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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ARBOR HEALTH CARE COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 34-1469604
- ----------------------------------- ------------------------------
(State of incorporation (IRS Employer
or organization) Identification No.)
1100 SHAWNEE ROAD
LIMA, OHIO 45805
- --------------------------------------- -------------------------------
(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 NASDAQ NATIONAL MARKET
PARTICIPATING CUMULATIVE PREFERRED
STOCK, PAR VALUE $.01 PER SHARE
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. |_|
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. |_|
Securities to be registered pursuant to Section 12(g) of the Act: NONE
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
--------------------------------------------------------
On November 14, 1996, the Board of Directors of Arbor Health Care
Company (the "Company") declared a dividend distribution authorizing the
issuance of one Preferred Stock Purchase Right (the "Right") for each share of
Common Stock, par value $.03 per share, of the Company (the "Common Stock"), and
has authorized the issuance of one Right for each share of Common Stock issued
between the Record Date and the Distribution Date, and, in certain cases
following the Distribution Date. As of September 30, 1996, 6,898,255 shares of
Common Stock were issued and outstanding. When exercisable, each Right entitles
the registered holder to purchase from the Company one one-thousandth (1/1000th)
of a share of Series A Junior Participating Cumulative Preferred Stock, par
value $.01 per share, of the Company (the "Preferred Stock"), at a purchase
price of $100.00 per one one-thousandth (1/1000th) of a share of Preferred
Stock, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement dated as of November 14, 1996, as the same may be
amended from time to time (the "Agreement"), between the Company and KeyBank,
National Association, as Rights Agent (the "Rights Agent").
Detachment of Rights; Exercise. Initially, the Rights will attach to
all Common Stock certificates representing outstanding shares and are not
severable from said certificate; no separate Rights Certificate (defined below)
will be distributed. The Rights will separate from the shares of Common Stock
and will become exercisable upon a Distribution Date defined as the earlier of
(i) ten (10) days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding Common Stock of the Company, or (ii) ten (10) 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 Common Stock.
Until the Distribution Date (or upon the earlier redemption, exchange
or expiration of the Rights as provided for in the Agreement) (i) the Rights
will be evidenced by the certificates representing such Common Stock, (ii) the
Rights will be transferred with and only with the Common Stock, (iii) new Common
Stock certificates issued after November 14, 1996, upon transfer or new issuance
of the Common Stock will contain a notation incorporating the Agreement by
reference, and (iv) the surrender for transfer of any certificates for Common
Stock outstanding, even without such notation being attached thereto, will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Rights Certificates alone will thereafter
evidence the Rights. Except as otherwise determined by the Board of Directors,
only shares of Common Stock outstanding prior to the Distribution Date will be
issued with Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth (10th) anniversary of the date of
the Agreement (the "Expiration Date"), unless the Expiration Date is extended or
the Rights are earlier redeemed or exchanged by the Company as described below.
If a person or group other than an exempt person were to acquire 15% or
more of the Common Stock of the Company, each Right then outstanding (other than
Rights beneficially owned by the Acquiring Person which would become null and
void pursuant to the terms of the Agreement) would become a right to buy one
one-thousandth (1/1000th) of a share of Preferred Stock (or, under certain
circumstances, that number of shares of Common
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Stock or other securities that at the time of such acquisition would have a
market value of two times the Purchase Price of the Right).
If (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation
(other than a Subsidiary (as such term is defined in the Agreement) of the
Company in a transaction which complies with the terms of the Agreement); (ii)
the Company is the surviving corporation in a merger or other business
combination (other than a Subsidiary (as such term is defined in the Agreement)
of the Company in a transaction which complies with the terms of the Agreement)
in which all or part of the outstanding shares of Common Stock are changed or
exchanged for stock or other securities of any other person or cash or any other
property; (iii) the Company, directly or indirectly effects a share exchange in
which all or part of the outstanding shares of Common Stock are changed or
exchanged for stock or other securities of any other person or cash or any other
property; or (iv) more than 50% of the consolidated assets or earning power is
sold, leased, or otherwise disposed of, proper provision will be made so that
each holder of a Right (other than Rights beneficially owned by a person or
group who had acquired 15% or more of the Common Stock of the Company, which
Rights will become null and void pursuant to the terms of the Agreement) 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 Stock. The dividend and liquidation rights, and the
non-redemption feature, of the Preferred Stock are designed so that the value of
one one-thousandth (1/1000th) of a share of Preferred Stock purchasable upon
exercise of each Right will approximate the value of one share of Common Stock.
The Preferred Stock 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
share of Preferred Stock 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 Stock. In
the event of liquidation, the holders of the Preferred Stock 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
Stock. In the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or other property, each whole share of Preferred Stock will be
entitled to receive 1,000 times the amount received per share of Common Stock.
Each whole share of Preferred Stock shall be entitled to 1,000 votes on all
matters submitted to a vote of the stockholders of the Company, and shares of
Preferred Stock 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 Stock 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.
Anti-dilution and Other Adjustments. The number of one one-thousandths
(1/1000ths) of a share of Preferred Stock or other securities or property
issuable upon exercise of the Rights, and the Purchase Price payable, are
subject to certain adjustments from time to time to prevent dilution and
significant changes to the actual or potential economic value of the Rights.
The number of outstanding Rights and the number of one one-thousandths
(1/1000ths) of a share of Preferred Stock issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split of the Common Stock
or a stock dividend on the Common Stock payable in Common Stock or subdivisions,
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consolidations or combinations of the Common Stock (by reverse stock split,
reclassification, or otherwise) occurring, in any such case, prior to the
Distribution Date.
With certain exceptions, no adjustments in the Purchase Price payable
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price.
Fractional Shares of Preferred Stock. No fractional shares of Preferred
Stock are required to be issued (other than fractions which are integral
multiples of one one-thousandth (1/1000th) of a share of Preferred Stock).
Fractions of shares of Preferred Stock may, at the election of the Company, be
evidenced by depositary receipts. In lieu of fractional shares of Preferred
Stock, the Company may issue scrip or warrants entitling the holder thereof to
receive a full one one-thousandth (1/1000th) of a share of Preferred Stock upon
the surrender of such scrip or warrants aggregating a full one one-thousandth
(1/1000th) of a share of Preferred Stock or make an adjustment in cash based on
the market price of the Preferred Stock on the last trading date prior to the
date of exercise.
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 Common Stock of the Company and before the acquisition by a
person or group of 50% or more of the outstanding Common Stock of the Company,
the Board of Directors may, at its option, issue Common Stock or Common Stock
Equivalents (as defined in the Agreement) in mandatory redemption of, and in
exchange for, all or part of the 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 share of Common Stock or Common Stock Equivalents for each
Right then exercisable, subject to adjustment as provided for in the Agreement.
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 Common Stock of the Company, the Board of Directors of
the Company may redeem all but not less than all the then outstanding Rights at
a price of $.01 per Right (the "Redemption Price") (which amount shall be
subject to adjustment as provided in the Agreement). 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. While
the distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for Common Stock (or
other consideration) of the Company as set forth above or in the event that the
Rights are redeemed.
Amendment of Rights. In general, prior to the Distribution Date, the
terms of the Agreement and 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 Expiration Date. After the Distribution Date, the Board
of Directors of the Company may amend or supplement the Agreement without the
approval of any holders of Rights Certificates to cure any ambiguity, to correct
or supplement any provision contained therein which may be defective or
inconsistent with any other provisions therein, and to change or supplement the
provisions therein in any manner which the Company may deem necessary and
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates; PROVIDED, HOWEVER, that no amendment to adjust the time
period governing
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redemption shall be made at such time as the Rights are not redeemable and that
any amendments or supplements made after the Distribution Date must be
determined by the Board of Directors to be in the best interests of the Company,
its stockholders and the holders of the Rights Certificates. The Agreement may
not be amended to change the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable to
amend the Redemption Price (except to reflect a stock split, stock dividend or
similar transaction) or to provide for an earlier Expiration Date.
The foregoing description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Agreement, form of
Certificate of Designation of Series A Junior Participating Cumulative Preferred
Stock, form of Rights Certificate, the specimen of the legend to be placed on
any new Common Stock share certificate, the text of the press release announcing
the declaration of the Rights Distribution, and the form of the letter sent to
the holders of the Company's Common Stock, dated November 20, 1996, explaining
the Rights, filed as exhibits hereto and incorporated by reference herein.
ITEM 2. EXHIBITS.
--------
1. Rights Agreement, dated as of November 14, 1996, between Arbor
Health Care Company and KeyBank, National Association, as
Rights Agent, which includes the Certificate of Designation of
Series A Junior Participating Cumulative Preferred Stock as
Exhibit A and the form of Rights Certificate as Exhibit B.
2. Form of Certificate of Designation of Series A Junior
Participating Cumulative Preferred Stock (included as Exhibit
A to the Agreement filed as Exhibit 1 hereto) setting forth
the powers, preferences, rights, qualifications, limitations
and restrictions of the Series A Junior Participating
Preferred Stock, par value $.01 per share.
3. Form of Rights Certificate (included as Exhibit B to the
Agreement filed as Exhibit 1 hereto). Pursuant to the
Agreement, printed Rights Certificates will not be delivered
until as soon as practicable after the Distribution Date.
4. Specimen of legend to be placed, pursuant to Section 3(d) of
the Agreement, on all new shares of Common Stock issued by the
Company after the Record Date and prior to the Distribution
Date (or upon the earlier redemption, exchange or expiration
of the Rights as provided for in the Agreement) upon transfer,
exchange or new issuance; PROVIDED, HOWEVER, that omission of
the legend from any share of Common Stock shall not affect the
enforceability of any part of the Agreement or the rights of
any holder of the Rights.
5. Text of Press Release, dated November 18, 1996.
6. Form of letter to the holders of Arbor Health Care Company,
dated November 20, 1996.
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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 hereunto duly authorized.
ARBOR HEALTH CARE COMPANY
By: /S/ PIER C. BORRA
---------------------------------------------------
Pier C. Borra, Chairman of the Board, President and
Chief Executive Officer
Dated: December 31, 1996
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<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Sequentially
Number Description Numbered Page
------- ----------- --------------
<S> <C> <C>
1 Rights Agreement, dated as of November 14, 1996, between Arbor
Health Care Company and KeyBank, National Association, as
Rights Agent, which includes the Certificate of Designation of
Series A Junior Participating Cumulative Preferred Stock as
Exhibit A and the form of Rights Certificate as Exhibit B.
2 Form of Certificate of Designation of Series A Junior
Participating Cumulative Preferred Stock (included as Exhibit A
to the Agreement filed as Exhibit 1 hereto) setting forth the
powers, preferences, rights, qualifications, limitations and
restrictions of the Series A Junior Participating Preferred
Stock, par value $.01 per share.
3 Form of Rights Certificate (included as Exhibit B to the
Agreement filed as Exhibit 1 hereto). Pursuant to the
Agreement, printed Rights Certificates will not be delivered
until as soon as practicable after the Distribution Date.
4 Specimen of legend to be placed, pursuant to Section 3(d) of
the Agreement, on all new shares of Common Stock issued by the
Company after the Record Date and prior to the Distribution
Date (or upon the earlier redemption, exchange or expiration of
the Rights as provided for in the Agreement) upon transfer,
exchange or new issuance; PROVIDED, HOWEVER, that omission of
the legend from any share of Common Stock shall not affect the
enforceability of any part of the Agreement or the rights of
any holder of the Rights.
5 Text of Press Release, dated November 18, 1996.
6 Form of letter to the holders of Arbor Health Care Company, dated
November 20, 1996.
</TABLE>
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Exhibit 1
RIGHTS AGREEMENT
BETWEEN
ARBOR HEALTH CARE COMPANY
AND
KEYBANK, NATIONAL ASSOCIATION
AS RIGHTS AGENT
DATED AS OF NOVEMBER 14, 1996
<PAGE> 2
<TABLE>
Table of Contents
<CAPTION>
Page
<S> <C> <C>
Recitals ............................................................ 1
Section 1. Certain Definitions.........................................-1-
Section 2. Appointment of Rights Agent.................................-9-
Section 3. Issuance of Rights and Rights
Certificates..............................................-9-
Section 4. Form of Rights Certificates................................-12-
Section 5. Execution, Countersignature and
Registration.............................................-13-
Section 6. Transfer, Division, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates; Uncertificated
Rights...................................................-14-
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights................................-15-
Section 8. Cancellation and Destruction of Rights
Certificates.............................................-18-
Section 9. Reservation and Availability of
Preferred Stock..........................................-18-
Section 10. Preferred Stock Record Date...............................-20-
Section 11. Adjustments to Purchase Price, Number
of Shares or Number of Rights; Exchange
of Rights for Stock......................................-21-
Section 12. Certification of Adjustments..............................-30-
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power......................-31-
Section 14. Fractional Rights and Fractional
Shares...................................................-34-
Section 15. Rights of Action..........................................-35-
Section 16. Agreement of Rights Holders Concerning
Transfer and Ownership of Rights.........................-36-
</TABLE>
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<TABLE>
<S> <C> <C>
Section 17. Rights Holder Not Deemed a Stockholder....................-36-
Section 18. Concerning the Rights Agent...............................-37-
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.....................................-38-
Section 20. Duties of Rights Agent....................................-39-
Section 21. Change of Rights Agent....................................-41-
Section 22. Issuance of New Rights Certificates.......................-42-
Section 23. Redemption and Termination................................-43-
Section 24. Notice of Certain Events..................................-44-
Section 25. Notices ................................................-45-
Section 26. Supplements and Amendments................................-45-
Section 27. Successors................................................-46-
Section 28. Benefits of this Agreement;
Determinations and Actions by the Board
of Directors.............................................-47-
Section 29. Severability..............................................-48-
Section 30. Governing Law.............................................-48-
Section 31. Counterparts..............................................-48-
Section 32. Descriptive Headings......................................-48-
Section 33. Numerical and Grammatical Construction....................-48-
Exhibit A -- Certificate of Designation of Series A Junior
Participating Cumulative Preferred Stock
Exhibit B -- Form of Rights Certificate
</TABLE>
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RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT (the "Agreement," as further defined in
Section 1) dated as of November 14, 1996, between ARBOR HEALTH CARE COMPANY, a
Delaware corporation (the "Company"), and KEYBANK, NATIONAL ASSOCIATION, as
Rights Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company, having
determined its actions to be in the interests of the Company and the
shareholders, has authorized and declared a dividend of one Preferred Stock
purchase right (the "Right," as further defined in Section 1) for each share of
Common Stock (as defined in Section 1) outstanding as of the Close of Business
(as defined in Section 1) on the Record Date (as defined in Section 1) and has
authorized the issuance of one Right (as such number may hereafter be adjusted
pursuant to the provisions of this Agreement) for each share of Common Stock
issued between the Record Date and the Distribution Date (as defined in Section
1), and, in certain cases, following the Distribution Date. Each Right shall
initially represent, as of the Record Date, the right to purchase one
one-thousandth (1/1000th) of a share of Preferred Stock (as defined in Section
1) upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth in this Agreement, the parties hereby agree as
follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be (or has
previously been, at any time after the date of this Agreement, whether or not
such Person(s) continues to be) the Beneficial Owner of 15% or more of the
Common Stock then outstanding. However, "Acquiring Person" shall not include any
Exempt Person.
No Person shall become an "Acquiring Person" solely as the
result of (i) an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Stock then
outstanding as determined above, (ii) such Person becoming the Beneficial Owner
of 15% or more of the Common Stock then outstanding as determined above solely
as a result of an Exempt Event, or (iii) such Person becoming a Beneficial Owner
of 15% or more of the Common Stock in the good faith belief that such
acquisition would not (x) cause such Beneficial Ownership to meet or exceed 15%
of the Common Stock
<PAGE> 5
then outstanding and such Person relied in good faith in computing the
percentage of its Beneficial Ownership on publicly filed reports or documents
of the Company which are inaccurate or out-of-date or (y) otherwise cause a
Distribution Date or the adjustment provided for in Section 11 to occur;
PROVIDED, HOWEVER, if any Person that is not an Acquiring Person due to clause
(i), (ii) or (iii) above does not reduce its percentage of Beneficial Ownership
of Common Stock below 15% by the Close of Business on the fifth (5th) Business
Day after notice from the Company (the date of notice being the first day) that
such Person's Beneficial Ownership of Common Stock so meets or exceeds 15%,
such Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clauses (i) through (iii) shall no longer apply to
such Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board of
Directors of the Company.
(b) "Agreement" shall mean this Rights Agreement as the same
may from time to time hereafter be supplemented and amended.
(c) "Affiliate," when used with reference to any Person, shall
have the meaning given to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement;
PROVIDED, HOWEVER, that for purposes of this Agreement, the term "Affiliate"
shall not include any Person that is an Exempt Person.
(d) "Associate," when used with reference to any Person, shall
have the meaning given to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement;
PROVIDED, HOWEVER, that for purposes of this Agreement, the term "Associate"
shall not include any Person that is an Exempt Person.
(e) Except as provided below, a Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to "beneficially own," and shall be
deemed to have "Beneficial Ownership" of, any securities:
(i) which such Person or any Affiliate or
Associate of such Person directly owns or is deemed to "beneficially own" as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act or any successor provision;
(ii) which such Person or any Affiliate or
Associate of such Person has, directly or indirectly, the right or obligation
(whether or not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other than these
Rights), warrants
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or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, or to have Beneficial Ownership
of, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any Affiliate or Associate of such Person until such
tendered securities are accepted for purchase or exchange thereunder; and
PROVIDED FURTHER, that prior to the occurrence of a Triggering Event, a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, securities
obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or
Associate of such Person has, directly or indirectly, the right (whether or not
then exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing); PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, or to have Beneficial Ownership of, any security pursuant to
this clause (iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the Exchange Act and applicable rules and
regulations thereunder and (B) is not also then reportable under Item 6 (or any
comparable or successor item) of Schedule 13D under the Exchange Act (or any
comparable or successor schedule or report);
(iv) which are beneficially owned, directly or
indirectly, by any other Person or any Affiliate or Associate of such other
Person with whom such Person or any Affiliate or Associate of such Person has
any agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in subparagraph (iii) of this Section 1(d)) or disposing of any
securities of the Company.
Nothing in this Section 1(d) shall cause a Person ordinarily
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such Person's
participation in a bona fide firm commitment underwriting pursuant to an
underwriting agreement with the Company.
Notwithstanding anything in this Agreement to the contrary,
for purposes of this Agreement, no Person shall be treated as the "Beneficial
Owner" of, or to "beneficially own," or to have "Beneficial Ownership" of, any
securities owned by any other Person that is an Exempt Person.
(f) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
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State of Ohio are authorized or obligated by law or other governmental actions
to close.
(g) "Certificate of Designation" shall mean the Certificate of
Designation of Series A Junior Participating Cumulative Preferred Stock setting
forth the powers, preferences, rights, qualifications, limitations and
restrictions of such series of Preferred Stock of the Company, a copy of which
is attached as Exhibit A.
(h) "Close of Business" on any given date shall mean 5:00
p.m., eastern standard time ("EST"), on such date; PROVIDED, HOWEVER, that if
such date is not a Business Day, "Close of Business" shall mean 5:00 p.m., EST,
on the next succeeding Business Day.
(i) "Common Stock" when used in any context applicable prior
to a Business Combination shall mean the Common Stock, par value $.03 per share,
of the Company (as the same may be changed by reason of any combination,
subdivision or reclassification of the Common Stock). "Common Stock" when used
with reference to any Person (other than the Company prior to a Business
Combination) shall mean shares of capital stock of such Person (if such Person
is a corporation) of any class or series, or units of equity interests in such
Person (if such Person is not a corporation) of any class or series, the terms
of which shares or units do not limit (as a fixed or maximum amount and not
merely in proportional terms) the amount of dividends or income payable or
distributable on such shares or units or the amount of assets distributable on
such shares or units upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person and do not provide that such shares or units are
subject to redemption at the option of such Person, or any shares of capital
stock or units of equity interests into which the foregoing shall be
reclassified or changed; PROVIDED, HOWEVER, that if at any time there shall be
more than one such class or series of capital stock of or equity interests in
such Person, "Common Stock" of such Person shall include all such classes and
series substantially in the proportion of the total number of shares or other
units of each such class or series outstanding at such time.
(j) "Current Market Price" per share of Common Stock,
Preferred Stock or Equivalent Shares on any date shall be deemed to be the
average of the daily closing prices per share of such securities for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date for the purpose of any computation under this Agreement
except computations made pursuant to Section 11(a)(iv), and for the Trading Day
immediately prior to such date for the purpose of any computation under Section
11(a)(iv); PROVIDED, HOWEVER, that in the event that the Current Market Price
per share of such securities is determined
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<PAGE> 8
during a period following the announcement by the issuer of such securities of
(i) a dividend or distribution on such securities other than a regular quarterly
cash dividend, or (ii) any subdivision, combination or reclassification of such
securities, and prior to the expiration of 30 Trading Days after the
"ex-dividend" date for such dividend or distribution or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"Current Market Price" shall be appropriately adjusted to take into account such
dividend, distribution, subdivision, combination or reclassification.
The closing price for each Trading Day shall be the last sale price,
regular way, on such day, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, on such day, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the securities are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal United
States national securities exchange on which the securities are listed or
admitted to trading or, if the securities are not listed or admitted to trading
on any United States national securities exchange, the last quoted sale price on
such day or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by NASDAQ or such other
system then in use. If on such day the securities are not quoted by any such
organization, the average of the closing bid and asked prices on such day as
furnished by a professional market maker making a market in the securities
selected by a majority of the Board of Directors of the Company shall be used.
If no such market maker is making a market or if the securities have not been
listed, admitted to trading, or traded in the over-the-counter market and
reported by NASDAQ for 30 or more Trading Days, the fair market value of such
shares on such day as determined in good faith by a majority of the Board of
Directors of the Company or the Board of Directors of the issuer of such
securities shall be used, which determination shall be described in a statement
filed with the Rights Agent and shall be binding and conclusive for all
purposes; PROVIDED, HOWEVER, that for the purpose of determining the closing
price for the Preferred Stock for any Trading Day on which there is no such
market maker making a market for the Preferred Stock or if the Preferred Stock
has not been listed, the closing price on such Trading Day shall be deemed to be
1,000 times (subject to adjustment as provided in this Agreement) the Current
Market Price of the Common Stock of the Company on such Trading Day as
determined above.
(k) "Distribution Date" shall mean the earlier
of (i) the tenth day after the Company's right to redeem the Rights
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pursuant to Section 23(a)(i) expires and (ii) the tenth day after commencement
or public disclosure of an intention to commence (including, without limitation,
any such commencement or public disclosure which occurs on or after the date of
this Agreement and prior to the issuance of the Rights) a tender offer or
exchange offer by a Person (other than an Exempt Person) if, after acquiring the
maximum number of securities sought pursuant to such offer, such Person (other
than an Exempt Person), or any Affiliate or Associate of such Person, would be
an Acquiring Person.
(l) "Equivalent Shares" shall mean any class or series of
capital stock of the Company, other than the Preferred Stock, which is entitled
to participate on a proportional basis with the Preferred Stock in dividends
and other distributions, including distributions upon the liquidation,
dissolution or winding up of the Company. In calculating the number of any class
or series of Equivalent Shares for purposes of Section 11, the number of shares,
or fractions of a share, of such class or series of capital stock that is
entitled to the same dividend or distribution as a whole share of Preferred
Stock shall be deemed to be one share.
(m) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and any successor statute.
(n) "Exchange Date" shall mean the time at which the Rights
are exchanged pursuant to Section 11(a)(iv).
(o) "Exempt Event" shall mean with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock solely as a
result of the occurrence of a Triggering Event and the effect of such Triggering
Event on the last proviso of clause (ii) of the definition of Beneficial Owner,
other than a Triggering Event in which such Person becomes an Acquiring Person.
(p) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person holding Common Stock for any such
employee benefit plan or for employees of the Company or of any Subsidiary of
the Company pursuant to the terms of any such employee benefit plan, (v) Pier C.
Borra, (vi) Renee A. Borra, and (vii) any Affiliate of either Pier C. Borra or
Renee A. Borra.
(q) "Expiration Date" shall mean the Close of Business on
the tenth anniversary of the Record Date.
(r) "NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotations System.
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<PAGE> 10
(s) "Person" shall mean any individual, firm, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity, and shall include any "group" as that term is used in Rule
13d-5(b) under the Exchange Act (or any successor provision).
(t) "Preferred Stock" shall mean the Company's Series A Junior
Participating Cumulative Preferred Stock, par value $.01 per share, having the
rights and preferences set forth in the Certificate of Designation of Series A
Junior Participating Preferred Stock attached hereto as Exhibit A.
(u) "Principal Party" shall mean (i) in the case of any
Business Combination described in clause (i), (ii) or (iii) of the first
sentence of Section 13(a), (A) the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted or for which they
are exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from the Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value, and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the assets or earning power transferred pursuant to such Business Combination
or, if each Person that is a party to such Business Combination receives the
same portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot reasonably
be determined, whichever of such Persons is the issuer of the Common Stock which
has the greatest aggregate market value; PROVIDED, HOWEVER, that in any such
case, if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" shall refer to whichever of such
other Persons has Common Stock that is and has been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act; (y)
if the Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" shall refer to whichever of such other Persons is
the issuer of the Common Stock which has the greatest aggregate market value; or
(z) if the Common Stock of none of such other Persons has been so registered,
"Principal Party" shall refer to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above shall apply to each of
the chains of
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<PAGE> 11
ownership having an interest in such joint venture as if such Person were a
Subsidiary of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in Section 13 in the same
ratio as their direct or indirect interests in such Person bear to the total of
such interests.
(v) "Purchase Price" with respect to each Right shall
initially be $100.00 per one one-thousandth of a share of Preferred Stock,
subject to adjustment from time to time as provided in Sections 11, 13 and 26,
and shall be payable in lawful money of the United States of America in cash or
by certified check or bank draft payable to the order of the Company. All
references to the Purchase Price shall mean the Purchase Price as in effect at
the time in question.
(w) "Record Date" shall mean the Close of Business on
November 14, 1996.
(x) "Redemption Date" shall mean the time at which the
Rights are scheduled to be redeemed as provided in Section 23.
(y) "Rights" shall mean the rights to purchase Preferred
Stock (or other securities) as provided in this Agreement.
(z) "Schedule 13D" and "Schedule 13G" have the meanings
assigned under Regulation 13D and Regulation 13G under the Exchange Act and
include any successor schedules or reports.
(aa) "Securities Act" shall mean the Securities Act of 1933,
as amended, and any successor statute.
(bb) "Stock Acquisition Date" shall mean the first date
(including, without limitation, any such date which is on or after the date of
this Agreement and prior to the issuance of the Rights) of public disclosure by
the Company, an Acquiring Person or otherwise that an Acquiring Person has
become such or that discloses information which reveals the existence of an
Acquiring Person.
(cc) "Subsidiary," when used with reference to any Person,
shall have the meaning given to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement;
PROVIDED, HOWEVER, that for purposes of this Agreement, the term "Subsidiary"
shall not include any Person that is an Exempt Person.
(dd) "Trading Day" shall mean a day on which the principal
United States national securities exchange on which any securities or Rights, as
the case may be, are listed or admitted to trading is open for the transaction
of business or, if the
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<PAGE> 12
securities or Rights in question are not listed or admitted to trading on any
United States national securities exchange, but are traded in the
over-the-counter market and reported by NASDAQ, then any day for which NASDAQ
reports the high bid and low asked prices in the over-the-counter market, or if
the securities or Rights in question are not traded in the over-the-counter
market and reported by NASDAQ, then a Business Day.
(ee) "Triggering Event" shall mean a Person becoming an
Acquiring Person.
(ff) The following terms shall have the meanings defined for
such terms in the Sections set forth below:
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Adjustment Shares ss. 11(a)(ii)
Business Combination ss. 13(a)
Common Stock Equivalents ss. 11(a)(iii)
Company Recitals,ss.13(b)
Current Value ss. 11(a)(iii)
Exchange Ratio ss. 11(a)(iv)
Redemption Price ss. 23(a)
Rights Agent Recitals
Rights Certificates ss. 3(b)
Substitute Consideration ss. 11(a)(iii)
Substitute Period ss. 11(a)(iii)
</TABLE>
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint one or more co-Rights
Agents as it may deem necessary or desirable (the term "Rights Agent" being used
herein to refer, collectively, to the Rights Agent together with any such
co-Rights Agents). In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights Agent shall
be determined by the Company.
Section 3. ISSUANCE OF RIGHTS AND RIGHTS CERTIFICATES.
(a) RIGHTS INITIALLY EVIDENCED BY SHARE CERTIFICATES. Until
the Distribution Date: (i) the Rights shall be issued in respect of and shall be
evidenced by the certificates representing the shares of Common Stock issued and
outstanding on the Record Date and shares of Common Stock issued after the
Record Date and prior to the earliest of the Distribution Date, the Redemption
Date, the Exchange Date or the Expiration Date (which certificates
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<PAGE> 13
for Common Stock shall be deemed to also be certificates evidencing the Rights),
and not by separate certificates; (ii) the registered holders of such shares of
Common Stock shall also be the registered holders of the Rights associated with
such shares; and (iii) the Rights shall be transferable only in connection with
the transfer of shares of Common Stock, and the surrender for transfer of any
certificate for such shares of Common Stock shall also constitute the surrender
for transfer of the Rights associated with such shares.
(b) RIGHTS EVIDENCED BY RIGHTS CERTIFICATES. As soon as
practicable after the Company has notified the Rights Agent of the occurrence of
the Distribution Date, the Rights Agent shall mail, by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Distribution Date, as shown by the records of the Company, at
the address of such holder shown on such records, one or more certificates
evidencing the Rights ("Rights Certificates"), in substantially the form of
EXHIBIT B hereto, evidencing one Right (as adjusted from time to time pursuant
to this Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
certificates. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(o) of this Agreement, at
the time of distribution of the Rights Certificates, the Company may make the
necessary and appropriate adjustments (in accordance with Section 14(a) of this
Agreement) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights.
(c) SUMMARY OF RIGHTS. As soon as practicable after the Record
Date, the Company will notify, by first-class, postage prepaid mail, each record
holder of Common Stock as of the Close of Business on the Record Date, as shown
by the records of the Company, at the address of such holder shown on such
records, of the adoption of the Agreement. Prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date, the surrender for transfer of any certificate for Common Stock, with or
without a copy of the Summary of Rights, shall constitute the transfer of the
Rights associated with the Common Stock represented thereby.
(d) NEW CERTIFICATES AFTER RECORD DATE. Rights shall be issued
in respect of all shares of Common Stock which are issued or sold by the Company
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date, the Exchange Date and the Expiration Date. In addition, in
connection with the issuance or sale of Common Stock by the Company following
the Distribution Date and prior to the earlier of the Exchange Date or the
Expiration Date, the Company (i) shall, with respect to Common Stock so issued
or sold pursuant to the exercise of stock options
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<PAGE> 14
issued prior to the Distribution Date or under any employee plan or arrangement
created prior to the Distribution Date, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company prior to the
Distribution Date, and (ii) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights and Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; PROVIDED, HOWEVER, that (x) no such Rights and Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued and (y) no such Rights and Rights
Certificates shall be issued, if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof. Certificates
issued after the Record Date representing shares of Common Stock issued after
the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date, the Exchange Date and the Expiration Date shall have impressed,
printed, stamped, written, or otherwise affixed onto them a legend substantially
in the following form:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Arbor Health Care Company (the "Company") and KeyBank,
National Association, as Rights Agent, dated as of November
14, 1996 as the same may be amended from time to time (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. 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. The Company
will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request therefor. Under certain circumstances, Rights that
were, are or become beneficially owned by Acquiring Persons or
their Associates or Affiliates (as such terms are defined in
the Rights Agreement) may become null and void and the holder
of any of such Rights (including any subsequent holder) shall
not have any right to exercise such Rights.
Notwithstanding this paragraph (d), the omission of a legend shall not affect
the enforceability of any part of this Agreement or the rights of any holder of
the Rights (or, prior to the Distribution Date, any holder of the Common Stock).
(e) CANCELLATION OF RIGHTS ASSOCIATED WITH TREASURY
STOCK. In the event that the Company purchases or acquires any
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<PAGE> 15
Common Stock after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date, the Exchange Date and the Expiration Date, any Rights
associated with such Common Stock shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated with the
Common Stock which are no longer outstanding. Nothing in this Section 3(e)
should be viewed as prohibiting the issuance of Rights associated with such
Common Stock when such Common Stock is later reissued or sold in accordance with
Section 3(d).
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) FORM. The Rights Certificates (and the form of election to
purchase Preferred Stock (or other securities) and form of assignment to be
printed on the reverse thereof) shall be in substantially the form of 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,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or trading system on which the Rights may from time to time be listed
or quoted, or to conform to usage. Subject to the provisions of this Agreement,
the Rights Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number of such securities and the
Purchase Price shall be subject to adjustment as provided in this Agreement. The
fact that such adjustment may not be expressly reflected on the face or in the
provisions of such Rights Certificate shall not invalidate or otherwise affect
the ability to exercise the Right on such amended terms, if any.
(b) CERTIFICATES SUBJECT TO NULLIFICATION. Notwithstanding any
other provision of this Agreement, (i) any Rights Certificate issued pursuant to
this Agreement that represents Rights beneficially owned or formerly
beneficially owned, on or after the earlier of the Distribution Date and the
Stock Acquisition Date, by a Person known by the Company to be: (A) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person; (B) a direct or
indirect transferee of an Acquiring Person (or of an Associate or Affiliate of
such Acquiring Person) who becomes or becomes entitled to be a transferee after
the Acquiring Person becomes such; or (C) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (x) a
direct or indirect transfer (whether or not for consideration) from
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<PAGE> 16
the Acquiring Person (or from an Associate or Affiliate of such Acquiring
Person) to holders of equity interest in such Acquiring Person (or to holders of
equity interests in an Associate or Affiliate of such Acquiring Person) or to
any Person with whom such Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (y) a direct or indirect transfer which a
majority of the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) of this Agreement, or (ii) any Rights Certificate
issued pursuant to this Agreement upon transfer, exchange, replacement or
adjustment of any other Rights Certificate beneficially owned by a Person
referred to in this Section 4(b), shall contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION.
(a) IN GENERAL. Each Rights Certificate shall be executed on
behalf of the Company by the Company's Chairman of the Board, President, Chief
Executive Officer or any Senior Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Company's Secretary or an Assistant
Secretary, either manually or by facsimile signature. Each Rights Certificate
shall be countersigned by the Rights Agent either manually, or if permitted by
the Company, by facsimile signature and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed a Rights Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
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<PAGE> 17
(b) BOOKS AND RECORDS OF REGISTRATION AND TRANSFER. Following
the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
principal corporate trust office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced by each of the Rights Certificates, the certificate number of
each of the Rights Certificates and the date of issuance of each of the Rights
Certificates.
Section 6. TRANSFER, DIVISION, COMBINATION AND EXCHANGE
OF RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES; UNCERTIFICATED RIGHTS.
(a) TRANSFER OF CERTIFICATES. Subject to the provisions of
Section 14, at any time after the Close of Business on the Distribution Date and
at or prior to the Close of Business on the earliest of the Redemption Date, the
Exchange Date and the Expiration Date, any Rights Certificate or Rights
Certificates may be transferred, divided, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or other securities, cash
or other property, following a Triggering Event or a Business Combination, as
the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, divide, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent
and shall surrender, together with any required form of assignment and
certificate duly completed, the Rights Certificate or Rights Certificates to be
transferred, divided, combined or exchanged at the principal corporate trust
office of the Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate or Rights Certificates until the registered
holder shall have duly completed and executed the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or such former or proposed
Beneficial Owner) thereof or such Beneficial Owner's Affiliates or Associates as
the Company shall reasonably request. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith.
(b) LOST OR DESTROYED CERTIFICATES. Upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a valid
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<PAGE> 18
Rights Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto (including, but
not limited to, payment of costs, if required by the Company, sufficient to
cover any tax or governmental charge that may be imposed), and upon surrender to
the Rights Agent and cancellation of the Rights Certificate if mutilated and on
the absence of notice to the Company or the Rights Agent that in the interim
such Rights Certificate has been acquired by a bona fide purchaser other than
the registered holder, the Company shall execute and upon its request the Rights
Agent shall countersign and deliver a new Rights Certificate of like tenor to
the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated. The provisions of this subsection are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to the replacement or payment of lost, stolen, destroyed or mutilated Rights
Certificates.
(c) UNCERTIFICATED RIGHTS. Notwithstanding any other provision
hereof, the Company and the Rights Agent may amend this Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced by Rights
Certificates.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE
OF RIGHTS.
(a) PURCHASE PRICE. Each Right shall entitle (except as
otherwise provided in this Agreement) the registered holder thereof, upon the
exercise thereof as provided in this Agreement, to purchase, for the Purchase
Price, at any time after the Distribution Date and prior to the earliest of the
Expiration Date, the Exchange Date and the Redemption Date, one one-thousandth
(1/1000th) of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are exercised, subject to
adjustment from time to time as provided in Sections 11 and 13.
(b) EXERCISE OF RIGHTS. The registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement) in whole or in part (except that no fraction of a
Right may be exercised) at any time on or after the Distribution Date and prior
to the earliest of the Expiration Date, the Exchange Date and the Redemption
Date, by surrendering the Rights Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
principal corporate trust office of the Rights Agent, together with payment of
the Purchase Price for each one one-thousandth of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised.
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<PAGE> 19
(c) PAYMENT FOR AND ISSUANCE OF UNDERLYING SECURITIES. Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase
Price for each one one-thousandth of a share of Preferred Stock (or, following a
Triggering Event or a Business Combination, other securities, cash or other
assets, as the case may be) to be purchased together with an amount in cash,
certified bank check or bank draft payable to the order of the Company equal to
any applicable transfer tax required to be paid by the surrendering holder
pursuant to Section 9(d), the Rights Agent shall, subject to the provisions of
this Agreement, thereupon promptly (i)(A) requisition from any transfer agent
for the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the total number of one one-thousandths
of a share of Preferred Stock (or other securities, as the case may be) to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Preferred Stock (or other securities, as
the case may be) issuable upon exercise of the Rights with a depositary agent,
requisition from the depositary agent appointed by the Company depositary
receipts representing such number of one one-thousandths of a share of Preferred
Stock (or other securities, as the case may be) as are to be purchased (in which
case certificates for the Preferred Stock (or other securities, as the case may
be) represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company shall direct the depositary agent to
comply with such request; (ii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder; and (iii) if appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 of this Agreement and, promptly after receipt
thereof, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is obligated to
issue other securities (including shares of Common Stock) of the Company, pay
cash and/or distribute other property pursuant to this Agreement, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
(d) PARTIAL EXERCISE. In case the registered holder of any
Rights Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Rights Certificate or to his duly authorized assigns, subject to
the provisions of Section 6 and Section 14.
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(e) CERTAIN RIGHTS MADE NULL AND VOID. Notwithstanding
anything in this Agreement to the contrary, any Rights that are or were formerly
beneficially owned on or after the earlier of the Distribution Date or the Stock
Acquisition Date by (i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a direct or indirect transferee of an Acquiring Person
(or of an Associate or Affiliate of such Acquiring Person) who becomes or
becomes entitled to be a transferee after the Acquiring Person becomes such, or
(iii) a direct or indirect transferee of an Acquiring Person (or of an Associate
or Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in any Associate or
Affiliate of such Acquiring Person) or to any Person with whom the Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Board of
Directors of the Company determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall, immediately upon the occurrence of a Triggering Event and
without any further action, be null and void and no holder of such Rights shall
have any rights whatsoever with respect to such Rights whether under this
Agreement or otherwise; PROVIDED, HOWEVER, that, in the case of transferees
under clause (ii) or clause (iii) above, any Rights beneficially owned by such
transferee shall be null and void only if and to the extent such Rights were
formerly beneficially owned by a Person who was, at the time such Person
beneficially owned such Rights, or who later became, an Acquiring Person or an
Affiliate or Associate of such Acquiring Person. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of a
Rights Certificate or to any other Person as a result of the Company's failure
to make, or any delay in making (including any such failure or delay by the
Board of Directors of the Company) any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) FULL INFORMATION CONCERNING OWNERSHIP. Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to the
registered holder of a Rights Certificate upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights
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<PAGE> 21
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered or presented for the purpose
of exercise, transfer, division, combination or exchange shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Rights Certificates shall be
issued in lieu thereof or in exchange therefor except as expressly permitted by
the provisions of this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
(a) AVAILABILITY OF SHARES. The Company covenants and agrees
that it will cause to be reserved and kept available at all times out of its
authorized and unissued shares of Preferred Stock or its authorized and issued
shares of Preferred Stock held in its treasury (and, following the occurrence of
a Triggering Event, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares of Common
Stock and/or other securities held in its treasury) free from preemptive rights
or any right of first refusal, a sufficient number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, shares of Common Stock
and/or other securities) to permit the exercise in full of all Rights from time
to time outstanding.
(b) LISTING OF SECURITIES. The Company further covenants and
agrees, so long as the Preferred Stock (and, following the occurrence of a
Triggering Event, shares of Common Stock and/or other securities) issuable upon
the exercise or exchange of Rights may be listed on any United States national
securities exchange or traded in the over-the counter market and quoted on the
NASDAQ, to use its best efforts to cause, from and after the time that the
Rights become exercisable or exchangeable, all such shares and/or other
securities reserved for such issuance to be listed on such exchange or so traded
in such over-the-counter
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market upon official notice of issuance upon such exercise or exchange.
(c) UNENCUMBERED NATURE. The Company further covenants and
agrees that it will take all such action as may be necessary to ensure that all
shares of Preferred Stock (and, following the occurrence of a Triggering Event
or a Business Combination, shares of Common Stock and/or other securities)
delivered upon the exercise of Rights shall, at the time of delivery of the
certificates for such shares and/or such other securities (subject to payment of
the Purchase Price), be duly and validly authorized and issued, fully paid,
nonassessable, freely tradeable, not subject to liens or encumbrances, and free
of preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof, of any kind or nature
whatsoever.
(d) TAXES. 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 original issuance or delivery of
the Rights Certificates or of any certificates for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) upon the exercise or
exchange of the Rights. The Company shall not, however, be required to (i) pay
any transfer tax which may be payable in respect of any transfer involved in the
issuance or delivery of any Rights Certificates or the issuance or delivery of
any certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) to a Person other than, or in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or exchange or (ii) transfer or deliver any Rights
Certificate or issue or deliver any certificates for shares of Preferred Stock
(or Common Stock and/or other securities as the case may be) upon the exercise
or exchange of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
(e) REGISTRATION OF SECURITIES. The Company shall use its best
efforts (i) as soon as practicable following a Triggering Event (provided the
consideration to be delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iii) of this Agreement), or as
soon as is required by law following the Distribution Date, as the case may be,
to prepare and file a registration statement on an appropriate form under the
Securities Act with respect to the securities purchasable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as soon as
practicable after such filing, and (iii) to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
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Securities Act) until the earlier of (A) the date as of which Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
shall also use its best efforts to take such action as may be necessary or
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states and other appropriate jurisdictions in connection
with the exercise of the Rights. The Company may temporarily suspend, for a
period of time not to exceed 90 days after the date of a Triggering Event
described in clause (i) of the first sentence of this paragraph of Section 9,
the exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective, and thereafter to prepare and file
amendments to such registration statement and permit them to become effective;
PROVIDED, HOWEVER, that no such suspension shall remain effective after, and the
Rights shall without any further action by the Company or any other Person
become exercisable immediately upon, the effectiveness of such registration
statement or amendments thereto. Should additional periods of time be required
by the Company to prepare and file such registration statement or amendments
thereto, the Company may, by a majority action of the Company's Board of
Directors, extend the temporary suspension period for successive periods of time
not to exceed thirty (30) days after the expiration of the initial or prior
temporary suspension period, subject to the same proviso that no such suspension
shall remain effective after, and the Rights shall without any further action by
the Company or any other Person become exercisable immediately upon, the
effectiveness of such registration statement. Upon any such suspension, the
Company shall make a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, (x) the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification under the blue sky or security
laws of such jurisdiction shall have been obtained, (y) the exercise of the
Rights is permitted under applicable law, and (z) until a registration statement
has been declared effective.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise or exchange of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Stock (or Common Stock and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such Person
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<PAGE> 24
shall be deemed to have become the record holder of such shares (and/or such
other securities, as the case may be) on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
open.
Section 11. ADJUSTMENTS TO PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS; EXCHANGE OF RIGHTS FOR STOCK. In order to preserve the actual
or potential economic value of the Rights, the Purchase Price, the number and
kind of securities, cash and other property obtainable upon exercise of each
Right and the number of Rights outstanding shall be subject to adjustment from
time to time as provided in this Section 11.
(a) CORPORATE DIVIDENDS, RECLASSIFICATIONS, ETC.
(i) In the event the Company shall at any time
on or after the date of this Agreement (A) declare a dividend or make a
distribution on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide (by a stock split or otherwise) the outstanding Preferred Stock into a
larger number of shares, (C) combine (by a reverse stock split or otherwise) the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
securities in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the surviving corporation), then in each such event the Purchase
Price and the Redemption Price set forth in Section 23, as each is in effect at
the time of the record date for such dividend or distribution, or of the
effective date of such subdivision, combination or reclassification, shall be
proportionately adjusted by multiplying the Purchase Price and such Redemption
Price by a fraction the numerator of which shall be the total number of shares
of Preferred Stock outstanding immediately prior to the occurrence of such event
and the denominator of which shall be the total number of shares of Preferred
Stock outstanding immediately following the occurrence of such event. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) Subject to action of the Board of
Directors of the Company, upon the first occurrence of a Triggering Event,
proper provision shall be made so that each holder of a Right, except as
otherwise provided in this Agreement, shall thereafter have the right to receive
and the Company shall issue, upon exercise thereof at the then-current Purchase
Price required to be paid in order to exercise a Right in accordance with the
terms of this Agreement, in lieu of the number of one one-thousandths of a share
of Preferred Stock or other securities receivable upon exercise of a Right prior
to the occurrence of the
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Triggering Event, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then-current Purchase Price by
the number of one-thousandths of a share of Preferred Stock or other securities
for which a Right was then exercisable (without giving effect to such Triggering
Event) and (y) dividing that product by 50% of the Current Market Price per
share of Common Stock on the date of the occurrence of the Triggering Event
(such number of shares being referred to as the "Adjustment Shares"); PROVIDED,
HOWEVER, that if the transaction or event that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 of this
Agreement, then only the provisions of Section 13 of this Agreement shall apply
and no adjustment shall be made pursuant to this Section 11(a)(ii). Upon the
occurrence of such Triggering Event, the Purchase Price required to be paid in
order to exercise a Right shall be unchanged, and the Purchase Price shall be
appropriately adjusted to reflect, and shall thereafter mean, the amount
required to be paid per share of Common Stock upon exercise of a Right.
(iii) In lieu of issuing shares of Common Stock
in accordance with Section 11(a)(ii), the Company shall, if a majority of the
Board of Directors of the Company determines that such action is necessary or
appropriate and not contrary to the interests of holders of Rights (and, in the
event that the number of shares of Common Stock which are authorized by the
Company's certificate of incorporation, but which are not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights, are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii)), make adequate provision with respect to each Right to
substitute for all or part of the Adjustment Shares otherwise obtainable upon
exercise of a Right: (1) cash, (2) other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which a majority of the Board of Directors of the Company has determined to have
the same value as shares of Common Stock (such shares or units of preferred
stock being referred to as "Common Stock Equivalents")), (3) debt securities of
the Company, (4) other assets, or (5) any combination of the foregoing
(collectively, "Substitute Consideration"), having an aggregate value which,
when added to the value of the Adjustment Shares (if any) in respect of which no
substitution is being made, is equal to the Current Value (as hereinafter
defined). If a majority of the the Board of Directors determines to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other assets pursuant to this Section
11(a)(iii), the value of such securities and/or assets shall be determined by a
majority of the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by a majority of the
Board of Directors of the Company.
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If the Company is required to make adequate provision to deliver value
pursuant to the first sentence of this Section 11(a)(iii) and the Company shall
not have made such adequate provision to deliver value within ninety (90) days
following the first occurrence of a Triggering Event (the "Substitution
Period"), then notwithstanding any provision of Section 11(a)(ii) or this
Section 11(a)(iii) to the contrary, the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
excess of the Current Value over the Purchase Price. If both Common Stock and
cash are to be delivered pursuant to the preceding sentence, amounts of both
Common Stock and cash shall be delivered upon surrender of each Right in a ratio
of Common Stock to cash that bears the same ratio as the total value of all
Common Stock to be delivered (as determined pursuant to this Section 11(a)(iii))
bears to the total value of all cash to be delivered; PROVIDED, HOWEVER, that
the Company may adjust such ratio to avoid issuing any fractional shares of
Common Stock so long as the method of adjustment is applied consistently to each
holder of Rights entitled to receive value thereon pursuant to this Section
11(a)(iii). To the extent that the Company determines that some action is to be
taken pursuant to the first and/or third sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights but in no event to a time later than the expiration
of the Substitution Period. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Upon any change in the Adjustment Shares
obtainable upon exercise of a Right pursuant to this Section 11(a)(iii),
requiring the issuance and/or delivery of Substitute Consideration, if any, upon
exercise of a Right, a majority of the Board of Directors of the Company shall
make any necessary provisions to ensure that the provisions of Section 11(e)
shall thereafter apply as appropriate to the Substitute Consideration, if any,
and the Adjustment Shares. For purposes of this Section 11(a)(iii), (A) "Current
Value" shall be the product derived by multiplying (x) the number of Adjustment
Shares issuable in respect of each Right determined under Section 11(a)(ii), by
(y) the Current Market Price per share of Common Stock on the date of the
Triggering Event, and (B) the value of each share of Common Stock and each share
or unit of any "Common Stock Equivalent" shall be deemed conclusively to be
equal to the Current Market Price per share of the Common Stock on the date of
the Triggering Event.
(iv) A majority of the Board of Directors of
the Company may, at their option, at any time and from time to time
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after the first occurrence of a Triggering Event, cause the Company to exchange,
for all or part of the then-outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
hereof), shares of Common Stock or Common Stock Equivalents at an exchange ratio
of one share of Common Stock or Common Stock Equivalents per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Any partial exchange
shall be effected on a pro rata basis based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
Immediately upon the action of a majority of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to this
Section 11(a)(iv) and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
and/or Common Stock Equivalents equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange and in addition, the Company shall promptly mail a
notice of any such exchange to all of the holders of such Rights in accordance
with Section 25 of this Agreement; PROVIDED, HOWEVER, that the failure to give,
any delay in giving or any defect in, such notice shall not affect the validity
of such exchange. Each such notice of exchange will state the method by which
the exchange of the Common Stock or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. In the event that the number of shares of Common Stock which
is authorized but not outstanding or reserved for issuance for a purpose other
than exercise of the Rights is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 11(a)(iv), the Board of
Directors of the Company shall take all such action within its power as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights. The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) the last sale price of
the Company's Common Stock on the fifth Trading Day following the public
announcement of the exchange by the Company, or, in case no such sale takes
place on such day, the average of the closing bid and
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asked prices on such day, in either case on a when issued basis (taking into
account the exchange), 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 quoted on the NASDAQ with respect to securities
traded in the over-the-counter market (or, if the Company's Common Stock is not
so listed or traded, then as determined in the manner provided under the
definition of "Current Market Price," adjusted to take into account the
exchange). For the purposes of this Section 11(a)(iv) the value of any Common
Stock Equivalent on any date shall be the same as the value of the Common Stock,
as determined pursuant to the previous sentence, on such date.
(b) DILUTIVE RIGHTS OFFERING. If the Company shall at any time
on or after the date of this Agreement fix a record date for the issuance of
rights, options or warrants to holders of Preferred Stock entitling them to
subscribe for or purchase Preferred Stock or Equivalent Shares (or securities
convertible into Preferred Stock or Equivalent Shares) at a price per share of
Preferred Stock or Equivalent Shares (or, in the case of a convertible security,
having a conversion price per share of Preferred Stock or Equivalent Shares)
less than the Current Market Price per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock and Equivalent Shares (if any) outstanding on such record
date, plus the number of shares of Preferred Stock or Equivalent Shares, as the
case may be, which the aggregate exercise and/or conversion price for the total
number of shares of Preferred Stock or Equivalent Shares, as the case may be,
which are obtainable upon exercise and/or conversion of such rights, options,
warrants or convertible securities would purchase at such Current Market Price,
and the denominator of which shall be the number of shares of Preferred Stock
and Equivalent Shares (if any) outstanding on such record date, plus the number
of additional shares of Preferred Stock or Equivalent Shares, as the case may
be, which may be obtained upon exercise and/or conversion of such rights,
options, warrants or convertible securities. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by a
majority of the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent. Preferred Stock and Equivalent Shares owned by or held for the
account of the Company or any Subsidiary of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not issued following such adjustment, the
Purchase Price shall be readjusted to be the
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<PAGE> 29
Purchase Price which would have been in effect if such record date had not been
fixed.
(c) DISTRIBUTIONS. In case the Company shall at any time after
the date of this Agreement fix a record date for the making of a distribution to
holders of Preferred Stock (including any such distribution made in connection
with a reclassification of the Preferred Stock or a consolidation or merger in
which the Company is the surviving corporation) of securities (other than
Preferred Stock and rights, options or warrants referred to in Section 11(b)),
cash (other than a regular periodic cash dividend out of earnings or retained
earnings), property, evidences of indebtedness, or assets, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price per share of Preferred
Stock on such record date, less the fair market value (as determined in good
faith by a majority of the Board of Directors of the Company whose determination
shall be described in a statement filed with the Rights Agent) of such
securities, cash, property, evidences of indebtedness or assets to be so
distributed in respect of one share of Preferred Stock, and the denominator of
which shall be such Current Market Price per share of Preferred Stock on such
record date. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not made following
such adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d) INSIGNIFICANT CHANGES. Except as provided below, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; PROVIDED,
HOWEVER, that any adjustments which by reason of this Section 11(d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent, to the nearest ten-thousandth of a share of Common Stock, or
to the nearest ten-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjust ment or (ii)
the Expiration Date.
(e) SHARES OTHER THAN PREFERRED STOCK. If, as a result of an
adjustment made pursuant to Section 11(a) or Section 13(a) of this Agreement,
the holder of any Right thereafter exercised shall become entitled to receive
any securities of the Company other than shares of Preferred Stock, thereafter
the Purchase Price and the number of such other securities so receivable upon
exercise of any
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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
of Preferred Stock contained in this Section 11 and the provisions of Sections
7, 9, 10, 12, 13, 14 and 24 with respect to the shares of Preferred Stock shall
apply on like terms to any such other securities.
(f) RIGHTS ISSUED SUBSEQUENT PRIOR TO ADJUSTMENT. All Rights
originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of shares of Preferred Stock or other securities,
cash or other property purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided in this Agreement.
(g) EFFECT OF ADJUSTMENTS. Unless the Company shall have
exercised its election as provided in Section 11(h), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(a)(i), 11(b)
and 11(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one ten-millionth of a share of Preferred Stock)
obtained by (i) multiplying the number of one one-thousandths of a share of
Preferred Stock covered by a Right immediately prior to adjustment pursuant to
this Section 11(g) by the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(h) ADJUSTMENT IN NUMBER OF RIGHTS. The Company may elect, on
or after the date of any adjustment of the Purchase Price or any adjustment to
the number of shares of Preferred Stock for which a Right may be exercised, to
adjust the number of Rights, in lieu of an adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right outstanding prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
hundred-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to such adjustment by the Purchase Price in effect immediately
after such adjustment. 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
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or any day thereafter, but, if the Rights Certificates have been issued, shall
be at least 10 days after the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(h) the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date a new Rights Certificate evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record, in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment and upon
surrender thereof (if required by the Company), new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for in this Agreement (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(i) RIGHTS CERTIFICATES UNCHANGED. Irrespective of any
adjustment or change in the Purchase Price or the number or kind of shares
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share of Preferred Stock and the number of shares of
Preferred Stock which were expressed in the initial Rights Certificates issued
hereunder.
(j) PAR VALUE LIMITATIONS. Before taking any action that would
cause an adjustment reducing the Purchase Price below the then par value, if
any, of one one-thousandth of a share of Preferred Stock issuable upon exercise
of the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable one one-thousandth shares of such
Preferred Stock at such adjusted Purchase Price.
(k) DEFERRED ISSUANCE. In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised after
such record date the shares of Preferred Stock and other securities, cash or
property of the Company, if any, issuable upon such exercise over and above the
shares of Preferred Stock and other securities, cash or property of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise)
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or other securities, cash or property upon the occurrence of the event requiring
such adjustment.
(l) REDUCTION IN PURCHASE PRICE. Anything in this Section 11
to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any combination or subdivision of
the Preferred Stock, issuance wholly for cash of any Preferred Stock at less
than the Current Market Price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable or
exercisable for Preferred Stock, stock dividends or issuance of rights, options
or warrants referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Stock, shall not be taxable to such stockholders.
(m) RESTRICTIONS ON FUNDAMENTAL CHANGES. The Company covenants
and agrees that it shall not (i) consolidate with, (ii) merge with or into, or
(iii) directly or indirectly sell, lease, or otherwise transfer or dispose of
(in one transaction or a series of related transactions) assets or earning power
aggregating more than 50% of the consolidated assets or earning power of the
Company and its Subsidiaries, to any other Person if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer or disposition the stockholders (or equity holders) of the
Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation, merger,
sale, lease, transfer or disposition unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(m).
(n) RESTRICTIONS ON COMPANY ACTIONS AFFECTING THE RIGHTS. The
Company covenants and agrees that, after the Stock Acquisition Date it will not,
except as permitted by Section 11(a)(iv), 26 or 29(b) of this Agreement, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will, directly or
indirectly, diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.
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(o) ADJUSTMENTS RELATED TO CHANGES AFFECTING THE COMMON STOCK.
Anything in this Agreement to the contrary notwithstanding, if the Company shall
at any time prior to the Distribution Date (i) pay a dividend or distribution on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered thereafter
but prior to the Distribution Date, and the Purchase Price under, and the number
of one one-thousandths of a share of Preferred Stock issuable in respect of, the
Rights, shall be proportionately adjusted, so that following such event one
Right (with the Purchase Price and the number of one one-thousandths of a share
proportionately adjusted thereunder) shall thereafter be associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date. For example, if the Company effects a
two-for-one stock split at a time when each Right (if it becomes exercisable)
would entitle the holder to purchase one one-thousandth of a share of Preferred
Stock for a Purchase Price of $"Z", then following such stock split each
previous Right would be split into two current Rights and thereafter each
current Right, upon becoming exercisable, would (subject to further adjustment)
entitle the holder to purchase one two-thousandth of a share of Preferred Stock
at a Purchase Price of 1/2 x $"Z".
Section 12. CERTIFICATION OF ADJUSTMENTS. Whenever an
adjustment is made as provided in Sections 11 and 13, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Preferred Stock a copy of
such certificate, and (c) mail a brief summary thereof to each holder of a
Rights Certificate (or, if no Rights Certificates have been issued, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 25. Notwithstanding the foregoing sentence, the failure of the Company
to give such notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment. Any adjustment to be made pursuant to
Sections 11 and 13 of this Agreement shall be effective as of the date of the
event giving rise to such adjustment.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) IN GENERAL. A "Business Combination" shall be deemed to
occur in the event that, in or following a Triggering Event, (i) the Company
shall, directly or indirectly, consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) and Section 11(n) of this Agreement) in a
transaction
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in which the Company is not the continuing, resulting or surviving corporation
of such merger or consolidation, (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m) and Section 11(n) of
this Agreement) shall, directly or indirectly, consolidate with the Company, or
shall merge with and into the Company, in a transaction in which the Company is
the continuing, resulting or surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Common Stock shall be changed (including, without limitation, any
conversion into or exchange for securities of the Company or of any other
Person, cash or any other property), (iii) the Company shall, directly or
indirectly, effect a share exchange in which all or part of the Common Stock
shall be changed (including, without limitation, any conversion into or exchange
for securities of any other Person, cash or any other property) or (iv) the
Company shall, directly or indirectly, sell, lease, exchange, mortgage, pledge
or otherwise transfer or dispose of (or one or more of its Subsidiaries shall
directly or indirectly sell, lease, exchange, mortgage, pledge or otherwise
transfer or dispose of), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the consolidated assets or
earning power of the Company and its Subsidiaries to any other Person (other
than the Company or any of its Subsidiaries in one or more transactions each and
all of which comply with Section 11(m) and Section 11(n) of this Agreement).
In the event of a Business Combination, proper provision shall
be made so that each holder of a Right (except as otherwise provided in this
Agreement) shall thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement and at the Purchase Price
immediately prior to the first occurrence of a Triggering Event multiplied by
the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Triggering
Event (without giving effect to the Triggering Event) in accordance with the
terms of this Agreement, such number of shares of Common Stock of the Principal
Party as shall be equal to the result obtained by (x) multiplying the Purchase
Price immediately prior to the first occurrence of a Triggering Event by the
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Triggering Event
(without giving effect to the Triggering Event), and (y) dividing that product
by 50% of the Current Market Price per share of the Common Stock of such
Principal Party immediately prior to the consummation of such Business
Combination. All shares of Common Stock of any Person for which any Right may be
exercised after consummation of a Business Combination as provided in this
Section 13(a) shall, when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of
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first refusal or any other restrictions or limitations on the transfer or
ownership thereof of any kind or nature whatsoever.
(b) ASSUMPTION OF THE AGREEMENT. After consummation of any
Business Combination, (i) the Principal Party shall be liable for, and shall
assume, by virtue of such Business Combination and without the necessity of any
further act, all the obligations and duties of the Company pursuant to this
Agreement, (ii) the term "Company" as used in this Agreement shall thereafter be
deemed to refer to such Principal Party, and (iii) such Principal Party shall
take all steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section 9) in connection
with such Business Combination as necessary to ensure that the provisions of
this Agreement shall thereafter be applicable, as nearly as reasonably may be,
in relation to the shares of its Common Stock thereafter deliverable upon the
exercise of the Rights.
(c) CONDITIONS PRECEDENT TO ANY BUSINESS COMBINATION. The
Company shall not consummate any Business Combination unless prior thereto (i)
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance (other than
shares reserved for issuance pursuant to this Agreement to the holders of
Rights) to permit the exercise in full of the Rights in accordance with this
Section 13, (ii) the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the
fulfillment of the Principal Party's obligations and the terms as set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable on or after the date of such Business Combination, the Principal
Party, at its own expense, shall (A) prepare and file, if necessary, a
registration statement on an appropriate form under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights, (B) use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, (C) 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 on Form 10 (or any successor
form) under the Exchange Act, (D) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights under the
state securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate, (E) use its best efforts to list the Rights and the securities
purchasable upon exercise of the Rights on a United States national securities
exchange, and (F) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights, (iii) the Company and
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the Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms, and (iv) the Company and the Principal Party
shall have filed with the Rights Agent a certificate of a nationally recognized
firm of independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(d) SURVIVAL OF REQUIREMENTS. The provisions of this Section
13 shall similarly apply to successive Business Combinations. In the event a
Business Combination shall be consummated at any time after the occurrence of a
Triggering Event, the Rights which have not theretofore been exercised shall
thereafter be exercisable for the consideration and in the manner described in
Section 13(a). Following a Business Combination, the provisions of Section
11(a)(ii) of this Agreement shall be of no effect.
(e) PROHIBITION ON ADJUSTMENT. Notwithstanding any other
provision of this Agreement, no adjustment to the number of shares of Preferred
Stock (or fractions of a share) or other securities, cash or other property for
which a Right is exercisable or the number of Rights outstanding or associated
with each share of Common Stock or any similar or other adjustment shall be made
or be effective if such adjustment would have the effect of reducing or limiting
the benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Sections 11 and 13, unless the
terms of this Agreement are amended so as to preserve such benefits.
(f) PROHIBITION ON ELIMINATION OF BENEFITS. The Company
covenants and agrees that it shall not effect any Business Combination if at the
time of, or immediately after such Business Combination, there are any rights,
options, warrants or other instruments outstanding which would diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(g) MAINTENANCE OF BENEFITS. Without limiting the generality
of this Section 13, in the event the nature of the organization of any Principal
Party shall preclude or limit the acquisition of Common Stock of such Principal
Party upon exercise of the Rights as required by Section 13(a) as a result of a
Business Combination, it shall be a condition to such Business Combination that
such Principal Party shall take such steps (including, but not limited to, a
reorganization) as may be necessary to ensure that the benefits intended to be
derived under this Section 13 upon the exercise of the Rights are assured to the
holders thereof.
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Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) CASH IN LIEU OF FRACTIONAL RIGHTS. The Company shall not
be required to issue fractional Rights or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Rights Certificates with respect to
which such fractional Rights would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of a Right (as determined pursuant to the second and third
sentences of the definition of Current Market Price contained in Section 1) for
the Trading Day immediately prior to the date on which such fractional Rights
otherwise would have been issuable.
(b) CASH, SCRIP OR WARRANTS IN LIEU OF FRACTIONAL PREFERRED
STOCK. The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock 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 Stock. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-thousandth
of a share of Preferred Stock, the Company may at its option (i) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full one one-thousandth of a share of Preferred
Stock upon the surrender of such scrip or warrants aggregating a full one
one-thousandth of a share of Preferred Stock, or (ii) pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the current market value of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred Stock (as determined pursuant
to the second and third sentences of the definition of Current Market Price
contained in Section 1) for the Trading Day immediately prior to the date of
such exercise. If, as a result of an adjustment made pursuant to Section 11, the
holder of any Right thereafter exercised shall become entitled to receive any
securities other than Preferred
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Stock, the provisions of this Section 14(b) shall apply, as nearly as reasonably
may be, on like terms to such other securities.
(c) FRACTIONAL COMMON STOCK. The Company may, but shall not be
required to, issue fractions of Common Stock upon exchange of Rights pursuant to
Section 11(a)(iv), or to distribute certificates which evidence fractional
Common Stock. In lieu of such fractional Common Stock, the Company may pay to
the registered holders of the Rights Certificates with regard to which such
fractional Common Stock would otherwise be issuable an amount in cash equal to
the same fraction of the Current Market Price of one share of Common Stock as of
the date on which a Person became an Acquiring Person.
(d) WAIVER OF RIGHT TO RECEIVE FRACTIONAL RIGHTS OR SHARES.
The holder of a Right by his acceptance thereof expressly waives any right to
receive any fractional Rights or any fractional shares upon exercise of a Right
(except as otherwise provided in this Agreement).
Section 15. RIGHTS OF ACTION.
(a) SCOPE OF RIGHT. Except as otherwise provided, all rights
of action in respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, any
registered holders of associated Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, any share of associated
Common Stock), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, any share of
associated Common Stock), may, on his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his rights pursuant to
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights (or, prior to the Distribution Date, any share of associated
Common Stock), it is specifically acknowledged that the holders of Rights (or,
prior to the Distribution Date, any share of associated Common Stock) 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
(including, without limitation, the Company) subject to this Agreement.
(b) NO ELECTION OF REMEDIES. 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
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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 WAIVER. 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 16. AGREEMENT OF RIGHTS HOLDERS CONCERNING TRANSFER
AND OWNERSHIP OF RIGHTS. Every holder of a Right (or, prior to the Distribution
Date, any share of associated Common Stock) by accepting the same consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right (or, prior to the Distribution Date, any share of associated Common Stock)
that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will
be transferable on the registry books of the Rights Agent only if surrendered at
the principal 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 a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the associated Common Stock
certificate made by anyone other than the Company, the transfer agent for the
Common Stock or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. RIGHTS HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Rights Certificate shall be entitled to vote, receive dividends
or distributions or be deemed for any purpose the holder of Preferred Stock or
any other securities, cash or other property of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained in this Agreement or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights
of a stockholder of the Company, including, without limitation, any right (i) to
vote for the election of directors or upon any matter submitted to stockholders
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at any meeting thereof, (ii) to give or withhold consent to any corporate
action, (iii) to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), (iv) to receive dividends,
distributions or subscription rights, (v) to institute, as a holder of Preferred
Stock or other securities issuable on exercise of the Rights represented by any
Rights Certificate, any derivative action on behalf of the Company, or
otherwise, until and only to the extent that the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions of this Agreement.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder in accordance with a fee schedule to be mutually agreed upon and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution of
this 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 (including reasonable fees and expenses
of counsel), incurred without negligence, bad faith, willful misconduct or
breach of this Agreement 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 shall the Company be liable with
respect to any action, proceeding, suit or claim against the Rights Agent unless
the Rights Agent shall have notified the Company, by letter or by facsimile
confirmed by letter, of the assertion of any action, proceeding, suit or claim
against the Rights Agent, promptly after the Rights Agent shall have notice of
any such assertion of an action, proceeding, suit or claim or have been served
with the summons or other first legal process giving information as to the
nature and basis of the action, proceeding, suit or claim. The Company shall be
entitled to participate at its own expense in the defense of any such action,
proceeding, suit or claim, and, if the Company so elects, the Company shall
assume the defense of any such action, proceeding, suit or claim. In the event
that the Company assumes such defense, the Company shall not thereafter be
liable for the fees and expenses of any additional counsel retained by the
Rights Agent, so long as the Company shall retain counsel satisfactory to the
Rights Agent, in the exercise of its reasonable judgment, to defend such action,
proceeding, suit or claim. The Rights Agent agrees not to settle any litigation
in connection with any action, proceeding, suit or claim with respect to which
it may seek indemnification from the Company without the prior written consent
of the Company.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
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omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Preferred Stock or
Common Stock or for other securities of the Company, instrument of assignment or
transfer, instruction, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
reasonably believed by it to be genuine and to be signed, executed and, when
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto; PROVIDED, HOWEVER, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificate so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificate either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement or otherwise upon the advice of its counsel
as set forth in Section 20 hereof.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates (or, prior to the
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Distribution Date, of the Common Stock), by their acceptance thereof, shall be
bound:
(a) LEGAL COUNSEL. 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) CERTIFICATES AS TO FACTS OR MATTERS. Whenever in the
performance of its duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person or any Affiliate or Associate of an
Acquiring Person or the determination of Current Market Price) 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 specifically
prescribed in this Agreement) may be deemed to be conclusively proved and
established by a certificate signed by the Company's Chairman of the Board,
President, Chief Executive Officer, or any Senior Vice President and delivered
to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) STANDARD OF CARE. The Rights Agent shall be liable
hereunder to the Company or any other Person only for the negligence, bad faith,
willful misconduct or breach of this Agreement by it or its attorneys or agents.
(d) RELIANCE ON RIGHTS AGREEMENT AND RIGHTS CERTIFICATES. 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 Rights Certificates
(except its countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) NO RESPONSIBILITY AS TO CERTAIN MATTERS. The Rights Agent
shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery of this Agreement (except the due
execution and delivery of this Agreement by the Rights Agent) or in respect of
the validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change or adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Sections
3, 11, 13 or 23 or the ascertaining of the existence of facts that would require
any such
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<PAGE> 43
change or adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any 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 shares
of Preferred Stock, Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock, Common Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) FURTHER ASSURANCE BY COMPANY. The Company agrees that it
will perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the carrying out or performance by the Rights Agent of the provisions of this
Agreement.
(g) AUTHORIZED COMPANY OFFICERS. The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from any one of the Company's Chairman of the Board,
President, Chief Executive Officer, and Senior Vice Presidents (whether preceded
or followed by any additional title), 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) FREEDOM TO TRADE IN COMPANY SECURITIES. The Rights Agent
and any stockholder, director, officer or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though the Rights Agent were not serving as such under this
Agreement. Nothing in this Agreement shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) DELEGATION TO ATTORNEYS AND AGENTS. The Rights Agent may
execute and exercise any of the rights or powers hereby vested in it or perform
any duty hereunder either itself or by or through its attorneys or agents; and
the Rights Agent shall not be answerable or accountable for any loss, liability
or expense incurred without negligence, bad faith, or willful misconduct or
breach of this Agreement on the part of such attorneys or agents and provided
reasonable care was exercised in the selection and continued employment thereof.
(j) DUTY TO CONSULT COMPANY. If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise,
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<PAGE> 44
exchange or transfer, the certificate attached to the form of assignment or form
of election to purchase, as the case may be, has not been completed, the Rights
Agent shall not take any further action with respect to such requested exercise,
exchange or transfer without first consulting with the Company.
(k) RIGHTS HOLDERS LIST. At any time and from time to time
after the Distribution Date, upon the request of the Company, the Rights Agent
shall promptly deliver to the Company a list, as of the most recent practicable
date (or as of such earlier date as may be specified by the Company), of the
holders of records of Rights.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock by registered or certified
mail, and to the holders of the Rights Certificates (or, prior to the
Distribution Date, of the Common Stock) by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail, and to the holders of the Rights Certificates (or,
prior to the Distribution Date, of the Common Stock) by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the resigning, removed or incapacitated Rights Agent shall remit to the
Company, or to any successor Rights Agent designated by the Company, all books,
records, funds, certificates or other documents or instruments of any kind then
in its possession which were acquired by such resigning, removed or
incapacitated Rights Agent in connection with its services as Rights Agent
hereunder, and shall thereafter be discharged from all duties and obligations
hereunder. Following notice of such removal, resignation, or incapacity, the
Company shall appoint a successor to the Rights Agent. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. 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 any holder of a Rights
Certificate (or, prior to the Distribution Date, of the Common Stock) (who
shall, with such notice, submit his Rights Certificate or, prior to the
Distribution Date, the certificate representing his Common Stock, for inspection
by the Company), then the incumbent Rights Agent or the registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock) may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any
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<PAGE> 45
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of Ohio (or of any other state of the United States so
long as such corporation is authorized to conduct a corporate trust or stock
transfer business in the State of Ohio) in good standing, 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
$50,000,000; PROVIDED, HOWEVER, that the principal transfer agent for the Common
Stock shall in any event be qualified to be the Rights Agent. 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
such purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates
(or, prior to the Distribution Date, of the Common Stock). Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights
Certificates to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing new Rights in such form as may be approved by a majority
of the Board of Directors of the Company to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of securities, cash
or other property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement.
Section 23. REDEMPTION AND TERMINATION.
(a) RIGHT TO REDEEM. Subject to Section 23(b) below, the Board
of Directors of the Company may, at its option, at any time prior to the close
of business on the earlier of (i) the Stock Acquisition Date and (ii) the
Expiration Date, order the redemption of all, but not less than all, the
then-outstanding Rights at a redemption price of $.01 per Right appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such redemption price being
hereinafter referred to as the "Redemption Price" and the
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<PAGE> 46
date of such redemption being hereinafter referred to as the "Redemption Date").
(b) TERMINATION OF EXERCISE RIGHT; REDEMPTION PROCEDURES. At
the time and date of effectiveness set forth in any resolution of the Board of
Directors of the Company ordering the redemption of the Rights, without any
further action and without any further notice, the right to exercise the Rights
will terminate and the only right thereafter of the holders of Rights shall be
to receive the redemption price; PROVIDED, HOWEVER, that such resolution of the
Board of Directors of the Company may be revoked, rescinded or otherwise
modified at any time prior to the time and date of effectiveness set forth in
such resolution, in which event the right to exercise will not terminate at the
time and date originally set for such termination by the Board of Directors of
the Company. As soon as practicable after the action of the Board of Directors
of the Company ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and 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 issuance of Rights Certificates, on the registry books of the transfer
agent for the Common Stock. Any notice which is mailed in the manner provided in
this Agreement shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the redemption price will be made. In any case, failure to give such
notice by mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of Rights. In
the case of a redemption permitted under this Section 23, the Company may, at
its option, discharge all of its obligations with respect to the Rights by (i)
issuing a press release announcing the manner of redemption of the Rights and
(ii) mailing payment of the redemption price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the issuance of the Rights Certificates, on the
registry books of the transfer agent for the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void without any further
action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Distribution Date and the Expiration Date.
Section 24. NOTICE OF CERTAIN EVENTS. In case the Company, on
or after the Distribution Date, shall propose to (a) pay any dividend payable in
stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash
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<PAGE> 47
dividend at an annual rate not in excess of 125% of the annualized rate of the
cash dividend paid on the Preferred Stock during the immediately preceding
fiscal year), or (b) offer to the holders of its Preferred Stock rights,
options, or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, or (c) effect any reclassification of the Preferred Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Preferred Stock, a change in the par value of such Preferred Stock or a change
from par value to no par value), or (d) directly or indirectly effect any
consolidation or merger into or with, or effect any sale, lease, exchange, or
other transfer or disposition (or to permit one or more of its Subsidiaries to
effect any sale, lease, exchange or other transfer or disposition), in one or
more transactions, of more than 50% of the consolidated assets or earning power
of the Company and its Subsidiaries to, any other Person or Persons (other than
a Subsidiary of the Company in a transaction which complies with Section 11(n)
hereof), or (e) effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Rights Agent and
to each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 25, a notice of such proposed action, which shall specify any
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, lease, exchange, transfer, disposition, liquidation, dissolution, or
winding up is to take place and if such holders will or may participate therein,
the date of participation therein by the holders of Common Stock and/or
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at least 20
days prior to the record date for determining holders of the Preferred Stock 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, if any, by the holders of Preferred Stock, whichever
shall be the earlier. The failure to give notice as required by this Section 24
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 25, notice of the
occurrence of such Triggering Event or Business Combination, which shall specify
the Triggering Event or Business Combination and include a description of the
consequences of such event to holders of Rights under Section 11(a)(ii) or 13.
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<PAGE> 48
Section 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate (or, prior to the Distribution Date, of the associated Common Stock)
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:
Arbor Health Care Company
1100 Shawnee Road
Lima, Ohio 45805
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate (or, prior to the Distribution Date, of the associated Common Stock)
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:
KeyBank, National Association
127 Public Square, 15th Floor
Cleveland, OH 44114
Attn: Kathryn M. Gallagher, Assistant Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, prior
to the Distribution Date, of the associated Common Stock) shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company (or, if no Rights Certificates have been issued, if sent by first-class
mail, postage prepaid, addressed to each holder of a certificate representing
shares of Common Stock at the address of such holder as shown on the Company's
Common Stock registry books).
Section 26. SUPPLEMENTS AND AMENDMENTS.
(a) IN GENERAL. At any time prior to the Stock Acquisition
Date and subject to Section 26(d) below, the Board of Directors of the Company
may, except as provided in Section 26(c), and the Rights Agent shall, if so
directed, supplement or amend any provision of this Agreement without the
approval of any holders of Rights.
(b) EXTENT OF RIGHT. From and after the Stock Acquisition Date
and subject to Section 26(d) below and applicable law, the Board of Directors of
the Company may, except as provided in Section 26(c), and the Rights Agent
shall, if so directed, amend this Agreement without the approval of any holders
of Rights
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<PAGE> 49
Certificates (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained in this Agreement which may be defective or inconsistent
with any other provision of this Agreement, or (iii) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); PROVIDED, HOWEVER, that after the Distribution Date,
the Board of Directors of the Company may supplement or amend the Agreement only
after determining that such supplements or amendments are, in their judgment, in
the best interests of the Company, its stockholders, and the holders of the
Rights Certificates.
(c) PROHIBITED SUPPLEMENTS AND AMENDMENTS. No supplement or
amendment to this Agreement shall be made which changes the number of shares of
Preferred Stock, other securities, cash or other property for which a Right is
then exercisable or the Redemption Price (except as required by the last proviso
of Section 23(a)) or provides for an earlier Expiration Date.
(d) EFFECTIVE DATE OF SUPPLEMENTS AND AMENDMENTS. Immediately
upon the action of the Board of Directors of the Company providing for any
amendment or supplement pursuant to this Section 26, and without any further
action and without notice, such amendment or supplement shall be deemed
effective. Promptly following the adoption of any amendment or supplement
pursuant to this Section 26, the Company shall deliver to the Rights Agent a
copy, certified by the Secretary or any Assistant Secretary of the Company, of
resolutions of the Board of Directors of the Company adopting such amendment or
supplement. Upon such delivery, the amendment or supplement shall be
administered by the Rights Agent as part of this Agreement in accordance with
the terms of this Agreement, as so amended or supplemented.
Section 27. 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 28. BENEFITS OF THIS AGREEMENT; DETERMINATIONS AND
ACTIONS BY THE BOARD OF DIRECTORS. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the
registered holders of Rights (or, prior to the Distribution Date, the associated
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights (or, prior to
the Distribution Date, of the associated Common Stock).
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<PAGE> 50
For purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time shall be made in
accordance with the last sentence of Rule 13d- 3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act (or any successor provision); PROVIDED,
HOWEVER, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(e) of this
Agreement. Except as explicitly otherwise provided in this Agreement, the Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to, the Board of Directors of the Company or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights, to exchange or not exchange the Rights for
Common Stock or other securities of the Company, or to amend or supplement this
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors of Company in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other Persons, and (y) not subject the
Board of Directors of the Company to any liability to the holders of the Rights.
Nothing contained in this Agreement shall be deemed to be in derogation of the
obligation of the Board of Directors of the Company to exercise its fiduciary
duty. Without limiting the foregoing, nothing contained in this Agreement shall
be construed to suggest or imply that the Board of Directors shall not be
entitled to reject any tender offer, or to recommend that the holders of the
Common Stock reject any tender offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer that the Board of Directors believes
is necessary or appropriate in the exercise of such fiduciary duty.
Section 29. SEVERABILITY.
(a) IN GENERAL. If any term, provision, covenant or
restriction of this Agreement or the application thereof to any Person or to any
circumstance is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants
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<PAGE> 51
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
(b) CHANGES IN LAW. If legal counsel to the Company delivers
to the Company a written opinion to the effect that, as a result of changes in
federal law or Delaware law, any term, provision, covenant, or restriction of
this Agreement may be invalid, void, or unenforceable, then, notwithstanding any
other provision of this Agreement, the Company and the Rights Agent may amend
this Agreement to modify, revise or delete such term, provision, covenant or
restriction to the extent necessary to comply with such law as so changed.
Section 30. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT AND EACH
RIGHTS CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAW) AND FOR ALL PURPOSES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF SUCH STATE APPLICABLE TO
CONTRACTS TO BE MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 31. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts when so executed and
delivered shall for all purposes be deemed to be an original, but all of which
shall together constitute but one and the same instrument.
Section 32. DESCRIPTIVE HEADINGS. The headings of the several
Sections and Subsections of this Agreement appear herein for convenience and
reference only and shall not in any way control or affect the meaning or
construction of any of the provisions of this Agreement.
Section 33. NUMERICAL AND GRAMMATICAL CONSTRUCTION. Wherever
the context so requires, terms used herein (i) importing the singular number
only shall include the plural, and vice versa, (ii) words importing the singular
form of nouns and pronouns shall include the plural, and vice versa, and (iii)
words importing any one gender shall include all others.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute, deliver and have their respective corporate
seals to be hereunto affixed and attested to this Agreement, all as of the day
and year first above written.
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<PAGE> 52
ARBOR HEALTH CARE COMPANY
By: /s/ P. Borra
-------------------------------
Pier C. Borra, Chairman
of the Board, President and
Chief Executive Officer
ATTEST:
By: /s/ Brad C. Roush
----------------------------------
Brad C. Roush, Secretary
KEYBANK, NATIONAL ASSOCIATION
By: /s/ Kathryn M. Gallagher
-------------------------------
Kathryn M. Gallagher,
Assistant Vice President
ATTEST:
By: /s/ Marlayna Miller
-----------------------------------
Marlayna Miller,
Trust Officer
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<PAGE> 1
Exhibit 2
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
of
ARBOR HEALTH CARE COMPANY
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
ARBOR HEALTH CARE COMPANY, a Delaware corporation (the "Company"),
through the undersigned duly authorized officers, in accordance with the
provisions of Sections 103 and 151 of the General Corporation Law of the State
of Delaware, DOES HEREBY CERTIFY:
That, the Board of Directors of the Company on November 14, 1996,
pursuant to the authority conferred upon the Board of Directors by Section C of
the Fourth Article of the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation") and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, adopted the
following resolution creating a series of Preferred Stock designated as Series A
Junior Participating Cumulative Preferred Stock:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Company in accordance with the provisions of the
Company's Certificate of Incorporation, a series of the Preferred Stock of the
Company, par value $.01 per share, be, and it hereby is, created and that the
designation and number of shares thereof and the voting powers, preferences and
relative, participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are as
follows:
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK:
Section 1. DESIGNATION AND NUMBER OF SHARES. The shares of such series
shall be designated as "Series A Junior Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), par value $.01 per share, and the
number of shares constituting the Series A Preferred Stock shall be 10,000;
PROVIDED, HOWEVER, that, if more than a total of 10,000 shares of Series A
Preferred Stock shall be issuable upon the exercise of Rights (the "Right")
issued pursuant to the Rights Agreement dated as of November 14, 1996, between
the Company and KeyBank, National Association, as Rights Agent (the
"Agreement"), the Board of Directors of the Company, pursuant to Section 151(g)
of the General Corporation Law of the State of Delaware, shall direct by
<PAGE> 2
resolution or resolutions that a certificate be properly executed, acknowledged,
filed and recorded, in accordance with the provisions of Section 103 thereof,
providing for the total number of shares of Series A Preferred Stock authorized
to be issued to be increased (to the extent that the Certificate of
Incorporation then permits) to the largest number of whole shares (rounded up to
the nearest whole number) issuable upon exercise of the Rights.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any other series of Preferred Stock or other Class of capital stock of
the Company ranking prior and superior to the shares of Series A Preferred Stock
with respect to dividends, the holders of shares of the Series A Preferred
Stock, in preference to the holders of Common Stock, par value $.03 per share
(the "Common Stock"), of the Company, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
the assets of the Company legally available therefor, quarterly dividends
payable on the last day of each fiscal quarter in each year, or such other dates
as the Board of Directors of the Company shall approve (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 or combination (by reverse stock split, reclassification or
otherwise) of the outstanding shares of Common Stock, declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date or with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. If the Company
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 reverse stock split,
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event 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; PROVIDED, FURTHER, that, if at any time after November 14, 1996, the
Company shall issue any shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were
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<PAGE> 3
entitled immediately prior to such event shall be appropriately adjusted to
reflect such subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reverse stock split, reclassification or otherwise)
so that each share of Preferred Stock continues to be the economic equivalent of
the amount to which holders of shares of Series A Preferred Stock were entitled
prior to such subdivision or combination or consolidation.
(B) The Company shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section 2 immediately
prior to or at the same time it declares a dividend or distribution on the
Common Stock (other than a dividend or distribution payable in shares of Common
Stock); PROVIDED, HOWEVER, that, in the event no dividend or distribution (other
than a dividend or distribution in shares of Common Stock) 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 Series A Preferred Stock shall
nevertheless accrue and be cumulative on the outstanding shares of Series A
Preferred Stock as provided in paragraph (C) of this Section 2. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a dividend or distribution declared
thereon, which record date shall be the same as the record date for any
corresponding dividend or distribution on the Common Stock.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
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.
(D) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock,
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
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<PAGE> 4
(E) The holders of the shares of Series A Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Company. If
the Company shall at any time declare or pay a dividend on Common Stock payable
in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reverse stock split, reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock, outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock, that was
outstanding immediately prior to such event; PROVIDED, FURTHER, that, if at any
time after November 14, 1996, the Company shall issue any shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
appropriately adjusted to reflect such subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reverse stock split,
reclassification, or otherwise) so that each share of Preferred Stock continues
to be the economic equivalent of the amount to which holders of shares of Series
A Preferred Stock were entitled prior to such subdivision or combination or
consolidation.
(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 Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the Company having general voting
rights shall vote together as one class for the election of directors of the
Company and on all other matters submitted to a vote of stockholders of the
Company.
(C) Except as set forth herein or as otherwise provided by law, holders
of Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
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<PAGE> 5
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A 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 Company shall not:
(i) declare or pay dividends, or make any other distributions,
on or redeem or purchase or otherwise acquire for consideration any shares or
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the holders of the
respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company 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
-5-
<PAGE> 6
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 the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, 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 Series A Preferred Stock unless,
prior thereto, the holders of Series A 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 stock
ranking on a parity (either as to dividends or as to amounts payable upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A 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
Company 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 reverse stock split,
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
Series A 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; PROVIDED, FURTHER, that, if at any
time after November 14, 1996, the Company shall issue any shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
appropriately adjusted to reflect such subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reverse stock split,
reclassification, or otherwise) so that each share of Preferred Stock continues
to be the economic equivalent of the amount to which holders of shares of Series
A Preferred Stock were entitled prior to such subdivision or combination or
consolidation.
Section 7. CONSOLIDATION, MERGER, ETC. If the Company shall enter
into any consolidation, merger or other transaction in which the shares of
Common Stock are exchanged for or changed into
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<PAGE> 7
other stock or securities, cash or any other property, or any combinations
thereof, then in any such case each share of Series A 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. In the event both
this Section 7 and Section 2 appear to apply to a transaction, this Section 7
will control. If the Company 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
reverse stock split, reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that was outstanding immediately prior to such
event; PROVIDED, FURTHER, that, if at any time after November 14, 1996, the
Company shall issue any shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be appropriately adjusted to reflect such
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reverse stock split, reclassification, or otherwise) so that each
share of Preferred Stock continues to be the economic equivalent of the amount
to which holders of shares of Series A Preferred Stock were entitled prior to
such subdivision or combination or consolidation.
Section 8. NO REDEMPTION; NO SINKING FUND. The shares of Series A
Preferred Stock shall not be redeemable by the Company or at the option of any
holder of Series A Preferred Stock. So long as any shares of Series A Preferred
Stock remain outstanding, the Company shall not purchase or otherwise acquire
for consideration any shares of stock ranking junior (either as to dividends or
upon dissolution or winding up) to the Series A Preferred Stock unless the
Company shall substantially concurrently also purchase or acquire for
consideration a proportionate number of shares of Series A Preferred Stock. The
Company may purchase or otherwise acquire outstanding shares of Series A
Preferred Stock in the open market or by offer to any holder or holders of
shares of Series A Preferred Stock. The shares of Series A Preferred Stock shall
not be subject to or entitled to the operation of a retirement or sinking fund.
Section 9. RANK. The Series A 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 Company's
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<PAGE> 8
Preferred Stock, unless the Board of Directors of the Company shall specifically
determine otherwise in fixing the powers, preferences and relative,
participating, optional and other special rights of the shares of such series
and the qualifications, limitations and restrictions thereof.
Section 10. FRACTIONAL SHARES. The Series A Preferred Stock shall be
issuable upon exercise of the Rights issued pursuant to the Agreement in whole
shares or in any fraction of a share that is one one-thousandths (1/1000ths) of
a share or any integral multiple of such fraction which shall entitle the
holder, in proportion to such holder's fractional shares, to receive dividends,
exercise voting rights, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock. In lieu of fractional
shares of Series A Preferred Stock that are not integral multiples of one
one-thousandth (1/1000th) of a share of Series A Preferred Stock, the Company
may, at its option, prior to the first issuance of a share or a fraction of a
share of Series A Preferred Stock, (i) issue scrip or warrants in registered
form (either represented by a certificate or uncertificated) or in bearer form
(represented by a certificate) evidencing such authorized fraction of a share of
Series A Preferred Stock which shall entitle the holder thereof to receive a
full one one-thousandth (1/1000th) of a share of Series A Preferred Stock upon
the surrender of such scrip or warrants aggregating a full one one-thousandth
(1/1000th) of a share of Series A Preferred Stock or (ii) make a cash payment as
provided in the Agreement for fractions of a share other than one
one-thousandths (1/1000th) of a share or any integral multiple thereof.
Section 11. AMENDMENT. The Certificate of Incorporation of the Company
shall not be amended in any manner which would materially alter or change the
powers, preferences, privileges or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of at least 66 2/3% of the outstanding shares of Series A Preferred Stock,
voting together as a single class.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed in its corporate name this 19th day of December,
1996.
ARBOR HEALTH CARE COMPANY
ATTEST:
By: /s/ Brad C. Roush By: /s/ P. Borra
------------------------------- ---------------------------------
Brad C. Roush, Secretary Pier C. Borra
Chairman of the Board, President
and Chief Executive Officer
-8-
<PAGE> 9
STATE OF OHIO
COUNTY OF ALLEN
The foregoing instrument was acknowledged before me this ____ day of
December, 1996, by Pier C. Borra, Chairman of the Board, President and Chief
Executive Officer, and Brad C. Roush, Secretary, of Arbor Health Care Company.
-----------------------------
NOTARY PUBLIC
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<PAGE> 1
Exhibit 3
EXHIBIT B
Form of Rights Certificate
Certificate No. R-_________ __________ Rights
NOT EXERCISABLE AFTER NOVEMBER 14, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID.
RIGHTS CERTIFICATE
ARBOR HEALTH CARE COMPANY
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 November 14, 1996, as the same may be amended
from time to time (the "Agreement"), between ARBOR HEALTH CARE COMPANY, a
Delaware corporation (the "Company"), and KEYBANK, NATIONAL ASSOCIATION, as
Rights Agent (the "Rights Agent"), unless the Rights evidenced hereby shall have
been previously redeemed or exchanged by the Company, 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., Eastern Standard Time, on the tenth
(10th) anniversary of the date of the Agreement (the "Expiration Date"), at the
offices of the Rights Agent (or at the office of its successor as Rights Agent),
one one-thousandth (1/1000th) of a fully paid non-assessable share of Series A
Junior Participating Cumulative Preferred Stock, par value $.01 per share of the
Company (the "Preferred Stock"), at a purchase price of $100.00 per one
one-thousandth (1/1000th) of a share of Preferred Stock (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 Rights Certificate (and the
number of one one-thousandths (1/1000ths) of a share of Preferred Stock which
may be purchased upon exercise hereof) set
<PAGE> 2
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of November 14, 1996, based on the Preferred Stock as constituted at
such date. As provided in the Agreement, the Purchase Price and the number and
kind of shares which may be purchased upon the exercise of the Rights evidenced
by this Rights Certificate are subject to modification and adjustment upon that
happening of certain events.
If the Rights evidenced by this Rights Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and the holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to exercise
or transfer any such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which 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 Rights Certificates. Copies of the Agreement are
on file at the principal executive offices of the Company and the office of the
Rights Agent and are available free of charge from the Company upon written
request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number and kind of
shares as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Rights Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right (the "Redemption Price") or (ii) may be exchanged by the Company
in whole or in part for shares of the Company's Common Stock, par value $.03 per
share, at a ratio of one (1) share of Common Stock per Right (the "Exchange
Ratio"). Both the Redemption Price and the Exchange Ratio are subject to
adjustment as provided in the Agreement.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth
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<PAGE> 3
(1/1000th) of a share of Preferred Stock); provided, however, that in lieu of
issuing fractional shares of Preferred Stock, the Company may, at its option,
issue scrip or warrants evidencing such authorized fraction of a share of
Preferred Stock and exchangeable for shares of Preferred Stock as provided in
the Agreement or make a cash payment as provided in the Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Stock 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
Agreement or herein be construed to confer upon the holder hereof, 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, 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 Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided in accordance with the
provisions of the Agreement.
If any term, provision, covenant or restriction of the Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
This Rights Certificate shall not be entitled to any benefit under the
Agreement or be valid, binding or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.
[Remainder of page intentionally left blank.]
-3-
<PAGE> 4
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated as of __________________, _____.
ARBOR HEALTH CARE COMPANY
By: ____________________________________
Pier C. Borra, Chairman of the
Board, President and
Chief Executive Officer
Attest:
- ------------------------------
Brad C. Roush, Secretary
[SEAL]
Countersignature:
This is one of the Rights Certificates referred to in the within-mentioned
Agreement.
KEY BANK, NATIONAL ASSOCIATION, as Rights Agent
By:______________________________
Authorized Signature
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<PAGE> 5
[Form of Reverse Side of Rights Certificate)
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer the Rights Certificate)
FOR VALUE RECEIVED, ______________________________ hereby sells
assigns and transfers unto ______________________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Rights Certificate, and the Rights evidenced thereby, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _______________________________ _________________ Attorney, to transfer
the within Rights 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 Agreement).
_____________________________
Signature
_________________________________________________________________
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<PAGE> 6
[Form of Reverse Side of Rights Certificate - continued]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Rights Certificate)
TO: ARBOR HEALTH CARE COMPANY
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the Preferred Stock
(or other securities) issuable upon the exercise of such Rights and requests
that certificates for such Preferred Stock (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 Rights
Certificate, a new Rights 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
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<PAGE> 7
[Form of Reverse Side of Rights 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
Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the 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 Rights
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 Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Agreement) and such Assignment
or Election to Purchase will not be honored.
-7-
<PAGE> 1
Exhibit 4
LEGEND FOR SHARES OF COMMON STOCK ISSUED BY THE COMPANY
AFTER THE RECORD DATE AND PRIOR TO THE DISTRIBUTION DATE
(OR UPON THE EARLIER REDEMPTION, EXCHANGE OR EXPIRATION
OF THE RIGHTS AS PROVIDED FOR IN THE AGREEMENT)
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF
TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN ARBOR
HEALTH CARE COMPANY (THE "COMPANY") AND KEYBANK, NATIONAL ASSOCIATION,
AS RIGHTS AGENT, DATED AS OF NOVEMBER 14, 1996 AS THE SAME MAY BE
AMENDED FROM TIME TO TIME (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH
ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. 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. THE COMPANY WILL MAIL TO THE HOLDER OF THIS
CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, RIGHTS THAT
WERE, ARE OR BECOME BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
ASSOCIATES OR AFFILIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID AND THE HOLDER OF ANY OF SUCH
RIGHTS (INCLUDING ANY SUBSEQUENT HOLDER) SHALL NOT HAVE ANY RIGHT TO
EXERCISE SUCH RIGHTS.
<PAGE> 1
Exhibit 5
For further information contact:
--------------------------------
Pier C. Borra
Chairman, President and
Chief Executive Officer
(419) 227-3000
Stefanie King
Edelman Financial
(212) 704-8291
FOR IMMEDIATE RELEASE
---------------------
ARBOR HEALTH CARE ADOPTS STOCKHOLDER RIGHTS AGREEMENT
Lima, OH, November 18, 1996 -- Arbor Health Care Company (Nasdaq: AHCC),
today announced that its Board of Directors has adopted a Stockholder
Rights Agreement to assure that all Arbor stockholders receive fair and
equal treatment in the event of a coercive takeover attempt of the Company.
Under the Plan, shareholders will receive one right for each outstanding
share of Arbor common stock. The rights will attach on November 21, 1996,
to stockholders of record on November 14, 1996. The rights will expire on
November 14, 2006.
Pier Borra, Chairman, President and CEO of Arbor stated, "This move by the
Board is not in response to any pending or anticipated takeover threat to
the Company, but rather as a measure to ensure fair and equal treatment for
all Arbor shareholders in the event that an unfriendly or unfair offer is
made for the Company. The rights protect Arbor stockholders by giving the
Board of Directors a mechanism by which the Directors could force a
potential acquiror to propose an adequate and fair price in any takeover
attempt. More than 1,700 other corporations, including our peer companies,
have issued Rights Plans similar to the one we have approved."
Since the rights may be redeemed by the Board of Directors under certain
circumstances, they will not interfere with any merger or other business
combination approved by the Board. The issuance of the rights does not in
any way dimminish the financial strength of Arbor or interfere with its
business plans. The issuance of the rights has no dilutive effect, will not
affect reported earnings per share, and will not change the way Arbor
common stock is currently traded.
The Rights Plan provides for the issuance of one right for each outstanding
share of Arbor common stock. The rights will become exercisable only if a
person or group hereafter acquires 15% or more of Arbor's outstanding
voting stock or announces a tender or exchange offer that would result in
ownership of 15% or more of Arbor's voting stock. Each right will entitle
stockholders to buy one one-thousandth (1/1000th) of a share of a new
series of junior participating cumulative preferred stock at an exercise
price of $100 per right, subject to antidilution adjustments. Each one
one-thousandth (1/1000th) of a share of this new preferred stock has the
dividend and voting rights of and is designed to be substantially
equivalent to one share of common stock. Arbor's Board of Directors may
redeem all rights for $0.01 per right at any time prior to the acquisition
of 15% or more of Arbor's stock by a person or group.
- more -
<PAGE> 2
Page 2:
In addition, the Rights Plan includes an exchange option whereby if a
person or group hereafter acquires 15% or more of the outstanding voting
stock, the Board of Directors may, at its option, exchange the rights in
whole or in part for shares of Arbor stock. Under this option, Arbor would
issue one share of common stock, or one one-thousandth (1/1000th) of a
share of the new preferred stock, for each right then exercisable. This
exchange would not apply to shares held by the person or group holding 15%
or more of Arbor's voting stock.
If, after the rights have become exercisable, Arbor decides to merge or
otherwise combine with another entity, or sells more than 50% of its assets
or earnings power, each right then outstanding will entitle its holder to
purchase for $100, subject to antidilution adjustments, a number of the
acquiring party's common stock having a market value of twice that amount.
Robertson, Stephens & Co. acted as the financial advisor for Arbor Health
Care Company in connection with the establishment of the Rights Plan.
Arbor Health Care Company provides subacute medical services, including
medical rehabilitation, ventilator weaning and respiratory therapy, and
complex medical services such as cardiac recovery, infusion therapy and
wound care, as well as basic health care services for geriatric or
chronically ill patients. The Company operates 29 licensed nursing centers
in five states with a total of 3,458 beds. Arbor's Pharmacy Division, with
operations in Ohio and Florida, serves approximately 23,900 beds, including
3,300 Arbor beds.
# # #
<PAGE> 1
Exhibit 6
TO OUR STOCKHOLDERS
Enclosed is a Press Release regarding a Stockholder Rights Agreement which was
approved on November 14, 1996, by Arbor Health Care Company's Board of
Directors.
YOU NEED NOT TAKE ANY ACTION TO RECEIVE THE RIGHTS NOR SHOULD YOU SEND IN MONEY
OR YOUR STOCK CERTIFICATE. The rights will be represented by the certificates of
Arbor Common Stock held by you or your broker and they will trade with the
Common Stock. Common Stock certificates issued after the Record Date will
contain a reference to the Stockholder Rights Agreement, but there is no need to
send in your certificates to have this reference added.
As explained in the enclosed Press Release, the rights WILL NOT be exercisable
unless certain future events occur. Separate rights certificates will be sent to
stockholders ONLY if a person or group acquires 15% or more of Arbor's
outstanding Common Stock or makes a tender offer for 15% or more of the
outstanding Common Stock. The rights will expire on November 14, 2006, the tenth
anniversary of the Board's action in declaring the rights distribution, unless
such date is extended or the rights are earlier redeemed by the Company.
In approving the Stockholder Rights Agreement, we have expressed our confidence
in the future of the Company and our determination that our stockholders be
given every opportunity to participate fully in that future.
Sincerely,
PIER C. BORRA
Chairman, President and
Chief Executive Officer
November 20, 1996
