Exhibit 1
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AGREEMENT
by and between
THE GRAND UNION COMPANY
and
AMERICAN STOCK TRANSFER & TRUST CO.,
as Rights Agent
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Dated as of
April 29, 1999
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NYFS03...:\18\50318\0005\1708\AGR9158J.21G
TABLE OF CONTENTS
Section Page
------- ----
1. Certain Definitions.................................................... 2
2. Appointment of Rights Agent............................................ 12
3. Issuance of Right Certificates......................................... 13
4. Form of Right Certificates............................................. 17
5. Countersignature and Registration...................................... 18
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates........................................ 19
7. Exercise of Rights; Exercise Price; Expiration Date
of Rights........................................................ 21
8. Cancellation and Destruction of Right Certificates..................... 26
9. Reservation and Availability of Shares of Preferred
Stock............................................................ 27
10. Preferred Stock Record Date............................................ 30
11. Adjustment of Exercise Price or Number of Shares....................... 31
12. Certification of Adjusted Exercise Price or Number of
Shares........................................................... 44
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power................................................. 45
14. Fractional Rights and Fractional Shares................................ 54
15. Rights of Action....................................................... 56
16. Agreement of Right Holders............................................. 56
17. Right Certificate Holder Not Deemed a Stockholder...................... 58
18. Concerning the Rights Agent............................................ 58
19. Merger or Consolidation of, or Change in Name of, the
Rights Agent..................................................... 60
i
Section Page
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20. Duties of Rights Agent................................................. 61
21. Change of Rights Agent................................................. 66
22. Issuance of New Right Certificates..................................... 68
23. Redemption............................................................. 69
24. Notice of Proposed Actions............................................. 70
25. Notices................................................................ 73
26. Supplements and Amendments............................................. 74
27. Exchange............................................................... 75
28. Successors............................................................. 77
29. Benefits of this Agreement............................................. 77
30. Delaware Contract...................................................... 78
31. Counterparts........................................................... 78
32. Descriptive Headings................................................... 78
33. Severability........................................................... 79
34. Determinations and Actions by the Board of Directors................... 79
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Certificate of Designations
of Series A Junior Preferred Stock
ii
AGREEMENT
Agreement, dated as of April 29, 1999, by and between The Grand
Union Company, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Co., a corporation organized under the laws of the State of New
York (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on April 29, 1999, the Board of Directors of the Company
authorized the issuance of, and declared a dividend payable in, one right (a
"Right") for each share of Common Stock, $0.01 par value per share, of the
Company outstanding as of the close of business on May 10, 1999 (the "Record
Date"), each such Right representing the right to purchase one one-thousandth of
a share of Series A Junior Preferred Stock of the Company ("Preferred Stock")
having the rights and preferences set forth in the form of Certificate of
Designations attached hereto as Exhibit C authorized by the Board of Directors
on April 29, 1999, upon the terms and subject to the conditions hereinafter set
forth; and
WHEREAS, the Board of Directors of the Company further authorized
the issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Distribution Date, the Expiration Date or the Final Expiration Date
(as such
terms are hereinafter defined); provided, however, that Rights may be issued
with respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with Section
22.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner
(as such term is hereinafter defined) of 15% or more of the Voting
Stock (as such term is hereinafter defined) of the Company then
outstanding; provided, that, an Acquiring Person shall not include
(i) an Exempt Person (as such term is hereinafter defined) or (ii)
any Person who or which, together with all Affiliates and Associates
of such Person, would be an Acquiring Person solely by reason of (A)
being the Beneficial Owner of shares of Voting Stock of the Company,
the Beneficial Ownership of which was acquired
2
by such Person (together with all Affiliates and Associates of such
Person) pursuant to any action or transaction or series of related
actions or transactions approved by the Board of Directors before
such Person (together with all Affiliates and Associates of such
Person) otherwise became an Acquiring Person or (B) a reduction in
the number of issued and outstanding shares of Voting Stock of the
Company pursuant to a transaction or a series of related
transactions approved by the Board of Directors of the Company;
provided, further, that in the event such Person described in this
clause (ii) does not become an Acquiring Person by reason of
subclause (A) or (B) of this clause (ii), such Person nonetheless
shall become an Acquiring Person in the event such Person (together
with all Affiliates and Associates of such Person) thereafter
acquires Beneficial Ownership of an additional 1% of the Voting
Stock of the Company, unless the acquisition of such additional
Voting Stock would not result in such Person becoming an Acquiring
Person by reason of subclause (A) or (B) of this clause (ii).
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise
be an "Acquiring Person"
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as defined pursuant to the foregoing provisions of this paragraph
(a) has become such inadvertently, and such Person divests as
promptly as practicable (as determined in good faith by the Board of
Directors) a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person" as defined
pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed an "Acquiring Person" for any
purposes of this Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), as in
effect on the date of this Agreement.
(c) "Associate" of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or of any Subsidiary
(as such term is hereinafter defined) thereof, or any Beneficial
Owner of 10% or more of any class of equity security thereof, (ii)
with respect to an association, any officer or director thereof or
of a Subsidiary thereof, (iii) with respect to a partnership, any
general partner thereof or any limited partner thereof who is,
directly or indirectly, the Beneficial Owner of a 10% ownership
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interest therein, (iv) with respect to a business trust, any officer
or trustee thereof or of any Subsidiary thereof, (v) with respect to
any other trust or an estate, any trustee, executor or similar
fiduciary or any Person who has a 15% or greater interest as a
beneficiary in the income from or principal of such trust or estate,
(vi) with respect to a natural person, any relative or spouse of
such person, or any relative of such spouse, who has the same home
as such person, and (vii) any Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities (and correlative terms shall have
correlative meanings):
(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Regulations
13D and 13G thereunder (or any comparable or successor law or
regulation), in each case as in effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right
is exercis-
5
able immediately or only after the passage of time or the
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, other rights (other than
the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," securities tendered
pursuant to a tender or exchange offer made by such Person or
any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or
(B) the right to vote, alone or in concert with others,
pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to
a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under
the Exchange Act and (2) is not at the time
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reportable by such Person on a Schedule 13D or Schedule 13G
report under the Exchange Act (or any comparable or successor
report), other than by reference to a proxy or consent
solicitation being conducted by such Person; or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except as described
in clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company; provided, however,
that for purposes of determining Beneficial Ownership of
securities under this Agreement, officers and directors of the
Company solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a
group for purposes of Section 13(d) the Exchange Act) and
shall not be deemed to own shares owned by another officer or
director of the Company.
7
Notwithstanding anything in this paragraph (d) to the
contrary, a Person engaged in the business of underwriting
securities shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any securities acquired or otherwise
beneficially owned in good faith in a firm commitment underwriting
until the expiration of forty (40) days after the date of the sale
of securities to the public pursuant to such firm commitment
underwriting.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York
City time, on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company
shall collectively mean the Common Stock, $0.01 par value, of the
Company. "Common Stock" when used with reference to any Person other
than the Company which shall be organized in corporate form shall
mean the capital stock or other equity security
8
with the greatest per share voting power of such Person. "Common
Stock" when used with reference to any Person other than the Company
which shall not be organized in corporate form shall mean units of
beneficial interest which shall represent the right to participate
in profits, losses, deductions and credits of such Person and which
shall be entitled to exercise the greatest voting power per unit of
such Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(i) "Exchange Act" shall have the meaning set forth in Section
1(b) hereof.
(j) "Exchange Consideration" shall have the meaning set forth
in Section 27 hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company or (iii) any employee benefit plan or
employee stock plan of the Company or any Subsidiary of the Company,
or any trust or other entity organized, appointed, established or
holding Voting Stock for or pursuant to the terms of any such plan.
(l) "Exercise Price" shall have the meaning set forth in
Section 4 hereof.
9
(m) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with
Section 11(b) hereof.
(o) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation or
other entity.
(q) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(r) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(s) "Right Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(t) "Spread" shall mean the excess of (1) the value of the
shares of Preferred Stock issuable upon the exercise of a Right in
accordance with Section 11(a)(ii) over (2) the Exercise Price in
effect at the time of determination of the Spread.
(u) "Stock Acquisition Date" shall mean the first date on
which there shall be a public announcement by the Company or an
Acquiring Person that an Acquiring Person has become such (which,
for purposes of this
10
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) or such earlier date
as a majority of the Board of Directors of the Company shall become
aware of the existence of an Acquiring Person.
(v) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are
beneficially owned, directly or indirectly, by such Person or by any
corporation or other entity that is otherwise controlled by such
Person.
(w) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
(x) "Trading Day" shall have the meaning set forth in Section
11(b) hereof.
(y) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security,
instrument or right, including the Rights, shares of the Common
Stock and shares of the Preferred Stock.
11
(z) "Voting Stock" shall mean (i) the Common Stock of the
Company and (ii) any other shares of capital stock of the Company
entitled to vote generally in the election of directors or entitled
to vote together with the Common Stock in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up. For purposes of this
Agreement, a stated percentage of the Voting Stock shall mean a
number of shares of the Voting Stock as shall equal in voting power
that stated percentage of the total voting power of the then
outstanding shares of Voting Stock in the election of a majority of
the Board of Directors of the Company or in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the Company
for purposes of applying the definitions contained in this Section 1 shall be
made by a majority of the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
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
12
hereof, shall prior to the Distribution Date be the holders of 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 such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable
thereafter), the Company or the Rights Agent shall send a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit A (the "Summary of
Rights"), by first class mail, postage prepaid, to each record holder of the
Common Stock as of the close of business on the Record Date, at the address of
such holder shown on the records of the Company.
(b) Until the close of business on the day which is the earlier of
(i) the tenth day after the Stock Acquisition Date or (ii) the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person would be the Beneficial Owner of 15% or more of the then outstanding
shares of Voting Stock of the Company (including any such date
13
which is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights shall be evidenced by the certificates for Common Stock
registered in the name of the holders of Common Stock (together with, in the
case of certificates for Common Stock outstanding as of the Record Date, the
Summary of Rights) and not by separate Right certificates and the record holders
of such certificates for Common Stock shall be the record holders of the Rights
represented thereby and (y) each Right shall be transferable only simultaneously
and together with the transfer of a share of Common Stock (subject to adjustment
as hereinafter provided). Until the Distribution Date (or, if earlier, the
Expiration Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Stock shall constitute the surrender for transfer of the
Right or Rights associated with the Common Stock evidenced thereby, whether or
not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock
that become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date.
Certificates for Common Stock (including, without limitation, certificates
issued upon original issuance, disposition from the Company's treasury or
transfer or
14
exchange of Common Stock) issued after the Record Date but prior to the earliest
of the Distribution Date, the Expiration Date, or the Final Expiration Date
shall have impressed, printed, written or stamped thereon or otherwise affixed
thereto the following legend:
This certificate also evidences and entitles the holder hereof to
the same number of Rights (subject to adjustment) as the number of shares
of Common Stock represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between The Grand Union Company
and American Stock Transfer & Trust Co. (the "Rights Agent"), dated as of
April 29, 1999, as it may be amended from time to time (the "Agreement"),
the terms of which are incorporated herein by reference and a copy of
which is on file at the principal executive offices of The Grand Union
Company. Under certain circumstances, as set forth in the Agreement, such
Rights shall be evidenced by separate certificates and shall no longer be
evidenced by this certificate. The Grand Union Company shall mail to the
registered holder of this certificate a copy of the Agreement without
charge within five (5) days after receipt of a written request therefor.
As provided in Section 7(e) of the Agreement, Rights issued to or
Beneficially Owned by Acquiring Persons or their Affiliates or Associates
(as such terms are defined in the Agreement) or any subsequent holder of
such Rights shall be null and void and may not be exercised by or
transferred to any Person.
With respect to such certificates containing the foregoing legend,
until the Distribution Date the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate, except as otherwise
provided herein, shall also constitute the transfer of the Rights associated
with the Common Stock represented thereby. In the
15
event that the Company purchases or otherwise acquires any Common Stock after
the Record Date but prior to the Distribution Date, any Rights associated with
such Common Stock shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Stock which
are no longer outstanding.
Notwithstanding this paragraph (c), 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.
(d) As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send),
by first class mail, postage prepaid, 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, a certificate
in the form provided by Section 4 hereof (a "Right Certificate"), evidencing one
Right (subject to adjustment as provided herein) for each share of Common Stock
so held. As of and after the Distribution Date, the Rights shall be evidenced
solely by Right Certificates and may be transferred by the transfer of the Right
Certificate as permitted hereby, separately and apart from any transfer of one
or more shares of Common Stock.
16
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, shall be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Common Stock or the Rights may from time to time be listed
or as the Company may deem appropriate to conform to usage or otherwise and as
are not inconsistent with the provisions of this Agreement. Subject to the
provisions of Section 22 hereof, Right Certificates evidencing Rights whenever
issued, (i) shall be dated as of the date of issuance of the Rights they
represent and (ii) subject to adjustment from time to time as provided herein,
on their face shall entitle the holders thereof to purchase such number of one
one-thousandths of a share (including fractional shares which are integral
multiples of one-thousandth of a share) of Preferred Stock as shall be set forth
thereon at the price per one one-thousandth of a share of Preferred Stock
payable upon exercise of a Right provided by Section 7(b) hereof, as the same
may from time to time be adjusted as provided herein (the "Exercise Price").
17
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf
of the Company by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. Each Right Certificate shall be countersigned by the Rights Agent
either manually or 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 any Right Certificate shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery of the
certificate by the Company, such Right 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 Right Certificates had not
ceased to be such officer of the Company. Any Right Certificate may be signed on
behalf of the Company by any person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer.
18
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or one or more offices designated as
the appropriate place for surrender of Right Certificates upon exercise or
transfer, and in such other locations as may be required by law, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Right Certificate, may be (i) transferred or (ii)
split up, combined or exchanged for one or more other Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
19
surrender the Right Certificate at the office of the Rights Agent designated for
the surrender of Right Certificates with the form of certificate and assignment
on the reverse side thereof duly endorsed (or enclose with such Right
Certificate a written instrument of transfer in form satisfactory to the Company
and the Rights Agent), duly executed by the registered holder thereof or his
attorney duly authorized in writing, and with such signature duly guaranteed.
Any registered holder desiring to split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate to be split up, combined or exchanged
at the office of the Rights Agent designated therefor. Thereupon, the Rights
Agent shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any Transfer Tax that
may be imposed in connection with any transfer, split up, combination or
exchange of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14 hereof,
at any time after the Distribution Date and prior to the Expiration Date, upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or
20
security reasonably satisfactory to them and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, or upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company shall cause a new Right
Certificate of like tenor to be issued and delivered to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Sections 7(e) and 27(b) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in New York, New York, together with payment of the Exercise
Price for each Right exercised, subject to adjustment as hereinafter provided,
at or prior to the Close of Business on the earlier of (i) April 29, 2001 (the
"Final Expiration Date") or (ii) the date
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on which the Rights are redeemed as provided in Section 23 hereof or the date on
which the Rights are exchanged as provided in Section 27 hereof (such earlier
date being herein referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $35.00 for each one
one-thousandth (1/1,000) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of one one-thousandths of
a share of Preferred Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof. The Exercise Price shall be payable in lawful
money of the United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase and certificate duly executed, accompanied by payment by certified
check, cashier's check, bank draft or money order payable to the Company or the
Rights Agent of the Exercise Price for the shares of Preferred Stock to be
purchased and an amount equal to any applicable Transfer Tax required to be paid
by the holder of the Right Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Stock of the Company one or more certificates
22
representing the number of shares of Preferred Stock to be so purchased, and the
Company hereby authorizes and directs such transfer agent to comply with all
such requests, (ii) as provided in Section 14(b), at the election of the
Company, cause depositary receipts to be issued in lieu of fractional shares of
Preferred Stock, (iii) if the election provided for in the immediately preceding
clause (ii) has not been made, requisition from the Company the amount of cash
to be paid in lieu of the issuance of fractional shares (other than fractions
that are integral multiples of one one-thousandth of a share) in accordance with
Section 14(b) hereof, (iv) after receipt of such Preferred Stock certificates
and, if applicable, depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (v) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; provided, however, that in the case of a
purchase of securities, other than Preferred Stock, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses (i)
through (v) of this Section 7(c). Notwithstanding the foregoing provisions of
this Section 7(c), the Company may suspend the issuance of shares of Preferred
Stock
23
and other securities upon exercise of a Right for a reasonable period, not in
excess of ninety (90) days, during which the Company seeks to register under the
Securities Act of 1933, as amended (the "Act"), and any applicable securities
law of any other jurisdiction, the shares of Preferred Stock or other securities
to be issued pursuant to the Rights; provided, however, that nothing contained
in this Section 7(c) shall relieve the Company of its obligations under Section
9(d) hereof. Upon 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.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or his
assign, subject to the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Agreement to the contrary,
from and after the time (the "invalidation time") when any Person first becomes
an Acquiring Person, any Rights that are Beneficially Owned by (x) such
Acquiring Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or
24
Affiliate) who becomes a transferee after the invalidation time or (z) a
transferee of such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the invalidation time
pursuant to either (I) a transfer from the Acquiring Person (or any such
Associate or Affiliate) to holders of its equity securities or to any Person
with whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of Directors
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z) above,
shall be null and void without any further action and any holder of such Rights
shall thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) are complied with, but shall
have no liability to any holder of Right Certificates or any other Person as a
result of its failure to make any determination with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued pursuant to Section 3 hereof that represents Rights
beneficially owned by an Acquiring Person or any Affiliate or Associate thereof
whose Rights would be null and
25
void pursuant to the provisions of this Section 7(e); no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person (or
an Affiliate or Associate of such Acquiring Person) whose Rights would be null
and void pursuant to the provisions of this Section 7(e) or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person (or an Associate or Affiliate of such Acquiring Person)
whose Rights would be void pursuant to the provisions of this Section 7(e) shall
be cancelled.
(f) 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 a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate following the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose
26
of exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall
be cancelled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall cancel and retire, any Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred
Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock held
in its treasury, such number of shares of Preferred Stock as will from time to
time be sufficient to permit the exercise in full of all outstanding Rights.
27
(b) The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares of Preferred Stock issued
or reserved for issuance in accordance with this Agreement to be listed, upon
official notice of issuance, upon the principal national securities exchange, if
any, upon which the Common Stock is listed or, if the principal market for the
Common Stock is not on any national securities exchange, to be eligible for
quotation in the National Association of Securities Dealers' Automated Quotation
System or any successor thereto or other comparable quotation system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Act, with respect to the
shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
28
become effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (a) the date as of
which the Rights are no longer exercisable for Preferred Stock, and (b) the
earlier of the Expiration Date and the Final Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days, the
issuance of shares of Preferred Stock upon exercise of a Right in order to
prepare and file a registration statement under the Act and permit it to become
effective. The Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained and until a registration statement under the Act (if
required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Preferred Stock issued or delivered upon the exercise of Rights. The Company
shall not,
29
however, be required to pay any Transfer Tax which may be payable in respect of
any transfer or delivery of a Right Certificate to a Person other than, or the
issuance or delivery of certificates for Preferred Stock upon exercise of Rights
in a name other than that of, the registered holder of the Right Certificate,
and the Company shall not be required to issue or deliver a Right Certificate or
certificate for Preferred Stock to a Person other than such registered holder
until any such Transfer Tax shall have been paid (any such Transfer Tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Stock represented thereby on, and such certificate shall be dated
as of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise 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 transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated as
30
of, the next succeeding Business Day on which the Preferred Stock transfer books
of the Company are open.
Section 11. Adjustment of Exercise Price or Number of Shares. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare or pay any dividend on Common
Stock payable in shares of Common Stock, (B) subdivide or split the
outstanding shares of Common Stock into a greater number of shares
or (C) combine or consolidate the outstanding shares of Common Stock
into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then and in each such event the
number of one one-thousandth of a share of Preferred Stock issuable
upon the Exercise of a Right after the record date for such event
(if one shall have been established or, if not, after the date of
such event) shall be the number of one one-thousandth of a share of
Preferred Stock issuable immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately prior to such event and the
denominator of which is the number
31
of shares of Common Stock outstanding immediately after such event
and the Exercise Price to be in effect after the record date for
such event (if one shall have been established or, if not, after the
date of such event) shall be determined by multiplying the Exercise
Price in effect immediately prior to such event by such fraction. If
an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, 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 Section 27 of this Agreement, in the event
that any Person shall become an Acquiring Person, then, except as
otherwise provided in this Section 11, each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the
right to receive upon exercise of such Right in accordance with the
terms of this Agreement and payment of the Exercise Price, such
number of one one-thousandth of a share of Preferred Stock as shall
equal the result obtained by (1) multiplying the then current
Exercise Price by the number of one one-thousandth of a share of
Preferred Stock for which a Right is then exercisable
32
and dividing the product by (2) 50% of the per share Fair Market
Value of the Preferred Stock (determined pursuant to Section 11(b)
hereof) on the date of such occurrence.
(iii) In the event that the Company does not have available
sufficient authorized but unissued Preferred Stock to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize and reserve for issuance such number of
additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights from
time to time outstanding and, if necessary, shall use its best
efforts to obtain stockholder approval thereof. In lieu of issuing
shares of Preferred Stock in accordance with the foregoing
subparagraph (ii), the Company may, if the Board of Directors
determines that such action is necessary or appropriate and not
contrary to the interests of holders of Rights, elect to issue or
pay, upon the exercise of the Rights, cash, property, shares of
Preferred or Common Stock, or any combination thereof, having an
aggregate Fair Market Value equal to the Fair Market Value of the
shares of Preferred Stock
33
which otherwise would have been issuable pursuant to Section
11(a)(ii), which Fair Market Value shall be determined by an
investment banking firm selected by the Board of Directors. For
purposes of the preceding sentence, the Fair Market Value of the
Preferred Stock shall be as determined pursuant to Section 11(b).
Subject to Section 23 hereof, any such election by the Board of
Directors of the Company must be made and publicly announced within
thirty (30) days after the date on which the event described in
Section 11(a)(ii) occurs.
(b) For the purpose of this Agreement, the "Fair Market Value" of any share of
Preferred Stock, Common Stock or any other stock or any Right or other security
or any other property on any date shall be determined as provided in this
Section 11(b). In the case of a publicly-traded stock or other security, the
Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Fair Market Value per share of any share of Common Stock is determined during a
period which includes any date that is within thirty (30) Trading Days after (i)
the ex-dividend date
34
for a dividend or distribution on such stock payable in shares of Common Stock
or securities convertible into shares of Common Stock, or (ii) the effective
date of any subdivision, split, combination, consolidation, reverse stock split
or reclassification of such stock, then, and in each such case, the Fair Market
Value shall be appropriately adjusted by the Board of Directors of the Company
to take into account ex-dividend or post-effective date trading. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way (in either case, as reported in the applicable transaction reporting
system with respect to securities listed or admitted to trading on the Nasdaq
National Market), or, if the securities are not listed or admitted to trading on
the Nasdaq National Market, as reported in the applicable transaction reporting
system with respect to securities listed on the principal national securities
exchange or Nasdaq market on which such security is listed or admitted to
trading; or, if not listed or admitted to trading on any national securities
exchange or Nasdaq market, the last quoted price (or, if not so quoted, the
average of the high bid and low asked prices) in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use; or,
35
if no bids for such security are quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in such security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange or Nasdaq market on which such security is listed or
admitted to trading is open for the transaction of business or, if such security
is not listed or admitted to trading on any national securities exchange or
Nasdaq market, a Business Day. If a security is not publicly held or not so
listed or traded, "Fair Market Value" shall mean the fair value per share of
stock or per other unit of such other security, as determined by an independent
investment banking firm experienced in the valuation of securities selected in
good faith by the Board of Directors of the Company, or, if no such investment
banking firm is, in the good faith judgment of the Board of Directors, available
to make such determination, in good faith by the Board of Directors of the
Company; provided, however, that for purposes of making the adjustment provided
for by Section 11(a)(ii) hereof, the Fair Market Value of a share of Preferred
Stock shall not be less than 100% of the product of the Fair Market Value of a
share of Common Stock multiplied by the higher of the then Dividend Multiple or
Vote Multiple applicable to the Preferred Stock (as defined in the Certificate
of Designations
36
relating to the Preferred Stock) and shall not exceed 105% of the product of the
then Fair Market Value of a share of Common Stock multiplied by the higher of
the then Dividend Multiple or Vote Multiple applicable to the Preferred Stock.
In the case of property other than securities, the "Fair Market Value" thereof
shall be determined in good faith by the Board of Directors of the Company based
upon such appraisals or valuation reports of such independent experts as the
Board of Directors of the Company shall in good faith determine to be
appropriate in accordance with good business practices and the interests of the
holders of Rights. Any such determination of Fair Market Value shall be
described in a statement filed with the Rights Agent and shall be binding upon
the Rights Agent.
(c) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within forty-five (45) calendar days after such record date) to
subscribe for or purchase Common Stock or securities convertible into Common
Stock at a price per share (or having a conversion price per share, if a
security convertible into Common Stock) less than the then current per share
Fair Market Value of the Common Stock on such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
37
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current Fair Market Value
and the denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Shares of Common Stock owned by or held for the account 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 so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect if such
record date had not been fixed.
38
(d) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend not in excess of 150% of the previous
regular quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section 11(c)
hereof), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Fair Market Value
of the shares of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one share of Common Stock
and the denominator of which shall be such current Fair Market Value of the
shares of Common Stock. Such adjustment shall be made successively whenever such
a record date is fixed and in the event that such distribution is not so made,
the
39
Exercise Price shall again be adjusted to be the Exercise Price which would then
be in effect if such record date had not been fixed.
(e) Unless the Company shall have exercised its election as provided
in Section 11(f), upon each adjustment of the Exercise Price as a result of the
calculations made in Section (c) and (d), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of one one-thousandths of
a share of Preferred Stock obtained by (i) multiplying (x) the number of one
one-thousandths of a share of Preferred Stock covered by a Right immediately
prior to the adjustment pursuant to this Section 11(e) by (y) the Exercise Price
in effect immediately prior to such adjustment of the Exercise Price and (ii)
dividing the product so obtained by the Exercise Price in effect immediately
after such adjustment of the Exercise Price.
(f) The Company may elect on or after the date of any adjustment of
the Exercise Price pursuant to Sections 11(c) and 11(d) to adjust the number of
Rights in substitution for any adjustment pursuant to Section 11(e) 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
40
number of one one-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If the Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(e), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights, if any, to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon
41
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(g) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-thousandth of a share, as the case may
be.
(h) Irrespective of any adjustment or change in the Exercise Price
or the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Exercise Price and the number of shares to be issued upon exercise
of the Rights as in the initial Right Certificates issued hereunder but,
nevertheless, shall represent the Rights as so adjusted.
(i) Before taking any action that would cause an adjustment reducing
the purchase price per whole share of Preferred Stock upon exercise of the
Rights below the then par value, if any, of the shares of Preferred Stock, the
Company shall use its best efforts to take any corporate action which may, in
the opinion of its counsel, be necessary in order that
42
the Company may validly and legally issue fully paid and non-assessable shares
of such Preferred Stock at such adjusted purchase price per share.
(j) Anything in this Section 11 to the contrary notwithstanding, in
the event of any reclassification of stock of the Company or any
recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be acquired
upon exercise of the Rights, and such adjustments in the Exercise Price
therefor, in addition to those adjustments expressly required by the other
paragraphs of this Section 11, as the Board of Directors of the Company shall
determine to be necessary or appropriate in order for the holders of the Rights
in such event to be treated equitably and in accordance with the purpose and
intent of this Agreement or in order that any such event shall not, but for such
adjustment, in the opinion of counsel to the Company, result in the stockholders
of the Company being subject to any United States federal income tax liability
by reason thereof.
(k) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preferred
Stock, thereafter the Exercise Price and the number of such other shares so
43
receivable upon exercise of a Right shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
11(c), 11(e), 11(f) and 11(j) hereof, as applicable, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
Section 12. Certification of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11, 13, 23 or 27,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to 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 Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11, 13 or 23(c) of this Agreement shall be effective as of
the date of the event giving rise to such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have
44
knowledge of any adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, at any time after the time that any Person
becomes an Acquiring Person, (x) the Company shall, directly or indirectly,
consolidate with, or merge with and into, any other Person or Persons (other
than an Exempt Person) and the Company shall not be the surviving or continuing
corporation of such consolidation or merger, or (y) any Person or Persons (other
than an Exempt Person) shall, directly or indirectly, consolidate with, or merge
with and into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person (other than an Exempt Person) or of the Company or cash or any other
property, or (z) the Company or one or more of its Subsidiaries shall, directly
or indirectly, sell or otherwise transfer to any other Person, in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole), then, on
the first occurrence of any such event, proper provision shall be
45
made so that (i) each holder of record of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Exercise Price multiplied by the
number of one one-thousandths of a share of Preferred Stock for which a Right is
then exercisable, in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall equal the result obtained by (1) multiplying
the then current Exercise Price by the number of one one-thousandths of a share
of Preferred Stock for which a Right is then exercisable and dividing that
product by (2) 50% of the then per share Fair Market Value of the Common Stock
of the Principal Party on the date of the consummation, merger, sale or
transfer; provided, however, that the Exercise Price (as adjusted) and the
number of shares of Common Stock of such Principal Party so receivable upon
exercise of a Right shall be subject to further adjustment as appropriate in
accordance with Section 11 hereof to reflect any events occurring in respect of
the Common Stock of such Principal Party after the occurrence of such
consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume,
46
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
for all purposes of this Agreement shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with the provisions of Section 9 hereof applicable to the
reservation of Preferred Stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
47
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which shares of Common Stock of the Company are changed or
otherwise exchanged or converted in such merger or consolidation, or, if there
is more than one such issuer, the issuer of the Common Stock of which has the
greatest market value or (B) if no securities are so issued, (x) the Person that
is the other party to the merger or consolidation and that survives such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest market value or (y) if the Person that is
the other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is
48
the party receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each Person
that is a party to such transaction or transactions 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 be determined, whichever
of such Persons as is the issuer of Common Stock having the greatest market
value of shares outstanding; 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, then (i) if such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, the term
"Principal Party" shall refer to such other Person, or (2) if such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Stocks
of all of which are and have been so registered, the term "Principal Party"
shall refer to whichever of such Persons is the issuer of the Common Stock
having the greatest market value of shares outstanding, or (3) if such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in clauses (1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the
49
joint venture was a Subsidiary of both or all of such joint venturers, and the
Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total
of such interests.
(c) The Company shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section 13(a) unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such consolidation, merger or sale
or transfer of assets or earning power, assume this Agreement in accordance with
Section 13(a) hereof and that all rights of first refusal or preemptive rights
in respect of the issuance of shares of Common Stock of the Principal Party upon
exercise of outstanding Rights have been waived and that such transaction shall
not result in a default by the Principal Party under this Agreement, and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets or earning power referred to in Section
13(a) hereof, the Principal Party will:
50
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act. In the event that any of the transactions
described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof,
the Rights which
51
have not theretofore been exercised shall, subject to the provisions
of Section 7(e) hereof, thereafter be exercisable in the manner
described in Section 13(a); and
(iv) 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.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such
52
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time
after any Person becomes an Acquiring Person, enter into any transaction of the
type described in clauses (x) through (z) of Section 13(a) hereof if (i) at the
time of or immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or nature
of
53
organization of the Principal Party would preclude or limit the
exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence
fractional Rights (i.e., Rights to acquire less than one one-thousandth of a
share of Preferred Stock), unless such fractional Rights result from a
transaction referred to in Section 11(a)(i) hereof. If the Company shall
determine not to issue such fractional Rights, then, in lieu of such fractional
Rights, there shall be paid to the holders of record of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the Fair Market Value of a whole
Right.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions that are
integral multiples of one one-thousandth of a share). In lieu of issuing
fractions of shares of Preferred Stock, the Company may, at its election, issue
depositary receipts evidencing fractions of shares pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided, that
such
54
agreement shall provide that the holders of such depositary receipts shall have
all of the rights, privileges and preferences to which they would be entitled as
owners of the Preferred Stock. With respect to fractional shares that are not
integral multiples of one one-thousandth of a share, if the Company does not
issue such fractional shares or depositary receipts in lieu thereof, there shall
be paid to the holders of record of Right Certificates at the time such Right
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent in Section
18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of
55
the Common Stock), may, in 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 right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together, as applicable, with the Summary of Rights), which
certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Right Certificates, and each
56
Right shall be transferable only simultaneously and together
with the transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock or any
other securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any
57
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
to be done by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the cost and expenses of defending
against any claim of liability relating to the Rights or this Agreement.
58
(b) The Rights Agent shall be protected against, and shall incur no
liability for or in respect of, any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation of, or Change in Name of, the
Rights Agent.
(a) 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 paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
59
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 Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; in case at
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the
60
Company and the holders of Right Certificates by their acceptance thereof shall
be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President
or any Vice President and by the Treasurer or the Secretary or an Assistant
Secretary of the Company and delivered to the Rights Agent. Any such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect, consequential or
61
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or
62
warranty as to the authorization or reservation of any shares of Preferred Stock
to be issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Preferred Stock will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of the Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Treasurer or
the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on and/or after which such action
63
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually receives such
application unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for
64
any act, default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. If the Rights Agent shall resign or be removed or shall
65
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. Notwithstanding the foregoing provisions of this Section 21,
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 thirty (30) days after such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the incumbent Rights
Agent or the holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a)
a corporation organized and doing business under the laws of the United States
or of any state thereof, in good standing, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination in the conduct of its corporate trust or stock
transfer business by federal or state authorities and which has at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$5,000,000 or (b) an Affiliate controlled by a corporation described in clause
(a) of this sentence. After
66
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed, but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the Rights
Agent, the Company shall have the authority to act as the Rights Agent until a
successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be
67
approved by its Board of Directors to reflect any adjustment or change in the
Exercise Price per share and the number or kind or class of shares of stock or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Voting Stock following the Distribution Date and
prior to the Expiration Date, the Company may with respect to shares of Voting
Stock so issued or sold pursuant to (i) the exercise of stock options, (ii)
under any employee plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not less than all of the then
outstanding Rights, at any time prior to the Stock Acquisition Date at a
redemption price of $.001 per Right, subject to adjustments as provided in
subsection (c) below (the "Redemption Price").
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the
68
time so designated by action of the Board of Directors ordering the redemption
of the Rights and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within ten (10) days after the effective time of
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price may
be paid in cash to each Rights holder or by the issuance of shares (and, at the
Company's election pursuant to Section 14(b) hereof, cash or depositary receipts
in lieu of fractions of shares other than fractions which are integral multiples
of one one-thousandth of a share) of Preferred Stock or Common Stock having a
Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of
this Agreement (A) pay any dividend on Common Stock in shares of Common Stock,
(B) subdivide or split the outstanding
69
shares of Common Stock into a greater number of shares or (C) combine or
consolidate the outstanding shares of Common Stock into a smaller number of
shares or effect a reverse split of the outstanding shares of Common Stock,
then, and in each such event, the Redemption Price shall be appropriately
adjusted to reflect the foregoing.
Section 24. Notice of Proposed Actions.
(a) In case the Company, after the Distribution Date,
shall propose (i) to effect any of the transactions referred to in Section
11(a)(i) or to pay any dividend to the holders of record of its shares of Common
Stock payable in shares of capital stock of any class or to make any other
distribution to the holders of record of its Common Stock (other than a regular
periodic cash dividend at a rate not in excess of 150% of the rate of the last
cash dividend theretofore paid), or (ii) to offer to the holders of record of
its Common Stock options, warrants, or other rights to subscribe for or to
purchase shares of Common Stock (including any security convertible into or
exchangeable for Common Stock) or shares of stock of any class or any other
securities, options, warrants, convertible or exchangeable securities or other
rights, or (iii) to effect any reclassification of its Preferred Stock or Common
Stock or any recapitalization or reorganization of the Company, or (iv) to
effect any consolidation or merger with or into, or to effect any
70
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of record of a Right Certificate, in accordance with
Section 25, notice of such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section 11(a)(i) or such
dividend or distribution, or the date on which such reclas- sification,
recapitalization, reorganization, consolidation, merger, sale or transfer of
assets, liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
Stock 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 (i) or (ii) above at
least ten (10) days prior to the record date for determining holders of record
of the Preferred Stock for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock or Preferred Stock, whichever shall be the earlier. The failure to
give notice required by
71
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.
(b) In case the event referred to in Section 11(a)(ii) shall occur,
then the Company shall as soon as practicable thereafter, in accordance with
Section 25 hereof, give to each holder of a Right notice of the occurrence of
such event, which notice shall describe the event and the consequences of the
event to holders of Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of record of any Right
Certificate or Right 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:
The Grand Union Company
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx, Xxx Xxxxxx 00000
Attn: General Counsel
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 record of any
Right Certificate or Right 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:
72
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Vice President, Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Right Certificate or
Right shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. Supplements and Amendments. For as long as the Rights
are then redeemable and except as provided in the last sentence of this Section
26, the Company may in its sole and absolute discretion, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time when
the Rights are not then redeemable and except as provided in the last sentence
of this Section 26, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Agreement without the approval of any
holders of Right Certificates (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein or (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable,
provided, that no such supplement or amendment pursuant to this clause (iii)
shall
73
materially adversely affect the interest of the holders of Right Certificates.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made which changes the Redemption Price.
Section 27. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the provisions of
Section 7(e) hereof) by exchanging for each such Right a number of shares of
Common Stock having an aggregate Fair Market Value on the date such Person
becomes an Acquiring Person equal to the Spread, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date such Person becomes an Acquiring Person (such amount per Right being
hereinafter referred to as the "Exchange Consideration"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
74
more of the Voting Stock then outstanding. From and after the occurrence of an
event specified in Section 13(a) hereof, any Rights that theretofore have not
been exchanged pursuant to this Section 27(a) shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged pursuant to this
Section 27(a).
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 27 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 the Exchange Consideration. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be
75
effected pro rata based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section 7(e) hereof) held by
each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 27, the
Company shall substitute to the extent of such insufficiency, for each share of
Common Stock that would otherwise be issuable upon exchange of a Right, a number
of shares of Preferred Stock or fractions thereof having an aggregate Fair
Market Value equal to the Fair Market Value of one share of Common Stock as of
the date any Person becomes an Acquiring Person.
(d) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional shares.
In lieu of such fractional shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole share of Common Stock. For the
purposes of this paragraph (d), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common Stock for the
Trading Day
76
immediately prior to the date of exchange pursuant to this Section 27.
Section 28. Successors. All of 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 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the holders of Common Stock in their capacity as
holders of the Rights) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of record of the Right Certificates
(and, prior to the Distribution Date, the holders of Common Stock in their
capacity as holders of the Rights).
Section 30. Delaware Contract. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed and enforced in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.
77
Section 31. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 33. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 34. Determinations and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to 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
78
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.
79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
THE GRAND UNION COMPANY
By /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
80
EXHIBIT A
AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED
TO BELOW), RIGHTS ISSUED TO OR BENEFICIALLY OWNED
BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT
BE EXERCISED OR TRANSFERRED TO ANY PERSON
THE GRAND UNION COMPANY
SUMMARY OF RIGHTS TO PURCHASE
SERIES A JUNIOR PREFERRED STOCK
On April 29, 1999, the Board of Directors of The Grand Union Company
(the "Company") declared a dividend distribution of one Preferred Stock Purchase
Right for each outstanding share of Common Stock, par value $.01 per share (the
"Common Stock"), of the Company. The distribution is payable as of May 10, 1999
to stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one-thousandth (1/1,000) of a share of
preferred stock of the Company, designated as Series A Junior Preferred Stock
(the "Preferred Stock") at a price of $35.00 per one-thousandth (1/1,000) of a
share ("Exercise Price"). The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and American
Stock Transfer & Trust Co., as Rights Agent (the "Rights Agent").
As discussed below, initially the Rights will not be exercisable,
certificates will not be sent to stockholders and the Rights automatically will
trade with the Common Stock.
The Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 15% or more of
the outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or
NYFS03...:\18\50318\0005\1708\EXH9158L.56D
exchange offer the consummation of which would result in the ownership of 15% or
more of the Company's outstanding voting stock (even if no shares are actually
purchased pursuant to such offer); prior thereto, the Rights would not be
exercisable, would not be represented by a separate certificate, and would not
be transferable apart from the Company's Common Stock, but will instead be
evidenced, with respect to any of the Common Stock certificates outstanding as
of May 10, 1999, by such Common Stock certificate with a copy of this Summary of
Rights attached thereto. An Acquiring Person does not include (A) the Company,
(B) any subsidiary of the Company, (C) any employee benefit plan or employee
stock plan of the Company or of any subsidiary of the Company, or any trust or
other entity organized, appointed, established or holding voting stock for or
pursuant to the terms of any such plan or (D) any person or group of affiliated
or associated persons whose ownership of 15% or more of the shares of voting
stock of the Company then outstanding results solely from (i) any action or
transaction or transactions approved by the Board of Directors before such
person or group became an Acquiring Person or (ii) a reduction in the number of
issued and outstanding shares of voting stock of the Company pursuant to a
transaction or transactions approved by the Board of Directors (provided that
any person or group that does not become an Acquiring Person by reason of clause
(i) or (ii) above shall become an Acquiring Person upon acquisition of an
additional 1% of the Company's voting stock unless such acquisition of
additional voting stock will not result in such person or group becoming an
Acquiring Person by reason of such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Stock certificates issued after May 10,
1999 will contain a legend incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), the surrender for transfer of any of the Common Stock certificates
outstanding as of May 10, 1999, with or without a copy of this Summary of Rights
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
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such
2
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on April 29, 2001, unless earlier
redeemed or exchanged by the Company as described below.
The Preferred Stock is nonredeemable and, unless otherwise provided
in connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock. The Preferred
Stock may not be issued except upon exercise of Rights. Each share of Preferred
Stock will be entitled to receive when, as and if declared, a quarterly dividend
in an amount equal to the greater of $0.001 per share or 1,000 times the cash
dividends declared on the Company's Common Stock. In addition, the holders of
the Preferred Stock are entitled to receive 1,000 times any non-cash dividends
(other than dividends payable in equity securities) declared on the Common
Stock, in like kind. In the event of the liquidation of the Company, the holders
of Preferred Stock will be entitled to receive, for each share of Preferred
Stock, a payment in an amount equal to the greater of $0.001 or 1,000 times the
payment made per share of Common Stock. Each share of Preferred Stock will have
1,000 votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which Common Stock is exchanged, each
share of Preferred Stock will be entitled to receive 1,000 times the amount
received per share of Common Stock. The rights of Preferred Stock as to
dividends, liquidation and voting are protected by anti-dilution provisions.
The number of shares of Preferred Stock issuable upon exercise of
the Rights and Exercise Price of the Rights are subject to certain adjustments
from time to time in the event of a stock dividend on, or a subdivision or
combination of, the Common Stock. The Exercise Price for the Rights also is
subject to adjustment in the event of extraordinary distributions of cash or
other property to holders of Common Stock.
Unless the Rights are earlier redeemed or exchanged, in the event
that, after the time that a Person becomes an Acquiring Person, the Company were
to be acquired in a merger or other business combination (in which any shares of
Common Stock are changed into or exchanged for
3
other securities or assets) or more than 50% of the assets or earning power of
the Company and its subsidiaries (taken as a whole) were to be sold or
transferred in one or a series of related transactions, the Rights Agreement
provides that proper provision will be made so that each holder of record of a
Right will from and after such date have the right to receive, upon payment of
the Exercise Price, that number of shares of common stock of the acquiring
company having a market value at the time of such transaction equal to two times
the Exercise Price.
In addition, unless the Rights are earlier redeemed or exchanged, in
the event that a person or group becomes an Acquiring Person, the Rights
Agreement provides that proper provisions will be made so that each holder of
record of a Right, other than the Acquiring Person (whose Rights will thereupon
become null and void), will thereafter have the right to receive, upon payment
of the Exercise Price, that number of shares of the Preferred Stock having a
market value at the time of the transaction equal to two times the Exercise
Price (such market value to be determined with reference to the market value of
the Company's Common Stock as provided in the Rights Agreement).
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding voting stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, for that number of shares of the Company's Common
Stock having a fair market value on the first date such person or group became
an Acquiring Person equal to the excess of (i) the value of the shares of
Preferred Stock issuable upon the exercise of the Rights in the event of such
acquisition over (ii) the exercise price of the Rights, in each case as
adjusted.
Fractions of shares of Preferred Stock (other than fractions which
are integral multiples of one-thousandth of a share) may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares which are not integral multiples of one-thousandth of
a share.
At any time prior to the time there has been a public announcement
that a person has become an Acquiring Person, the Company may redeem the Rights
in whole, but not in part, at a price of $.001 per Right (the "Redemption
4
Price"). Immediately upon the effective time of the action of the Board of
Directors of the Company authorizing 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.
For as long as the Rights are then redeemable, the Company may,
except with respect to the Redemption Price, amend the Rights in any manner,
including an amendment to extend the time period in which the Rights may be
redeemed. At any time when the Rights are not then redeemable, the Company may
amend the Rights in any manner that does not materially adversely affect the
interests of holders of the Rights as such.
Until a Right is exercised, the holder, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
April 29, 1999. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement
which is incorporated in this summary description herein by reference.
5
EXHIBIT B
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER APRIL 29, 2001 OR EARLIER IF EXCHANGED OR REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY AND
UNDER CERTAIN OTHER CIRCUMSTANCES, AT $.001 PER RIGHT (SUBJECT TO
ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE RIGHTS
AGREEMENT. AS PROVIDED IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW),
RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID
AND MAY NOT BE EXERCISED OR TRANSFERRED TO ANY PERSON.
Right Certificate
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 April 29, 1999 (the "Rights Agreement") between The Grand
Union Company, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Co., a banking corporation organized under the laws of the
State of New York (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York time) on April 29, 2001 at the office of the
NYFS03...:\18\50318\0005\1708\EXH9158M.07B
Rights Agent designated in the Rights Agreement for such purpose, or its
successor as Rights Agent, in New York, New York, one one-thousandth (1/1,000)
of a fully paid nonassessable share of Series A Junior Preferred Stock (the
"Preferred Stock") of the Company at a purchase price of $35.00, as the same may
from time to time be adjusted in accordance with the Rights Agreement (the
"Exercise Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the
number of shares of Preferred Stock which may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events and, upon the happening of
certain events, securities other than shares of Preferred Stock, or other
property, may be acquired upon exercise of the Rights evidenced by this Right
Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full
2
description of the rights, limitations of rights, obligations, duties and
immunities of the Rights Agent, the Company and the holders of record of Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive office of the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
of record to purchase a like aggregate number of shares of Preferred Stock as
the Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $.001 per Right.
No fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-
3
thousandth (1/1,000) of a share) are required to be issued upon the exercise of
any Right or Rights evidenced hereby, and in lieu thereof the Company may cause
depositary receipts to be issued and/or a cash payment may be made, as provided
in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of 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 Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at meeting
thereof, or to give or withhold consent to any corporate action or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
4
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal. Dated as of
----------, -----.
ATTEST:
By
--------------------------- ---------------------------------
Secretary Title:
Countersigned:
[Rights Agent]
By
----------------------------------
Authorized Signature
5
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificates.)
FOR VALUE RECEIVED
------------------------------------------------
hereby sells, assigns and transfers unto
--------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney to transfer the within Right Certificate on the
books of the within-named Company, with full power of substitution.
Dated: ________________, _____
-----------------------------------
Signature
Signature Guaranteed:
6
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement).
Dated: ____________, _____
-------------------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
7
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of such Rights and requests
that certificates for such share(s) be issued in the following name:
Please insert social security or other identifying number:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
8
Please insert social security
or other identifying number:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
Dated: _____________, _____
-----------------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate)
Signature Guaranteed:
9
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PREFERRED STOCK
OF
THE GRAND UNION COMPANY
Pursuant to Section 151 of the Delaware
General Corporation Law
I, Xxxxxxx X. Xxxxxxxx, the Executive Vice President and Chief
Financial Officer of The Grand Union Company, a corporation organized and
existing under the Delaware General Corporation Law (the "Company"), in
accordance with the provisions of Section 151 of such law, DO HEREBY CERTIFY
that pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Company, the Board of Directors on
April 29, 1999 adopted the following resolution which creates a series of shares
of Preferred Stock designated as Series A Junior Preferred Stock, as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware General
Corporation Law and the authority vested in the Board of Directors of the
Company in accordance with the provisions of ARTICLE FOURTH of the Restated
Certificate of Incorporation of the Company, a series of Preferred Stock of the
Company be, and hereby is, created, and the powers, designations, preferences
and relative, participating, optional or other special rights of the shares of
such series, and the
NYFS03...:\18\50318\0005\1708\EXH9158M.14C
qualifications, limitations or restrictions thereof, be, and hereby are, as
follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting such series shall be 50,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment here-
inafter set forth, and subject to the rights of the holders of any shares of any
series of Preferred Stock ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of Series A Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, (i) cash dividends in
an amount per share (rounded to the nearest cent) equal to 1,000 times the
aggregate per share amount of all cash dividends declared or paid on the Common
Stock, $0.01 par value per share, of the Company (the "Common Stock") and (ii) a
preferential cash dividend (the "Preferential Dividends"), if any, in preference
to the holders of Common Stock, on the first day of each fiscal quarter of the
Company (each a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock,
2
payable in an amount (except in the case of the first Quarterly Dividend Payment
if the date of the first issuance of Series A Preferred Stock is a date other
than a Quarterly Dividend Payment date, in which case such payment shall be a
prorated amount of such amount) equal to $0.001 per share of Series A Preferred
Stock less the per share amount of all cash dividends declared on the Series A
Preferred Stock pursuant to clause (i) of this sentence 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. In the event the Company shall,
at any time after the issuance of any share or fraction of a share of Series A
Preferred Stock, make any distribution on the shares of Common Stock of the
Company, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Company or
otherwise, which is payable in cash or any debt security, debt instrument, real
or personal property or any other property (other than cash dividends subject to
the immediately preceding sentence, a distribution of shares of Common Stock or
other capital stock of the Company or a distribution of rights or warrants to
acquire any such share, including any debt security convertible into or
exchangeable for any such share, at a price less than the Fair Market Value (as
hereinafter defined) of such
3
share), then, and in each such event, the Company shall simultaneously pay on
each then outstanding share of Series A Preferred Stock of the Company a
distribution, in like kind, of 1,000 times such distribution paid on a share of
Common Stock (subject to the provisions for adjustment hereinafter set forth).
The dividends and distributions on the Series A Preferred Stock to which holders
thereof are entitled pursuant to clause (i) of the first sentence of this
paragraph and pursuant to the second sentence of this paragraph are hereinafter
referred to as "Dividends" and the multiple of such cash and non-cash dividends
on the Common Stock applicable to the determination of the Dividends, which
shall be 1,000 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple". In the event
the Company shall at any time after May 10, 1999 declare or pay any dividend or
make any distribution on Common Stock payable in shares of Common Stock, or
effect a subdivision or split or a combination, consolidation or reverse split
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, then in each such case the Dividend Multiple thereafter
applicable to the determination of the amount of Dividends which holders of
shares of Series A Preferred Stock shall be entitled to receive shall be the
Dividend Multiple applicable immediately prior to such event multiplied by a
fraction the numerator of
4
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash dividend
or distribution on the Common Stock in respect of which a Dividend is required
to be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series A Preferred
Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential 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.
5
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 holders of the Common Stock. The
number of votes which a holder of Series A Preferred Stock is entitled to cast,
as the same may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Vote Multiple". In the event the Company shall
at any time after May 10, 1999 declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Common
Stock into a greater or lesser number of shares of Common Stock, then in each
such case the Vote Multiple thereafter applicable to the determination of the
number of votes per share to which holders of shares of Series A Preferred Stock
shall be entitled after such event shall be the Vote Multiple immediately prior
to such event multiplied by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
6
(B) Except as otherwise provided herein, in the Restated Certificate
of Incorporation or by law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on the
Series A Preferred Stock for four or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or irrevocably set
aside for payment, the holders of record of Preferred Stock of the Company of
all series (including the Series A Preferred Stock), other than any series in
respect of which such right is expressly withheld by the Restated Certificate of
Incorporation or the authorizing resolutions included in any Certificate of
Designations therefor, shall have the right, at the next meeting of stockholders
called for the election of directors, to elect two members to the Board of
Directors, which directors shall be in addition to the number required prior to
such event, to serve until the next Annual Meeting and until their successors
are elected and qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential Dividends upon
the outstanding shares of Series A Preferred Stock shall have been paid (or
irrevocably set aside for payment) in full. The holders of shares of Series A
Preferred Stock shall continue
7
to have the right to elect directors as provided by the immediately preceding
sentence until all accrued and unpaid Preferential Dividends upon the
outstanding shares of Series A Preferred Stock shall have been paid (or set
aside for payment) in full. Such directors may be removed and replaced by such
stockholders, and vacancies in such directorships may be filled only by such
stockholders (or by the remaining director elected by such stockholders, if
there be one) in the manner permitted by law; provided, however, that any such
action by stockholders shall be taken at a meeting of stockholders and shall not
be taken by written consent thereto.
(D) Except as otherwise required by the Restated Certificate of
Incorporation or by law or set forth herein, holders of Series A Preferred Stock
shall have no other 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 the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in arrears or
the Company shall be in default of payment thereof, thereafter and until all
accrued and unpaid Preferential Dividends and Dividends, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
or set irrevocably aside for payment in full, and in addition to any and
8
all other rights which any holder of shares of Series A Preferred Stock may have
in such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series A
Preferred Stock, unless dividends are 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 if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph 4(A),
redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Company ranking junior (both as
9
to dividends and upon liquidation, dissolution or winding
up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer
made to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Company shall not permit any Subsidiary (as hereinafter
defined) 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. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests having ordinary voting
power sufficient to elect a majority of the board of directors of such
corporation or other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Company or by any
10
corporation or other entity that is otherwise controlled by the Company.
(C) The Company shall not issue any shares of Series A Preferred
Stock except upon exercise of Rights issued pursuant to that certain Rights
Agreement dated as of April 29, 1999 between the Company and American Stock
Transfer & Trust Co., as Rights Agent, as it may be amended from time to time, a
copy of which is on file with the Secretary of the Company at its principal
executive office and shall be made available to stockholders of record without
charge upon written request therefor addressed to said Secretary.
Notwithstanding the foregoing sentence, nothing contained in the provisions
hereof shall prohibit or restrict the Company from issuing for any purpose any
series of Preferred Stock with rights and privileges similar to, different from,
or greater than, those of the Series A Preferred Stock.
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
upon their retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and such shares may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
11
Section 6. Liquidation, Dissolution or Winding Up. Upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
no distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received for each share of Series A Preferred Stock,
subject to adjustment as hereinafter provided, (A) $35.00 plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment or, (B) if greater than the amount
specified in clause (i)(A) of this sentence, an amount equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock, as the
same may be adjusted as hereinafter provided and (ii) to the holders of stock
ranking on a parity upon liquidation, dissolution or winding up with the Series
A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon
12
liquidation, dissolution or winding up of the Company pursuant to clause (i)(B)
of the foregoing sentence is hereinafter referred to as the "Participating
Liquidation Amount" and the multiple of the amount to be distributed to holders
of shares of Common Stock upon the liquidation, dissolution or winding up of the
Company applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, as said multiple may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the "Liquidation
Multiple". In the event the Company shall at any time after May 10, 1999 declare
or pay any dividend on Common Stock payable in shares of Common Stock, or effect
a subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then, in each such case, the Liquidation Multiple thereafter
applicable to the determination of the Participating Liquidation Amount to which
holders of Series A Preferred Stock shall be entitled after such event shall be
the Liquidation Multiple applicable immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
13
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common
Stock of the Company receive after May 10, 1999 in respect of their shares of
Common Stock any share of capital stock of the Company (other than any share of
Common Stock of the Company), whether by way of reclassification,
recapitalization, reorganization, dividend or other distribution or otherwise (a
"Transaction"), then, and in each such event, the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the Company of the
shares of Series A Preferred Stock shall be adjusted so that after such event
the holders of Series A Preferred Stock shall be entitled, in respect of each
share of Series A Preferred Stock held, in addition to such rights in respect
thereof to which such holder was entitled immediately prior to such adjustment,
to (i) such additional dividends as equal the Dividend Multiple in effect
immediately prior to such Transaction multiplied by the additional dividends
which the holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock, (ii) such
additional voting rights as equal the Vote Multiple in effect immediately prior
to such Transaction multiplied by the additional voting rights which the holder
of a share of Common Stock shall be entitled to receive by virtue of the receipt
in the Transaction of such capital stock and (iii)
14
such additional distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately prior to such
Transaction multiplied by the additional amount which the holder of a share of
Common Stock shall be entitled to receive upon liquidation, dissolution or
winding up of the Company by virtue of the receipt in the Transaction of such
capital stock, as the case may be, all as provided by the terms of such capital
stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after May 10, 1999 in respect of their shares of Common Stock
any right or warrant to purchase Common Stock (including as such a right, for
all purposes of this paragraph, any security convertible into or exchangeable
for Common Stock) at a purchase price per share less than the Fair Market Value
of a share of Common Stock on the date of issuance of such right or warrant,
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be
the product of the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to such event
multiplied by a fraction the numerator of which shall be the number of shares of
15
Common Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock which could be acquired upon
exercise in full of all such rights or warrants and the denominator of which
shall be the number of shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the number of shares of Common Stock
which could be purchased, at the Fair Market Value of the Common Stock at the
time of such issuance, by the maximum aggregate consideration payable upon
exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after May 10, 1999 in respect of their shares of Common Stock
any right or warrant to purchase capital stock of the Company (other than shares
of Common Stock), including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock of the Company
(other than Common Stock), at a purchase price per share less than the Fair
Market Value of such shares of capital stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, voting rights
and rights upon liquidation, dissolution or winding up of the Company of the
shares of Series A Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A
16
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such event, to receive (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such event multiplied, first, by the additional dividends to which the holder
of a share of Common Stock shall be entitled upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction (as hereinafter defined)
and (ii) such additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the additional voting
rights to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction and
(iii) such additional distributions upon liquidation, dissolution or winding up
of the Company as equal the Liquidation Multiple in effect immediately prior to
such event multiplied, first, by the additional amount which the holder of a
share of Common Stock shall be entitled to receive upon liquidation, dissolution
or winding up of the Company upon exercise of such right or warrant by virtue of
the capital stock which could be acquired upon such exercise and multiplied
again by the Discount Fraction. For purposes of this paragraph, the "Discount
Fraction" shall be a
17
fraction the numerator of which shall be the difference between the Fair Market
Value of a share of the capital stock subject to a right or warrant distributed
to holders of shares of Common Stock of the Company as contemplated by this
paragraph immediately after the distribution thereof and the purchase price per
share for such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Fair Market Value of a share of such capital
stock immediately after the distribution of such right or warrant.
(D) For purposes of this Certificate of Designations, the "Fair
Market Value" of a share of capital stock of the Company (including a share of
Common Stock) on any date shall be deemed to be the average of the daily closing
price per share thereof over the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however, that, in
the event that such Fair Market Value of any such share of capital stock is
determined during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or distribution on stock
payable in shares of such stock or securities convertible into shares of such
stock, or (ii) the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassifica- tion of such stock, then,
and in each such case, the Fair Market Value shall be appropriately adjusted by
the Board of Directors
18
of the Company to take into account ex-dividend or post-effective date trading.
The closing price for any day shall be the last sale price, regular way, or, in
case, no such sale takes place on such day, the average of the closing bid and
asked prices, regular way (in either case, as reported in the applicable
transaction reporting system with respect to securities listed or admitted to
trading on the Nasdaq National Market), or, if the shares are not listed or
admitted to trading on the Nasdaq National Market, as reported in the applicable
transaction reporting system with respect to securities listed on the principal
national securities exchange or Nasdaq market on which the shares are listed or
admitted to trading or, if the shares are not listed or admitted to trading on
any national securities exchange or Nasdaq market, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or if on any such date the shares are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which the principal
national securities exchange or Nasdaq market on which the shares are listed or
admitted to trading is
19
open for the transaction of business or, if the shares are not listed or
admitted to trading on any national securities exchange or Nasdaq market, on
which the Nasdaq National Market or such other national securities exchange as
may be selected by the Board of Directors of the Company is open. If the shares
are not publicly held or not so listed or traded on any day within the period of
30 Trading Days applicable to the determination of Fair Market Value thereof as
aforesaid, "Fair Market Value" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Company. In
either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of
20
the Vote Multiple, the Dividend Multiple or the Liquidation Multiple in effect
immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock
required by the provisions hereof shall be effective as of the time at which the
event requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each holder of a
share of Series A Preferred Stock of the effect of any adjustment to the voting
rights, dividend rights or rights upon liquidation, dissolution or winding up of
the Company of such shares required by the provisions hereof. 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.
Section 10. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
provisions hereof and the Amended and Restated Certificate of Incorporation of
the Company.
Section 11. Ranking. Unless otherwise provided in the
Restated Certificate of Incorporation of the Company or a
Certificate of Designations relating to a subsequent series of
21
preferred stock of the Company, the Series A Preferred Stock shall rank junior
to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets on liquidation, dissolution or winding
up and senior to the Common Stock.
Section 12. Amendment. The provisions hereof and the Restated
Certificate of Incorporation of the Company shall not be amended in any manner
which would adversely affect the rights, privileges or powers of the Series A
Preferred Stock without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate
of Designations and do affirm the foregoing as true under the penalties of
perjury this 29th day of April, 1999.
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
ATTEST:
/s/ Xxxxxx X. Xxxxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Corporate Secretary
