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Exhibit 4
CHARMING SHOPPES, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
RIGHTS AGREEMENT
Dated as of April 26, 1999
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Table of Contents
Section Page
Section 1. Certain Definitions.............................................................................2
Section 2. Appointment of Rights Agent.....................................................................5
Section 3. Issue of Rights Certificates....................................................................6
Section 4. Form of Rights Certificates.....................................................................8
Section 5. Countersignature and Registration...............................................................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.......................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights .................................11
Section 8. Cancellation and Destruction of Rights Certificates............................................13
Section 9. Reservation and Availability of Capital stock; Registration of Securities......................14
Section 10. Capital Stock Record Date......................................................................15
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights...............................................................................16
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................27
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................27
Section 14. Fractional Rights and Fractional Shares........................................................30
Section 15. Rights of Action...............................................................................32
Section 16. Agreement of Rights Holders....................................................................32
Section 17. Rights Certificate Holder Not Deemed a Shareholder.............................................33
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Section 18. Concerning the Rights Agent....................................................................33
Section 19. Merger or Consolidation or Change of Name of Rights Agent .....................................34
Section 20. Duties of Rights Agent.........................................................................35
Section 21. Change of Rights Agent.........................................................................37
Section 22. Issuance of New Rights Certificates.........................................................38
Section 23. Redemption and Termination.....................................................................39
Section 24. Notice of Certain Events.......................................................................40
Section 25. Notices........................................................................................41
Section 26. Supplements and Amendments.....................................................................42
Section 27. Successors.....................................................................................43
Section 28. Determinations and Actions by the Board of Directors, etc......................................43
Section 29. Benefits of this Agreement.....................................................................43
Section 30. Severability...................................................................................44
Section 31. Governing Law..................................................................................44
Section 32. Counterparts...................................................................................44
Section 33. Descriptive Headings...........................................................................44
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of April 26, 1999 (the "Agreement"), between
CHARMING SHOPPES, INC., a Pennsylvania corporation (the Company), and American
Stock Transfer & Trust Company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on April 27, 1989, the Mellon Bank (East) National Association
(as the rights agent) and the Company entered into a Rights Agreement (the
"Original Rights Agreement") dated as of April 27, 1989.
WHEREAS, on April 27, 1989, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as defined in the
Original Rights Agreement) for each share of common stock of the Company
outstanding at the close of business on May 11, 1989 and authorized the issuance
of one Right (as defined in the Original Rights Agreement), with each Right (as
defined in the Original Rights Agreement) initially representing the right to
purchase one three-hundredth of a Preferred Share (as defined in the Original
Rights Agreement) of the Company having the rights, powers and preferences set
forth in the form of a resolution of the Board of Directors; and
WHEREAS, the Original Rights Agreement and all Rights outstanding
thereunder expire in accordance with the terms of the Original Rights Agreement
at the close of business on April 26, 1999; and
WHEREAS, the Board of Directors of the Company authorized and declared
a dividend distribution payable effective immediately following the close of
business on April 26, 1999 (the "Rights Dividend Declaration Date") of one Right
(defined below) for each Common Share (as hereinafter defined) of the Company
outstanding at the close of business on April 12, 1999 (the "Record Date") with
each Right initially representing the right-to purchase one three-hundredth of a
Preferred Share (as hereinafter defined) of the Company having the rights,
powers and preferences set forth in the form of the Resolution of the Board of
Directors attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights"); and
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WHEREAS, the Rights will be held by the Rights Agent under this
Agreement as trustee for the shareholders of the Company until the Distribution
Date; and
WHEREAS, the Board of Directors of the Company has considered whether
approval of this Agreement and the distribution of the Rights is in the best
interests of the Company and all other pertinent factors; and
WHEREAS, the Board of Directors of the Company has concluded that
approval of this Agreement and the distribution of the Rights is in the best
interests of the Company because the existence of the Rights will help (i)
reduce the risk of coercive two-tiered, front-end loaded or partial offers that
may not offer fair value to all shareholders, (ii) mitigate against market
accumulators who through open market and/or private purchases may achieve a
position of substantial influence or control without paying to selling or
remaining shareholders a fair control premium, (iii) deter market accumulators
who are simply interested in putting the Company into "play" (iv) restrict
self-dealing by a substantial shareholder, and (v) preserve the Board of
Directors' bargaining power and flexibility to deal with third-party acquirors
and to otherwise seek to maximize values for all shareholders.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and intending to be legally bound hereby, the
parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
1. "Acquiring Person" shall mean any Person who or which
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of 20% or more of the Common Shares then
outstanding but shall not include the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan.
2. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and
in effect on the date hereof (the "Exchange Act").
3. A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own" any securities:
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1. that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; Provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) 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 payment,
purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights') or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;
2. that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial" ownerships of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act), including
without limitation 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 security under this subparagraph (ii) as a
result of an oral or written agreement, arrangement or understanding to
vote such security if such agreement, arrangement or understanding: (A)
arises solely from a revocable proxy given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under
the Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
3. that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding,
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voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c)) or disposing of any
voting securities of the Company,
provided, however, that nothing in this paragraph (c) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own" any securities acquired through such Person's
participation in good faith in a firm Commitment underwriting until the
expiration of forty days after the date of such acquisition.
4. "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.
5. "Close of business" an any given date shall mean 5:00 P.M.,
New York, New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York, New York
time, on the next succeeding Business Day.
6. "Common Share" shall mean the shares of Common Stock, par
value $.10 per share, of the Company and, to the extent that there are
not a sufficient number of Common Shares authorized to permit the full
exercise of the Rights, shares of any other class or series of the
Company designated for such purpose containing terms substantially
similar to the terms of the Common Shares, except that "Common Share"
when used with reference to any Person other than the Company shall
mean the shares of capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having
power to control or direct the management, of such Person.
7. "Continuing Director" shall mean (i) any member of the
Board of Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person or of
any such Affiliate or Associate, and was a member of the Board prior to
the date of this Agreement, or (ii) any Person who subsequently becomes
a member of the Board, while such Person is a member of the Board, who
is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, if such-Person's nomination for election
or election to the Board is recommended or approved by a majority of
the Continuing Directors.
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8. "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
9. "Expiration Date" shall have the meaning set forth in
Section 7(a).
10. "Person" shall mean any individual, firm, corporation,
partnership or other entity.
11. "Preferred Share" shall mean a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the
Company and, to the extent that there are not a sufficient number of
Series A Junior Participating Preferred Stock authorized to permit the
full exercise of the Rights, shares of any other series of Series
Preferred Stock of the Company designated for such purpose containing
terms substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
12. "Preferred Share Fraction" shall mean one three-hundredth
of a Preferred Share.
13. "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) (A), (B) or (C) hereof.
14. "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
15. "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
16. "Subsidiary" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
17. "Trading Day" shall have the meaning set forth-in Section
11(d)(i) hereof.
18. "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event. 1.
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Unless otherwise specified, where reference is made in this Agreement
to sections of, and the General Rules and Regulations under, the Exchange Act,
such reference shall mean such sections and rules as amended from time to time
and any successor provisions thereto.
Section 2. Appointment of Rights Agent.
1. The Company hereby appoints the Rights Agent to act as
agent for the Company and trustee for the beneficial owners of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) 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.
2. On the Record Date, the Company will deliver a Rights
Certificate to the Rights Agent, registered in the name of the Rights
Agent as trustee for the beneficial owners of the Rights represented
thereby, for that number of Rights equal to the number of Common Shares
issued and outstanding on the Record Date, and the Rights Agent shall
hold the Rights represented thereby in trust for the beneficial owners
in accordance with the provisions of this Agreement.
Section 3. Issue of Rights Certificates.
1. Until the earlier of (i) the close of business on the tenth
day after a Stock Acquisition Date involving an Acquiring Person that
has become such in a transaction as to which the Board of Directors has
not made the determination referred to in Section 11(a)(ii)(B) hereof,
or (ii) the close of business on such date as may be fixed by the Board
of Directors of the Company by notice to the Rights Agent and publicly
announced by the Company, which date shall not be later than 65 days
after the date that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such
Person would be the "Beneficial Owner" of 20% or more of the Common
Shares then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) beneficial interests in
the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates
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for the Common Shares registered in the names of the holders of the
common Shares (which certificates for Common Shares shall be deemed
also to be certificates for beneficial interests in the Rights) and not
by separate certificates, and (y) the Rights and beneficial interests
therein will be transferable only in connection with the transfer of
the underlying Common Shares (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each record
holder of the Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records
of the Company, one or more rights certificates, in substantially the
form of Exhibit B hereto (the "Rights Certificates"), evidencing one
Right for each Common Share so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per
Common Share has been made pursuant to Section 11(p) hereof, at the
time of distribution of the Rights certificates, the Company shall make
the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates. Upon the
distribution of the Rights Certificates as provided in this subsection
(a), the trust created hereby shall cease.
2. As promptly as practicable following the Record Date the
Company will send a copy of a Summary of Rights, in substantially the
form of Exhibit C hereto (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of the Common Shares as of
the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for
the Common Shares outstanding as of the Record Date, until the
Distribution Date, beneficial interests in the Rights will be evidenced
by such certificates for the Common Shares and the registered holders
of the Common Shares shall also be the registered holders of the
beneficial interests in the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in
Section 7 hereof), the transfer of any certificates representing Common
Shares in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such Common
Shares. Certificates issued after the Record Date upon the transfer of
Common Shares outstanding on the Record Date shall bear the legend set
forth in subsection (c).
3. Except as provided in Section 22 hereof, Rights shall be
issued in respect of all Common Shares that are issued (whether
originally issued or delivered from the Company's treasury) after the
Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such Common Shares shall
also be deemed to be certificates for beneficial interests in the
associated Rights, and shall bear the following legend:
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"This certificate also evidences a beneficial
interest in and entitles the holder hereof to certain
rights as set forth in the Rights Agreement between
Charming Shoppes, Inc. (the "Company") and American
Stock Transfer & Trust Company (the "Rights Agent")
dated as of April 26, 1999 (the "Rights Agreement"),
and as the same may be amended from time to time, the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate
certificates and beneficial interests therein will no
longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes-an
Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become
null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, beneficial
interests in the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and registered
holders of Common Shares shall also be the registered holders of beneficial
interests in the associated, Rights, and the transfer of any of such
certificates shall also constitute the transfer of beneficial interests in the
Rights associated with the Common Shares represented by such certificates.
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Section 4. Form of Rights Certificates.
1. The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any-rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall entitle the holders thereof to purchase such number
of Preferred Share Fractions as shall be set forth therein at the price
set forth therein (such exercise price per Preferred Share Fraction,
the "Purchase Price"), but the amount and two of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.
2. Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights that the Company knows are
beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing oral or written plan,
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the Company has
determined is part of an oral or written plan, agreement, arrangement
or understanding that has as a primary purpose or effect avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
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Rights Certificate and the Rights represented hereby
may become null and void in the circumstances
specified in Section 7(e) of such Agreement."
Section 5. Countersignature and Registration.
1. The Rights Certificates shall-be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be
valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as
though the Person who signed such Rights Certificates had not ceased to
be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any Person who, at the actual date
of the execution of such Rights Certificate, shall be a proper officer
of the Company to sign such Rights Certificate, although at the date of
the execution of this Agreement any such Person was not such an
officer.
2. Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or offices designated as
the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights
Certificates, the Certificate number and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
1. Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of Preferred Share Fractions (or,
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following a Triggering Event, Common Shares or other securities, cash
or other assets, as the case may be, as the Rights Certificate or
Certificates surrendered then entitled such holder or former holder in
the case of a transfer). Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificate
shall make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such Purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
2. Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
1. Subject to subsection (e), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price (except
as provided in Section 11(q) hereof) with respect to the total number
of Preferred
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Share Fractions (or Common Shares, other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are
then exercisable (except as provided in Section 11(q) hereof), at or
prior to the earliest of (i) the close of business on April 25, 2009
(the "Final Expiration Date"), (ii) the consummation of a transaction
contemplated by Section 13(d) hereof, or (iii) the time at which the
Rights are redeemed or terminated as provided in Section 23 hereof (the
earlier of (i), (ii) and (iii) being herein referred to as the
"Expiration Date").
2. The Purchase Price for each Preferred Share Fraction
pursuant to the exercise of a Right shall initially be $20.00, and
shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in accordance with
subsection (c).
3. Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price per Preferred Share Fraction
(or Common Shares, other securities, cash or other assets, as the case
may be) to be purchased as set forth below and an amount equal to any
applicable transfer tax, the Rights Agent shall, subject to Section
20(k) and Section 14(b) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares (or make available, if
the Rights Agent is the transfer agent for such Shares) certificates
for the total number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to deposit
some or all of the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts representing such number
of Preferred Share Fractions as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name
or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made, at the election of the holder of the
Rights Certificate, (x) in cash or by certified bank check or money
order payable to the order of the Company, or (y) by delivery of Rights
if and to the extent authorized by Section ll(q) hereof. In the event
that the Company is obligated to issue other securities of the Company
(including Common Shares) pay
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cash and/or distribute other property pursuant to Section 11(a) hereof,
the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution
by the Rights Agent, if, and when appropriate.
4. In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
5. Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing oral or written plan,
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of them Company
has determined is part of an oral or written plan, agreement,
arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise; provided, however, that the Rights held by
an Acquiring Person, an Affiliate or Associate of an Acquiring Person
or the transferees of such Persons referred to above shall not be
voided unless the Acquiring Person in question or an Affiliate or
Associate of such Acquiring Person shall be involved in the transaction
giving rise to the Section 11(a)(ii) Event. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e)
and Section 4(b) hereof are complied with, but shall have no liability
to any holder of Rights Certificates' or other Person as a result of
its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
6. 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 contained in the
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form of election to purchase set forth on-the reverse side of the
Rights 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 Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
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 so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock; Registration
of Securities.
1. The Company covenants and agrees that it will cause to be
reserved and kept available for issuance upon the exercise of
outstanding Rights as many of its authorized and unissued Preferred
Shares (and, following the occurrence of a Triggering Event, out of its
authorized and unissued Common Shares and/or other securities or out of
its authorized and issued shares held in its treasury), which together
shall at all times after the Distribution Date be sufficient to permit
the exercise in full of all outstanding Rights.
2. So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares or other securities)
issuable and deliverable upon the exercise of the Rights may be listed
on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares and other securities reserved for such issuance
to be listed on such exchange upon official notice of issuance upon
such exercise.
3. The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first occurrence
of a Section 11(a)(ii) Event on which the consideration to be delivered
by the Company upon exercise of the Rights has been
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determined in accordance with Section 11(a)(iii) hereof, or as soon as
is required by law following the Distribution Date, as the case may be,
a registration statement or statements under the Securities Act of 1933
(the "Act"), with respect to the securities purchasable upon exercise
of the Rights on an appropriate form or forms, (ii) cause such
registration statement or statements to become effective as soon as
practicable after such filing, and (iii) cause such registration
statement or statements 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 such
securities, and (B) the date of the expiration of the Rights. 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. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this subsection (c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it
to-become effective. 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. 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.
4. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (and,
following a Triggering Event, Common Shares or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to payment of
the Purchase Price), be duly and validly authorized and issued and,
with respect to Preferred Shares Common Shares or other shares of
capital stock, fully paid and nonassessable.
5. The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges that may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for a number of
Preferred Share Fractions (or Common Shares or other securities, as the
case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in
respect of any transfer or delivery of Rights Certificates to a Person
other than, or the issuance or delivery of a number of Preferred Share
Fractions (or Common Shares or other securities, as the case may be) in
respect of a name other than that of the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of Preferred Share
Fractions (or Common Shares or other securities, as
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the case may be) in a name other than that of the registered holder
upon the exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at
the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Capital Stock Record Date. Each Person in whose name any
certificate for a number of Preferred Share Fractions (or Common Shares or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such Preferred
Share Fractions (or Common Shares or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
applicable transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding Business Day on which
the applicable transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate shall not
be-entitled to any rights of a shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares and other
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
a. (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on any security of the
Company payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Preferred Shares or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any
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Right exercised after such time shall be entitled to receive, upon
payment of the adjusted Purchase Price, the aggregate number and kind
of Preferred Shares or capital stock, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Share transfer books were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. 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) hereof.
(ii) In the event:
(1) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the Stock
Acquisition Date, directly or indirectly, (1) shall merge into
the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of
such merger or combination and the Common Shares of the
Company or other equity securities of the Company shall remain
outstanding, (2) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of
its Subsidiaries in exchange (in whole or in part) for Common
Shares, for shares of other equity securities of the Company,
or for securities exercisable for or convertible into shares
of equity securities of the Company (Common Shares or
otherwise) or otherwise obtain from the Company, with or
without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro
rata distribution to all holders of Common Shares), (3) shall
sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of assets in one transaction or a
series of transactions, to, from or with (as the case may be)
the Company or any of its Subsidiaries, an terms and
conditions less favorable to the Company than the Company
would be able to obtain in arm's-length negotiation with an
unaffiliated third party, other than pursuant to a Section 13
Event, (4) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of assets
having an aggregate fair market value of more than $5,000,000
in one transaction or a series of transactions, to, from or
with (as the case may be) the Company or any of the Company's
Subsidiaries (other than incidental to the lines of business,
if any, engaged in as of the date hereof between the Company
and such Acquiring Person or Associate or Affiliate), other
than pursuant to a Section 13 Event, (5) shall receive any
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compensation from the Company or any of the Company's
Subsidiaries other than compensation for full-time employment
as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) shall
receive the benefit, directly or indirectly (except
proportionately as a shareholder and except if resulting from
a requirement of law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries, or
(2) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan), alone or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date become the
Beneficial Owner of 20% or more of the Common Shares then outstanding,
unless the event causing the 20% threshold to be crossed is a Section
13 Event, or is an acquisition of Common Shares pursuant to a tender
offer or an exchange offer for all outstanding Common Shares at a price
and on terms that provide fair value to all shareholders, as determined
by at least a majority of the Continuing Directors, after taking into
consideration all factors that such Members of the Board of Directors
deem relevant, including, without limitation, the long-term prospects
and value of the Company and the prices and terms that such members of
the Board of Directors believe, in good faith, could reasonably be
achieved if the Company or its assets were sold on an orderly basis
designed to realize maximum value, or
(3) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of
its Subsidiaries, other than a Section 13 Event or series of such
Events (whether or not with or into or otherwise involving an Acquiring
Person) that has the effect, directly or indirectly, of increasing by
more than it the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any Acquiring
Person or any Associate or Affiliate of any Acquiring Person,
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then, promptly following the first occurrence of a Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of Preferred Share Fractions, such number of Common Shares
of the Company as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the then number of Preferred Share
Fractions for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per Common Share on the date of such
first occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of Common Shares that are
authorized by the Company's Articles but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a),
the Company shall: (A) determine the excess of the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over the Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Shares of
the same or a different class or other equity securities of the Company
(including, without limitation, preferred shares or units of preferred
shares that a majority of the Continuing Directors in office at the
time has deemed (based, among other things, on the dividend and
liquidation rights of such preferred shares) to have substantially the
same economic value as Common Shares (such preferred shares,
hereinafter referred to as "common share equivalents"), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value,
where such aggregate value has been determined by a majority of the
Continuing Directors in office at the time after considering the advice
of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company
shall not have made
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adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company's right
of redemption pursuant to Section 23(a) expires (the later of (x) and
(y) being referred to herein as the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, Common Shares (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional Common Shares
could be authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period,
as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company
shall provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. The Company
shall make a public announcement when the exercisability of the Rights
has been temporarily suspended, and again when such suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of
the Common Shares shall be the current market price (as determined
pursuant to Section 11(d) hereof) per Common Share on the Section
11(a)(ii) Trigger Date and the value of any common share equivalent
shall be deemed to have the same value as the Common Shares on such
date.
b. In case the Company shall fix a record date for the
issuance of rights, options or warrants to holders of any-security of
the Company entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Shares (or shares having the same rights, privileges and
preferences as the Preferred Shares ("equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred
shares at a price per Preferred Share or per equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the current
market price (as determined pursuant to Section 11(d)
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hereof) per Preferred Share on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred
Shares outstanding on such record date, plus the number of Preferred
Shares that the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of Preferred
Shares outstanding on such record date, plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of which may
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 and shall be binding on the Company, the Rights Agent and
the holders of the Rights. Preferred Shares 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
or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price that would then be in effect if such record date
had not been fixed.
c. In case the Company shall fix a record date for a
distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly dividend out of the
earnings or retained earnings of the Company), assets (other than a
regular quarterly dividend referred to above or dividend payable in
Preferred Shares, but including any, dividend payable in stock other
than Preferred Shares) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per Preferred Share on
such record date, less the then 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 cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
applicable to a Preferred Share and the denominator of which shall be
such current market price (as determined pursuant to Section 11(d)
hereof) per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event
that such distribution is not so
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made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
d. (i) For the purpose of any computation hereunder, other
than computations made pursuant to section 11(a)(iii) hereof, the
"current market price" per Common Share on any date shall be deemed to
be the average of the daily closing prices per Common Share for the
thirty (30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to section 11(a)(iii) hereof, the "current
market price" per Common Share on any date shall be deemed to be the
average of the daily closing prices per Common Share for the ten (10)
consecutive Trading Days immediately following such date; provided,
however, that in the event that the current market price per Common
Share is determined during a period following the announcement by the
issuer of such Common Share of (A) a dividend or distribution on such
Common Share payable in Common shares or securities convertible into
Common Shares (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Shares, and prior to the
expiration of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
recurrent market price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each Trading Day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or
admitted to trading or, if the Common Shares ate not listed or admitted
to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the Common
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 Common Shares selected by the Board of
Directors of the Company. If on any such date no market maker is making
a market in the Common Shares, the fair value of such shares on such
date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Common Shares
are listed or admitted to trading is open for the transaction of
business or, if the Common Shares are not listed
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or admitted to trading on any national securities exchange, a Business
Day. If the Common Shares are not publicly held or not so listed or
traded, current market price" per share shall mean the fair value per
share 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 and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per Preferred Share shall be
determined in the same manner as set forth above for the
Common Shares in clause (i) of this Section 11(d) (other than
the last sentence thereof). If the current market price per
Preferred Share cannot be determined in the manner provided
above or if the Preferred Shares are not publicly held or
listed or traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per Preferred Share
shall be conclusively deemed to be an amount equal to 300 (as
such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with
respect to the Common Shares occurring after the date of this
Agreement) multiplied by the current market price per Common
Share. If neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current market
price" per Preferred Share shall mean the fair value per share
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 and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current
market price" of a Preferred Share Fraction shall be equal to
the recurrent market prices of one Preferred Share divided by
300.
e. Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of a Common
Share or one-millionth of a Preferred Share, as the case may be.
Notwithstanding the first sentence of this subsection (e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction that
mandates such adjustment, or (ii) the Expiration Date.
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f. If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than Preferred Shares, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof
shall be Subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k), (m) and (q), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Shares shall apply on like terms to any such other shares.
g. All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of
Preferred Share Fractions purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
h. Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in subsections (b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of Preferred Share Fractions (calculated to
the nearest one-millionth of a Preferred Share) obtained by (i)
multiplying (x) the number of Preferred Share Fractions covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price,
and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
i. The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of Preferred Share Fractions
purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the' number of Preferred Share Fractions for which a
Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth
of a Preferred Share) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. The
record date for the adjustment may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued,
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shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified
in the public announcement.
j. Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Share Fractions issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per
Preferred Share Fraction and the number of Preferred Share Fractions
that were expressed in the initial Rights Certificates issued
hereunder.
k. Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if any,
of the number of Preferred Share Fractions issuable upon exercise of
the Rights, the Company shall take any corporate action that may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue such number of fully paid and nonassessable
Preferred Share Fractions at such adjusted Purchase Price.
l. In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of Preferred Share
Fractions and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred
Share Fractions and other capital stock or securities of the Company,
if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the
event requiring such adjustment.
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m. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment the Board of Directors of the Company shall determine to
be advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares
at less than the current market price, (iii) issuance wholly for cash
or Preferred Shares or securities which by their terms are convertible
into or exchangeable for Preferred Shares, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such shareholders.
n. The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes, or
would constitute, the "Principal Party" for purposes of Section 13(a)
hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
o. The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
p. Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to
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the Distribution Date (i) declare a dividend on the outstanding Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common
Shares, or (iii) combine the outstanding Common Shares into a smaller
number of shares, the number of Rights associated with each Common
Share then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each Common Share following
any such event shall equal the result obtained by multiplying the
number of Rights associated with each Common Share immediately prior to
such event by a fraction the numerator of which shall be the total
number of Common Shares outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of
Common Shares outstanding immediately following the occurrence of such
event.
q. In the event that the Rights become exercisable following
a Section 11(a)(ii) Event, the Company, by action of a majority of the
Continuing Directors in office at the time, may permit the Rights,
subject to Section 7(e) hereof, to be exercised for 50% of the Common
Shares (or cash or other securities or assets to be substituted for the
Adjustment Shares pursuant to subsection (a)(iii)) that would otherwise
be purchasable under subsection (a), in consideration of the surrender
to the Company of the Rights so exercised and without other payment of
the Purchase Price. Rights exercised under this subsection (g) shall be
deemed to have been exercised in full and shall be canceled.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Shares and the Common Shares, a copy of such certificate, and (c) mail
a brief, summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing Common
Shares) in accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment unless and
until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
1. In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)
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hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than
a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate with, or merge with or 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 Common
Shares shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or
any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case and
except as contemplated by subsection (d), proper provision shall be
made so that:
1. each holder of a Right, except as provided in
Section 7(e) hereof or subsection (e), shall thereafter have
the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully
paid, non assessable and freely tradeable Common Shares of the
Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the
number of Preferred Share Fractions for which a Right is
exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such shares for which a Right was
exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that
product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50% of
the current market price (determined pursuant to Section
11(d)(i) hereof) per Common Share of such Principal Party on
the date of consummation of such Section 13 Event,
2. such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this
Agreement;
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3. the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply only to
such Principal Party following the first occurrence of a
Section 13 Event;
4. such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the
Rights; and
5. the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section
13 Event.
2. "Principal Party" shall mean
1. in the case of any transaction described in clause
(x) or (y) of the first sentence of subsection (a), the Person
that is the issuer of any securities into which Common Shares
of the Company are converted in such merger or consolidation,
and if no securities are so issued, the Person that is the
other party to such merger or consolidation; and
2. in the case of any transaction described in clause
(z) of the first sentence of subsection (a), the Person that
is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, "Principal Party" shall refer
to such other Person, and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value.
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3. The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number-of authorized shares of its Common Shares that have
not been issued or reserved for issuance to permit the exercise in full
of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this section 13 and
further providing that, as soon as practicable after the date of any
Section 13 event, the Principal Party will
1. prepare and file a registration statement under
the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
Expiration Date; and
2. will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights that have not theretofore been exercised shall thereafter become
exercisable solely in the manner described in Section 13(a).
4. Notwithstanding anything in this Agreement to the contrary,
Section 13 (other than this subsection (d)) shall not be applicable to,
and the term "Section 13 Event" shall not include, a transaction
described in subparagraphs (x) and (y) of Section 13(a) if (i) such
transaction is consummated with a Person, or Persons who acquired
Common Shares pursuant to a tender offer or exchange offer for all
outstanding Common Shares that complies with the, provisions of Section
11(a)(ii)(B) hereof (or a wholly owned Subsidiary of any such Person or
Persons), (ii) the price per Common Share offered in such transaction
is not less than the price per Common Share paid to all holders of
Common Shares whose shares were purchased pursuant to such tender offer
or exchange offer and (iii) the form of consideration being offered to
the remaining holders of Common Shares pursuant to such transaction is
the same as the form of consideration paid pursuant to such tender or
exchange offer. Upon consummation of any such transaction contemplated
by this subsection (d), all Rights hereunder shall expire.
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5. In the event that the Rights become exercisable under
subsection (a) (except as provided in subsection (d)), the Company, by
action of a majority of the Continuing Directors in office at the time,
may agree with the Principal Party that the Principal Party shall
permit the Rights to be exercised for 50% of the Common Shares of the
Principal Party that would otherwise be purchasable under subsection
(a), in consideration of the surrender to the Principal Party, as the
successor to the Company under subsection (a) (ii), of the Rights so
exercised and without other payment of the Purchase Price. Rights
exercised under this subsection (e) shall be deemed to have been
exercised in full and shall be canceled.
Section 14. Fractional Rights and Fractional Shares.
1. The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates that evidence
fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a
whole Right. For purposes of this subsection (a), the current market
value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on'
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of
the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
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2. The Company shall not be required to issue fractions of
Preferred Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares, except in each
case for fractions which are integral multiples of Preferred Shares in
lieu of fractional Preferred Shares that are not integral multiples of
Preferred Shares, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of a Preferred Share. For purposes of this subsection (b),
the current market value of one Preferred Share shall be the closing
price of a Preferred share (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such
exercise.
3. Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of common Shares upon exercise
of the Rights or to distribute certificates that evidence fractional
Common Shares. In lieu of fractional Common Shares, the Company may pay
to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Common Share. For
purposes of this subsection (c), the current market value of one Common
Share shall be the closing price of one Common Share (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
4. The holder of a Right or a beneficial interest in a Right
by the acceptance thereof expressly waives his right to receive any
fractional Rights or any fractional Common Shares upon exercise of a
Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement other than those vested in the Rights Agent in Section 18, are vested
in the respective registered holders of the Rights Certificates (and, prior to
the Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights or beneficial interests therein, it
is specifically acknowledged that the holders of Rights or beneficial interests
therein would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the obligations
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hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right or a
beneficial interest in a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other such holder that:
1. prior to the Distribution Date, beneficial interests in the
Rights will be transferable only in connection with the transfer of
Common Shares;
2. after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or Offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
3. subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in whose
name a Rights Certificate (or, prior to the Distribution Date the
associated Common Share certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Share certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to
the contrary; and
4. notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or a beneficial interest in a Right or other
Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation
or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to
have any such order, decree or ruling lifted or otherwise overturned as
soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Preferred
Share Fractions or any other securities of the
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Company (including the Common Shares) that may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate-action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
1. 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 disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent, for and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
2. The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Shares 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 or Change of Name of Rights Agent.
1. 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
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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, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section
21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency and trust 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 a
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
2. In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates
or beneficial interests in the Rights, by their acceptance thereof, shall be
bound:
1. The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the written 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.
2. Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of recurrent market price') be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the
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Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
3. The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
4. The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
5. 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 Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or Section
13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt of a Certificate
furnished pursuant to Section 12, describing any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to
be issued pursuant to this Agreement or any Rights Certificate or as to
whether any Common Shares or Preferred Shares will, when so issued, be
validly authorized and issued, fully paid and nonassessable:
6. The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
7. 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, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions
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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. 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 Rights Agreement and the date
on and/or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after
the date any officer of the 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), unless the Rights Agent shall have received
written instructions in response to such application specifying the
action to be taken or omitted.
8. 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 and none of
such actions shall constitute a breach of trust. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
9. The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the selection and
continued employment thereof.
10. No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
11. If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an
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affirmative response to clause 1 and/or 2 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' prior written notice mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' prior written notice mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares and Preferred Shares, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
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, doing business
and in good standing under the laws of the United States or of any state, having
a principal office in the State of New York or the Commonwealth of Pennsylvania,
that is authorized by law to exercise corporate trust and stock transfer powers
and is subject to supervision or examination by federal or state authority and
that has at the time of its-appointment as Rights Agent a combined capital and
surplus adequate in the judgment of a majority of Continuing Directors in office
at the time to assure the performance of its duties hereunder and the protection
of the interests of the Company and the holders of Rights or beneficial
interests therein, or (b) an Affiliate of a corporation described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and Preferred Shares and mail a notice thereof in writing to
the registered holders of the Rights Certificates or, prior to the Distribution
Date, to the registered holders of the Common Shares. Failure to give any notice
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provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance, sale or delivery of Common Shares following the Distribution
Date and prior to the redemption-or expiration of the Rights, the Company (a)
shall, with respect to Common Shares so issued, sold or delivered pursuant to
the exercise of stock options, stock appreciation rights grants or awards
outstanding on the Distribution Date under any benefit plan or Arrangement for
employees or directors, or upon the exercise, conversion or exchange of
securities outstanding on the Record Date or hereinafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
1. The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the close of business on the
tenth day following a Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the
close of business on the tenth day following the Record Date), or (ii)
the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.0l per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price") and the Company may, at its option, pay the Redemption Price
either in Common Shares (based on the "current market price", as
defined in Section 11(d)(i) hereof, of the Common Shares at the time of
redemption) or cash; provided, however, if the Board of
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Directors of the Company authorizes redemption of the Rights in either
of the circumstances set forth in the following clauses (i) and (ii),
of this proviso, then there must be Continuing Directors then in office
and such authorization shall require the concurrence of a majority of
such Continuing Directors: (i) such authorization occurs on or after
the time a Person becomes an Acquiring Person, or (ii) such
authorization occurs on or after the date of a change (resulting from a
proxy or consent solicitation) in a majority of the directors in office
at the commencement of such solicitation if any Person who is a
participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of Directors
of the Company has determined in good faith) that such Person (or any
of its Affiliates or Associates) intends to take, or may consider
taking, any action that would result in such Person becoming an
Acquiring Person or that would cause the occurrence of a Triggering
Event unless, concurrent with such solicitation, such Person (or one or
more of its Affiliates or Associates) is making a cash tender offer
pursuant to Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding Common Shares
not beneficially owned by such Person (or by its Affiliates or
Associates) at a price and on terms that provide fair value to all
shareholders, as determined by at least a majority of the Continuing
Directors, taking into account all factors deemed relevant including,
without limitation, such factors set forth in Section 11(a)(ii)(B)
hereof. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired.
2. Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right so held. Promptly
after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the
Common Shares. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
3. In deciding whether or not to exercise the Company's right
of redemption hereunder, the directors of the Company shall act in good
faith, in a manner they reasonably believe to be in the best interests
of the Company and with such care, including
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reasonable inquiry, skill and diligence, as a Person of ordinary
prudence would use under similar circumstances.
Section 24. Notice of Certain Events.
1. In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular
quarterly dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction
or a series-of related 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 (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), 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 a Rights Certificate, to the extent feasible and
in accordance with Section 25 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of Preferred
Shares for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of
such proposed action or the date of participation therein by the
holders of Preferred Shares, Whichever shall be the earlier.
2. Upon the occurrence of a Section 11(a)(ii) Event, (i) the
Company shall as soon as practicable thereafter give to each holder of
a Right, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such-event, which shall specify
the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof,
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and (ii) all references in the preceding paragraph to Preferred Shares
shall be deemed thereafter to refer to Common Shares and/or, if
appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
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:
Charming Shoppes, Inc.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate 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:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date to the holder of certificates representing common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. Supplements and Amendments.
1. Prior to the Distribution Date the Company may, 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
Common Shares. From and after the Distribution Date 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 Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective
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or inconsistent with any other provisions herein, (iii) to shorten or
lengthen any time period hereunder (which lengthening or shortening,
following the first occurrence of an event set forth in clauses (i) and
(ii) of the proviso to Section 23(a) hereof, shall be effective only if
there are Continuing Directors and shall require the concurrence of a
majority of such Continuing Directors), or (iv) to change or supplement
the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the
interests of the holders of Rights Certificates; provided, this
Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company that 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. Prior to the Distribution Date, the interests of the
beneficial owners of Rights shall be deemed coincident with the
interests of the holders of Common Shares.
2. In deciding whether or not to supplement or amend this
Agreement, the directors of the Company shall act in good faith, in a
manner they reasonably believe to be in the best interests of the
Company and with such care, including reasonable inquiry, skill and
diligence, as a Person of ordinary prudence would use under similar
circumstances, and they may consider the effects of any action upon
employees, suppliers and customers of the Company and upon communities
in which offices or other establishments of the Company are located,
and all other pertinent factors.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company (with, where specifically provided for
herein, the concurrence of the Continuing Directors) shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board (with, where specifically provided for
herein, the concurrence of the
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Continuing Directors) 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 administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend or supplement the 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
(with, where specifically provided for herein, the concurrence of the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board or the Continuing Directors to any liability to the
holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Shares) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Shards).
Section 30. 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 for any purpose or under
any set of circumstances or as applied to any Person, such invalid, void or
unenforceable term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all other
circumstances and as applied to all other Persons; and 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;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term provision, covenant or restriction is held by such
Court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Without limiting the foregoing, if any provisions requiring that a determination
be made by less than the entire Board (or at a time or with the concurrence of a
group of directors consisting of less than the entire Board) is held by a court
of competent jurisdiction or other authority to be
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invalid, void or unenforceable, such determination shall then be made by the
Board in accordance with applicable law and the Company's articles of
incorporation and by-laws.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Pennsylvania and for all purposes shall be governed
by and construed in accordance with the laws of such jurisdiction applicable to
contracts made and to be performed entirely within such jurisdiction.
Section 32. 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 33. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CHARMING SHOPPES, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
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EXHIBIT A
RESOLUTION OF THE BOARD OF DIRECTORS OF
CHARMING SHOPPES, INC.
RESOLVED, that pursuant to Section 1522 of the Pennsylvania Business
Corporation Law and the authority expressly vested in the Board of Directors of
Charming Shoppes, Inc. (the "Corporation") by Article FIVE of the Amended and
Restated Articles of the Corporation, the Board of Directors hereby adopts the
following resolutions:
WHEREAS, in April of 1989 the Corporation previously filed a
Certificate of Designations (the "Certificate of Designations") fixing and
determining the voting rights, designations, preferences, qualifications,
privileges, limitations, restrictions, options, conversion rights and other
special or relative rights of the first series of the Series Preferred Stock,
par value $1.00 per share, which consists of 300,000 shares and was designated
as Series A Junior Participating Preferred Shares (the "Series A Preferred
Shares"); and
WHEREAS, the Corporation currently has in effect a shareholders' rights
plan under which, in the event certain circumstances occur, the Corporation may
issue one three-hundredth of a share of the Series A Preferred Shares for each
outstanding share of the Corporation's then outstanding common stock, par value
$.10 per share (each, a "Common Share"); and
WHEREAS, the Corporation's current shareholders' rights plan expires on
the close of business April 26, 1999; and
WHEREAS, the Board of Directors has approved the adoption of a new
shareholders' rights plan that will commence on the close of business on April
26, 1999; and
WHEREAS, the Board of Directors believes that it is in the best
interests of the Corporation to increase the number of authorized shares of
Series A Preferred Shares and make certain amendments to the Certificate of
Designations;
WHEREAS, the Board of Directors is authorized by the Corporation's
Amended and Restated Articles of Incorporation to establish from time to time
the number, voting rights, designations, preferences, qualifications,
privileges, limitations, restrictions, options, conversion rights and other
special or relative rights of the preferred stock of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors deems it
advisable to and hereby does, increase the number of authorized shares of the
Series A
50
Preferred Shares and amend the rights preferences, qualifications, limitations
and restrictions of the Series A Preferred Shares as follows:
1. Authorized Number. The number of authorized shares constituting the
Series A Preferred Shares shall be increased by 200,000 shares, such that the
aggregate number of authorized Series A Preferred Shares shall be 500,000.
2. Rights, Preferences, Qualifications, Limitations and Restrictions.
The rights preferences, qualifications, limitations and restrictions of the
Series A Preferred Shares shall be amended such that all references to April 27,
1989 shall be deemed to be references to April 26, 1999.
AND BE IT FURTHER RESOLVED, that the proper officers of the Corporation
be, and each of them hereby is, authorized and directed to do and perform or
cause to be done and performed all such acts, deeds and things, and to make,
execute and deliver, or cause to be made, executed and delivered, all such
agreements, undertakings, documents, instruments or certificates, in the name
and on behalf of the Corporation and under its corporate seal or otherwise, and
to pay all such expenses and taxes, as each such officer or officers shall, in
his or their sole discretion, determine to be necessary, proper or advisable to
effectuate or carry out fully the purpose and intent of the foregoing
resolutions, such determination to be evidenced conclusively by the taking of
such action or the resolutions, such determination to be evidenced conclusively
by the taking of such action or the execution or delivery of such agreements,
documents, instruments or certificates, as the case may be.
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EXHIBIT B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER APRIL 25, 2009 OR AFTER EARLIER REDEMPTION BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
---------------
* The bracketed portion of the legend shall be inserted only if
applicable and shall replace the preceding sentence.
52
CHARMING SHOPPES, INC.
RIGHTS CERTIFICATE
This certifies that American Stock Transfer & Trust Company, 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 26, 1999
(the "Rights Agreement"), between Charming Shoppes, Inc., a Pennsylvania
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 P.M.
(New York, New York time) on April 25, 2009 at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent, one
three-hundredth of a fully paid, nonassessable Series A Junior Participating
Preferred Share (the "Preferred Share") of the Company, at a purchase price (the
"Purchase Price") of $20.00 per one three-hundredth of a Preferred Share (such
fraction, a "Preferred Share Fraction"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related Certificate
duly executed. Except as provided in Sections 11(q) and 13(e) of the Rights
Agreement, the Purchase Price shall be paid in cash. The number of Rights
evidenced by this Rights Certificate (and the number of Preferred Share
Fractions that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per Preferred Share Fraction set forth above, are the number and
Purchase Price as of April 26, 1999, based on the Preferred Shares as
constituted at such date. Terms used herein but not defined herein shall have
the meanings ascribed to them in the Rights Agreement.
Except as otherwise provided in the Rights Agreement, upon the
occurrence of any Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of any such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Preferred Shares or other securities that may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events.
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53
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Share Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights 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 at a redemption
price of $.01 per Right at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement), and (ii) the Final
Expiration Date.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company (including Common Shares) that 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 shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
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This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of April 26, 1999
ATTEST CHARMING SHOPPES, INC.
By
--------------------------- ----------------------------
Secretary Title:
Countersigned
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
------------------------
Authorized Officer
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________ hereby sells,
assigns and transfers unto _____________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________ Attorney,
to transfer the within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ______________ ___, _______
_______________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ________________, ________ ______________________
Signature
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Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: CHARMING SHOPPES, INC.:
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or Common Shares or such other securities of
the Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
________________________________________________________________________________
Dated: _____________ ___, ________
_________________________
Signature
Signature Guaranteed:
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Certificate
The undersigned hereby certifies by checking the appropriate boxes that
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, ________ _________________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of Charming Shoppes, Inc. (the "Company") has
declared a dividend distribution of one Right for each outstanding share of
Common Stock, $.10 par value (each, a "Common Share"), of the Company payable
effective immediately on the close of business on April 26, 1999 to shareholders
of record at the close of business on April 12, 1999. Each Right entitles the
registered holder to purchase from the Company a unit consisting of one
three-hundredth of a share (a "Unit") of the Series A Junior Participating
Preferred Shares, par value $1.00 per share, of the Company (the "Preferred
Shares"), or a combination of securities and assets of equivalent value, at a
Purchase Price of $20.00 per Unit, subject to adjustment. 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 Company, as Rights
Agent.
Initially, ownership of the Rights will be evidenced by the Common
Share certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Shares and a Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 20% or more of the outstanding Common Shares
(the "Stock Acquisition Date"), or (ii) the close of business on such date as
may be fixed by the Board of Directors, which date shall not be more than 65
days following the commencement of a tender offer or exchange offer that would
result in a person or group beneficially owning 20% or more of the outstanding
Common Shares. Until the Distribution Date, (i) the Rights will be evidenced by
the Common Share certificates and will be transferred with and only with such
Common Share certificates, (ii) new Common Share certificates issued after April
26, 1999 will contain a notation incorporating the Rights Agreement by reference
and (iii) the surrender for transfer of any certificates for Common Shares
outstanding will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on April 25, 2009, unless earlier redeemed by
the Company as described below or unless a transaction under Section 13(d) of
the Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, and except in connection with the exercise of employee
stock options or stock appreciation rights or under any other benefit plan for
employees or directors or in connection with the exercise of warrants or
60
conversion of convertible securities, only Common Shares issued after April 12,
1999 and prior to the Distribution Date will be issued with Rights.
Except in the circumstances described below, after the Distribution
Date each Right will be exercisable for one three-hundredth of a Preferred Share
(a "Preferred Share Fraction"). Each Preferred Share Fraction carries voting and
dividend rights that are intended to produce the equivalent of one Common Share.
The voting and dividend rights of the Preferred Shares are subject to adjustment
in the event of dividends, subdivisions and combinations with respect to the
Common Shares of the Company. In lieu of issuing certificates for Preferred
Share Fractions which are less than an integral multiple of one Preferred Share
(i.e., 300 Preferred Share Fractions), the Company may pay cash representing the
current market value of the Preferred Share Fractions.
In the event that at any time following the Stock Acquisition Date, (i)
the Company is the surviving corporation in a merger with an Acquiring Person
and its Common Shares remain outstanding, (ii) a Person becomes the beneficial
owner of more than 20% of the then outstanding Common Shares other than pursuant
to a tender offer that provides fair value to all shareholders, (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as set forth
in the Rights Agreement, or (iv) during such time as there is an Acquiring
Person an event occurs that results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., a reverse stock split), each
holder of a Right will thereafter have the right to receive, upon exercise,
Common Shares (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. In lieu of requiring payment of the Purchase Price upon exercise of the
Rights following any such event, the Company may permit the holders simply to
surrender the Rights, in which event they will be entitled to receive Common
Shares (and other property, as the case may be) with a value of 50% of what
could be purchased by payment of the full Purchase Price. Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in
clauses (i), (ii), (iii) or (iv) of this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person who was involved in the transaction
giving rise to any such event will be null and void. However, Rights are not
exercisable following the occurrence of any of the events set forth above until
such time as the Rights are no longer redeemable by the Company as set forth
below.
For example, at an exercise price of $20.00 per Right, each Right not
otherwise voided following an event set forth in the preceding paragraph would
entitle its holder to purchase $40.00 worth of Common Shares (or other
consideration, as noted above) for $20.00. Assuming that the Common Shares had a
per share value of $10.00 at such time, the holder of each valid Right would be
entitled to purchase four Common Shares for $20.00. Alternatively, the Company
could permit the holder to surrender each Right in exchange for
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stock or cash equivalent to two Common Shares (with a value of $20.00) without
the payment of any consideration other than the surrender of the Right.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger that is described in, or that follows a tender offer or exchange offer
described in, the second preceding paragraph), or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights that previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common shares of the
acquiring company having a value equal to two times the exercise price of the
Right. Again, provision is made to permit surrender of the Rights in exchange
for one-half of the value otherwise purchasable. The events set forth in this
paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Shares
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Shares on the last
trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right. That ten-day redemption period may be extended by the Board of Directors
so long as the Rights are still redeemable. Immediately upon the action of the
Board of Directors ordering redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in
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the event that the Rights become exercisable for Preferred Shares (or other
consideration) of the Company or for common shares of the acquiring company as
set forth above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes that do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. 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 herein by reference.
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