
actions to be in the interests of the Company, has authorized the creation of
Rights, has authorized and directed 1. 5 the issuance to the holders of record
of Common Shares of the Company outstanding on September 3, 1996 of one Right
with respect to each Common Share of the Company outstanding on September 3,
1996, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between September 3,
1996 and the earlier of the Distribution Date, the Redemption Date and the Final
Expiration Date; and
WHEREAS, the Board of Directors of the Company has authorized and
directed that the terms and conditions under which the Rights are to be
distributed, including without limitation those affecting the exercise thereof,
the securities or other property to be acquired thereby and the purchase price
to be paid therefor, shall be set forth in a written agreement between the
Company and a rights agent made for the benefit of the holders of the Rights to
the extent so provided therein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Voting Shares of the Company then
outstanding, but shall not include the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company or any entity holding Voting Shares for or pursuant to
any such plan. Notwithstanding the foregoing, (a) no Person shall become
an "Acquiring Person" as the result of an acquisition of Voting Shares
by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such
Person to 15% or more of the Voting Shares of the Company then
outstanding; PROVIDED, HOWEVER, that, if a Person shall become the
Beneficial Owner of 15% or more of the Voting Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company and at a time when such Person is
the Beneficial Owner of 15% or more of the Voting Shares of the Company
then outstanding, become the Beneficial Owner of any additional Voting
Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person" and (b) no Person shall be deemed to be an "Acquiring
Person" if (i) within 7 days after such Person would otherwise have
become an Acquiring Person (but for the operation of
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this subclause (b)), such Person notifies the Board of Directors that
such Person did so inadvertently and (ii) within 2 days after such
notification, such Person is the Beneficial Owner of less than 15% of
the outstanding September Voting Shares of the Company.
"Agreement" shall mean this Rights Agreement as hereafter amended
from time to time.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement.
A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "own beneficially" any securities which (without duplication):
(i) such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly, within the meaning of either
Section 13 or 16 of the Exchange Act;
(ii) such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; or
(iii) are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting or disposing of any
securities of the Company; PROVIDED, HOWEVER, that, for purposes of each
clause of this definition, a Person shall not be deemed the Beneficial
Owner of, or to own beneficially, 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; and PROVIDED, FURTHER, that, for
purposes of each clause of this definition, a Person shall not be deemed
the Beneficial Owner of, or to own beneficially, any security as a
result of any agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (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).
Notwithstanding anything in this definition to the contrary, the
phrase "then outstanding", when used with reference to a Person's
Beneficial Ownership of securities
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of the Company (or to the number of such securities "beneficially
owned"), 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.
"Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of Texas are
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5:00 P.M.,
Houston time, on such date; PROVIDED, HOWEVER, that if such date is not
a Business Day it shall mean 5:00 P.M., Houston time, on the next
succeeding Business Day.
"Closing Price," with respect to any security, shall mean the
last sale price, regular way, on a specific Trading Day or, in case no
such sale takes place on such Trading 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 such security is not then 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 such security is listed
or admitted to trading or, if such security is not then 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 or
such other system then in use, or, if on any such Trading Day such
security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in such security selected by the Board of Directors of
the Company. If such security is not publicly held or so listed or
traded, "Closing Price" shall mean the fair value per unit of such
security as determined in good faith by the Board of Directors of the
Company, whose determination shall be described, and the Closing Price
set forth in, a statement filed with the Rights Agent.
"Common Shares" when used with reference to the Company shall
mean shares of capital stock of the Company which have no preference
over any other class of stock with respect to dividends or assets, which
are not redeemable at the option of the Company and with respect to
which no sinking, purchase or similar fund is provided and shall
initially mean the shares of Common Stock, $.01 par value, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall, if used with reference to a corporation, 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 and, if used with reference to any Person other
than a corporation, mean the equity interest in such Person (or, if the
net worth determined in accordance with generally accepted accounting
principles of another Person (other than an individual) which controls
such first-mentioned Person is greater than such first-mentioned Person,
then such other Person)
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with the greatest voting power or managerial power with respect to the
business and affairs of such Person.
"Company" shall mean Hi-Lo Automotive, Inc., a Delaware
corporation, and its successors.
"Company Order" means a written request or order signed in the
name of the Company by its Chairman of the Board, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Rights Agent.
"Corporate Trust Office" means the principal office of the Rights
Agent at which it administers its corporate trust business, which, in
the case of ChaseMellon Shareholder Services shall, until hereafter
changed, be its office at 85Challenger Road, Ridgefield Park, NJ 07550.
"Distribution Date" shall mean the earlier of (i) the tenth
Business Day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may be determined by action of the
Board of Directors prior to such time as any Person becomes an Acquiring
Person) after the date of commencement by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding
Voting Shares for or pursuant to the terms of any such plan) of, or
after the date of the first public announcement of the intent of any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding Voting Shares for or pursuant to the
terms of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial
Owner of 15% or more of the then outstanding Voting Shares of the
Company; PROVIDED, HOWEVER, that an occurrence described in clause (ii)
of this definition above shall not cause the occurrence of the
Distribution Date if the Board of Directors of the Company shall, prior
to such tenth Business Day (or such later date as described in clause
(ii) above), determine that such tender or exchange offer is spurious,
unless, thereafter, the Board of Directors of the Company shall make a
contrary determination, in which event the Distribution Date shall occur
on the later to occur of such tenth Business Day (or such later date as
described in clause (ii) above) and the date of such latter
determination.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto.
"Final Expiration Date" shall mean the Close of Business on
September 2, 2006.
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability company, trust or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
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"Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company having the
rights and preferences set forth in the form of Certificate of
Designation of Series A Junior Participating Preferred Stock attached
hereto as EXHIBIT A.
"Purchase Price" shall mean the initial price at which the holder
of a Right may, subject to the terms and conditions of this Agreement,
purchase one one-thousandth (1/1000) of a Preferred Share (which initial
price is set forth in Section 8(b) hereof), as such price shall be
adjusted pursuant to the terms of this Agreement.
"Redemption Date" shall mean the time at which the Rights are
redeemed pursuant to Section 24 herein or the time at which all of the
Rights are mandatorily redeemed and exchanged pursuant to Section 25
hereof.
"Redemption Price" shall have the meaning specified in Section
24(b) herein.
"Right" shall mean one preferred share purchase right which
initially represents the right of the registered holder thereof to
purchase one one-thousandth (1/1000) of a Preferred Share upon the terms
and subject to the conditions herein set forth.
"Right Certificate" shall mean a certificate, in substantially
the form of EXHIBIT B attached to this Rights Agreement, evidencing the
Rights registered in the name of the holder thereof.
"Rights Agent" shall mean ChaseMellon Shareholder Services,
L.L.C., and any successor thereto appointed in accordance with the terms
hereof, in its capacity as agent for the Company and the holders of the
Rights pursuant to this Agreement.
"Rights Register" and "Rights Registrar" shall have the meanings
specified in Section 6.
"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 Section 13(d) or Section
16(a) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the outstanding capital stock or other
equity interests having ordinary voting power in the election of
directors or similar officials is owned, directly or indirectly, by such
Person.
"Summary of Rights" shall mean a Summary of Rights to Purchase
Preferred Shares in substantially the form attached as EXHIBIT C to this
Agreement.
"Trading Day" shall mean a day on which the principal national
securities exchange on which any of the Voting Shares of the Company are
listed or admitted to trading is
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open for the transaction of business or, if none of the Voting Shares of
the Company is listed or admitted to trading on any national stock
exchange, a Business Day.
"Voting Shares" shall mean (i) the Common Shares of the Company
and (ii) any other shares of capital stock of the Company entitled to
vote generally in the election of directors or entitled to vote together
with the Common Shares in respect of any merger or consolidation of the
Company, any sale of all or substantially all of the Company's assets or
any liquidation, dissolution or winding up of the Company. Whenever any
provision of this Agreement requires a determination of whether a number
of Voting Shares comprising a specified percentage of such Voting Shares
is, was or will be beneficially owned or has been voted, tendered,
acquired, sold or otherwise disposed of or a determination of whether a
Person has offered or proposed to acquire a number of Voting Shares
comprising such specified percentage, the number of Voting Shares
comprising such specified percentage of Voting Shares shall in every
such case be deemed to be the number of Voting Shares comprising the
specified percentage of all the Company's then outstanding Voting
Shares.
"Wholly-Owned Subsidiary" of a Person shall mean any corporation
or other entity all the outstanding capital stock or other equity
interests of which having ordinary voting power in the election of
directors or similar officials (other than directors' qualifying shares
or similar interests) are owned, directly or indirectly, by such Person.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the Common Shares of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) From and after September 3,
1996 until the Distribution Date, (i) outstanding Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for outstanding Common Shares of the Company and not by separate
Right Certificates, and (ii) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares of the
Company. As soon as practicable after the Distribution Date, the Rights Agent
will send, by first-class, insured, postage-prepaid mail, to each record holder
of Common Shares of the Company as of the Close of Business on the Distribution
Date, at the address of such holder shown on the stock transfer records of the
Company, a Right Certificate evidencing one Right for each Common Share so held.
From and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On September 9, 1996, or as soon thereafter as practicable,
the Company will send a copy of a Summary of Rights, by first-class,
postage-prepaid mail, to each record holder of Common Shares of the Company as
of the Close of Business on September 3, 1996, at the address of such holder
shown on the stock transfer records of the Company. With respect to Common
Shares of the Company outstanding on September 3, 1996, the certificates
evidencing such Common Shares shall, together with copies of such Summary of
Rights, thereafter also
-7-
evidence the outstanding Rights (as such Rights may be amended or supplemented)
distributed with respect thereto until the earlier of the Distribution Date or
the date of surrender thereof to the Company's transfer agent for registration
of transfer or exchange of Common Shares of the Company. Until the Distribution
Date (or, if earlier, the Redemption Date or Final Expiration Date), the
surrender for registration of transfer or exchange of any certificate for Common
Shares outstanding as of the Close of Business on September 3, 1996, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the surrender for registration of transfer or exchange of the outstanding Rights
associated with the Common Shares represented thereby.
(c) The Company agrees that, at any time after September 3, 1996
and prior to the Distribution Date (or, if earlier, the Redemption Date or Final
Expiration Date) at which it issues any of its Common Shares upon original issue
or out of treasury, it will concurrently distribute to the holder of such Common
Shares one Right for each such Common Share, which Right shall be subject to the
terms and provisions of this Agreement and will evidence the right to purchase
the same number of one one-thousandths (1/1000) of a Preferred Share at the same
Purchase Price as the Rights then outstanding.
(d) Certificates for Common Shares of the Company issued after
September 3, 1996 but prior to the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date, whether upon registration of
transfer or exchange of Common Shares of the Company outstanding on September 3,
1996 or upon original issue or out of treasury thereafter, shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Hi-Lo
Automotive, Inc. and ChaseMellon Shareholder Services, L.L.C., dated as
of August 28, 1996 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Hi-Lo Automotive, Inc. Under
certain circumstances, as set forth in the Rights Agree ment, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Hi-Lo Automotive, Inc. will mail to the
holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. As described in the Rights
Agreement, Rights issued to or acquired by any Acquiring Person or any
Affiliate or Associate thereof (each as defined in the Rights Agreement)
shall, under certain circumstances, become null and void.
With respect to certificates containing the foregoing legend, until the
Distribution Date, outstanding Rights associated with the Common Shares of the
Company represented by such certificates shall be evidenced by such certificates
alone, and the surrender of any such certificate for registration of transfer or
exchange of the Common Shares evidenced thereby shall also constitute surrender
for registration of transfer or exchange of outstanding Rights (as such Rights
may be amended or supplemented) associated with the Common Shares represented
thereby.
-8-
(e) If the Company purchases or acquires any of its Common Shares after
September 3, 1996, but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The form of Right Certificates
(and the forms of election to purchase Preferred Shares (or other securities)
and of assignment to be printed on the reverse thereof) shall in form and
substance be substantially the same as EXHIBIT B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, 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 as may be necessary to conform to usage. Subject to the
provisions of Section 23 hereof, the Right Certificates, whenever issued, shall
be dated as of the date of authentication thereof, but, regardless of any
adjustments of the Purchase Price or the number of Preferred Shares (or other
securities) as to which a Right is exercisable (whether pursuant to this
Agreement or any future amendments or supplements to this Agreement), or both,
occurring after September 3, 1996 and prior to the date of such authentication,
such Right Certificates may, on their face, without invalidating or otherwise
affecting any such adjustment, expressly entitle the holders thereof to purchase
such number of Preferred Shares at the Purchase Price per one one-thousandth
(1/1000) of a Preferred Share as to which a Right would be exercisable if the
Distribution Date were September 3, 1996; no adjust ment of the Purchase Price
or the number of Preferred Shares (or other securities) as to which a Right is
exercisable, or both, effected subsequent to the date of authentication of any
Right Certificate shall be invalidated or otherwise affected by the fact that
such adjustment is not expressly reflected on the face or in the provisions of
such Right Certificate.
Pending the preparation of definitive Right Certificates, the Company
may execute, and upon Company Order the Rights Agent shall authenticate and
send, by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares of the Company as of the Close of Business on the Distribution
Date, temporary Right Certificates which are printed, lithographed, typewritten,
mimeographed or otherwise produced substantially of the tenor of the definitive
Right Certificates in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Right Certificates may determine, as evidenced by their execution
of such Right Certificates.
If temporary Right Certificates are issued, the Company will cause
definitive Right Certificates to be prepared without unreasonable delay. After
the preparation of definitive Right Certificates, the temporary Right
Certificates shall be exchangeable for definitive Right Certifi cates, upon
surrender of the temporary Right Certificates at the Corporate Trust Office of
the Rights Agent, without charge to the holder. Upon surrender for cancellation
of any one or more temporary Right Certificates, the Company shall execute and
the Rights Agent shall authenticate and deliver in exchange therefor one or more
definitive Right Certificates, evidencing a like number of Rights. Until so
exchanged, the temporary Right Certificates shall in all respects be entitled to
the same benefits under this Agreement as definitive Right Certificates.
-9-
Section 5. EXECUTION, AUTHENTICATION AND DELIVERY. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Right Certificates
may be manual or facsimile.
Right Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Right
Certificates or did not hold such offices at the date of authentication of such
Right Certificates. At any time and from time to time after the execution and
delivery of this Agreement and prior to the Distribution Date, the Company may
deliver Right Certificates executed by the Company to the Rights Agent for
authentication, together with a Company Order for the authentication and
delivery of such Right Certificates; and the Rights Agent in accordance with
such Company Order shall authenticate and deliver such Right Certificates as in
this Agreement provided and not otherwise.
No Right Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Right Certificate a certificate of authentication substantially in the form
provided for herein executed by the Rights Agent by manual signature, and such
certificate upon any Right Certificate shall be conclusive evidence, and the
only evidence, that such Right Certificate has been duly authenticated and
delivered hereunder.
Section 6. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. From and
after the Distribution Date and prior to the earlier of the Redemption Date and
the Final Expiration Date, the Company shall cause to be kept at the Corporate
Trust Office of the Rights Agent a Rights Register (a "Rights Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Right Certificates and of transfers of
Rights. The Rights Agent is hereby appointed the registrar and transfer agent
(the "Rights Registrar") for the purpose of registering Right Certificates and
transfers of Rights as herein provided and the Rights Agent agrees to maintain
such Rights Register in accordance with such regulations so long as it continues
to be designated as Rights Registrar hereunder.
Upon surrender to the Rights Agent for registration of transfer of any
Right Certificate, the Company shall execute, and the Rights Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Right Certificates evidencing a like number of
Rights.
At the option of the holder, Right Certificates may be exchanged for
other Right Certificates upon surrender of the Right Certificates to be
exchanged to the Rights Agent. Whenever any Right Certificates are so
surrendered for exchange, the Company shall execute, and the Rights Agent shall
authenticate and deliver, the Right Certificates which the holder making the
exchange is entitled to receive.
-10-
All Right Certificates issued upon any registration of transfer or
exchange of Right Certificates shall be the valid obligations of the Company,
evidencing the same Rights, and entitled to the same benefits under this
Agreement, as the Right Certificates surrendered upon such registration of
transfer or exchange.
Every Right Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Rights Agent)
be duly endorsed, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Rights Registrar duly executed, by the
holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Right Certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Right Certificates,
other than exchanges not involving any transfer.
The provisions of this Section 6 shall be subject to the provisions of
Section 15.
Section 7. MUTILATED, DESTROYED, LOST AND STOLEN RIGHT CERTIFICATES. If
any mutilated Right Certificate is surrendered to the Rights Agent, the Company
shall execute and the Rights Agent shall authenticate and deliver in exchange
therefor a new Right Certificate of like tenor, for a like number of Rights and
bearing a registration number not contemporaneously outstanding.
If there shall be delivered to the Company and the Rights Agent (i)
evidence to their satisfaction of the destruction, loss or theft of a Right
Certificate and (ii) such security or indemnity, if any, as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Rights Agent that such Right Certificate
has been acquired by a bona fide purchaser, the Company shall execute and upon
its request the Rights Agent shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Right Certificate, a new Right Certificate of like
tenor, for a like number of Rights and bearing a registration number not
contemporaneously outstanding.
Upon the issuance of any new Right Certificate under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
Every new Right Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Right Certificate shall constitute an additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Right Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and proportionately
with any and all other Right Certificates duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Right Certificates.
-11-
Section 8. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) 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 on the reverse side thereof
duly executed, to the Rights Agent at its Corporate Trust Office, together with
payment of the Purchase Price for each one one-thousandth (1/1000) of a
Preferred Share (or other securities) as to which the Rights are exercised, at
or prior to the earliest of (i) the Close of Business on the Final Expiration
Date, (ii) the time of redemption on the Redemption Date or (iii) the time at
which such Rights are mandatorily redeemed and exchanged as provided in Section
25 hereof.
(b) The Purchase Price for each one one-thousandth (1/1000) of a
Preferred Share pursuant to the exercise of a Right shall initially be fourteen
dollars ($14.00), shall be subject to adjustment from time to time as provided
in Sections 12 and 14 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the securities 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 10 in cash, or by certified check
or cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or other securities) certificates for such number of one one-thousandths
of a Preferred Share (or other securities) as are to be purchased and registered
in such name or names as may be designated by the registered holder of such
Right Certificate or, if appropriate, in the name of a depositary agent or its
nominee, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, and (B) requisition from a depositary agent
appointed by the Company, if any, depositary receipts representing such number
of one one-thousandths of a Preferred Share as are to be purchased and
registered in such name or names as may be designated by such holder (in which
case certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with such depositary agent), and the Company
hereby directs such depositary agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 15, (iii) promptly
after receipt of such certificates or depositary receipts registered in such
name or names as may be designated by such holder, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate and (iv) when appropriate, after receipt, promptly deliver such cash
to or upon the order of such holder.
(d) If the registered holder of the Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equal to the Rights remaining unexercised shall be issued by
the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 15 hereof.
Section 9. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer or exchange
shall, if surrendered to the Company or to any of its other agents, be delivered
to the Rights Agent for such purpose and for
-12-
cancellation or, if surrendered to the Rights Agent for such purpose, shall be
canceled by it. No Right Certificates shall be authenticated in lieu of or in
exchange for any Right Certificates canceled as provided in this Section 9
except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation, and the Rights Agent
shall so cancel, any other Right Certificate purchased or acquired by the
Company. The Rights Agent shall deliver all canceled Right Certificates to the
Company, or shall, pursuant to a Company Order, destroy such canceled Right
Certificates and in such case shall deliver a certificate of destruction thereof
to the Company.
Section 10. RESERVATION AND AVAILABILITY OF SHARES. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 8;
PROVIDED, HOWEVER, that the Company will not be required to reserve and keep
available Common Shares or Preferred Shares sufficient to permit the exercise in
full of all outstanding Rights pursuant to the adjustments set forth in Section
12(a)(ii) or Section 14 until such time as the Rights become exercisable
pursuant to such adjustments.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares or Common Shares of the
Company issued upon exercise of Rights shall (subject to payment of the Purchase
Price) be duly authorized, validly issued, fully paid and nonassessable. The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares (or depositary receipts therefor) or Common Shares of the
Company upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or in respect of the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares or Common Shares of the Company upon exercise of Rights evidenced by
Right Certificates in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for transfer or exercise or to
issue or deliver any certificates or depositary receipts for Preferred Shares or
Common Shares of the Company 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 thereof) or until it has been established
to the Company's satisfaction that no such tax is due.
Section 11. RECORD DATE. Each Person in whose name any certificate for
Preferred Shares or Common Shares of the Company is issued upon the exercise of,
or upon mandatory redemption and exchange of, Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares or Common
Shares represented thereby on, and such certificate shall be dated, (i) in the
case of the exercise of Rights, 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, or (ii) in the case of the
mandatory redemption and exchange of Rights, the date of such mandatory
redemption and exchange; PROVIDED, HOWEVER, that, if the date of such surrender
and payment or mandatory redemption and exchange is a date upon which the
transfer books of the Company for its Preferred Shares or Common Shares, as the
case may
-13-
be, 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 such transfer books of the Company are open. Prior to the
exercise of (or the mandatory redemption and exchange of) the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any rights
of a holder of Preferred Shares or Common Shares of the Company for which the
Rights shall be exercisable, including without limitation the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 12. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number and kind of shares of capital stock of
the Company covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 12.
(a) (i) If the Company shall at any time (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
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 12(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised thereafter shall be entitled to receive, upon
payment of the Purchase Price for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such
date, the aggregate number and kind of shares of capital stock which, if such
Right had been duly exercised immediately prior to such date (at a time when the
Preferred Shares transfer books of the Company were open), such holder would
have acquired upon such exercise and been entitled to receive upon payment or
effectuation 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 Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both Section 12(a)(i) and Section
12(a)(ii), the adjustment provided for in this Section 12(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 12(a)(ii).
(ii) Subject to action of the Board of Directors of the Company
pursuant to Section 25 of this Agreement, if any Person shall become an
Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares of the
Company as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable and dividing that product by (y) 50% of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 12(d)) on the date such Person became an Acquiring Person.
If any Person
-14-
shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
Notwithstanding any other provision of this Agreement, from and after
the time any Person shall become an Acquiring Person, any Rights that are or
were acquired or beneficially owned by any such Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be null and void and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate shall be issued
pursuant to this Agreement that represents Rights beneficially owned by an
Acquiring Person whose Rights would be null and void pursuant to the preceding
sentence or by any Associate or Affiliate thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be null and void pursuant to the preceding sentence or to any
Associate or Affiliate thereof or to any nominee (acting in its capacity as
such) of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be null and void pursuant to the preceding sentence or to any
Associate or Affiliate thereof or to any nominee (acting in its capacity as
such) of such Acquiring Person, Associate or Affiliate shall be canceled.
(iii) If on or after the Distribution Date there shall not be sufficient
Common Shares issued but not outstanding, or authorized but unissued, to permit
the exercise in full of all outstanding Rights in accordance with the foregoing
subparagraph (ii), the Company agrees to take all such action as is within its
power, including without limitation appropriate action by its Board of
Directors, as may be necessary to amend the Company's certificate of
incorporation to authorize additional Common Shares for issuance upon exercise
of the Rights. If, notwithstanding the foregoing, the shareholders shall not
approve an amendment to the Company's certificate of incorporation authorizing
such additional Common Shares within 60 days, the adjustment prescribed in
Section 12(a)(ii) shall not be made but, in lieu thereof, each holder of a Right
shall thereafter have the right to receive, upon exercise thereof in accordance
with the terms of this Agreement, such number of one one-thousandths of
Preferred Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable and dividing that product by (y) 50% of
the then current per share market price of one one-thousandth of a Preferred
Share (determined pursuant to Section 12(d)) on the date such Person became an
Acquiring Person.
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date) to 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 or exchangeable for Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(together with any additional consideration required upon conversion or exchange
in the case of a security convertible into or exchangeable for Preferred Shares
or equivalent preferred shares), less than the current per share market price of
the Preferred Shares (determined pursuant to Section 12(d) on such record date),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of
-15-
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 (together with the aggregate of any additional consideration required
upon conversion or exchange in the case of any convertible or exchangeable
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into or for
which the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case all or part of such subscription or purchase
price may be paid in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Preferred Shares owned by or held for the account of the Company or any
of its Subsidiaries shall not be deemed outstanding for the purpose of any
computation described in this Section 12(b). The adjustment described in this
Section 12(b) shall be made successively whenever such a record date is fixed;
and, if none of such rights, options or warrants is 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) If the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 12(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Preferred Shares (determined pursuant
to Section 12(d)) on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares; PROVIDED, HOWEVER, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon the exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and, if 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 the Common Shares on any date shall be deemed to be the
average of the daily Closing Prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to such date; PROVIDED, HOWEVER,
that, if the issuer of such Common Shares shall announce (A) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible
-16-
into such Common Shares or (B) any subdivision, combination or reclassification
of such Common Shares, and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, shall occur during such period of 30 Trading Days, then, and
in each such case, the current per share market price of the Common Shares shall
be appropriately adjusted to reflect the current market price per Common Share
equivalent.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in the same
manner as set forth above for Common Shares in paragraph (i) of this Section
12(d). If the current per share market price of the Preferred Shares cannot be
determined in the manner provided above, 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 (determined in the manner provided above)
multiplied by one thousand.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; PROVIDED; HOWEVER, that any adjustments which by reason of this Section
12(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 12
shall be made to the nearest cent or to the nearest ten-thousandth of a Common
Share or other share or one ten-millionth of a Preferred Share, as the case may
be, and references herein to the "number of one one-thousandths of a Preferred
Share" (or similar phrases) shall be construed to include fractions of one
one-thousandth of a Preferred Share. Notwithstanding the first sentence of this
Section 12(e), any adjustment required by this Section 12 shall be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the thirtieth day preceding the Final
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 12(a), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Shares, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares contained
in this Section 12, and the provisions of this Agreement, including without
limitation Sections 8, 10, 11 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 Company subsequent to any
adjustment made to the Purchase Price hereunder shall, whether or not the Right
Certificate evidencing such Rights reflects such adjusted Purchase Price,
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) Unless the Company shall have exercised its election as provided in
Section 12(i), upon each adjustment of the Purchase Price pursuant to Section
12(b) or 12(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price per one one-thousandth of a Preferred Share, that number of one
one-thousandths of a Preferred Share obtained by (i) multiplying (x) the number
of one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the
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Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights outstanding in lieu of any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each Right 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 of the Purchase Price. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. Until such record date, however, any adjustment in the
number of one one-thousandths of a Preferred Share for which a Right shall be
exercisable made as required by this Agreement shall remain in effect. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 12(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 15 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
authenticated in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-thousandth of the amount of consideration per
Preferred Share determined by the Board of Directors of the Company to be
capital, or below one one-thousandth of the par value, if any, per Preferred
Share issuable upon exercise of the Rights, the Company agrees to take such
corporate action as is within its power, including without limitation
appropriate action by its Board of Directors, and which is, in the opinion of
its counsel, necessary in order that the Company may validly and legally issue
fully paid and nonassessable one one-thousandths of Preferred Shares at such
adjusted Purchase Price.
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(l) In any case in which this Section 12 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the Preferred Shares or other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares or other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 12 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 12, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination or subdivision of the Preferred Shares, issuance
wholly for cash of any of the Preferred Shares at less than the current market
price, issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to in subsection (b) of this Section 12, hereafter effected by
the Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(n) If at any time prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Shares payable in Common Shares or
(ii) effect a subdivision or combination 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 (i) the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision or combination shall be adjusted by
multiplying such Purchase Price by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (ii) the number of Rights outstanding immediately after
such event shall be adjusted, either through cancellation of outstanding Rights
or through distribution of additional Rights (but without duplication of the
Company's obligations under Section 3(c)), so that the certificate evidencing
each Common Share outstanding immediately after such event shall also evidence
the associated Right to purchase the same number of one one-thousandths of a
Preferred Share as to which a Right would have entitled the holder thereof to
purchase immediately prior to such event. The adjustment provided for in this
Section 12(n) shall be made successively whenever such a dividend is declared or
paid or such a subdivision or combination is effected. If an event occurs which
would require an adjustment under Section 12(a)(ii) and this Section 12(n), the
adjustments provided for in this Section 12(n) shall be in addition and prior to
any adjustment required pursuant to Section 12(a)(ii).
Section 13. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 12 or 14 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Shares of
the Company and the Preferred Shares a copy of such certificate and (c) mail
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a brief summary thereof to each holder of record of a Right Certificate in
accordance with Section 28 hereof.
Section 14. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) If, directly or indirectly, at any time after a Person has
become an Acquiring Person (i) the Company shall consolidate with, or merge with
and into, any other Person, (ii) any Person shall merge with and into the
Company and the Company shall be the continuing or surviving corpo ration of
such merger and, in connection with any such merger, all or part of the Common
Shares of the Company shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (iii) the Company shall sell or other wise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or a series of two or
more transactions, assets of the Company or its Subsidiaries which constitute
more than 50% of the assets or which produce more than 50% of the earning power
or cash flow of the Company and its Subsidiaries (taken as a whole) to any
Person other than the Company or one or more of its Wholly-Owned Subsidiaries,
then, and in each such case, the Company agrees that, as a condition to engaging
in any such transaction, it will make or cause to be made proper pro vision so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Principal Party (as such term is hereinafter defined) as
shall be equal to the result obtained by (X) 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 12(a)(ii)) and dividing that product by (Y)
50% of the current per share market price of the Common Shares of the Principal
Party (determined pursuant to Section 12(d)) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company", as used herein, shall thereafter be
deemed to refer to such Principal Party; and (iv) such Principal Party shall
take such steps (including without limitation the reservation of a sufficient
number of shares of its Common Shares in accordance with Section 10) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares of the Principal Party thereafter
deliverable upon the exercise of the Rights. The Company shall not enter into
any transaction of the kind referred to in this Section 14 if at the time of
such transaction there are outstanding any rights, warrants, instruments or
securities or any agreement or arrangements which, as a result of the
consummation of such transaction, would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights. For the purposes
of this Section 14, 50% of the assets of the Company and its Subsidiaries shall
be determined by reference to the book value of such assets as set forth in the
most recent consolidated balance sheet of the Company and its Subsidiaries
(which need not be audited) and 50% of the earning power or cash flow of the
Company and its Subsidiaries shall be determined by reference to the
mathematical average of the operating income or cash flow, respectively,
resulting from the operations of the Company and its Subsidiaries for the two
most recent full fiscal years as set forth in the consolidated and consolidating
financial statements of the Company and its Subsidiaries for such years;
PROVIDED, HOWEVER, that, if the Company has, during such period, engaged in one
or more transactions to which purchase accounting is applicable, such
determination shall be made
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by reference to the pro forma operating income of the Company and its
Subsidiaries giving effect to such transactions as if they had occurred at the
commencement of such two-year period.
(b) The term "Principal Party" shall mean: (i) in the case of any
transaction described in clause (i) or (ii) of the first sentence of Section
14(a), the Person that is the issuer of any securities into which Common Shares
of the Company 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; and (ii) in the case of any transaction described in clause (iii)
of the first sentence of Section 14(a), the Person that is the party receiving
the greatest portion of the assets transferred pursuant to such transaction or
transactions; PROVIDED, HOWEVER, that in any such case (1) if the Common Shares
of such Person are not at such time and have not been continuously over the
preceding twelve months 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, the term "Principal Party" shall refer to
such other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, the term "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Shares having the greatest
aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
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 14 and
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in subsections (a) and (b) of this Section 14 and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer of assets referenced in the first sentence of Section
14(a), the Principal Party shall: (i) prepare and file a registration statement
under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and shall use
its best efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Final Expiration Date; and (ii) shall deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for registration
of a class of securities under the Exchange Act. The provisions of this Section
14 shall similarly apply to successive mergers, consolidations, sale or other
transfers of assets. If an event subject to this Section 14 shall occur at any
time after the occurrence of an event subject to Section 12(a)(ii), the Rights
that have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 14(a).
Section 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue or distribute Right Certificates which evidence
fractional Rights. If, on the Distribution Date or thereafter, as a result of
any adjustment effected pursuant to Section 12(i) or otherwise hereunder, a
Person would otherwise be entitled to receive a Right Certificate evidencing a
fractional Right, the Company shall, in lieu thereof, pay or cause to be paid to
such Person an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purpose of this Section 15(a), the current
market value of a whole Right shall be the
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Closing Price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are 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
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 Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares. If, on
the Distribution Date or thereafter, as a result of any adjustment effected
hereunder in the number of one one-thousandths of a Preferred Share as to which
a Right has become exercisable, a Person would otherwise be entitled to receive
a fractional Preferred Share that is not an integral multiple of one
one-thousandth of a Preferred Share, the Company shall, in lieu thereof, pay to
such Person at the time such Right is exercised as herein provided an amount in
cash equal to the same fraction (which is not an integral multiple of one
one-thousandth of a Preferred Share) of the current market value of one
Preferred Share. For purposes of this Section 15(b), the current market value of
a Preferred Share shall be the Closing Price of a Preferred Share for the
Trading Day immediately prior to the date of such exercise.
(c) Should any adjustment contemplated by Section 12(a)(ii) or any
mandatory redemption and exchange contemplated by Section 25 occur, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares. If
after any such adjustment or mandatory redemption and exchange, a Person would
otherwise be entitled to receive a fractional Common Share of the Company upon
exercise of any Right Certificate or upon mandatory redemption and exchange as
contemplated by Section 25, the Company shall, in lieu thereof, pay to such
Person at the time such Right is exercised as herein provided or upon such
mandatory redemption and exchange an amount in cash equal to the same fraction
of the current market value of one Common Share. For purposes of this Section
15(c), the current market value of a Common Share shall be the Closing Price of
a Common Share for the Trading Day immediately prior to the date of such
exercise or the date of such mandatory redemption and exchange.
(d) The holder of a Right by the acceptance thereof expressly waives his
right to receive any fractional Rights or any fractional shares upon exercise or
mandatory redemption and exchange of a Right (except as provided above).
Section 16. RIGHTS OF ACTION. (a) All rights of action in respect of the
obligations and duties owed to the holders of the Rights under this Agreement
are vested in the registered holders of the Rights; and, without the consent of
the Rights Agent or of the holder of any other Rights, any registered holder of
any Rights may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding, judicial or otherwise,
against the Company to enforce, or otherwise to act in respect of, such holder's
right to exercise such Rights in the manner provided in the Right Certificate
evidencing such Rights and in this Agreement.
-22-
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.
(b) No right or remedy herein conferred upon or reserved to the
registered holder of Rights is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy, whether hereunder or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or
remedy.
(c) No delay or omission of any registered holder of Rights to exercise
any right or remedy accruing hereunder shall impair any such right or remedy or
constitute a waiver of any default hereunder or an acquiescence therein. Every
right and remedy given hereunder or by law to such holders may be exercised from
time to time, and as often as may be deemed expedient, by such holders.
Section 17. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares
of the Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the Corporate Trust Office of the Rights Agent duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes, and
neither the Company nor the Rights Agent shall be affected by any notice
to the contrary.
Section 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right (whether or not then evidenced by a Right
Certificate) shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Preferred Shares, Common Shares of the Company or any
other securities of the Company which may at any time be issuable on the exer
cise (or mandatory redemption and exchange) of the Rights represented thereby,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon any such holder, as such, any of the rights of a stockholder of the
Company, including without limitation any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
-23-
to give or withhold consent to any corporate action, to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
26) or to receive dividends or subscription rights until the Right or Rights
evidenced by such Right Certificate shall have been exercised (or mandatorily
redeemed and exchanged) in accordance with the provisions hereof.
Section 19. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. In no case will the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage of any kind whatsoever, even if the Rights Agent has been advised of
hte possibility of such loss or damage.
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 Preferred Shares, Common Shares of the Company or other
securities of the Company, Company Order, 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 executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of its counsel as set forth in
Section 20 hereof.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder to the Company or any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its authentication thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any responsibility with respect to
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or with respect to the validity or
execution of any Right Certificate (except its authentication thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 12(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 12, 14, 24 and 25, or the ascertainment of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be duly authorized, validly
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or
-25-
misconduct of any such attorneys or agents or for any loss of the Company
resulting from any such act, default, neglect or misconduct provided reasonable
care was exercised in the selection and continued employment thereof.
Section 21. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
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 22. If at the time such successor
Rights Agent shall succeed to the agency created by this Agreement any of the
Right Certificates shall have been authenticated but not delivered, any such
successor Rights Agent may adopt the authentication of the predecessor Rights
Agent and deliver such Right Certificates so authenticated, and, if at that time
any of the Right Certificates shall not have been authenticated, any successor
Rights Agent may authenticate such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
If at any time the name of the Rights Agent shall be changed and at such
time any of the Right Certificates shall have been authenticated but not
delivered, the Rights Agent may adopt the authentication under its prior name
and deliver Right Certificates so authenticated; and, in case at that time any
of the Right Certificates shall not have been authenticated, the Rights Agent
may authenticate 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 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
for the Common Shares of the Company and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent for the Common Shares of
the Company and the Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the registered holder of a
Right Certificate (or, prior to the Distribution Date, of Common Shares), then
any registered holder of a Right Certificate (or, prior to the Distribution
Date, of Common Shares) may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the
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Company 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, which
is authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million, or an affiliate of such corporation. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent for the Common Shares of the Company and the 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 22,
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 23. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities purchasable under the Right Certificates made in accordance
with the provisions of this Agreement.
Section 24. REDEMPTION. (a) The Rights may be redeemed by action of the
Board of Directors of the Company pursuant to paragraph (b) of this Section 24,
or may be redeemed and exchanged by action of the Board of Directors of the
Company pursuant to Section 25 herein, but shall not be redeemed in any other
manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the time any Person becomes an Acquiring Person redeem all but not
less than all the then outstanding Rights at a redemption price of one cent
($0.01) per Right then outstanding, appropriately adjusted to reflect any
adjustment in the number of Rights outstanding pursuant to Section 12(i) herein
(such redemption price being hereinafter referred to as the "Redemption Price").
Any such redemption of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(c) The right of the registered holders of Right Certificates to
exercise the Rights evidenced thereby or, if the Distribution Date has not
theretofore occurred, the inchoate right of the registered holders of Rights to
exercise the same shall, without notice to such holders or to the Rights Agent
and without further action, terminate and be of no further force or effect
effective as of the time of adoption by the Board of Directors of the Company of
a resolution authorizing and directing the redemption of the Rights pursuant to
paragraph (b) of this Section 24 (or, alternatively, if the Board of Directors
qualified such action as to time, basis or conditions, then at such time, on
such basis and with such conditions as the Board of Directors may have
established pursuant to such paragraph (b)); thereafter, the only right of the
holders of Rights shall
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be to receive the Redemption Price. The Company shall promptly give public
notice of any redemption resolution pursuant to paragraph (b) of this Section
24; PROVIDED, HOWEVER, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within 10 days after
the adoption of any redemption resolution pursuant to paragraph (b) of this
Section 24, the Company shall give notice of such redemption to the holders of
the then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agents 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 shall state the method by which the payment of the
Redemption Price will be made.
(d) Neither the Company nor any of its Affiliates or Associates may
acquire (other than, in the case of such Affiliates and Associates, in their
capacity as holders of Common Shares of the Company), redeem or purchase for
value any Rights at any time in any manner other than as specifically set forth
in this Section 24 or in Section 25 herein, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.
Section 25. MANDATORY REDEMPTION AND EXCHANGE. (a) The Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, issue Common Shares of the Company in mandatory
redemption of, and in exchange for, all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and
void pursuant to the provisions of Section 12(a)(ii) hereof) at an exchange
ratio of one Common Share for each two Common Shares for which each Right is
then exercisable pursuant to the provisions of Section 12(a)(ii) hereof.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such redemption and exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any such Subsidiary, or any entity holding Voting Shares for or pursuant
to the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Voting Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the mandatory redemption and exchange of any Rights pursuant to
subsection (a) of this Section 25 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 such number of Common
Shares as is provided in paragraph (a) of this Section 25. The Company shall
promptly give public notice of any such redemption and exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such redemption and exchange. The Company promptly shall
give notice of any such redemption and exchange to the holders of then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent. 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 mandatory redemption and
exchange shall state the method by which the redemption and exchange of the
Common Shares for Rights will be effected and, in the event of any partial
redemption and exchange, the number of Rights which will be redeemed and
exchanged. Any partial redemption and exchange shall be effected pro rata based
on the number
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of Rights (other than Rights which have become null and void pursuant to the
provisions of Section 12(a)(ii) hereof) held by each holder of Rights.
(c) In any mandatory redemption and exchange pursuant to this Section
25, the Company, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 12(b) hereof) for Common
Shares, at the initial rate of one one-thousandth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted.
Section 26. NOTICE OF CERTAIN EVENTS. If the Company shall, on or after
the Distribution Date, propose (a) to pay any dividend or other distribution
payable in stock of any class of the Company or any Subsidiary of the Company to
the holders of its Preferred Shares, (b) to distribute 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, (c) to make any other distribution to the holders
of its Preferred Shares (other than a regular quarterly cash dividend), (d) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (e) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries
(determined as provided in Section 14 herein) to, any other Person (other than
the Company or a Wholly- Owned Subsidiary or Wholly-Owned Subsidiaries), (f) to
effect the liquidation, dissolution or winding up of the Company or (g) if the
Rights have theretofore become exercisable with respect to Common Shares
pursuant to Section 12(a)(ii) herein, to declare or pay any dividend or other
distribution on the Common Shares payable in Common Shares or in stock of any
other class of the Company or any Subsidiary of the Company or to effect a
subdivision or combination of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) then, in each such
case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 28 hereof, notice of such proposed action, which shall
specify the date of authorization by the Board of Directors of the Company of,
and record date for, such stock dividend or such distribution of rights or
warrants or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, winding up, subdivision or combination
is to take place and the date of participation therein by the holders of the
Common Shares of the Company or the Preferred Shares, or both, if any such date
is to be fixed. Such notice shall be so given in the case of any action covered
by clause (a), (b) or (g) above at least 20 days prior to the record date for
determining holders of the Preferred Shares or of the Common Shares of the
Company, as the case may be, for purposes of such action, and in the case of any
such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Preferred Shares or Common Shares of the Company, as the case may be, whichever
shall be the earlier.
If any of the events set forth in Section 12(a)(ii) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 28 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
12(a)(ii) hereof.
-29-
Section 27. SECURITIES LAWS REGISTRATIONS. To the extent legally
required, the Company agrees that it will prepare and file, no later than the
Distribution Date, and will use its best efforts to cause to be declared
effective, a registration statement under the Securities Act registering the
offering, sale and delivery of the Preferred Shares issuable upon exercise of
the Rights, and the Company will, thereafter, use its best efforts to maintain
such registration statement (or another) continuously in effect so long as any
Rights remain outstanding and exercisable with respect to Preferred Shares.
Should the Rights become exercisable with respect to securities of the Company
or one of its Subsidiaries other than Preferred Shares, the Company agrees that
it will, to the extent legally required, promptly thereafter prepare and file,
or cause to be prepared and filed, and will use its best efforts to cause to be
declared effective, a registration statement under the Securities Act
registering the offering, sale and delivery of such other securities and the
Company will, thereafter, use its best efforts to maintain such registration
statement (or another) continuously in effect so long as any outstanding Rights
are exercisable with respect to such securities. The Company further agrees to
use its best efforts, from and after the Distribution Date, to qualify or
register for sale the Preferred Shares or other securities of the Company or one
of its Subsidiaries issuable upon exercise of the Rights under the securities or
"blue sky" laws (to the extent legally required thereunder) of all jurisdictions
in which registered holders of Right Certificates reside determined by reference
to the Rights Register.
Section 28. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Hi-Lo Automotive, Inc.
2575 W. Bellfort
Houston, Texas 77054
Attention: Secretary
Subject to the provisions of Section 22 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
2323 Bryan Street
Suite 2300
Dallas, Texas 75201
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the Rights
Register of the Company or, prior to the Distribution Date, on the stock
transfer records for the Common Shares of the Company.
-30-
Section 29. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement (which supplement or amendment shall be
evidenced by a writing signed by the Company and the Rights Agent) without the
approval of any holders of Right Certificates in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, to make any other provisions in
regard to matters or questions arising hereunder, or to add, delete, modify or
otherwise amend any provision, which the Company may deem necessary or
desirable, including without limitation extending the Final Expiration Date and,
provided that at the time of such amendment or supplement the Distribution Date
has not occurred, the period during which the Rights may be redeemed; PROVIDED,
HOWEVER, that, from and after such time as any Person becomes an Acquiring
Person, any such amendment or supplement shall not materially and adversely
affect the interests of the holders of Right Certificates. Without limiting the
foregoing, the Board of Directors of the Company may by resolution adopted at
any time prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the threshold set forth in the definitions of Acquiring
Person and Distribution Date herein from 15% to a percentage not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding Voting Shares then known to the Company to be beneficially owned by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
holding Voting Shares for or pursuant to the terms of any such plan), and (ii)
10%.
Section 30. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 31. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights.
Section 32. 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 33. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to con tracts to be made and
performed entirely within such State.
Section 34. 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 35. 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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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
HI-LO AUTOMOTIVE, INC.
Attest:
By /S/ K. GRANT HUTCHINS By /S/ T. MICHAEL YOUNG
Title: Secretary Title: Chairman of the Board and President
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
As Rights Agent
Attest:
By /S/ BARBARA J. COTTE ROBBINS By /S/ SAM A. SELLERS
Title: Authorized Officer Authorized Officer
-32-
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
HI-LO AUTOMOTIVE, INC.
Pursuant to Section 151 of the
Delaware General Corporation Law
HI-LO AUTOMOTIVE, INC., a Delaware corporation (the "Corporation"),
through the undersigned duly authorized officer, in accordance with the
provisions of Section 151 of the Delaware General Corporation Law, DOES HEREBY
CERTIFY:
That, the Board of Directors of the Corporation on August 23, 1996,
pursuant to the authority conferred upon the Board of Directors by the Amended
and Restated Certificate of Incorporation of the Corporation (the "Certificate
of Incorporation") and in accordance with the provisions of Section 151 of the
Delaware General Corporation Law, adopted the following resolution creating a
series of 100,000 shares of Preferred Stock, par value $.01 per share:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation in accordance with the
provisions of Article Four of the Certificate of Incorporation, a series of the
Preferred Stock of the Corporation, par value $.01 per share, be, and it hereby
is, created and that the voting powers, designations, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualification, limitations or restrictions thereof are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting the Junior Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into Junior
Preferred Stock.
<PAGE>
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the Junior
Preferred Stock with respect to dividends, the holders of shares of Junior
Preferred Stock, in preference to the holders of Common Stock, par value $.01
per share (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable on the first business day of February, May, August and November in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date") as provided in paragraphs (B) and (C) of this Section 2 in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 in cash or
(b) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount (payable in cash) 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 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 Junior Preferred Stock. If 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) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Junior 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 was
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Junior Preferred Stock as provided in paragraph (A) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); PROVIDED that, if 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 $1.00 per share payable in cash
on the Junior Preferred Stock shall nevertheless accrue and be cumulative on the
outstanding shares of Junior Preferred Stock as provided in paragraph (C) of
this Section 2.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, 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 Junior 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
A-2
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior 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 Junior 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 Junior Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth, each
share of Junior Preferred Stock shall entitle the holder thereof to 1,000 votes
on all matters submitted to a vote of the stockholders of the Corporation. If
the Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Junior 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 was outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designation creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law, holders
of Junior Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior 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 Junior Preferred Stock outstanding shall have been
paid in full, or declared and a sum sufficient for the payment therefor be set
apart for payment and be in the process of payment, 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 Junior Preferred Stock;
A-3
(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 Junior Preferred
Stock, except dividends paid ratably on the Junior 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;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior 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 (as to both dividends and
upon dissolution, liquidation or winding up) to the Junior Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Junior 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 holders of 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 Junior 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
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or as
to amounts payable upon liquidation, dissolution or winding up) to the Junior
Preferred Stock unless, prior thereto, the holders of Junior Preferred Stock
shall have received an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1,000 per share, or (b) an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, plus,
in either case, an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(2) to the holders of
A-4
stock ranking on a parity (either as to dividends or as to amounts payable upon
liquidation, dissolution or winding up) with the Junior Preferred Stock, except
distributions made ratably on the Junior Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such Shares
are entitled upon such liquidation, dissolution or winding up. If the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the aggregate amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1)(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 was outstanding immediately prior to
such event.
Section 7. CONSOLIDATION, MERGER, ETC. If 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 or any other property, or any combination thereof, then in any
such case each share of Junior Preferred Stock shall at the same time be
similarly exchanged or changed into 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 or any other property (payable in
kind), or any combination thereof, as the case may be, into which or for which
each share of Common Stock is changed or exchanged. If 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) 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 Junior Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that was outstanding immediately prior to
such event.
Section 8. REDEMPTION. The shares of Junior Preferred Stock shall not be
redeemable. So long as any shares of Junior Preferred Stock remain outstanding,
the Corporation shall not purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Preferred Stock unless the Corporation
shall substantially concurrently also purchase or acquire for consideration a
proportionate number of shares of Junior Preferred Stock.
Section 9. RANK. The Junior Preferred Stock shall rank, with respect to
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.
Section 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences, privileges
A-5
or special rights of the Junior Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Junior Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by its President, and attested by its Secretary, this
____ day of August, 1996.
HI-LO AUTOMOTIVE, INC.
By:
President
ATTEST:
By:
Secretary
A-
EXHIBIT B
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER SEPTEMBER 2, 2006 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01
PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY ACQUIRING PERSONS (AS DEFINED IN SECTION 1 OF THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID.
Right Certificate
Hi-Lo Automotive, 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 August 28, 1996 (the "Rights
Agreement"), between Hi-Lo Automotive, Inc., a Delaware corporation (the
"Company"), and ChaseMellon Financial Services, L.L.C. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m., Houston, Texas time,
on September 2, 2006, at the Corporate Trust Office of the Rights Agent (or at
the office of its successor as Rights Agent), one one-thousandth (1/1000) of a
fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of the Company, at a
purchase price of $14.00 per one one-thousandth (1/1000) of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of 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 September 3, 1996, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon that happening of certain
events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file
<PAGE>
at the principal executive offices of the Company and the Corporate Trust Office
of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the Corporate Trust Office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged by the Company in whole or in part for
Preferred Shares or shares of the Company's common stock, par value $.01 per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be entitled to any benefit under the
Rights Agreement or be valid or obligatory for any purpose until it shall have
been authenticated by the Right Agent.
B-2
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated as of ___________________, ____.
ATTEST: HI-LO AUTOMOTIVE, INC.
[SEAL]
By:
Secretary President
Authentication:
This is one of the Right Certificates referred to in the within-mentioned Rights
Agreement.
ChaseMellon Shareholder Services, L.L.C., as Rights Agent
By:
Authorized Signature
B-3
[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 Company, with full power of
substitution.
Dated as of ___________________, ____.
_________________________
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.
_____________________________________________________________________________
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
_________________________
Signature
- ------------------------------------------------------------------------------
B-4
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
TO HI-LO AUTOMOTIVE, INC.:
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Right Certificate to purchase the Preferred Shares
(or other securities) issuable upon the exercise of such Rights and requests
that certificates for such Preferred 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 as of ___________________, ____.
________________________
Signature
B-5
[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.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
______________________________
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE
The signature in the foregoing Form of Assignment or Form of Election to
Purchase must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Company 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 defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
B-6
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On August 23, 1996, the Board of Directors of Hi-Lo Automotive, Inc.
(the "Company"), authorized the issuance of one preferred share purchase right
(a "Right") with respect to each out standing share of common stock, par value
$.01 per share (the "Common Shares"), of the Company. The rights were issued on
September 3, 1996 to the holders of record of Common Shares on that date. Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company at a price of
$14.00 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") dated as of August 28, 1996, between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent").
DETACHMENT OF RIGHTS; EXERCISE. Initially, the Rights will attach to all
Common Share certificates representing outstanding shares and no separate Right
Certificate will be distributed. The Rights will separate from the Common Shares
and a Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding Voting Shares (as defined in the Rights
Agreement) of the Company, or (ii) 10 business days following the commencement
or announcement of an intention to commence a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Voting Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced, with respect to any of the Common
Shares outstanding on September 3, 1996, by the certificates representing such
Common Shares with a copy of this Summary of Rights attached thereto, (ii) the
Rights will be transferred with and only with the Common Shares, (iii) new
Common Share certificates issued after September 3, 1996, upon transfer or new
issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference, and (iv) the surrender for transfer of any certificates
for Common Shares outstanding as of September 3, 1996, 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 (the "Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will thereafter
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 2, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or the Rights are earlier redeemed or exchanged by
the Company as described below.
<PAGE>
If a person or group were to acquire 15% or more of the Voting Shares of
the Company, each Right then outstanding (other than Rights beneficially owned
by the acquiring person which would become null and void) would become a right
to buy that number of Common Shares (or under certain circumstances, the
equivalent number of one one-thousandths of a Preferred Share) that at the time
of such acquisition would have a market value of two times the Purchase Price of
the Right.
If the Company were acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power were
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
PREFERRED SHARES. The dividend and liquidation rights, and the
non-redemption feature, of the Preferred Shares are designed so that the value
of one one-thousandth of a Preferred Share purchasable upon exercise of each
Right will approximate the value of one Common Share. The Preferred Shares
issuable upon exercise of the Rights will be non-redeemable and rank junior to
all other series of the Company's preferred stock. Each whole Preferred Share
will be entitled to receive a quarterly preferential dividend in an amount per
share equal to the greater of (i) $1.00 in cash, or (ii) in the aggregate, 1,000
times the dividend declared on the Common Shares. In the event of liquidation,
the holders of the Preferred Shares will be entitled to receive a preferential
liquidation payment equal to the greater of (i) $1,000 per share, or (ii) in the
aggregate, 1,000 times the payment made on the Common Shares. In the event of
any merger, consolidation or other transaction in which Common Shares are
exchanged for or changed into other stock or securities, cash or other property,
each whole Preferred Share will be entitled to receive 1,000 times the amount
received per Common Share. Each whole Preferred Share shall be entitled to 1,000
votes on all matters submitted to a vote of the stockholders of the Company, and
Preferred Shares shall generally vote together as one class with the Common
Stock and any other capital stock on all matters submitted to a vote of
stockholders of the Company.
The offer and sale of the Preferred Shares issuable upon exercise of the
Rights will be registered with the Securities and Exchange Commission and such
registration will not be effective until the Rights become exercisable. The
Rights themselves are listed on the New York Stock Exchange.
ANTIDILUTION AND OTHER ADJUSTMENTS. The number of one one-thousandths of
a Preferred Share or other securities or property issuable upon exercise of the
Rights, and the Purchase Price payable, are subject to customary adjustments
from time to time to prevent dilution.
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right 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.
C-2
EXCHANGE OPTION. At any time after the acquisition by a person or group
of affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding Voting Shares of the Company and before the acquisition by a
person or group of 50% or more of the outstanding Voting Shares of the Company,
the Board of Directors may, at its option, issue Common Shares in mandatory
redemption of, and in exchange for, all or part of the then outstanding and
exercisable Rights (other than Rights owned by such person or group which would
become null and void) at an exchange ratio of one Common Share (or one
one-thousandth of a Preferred Share) for each two Common Shares for which each
Right is then exercisable, subject to adjustment.
REDEMPTION OF RIGHTS. At any time prior to the first public announcement
that a person or group has become the beneficial owner of 15% or more of the
outstanding Voting Shares, the Board of Directors of the Company may redeem all
but not less than all the then outstanding Rights at a price of $0.01 per Right
(the "Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
NO RIGHTS AS STOCKHOLDER. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
AMENDMENT OF RIGHTS. The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders of the Rights,
including an amendment to extend the Final Expiration Date, and, provided a
Distribution Date has not occurred, to extend the period during which the Rights
may be redeemed, except that after the first public announcement that a person
or group has become the beneficial owner of 15% or more of the outstanding
Voting Shares, no such amendment may materially and adversely affect the
interests of the holders of the Rights.
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.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
August __, 1996. A copy of the Rights Agreement is available free of charge from
the Company.
C-3
Exhibit 5
SPECIMEN OF LEGEND FOR COMMON STOCK CERTIFICATES
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Hi-Lo Automotive, Inc.
and ChaseMellon Shareholder Services, L.L.C., dated as of August 28, 1996 (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of
Hi-Lo Automotive, 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. Hi-Lo Automotive, Inc. will mail to the
holder of this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. As described in the Rights Agreement,
Rights issued to or acquired by any Acquiring Person or any Affiliate or
Associate thereof (each as defined in the Rights Agreement) shall, under certain
circumstances, become null and void.
<PAGE>
