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THE PEP BOYS - MANNY, MOE & XXXX
and
First Union National Bank,
Rights Agent
Rights Agreement
Dated as of December 5, 1997
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TABLE OF CONTENTS
Page
Section 1. Certain Definitions.............................................1
Section 2. Appointment of Rights Agent.....................................3
Section 3. Issue of Right Certificates.....................................3
Section 4. Form of Right Certificates......................................5
Section 5. Countersignature and Registration...............................6
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates....................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...7
Section 8. Cancellation and Destruction of Right Certificates..............8
Section 9. Reservation and Availability of Common Shares...................8
Section 10. Common Shares Record Date......................................9
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights......................................................9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power..................................................19
Section 14. Fractional Rights and Fractional Shares........................21
Section 15. Rights of Action...............................................22
Section 16. Agreement of Right Holders.....................................22
Section 17. Right Certificate Holder Not Deemed a Shareholder..............23
Section 18. Concerning the Rights Agent....................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent......24
Section 20. Duties of Rights Agent.........................................25
Section 21. Change of Rights Agent.........................................27
Section 22. Issuance of New Right Certificates.............................28
Section 23. Redemption.....................................................29
Section 24. Notice of Certain Events.......................................30
Section 25. Notices....................................................... 30
Section 26. Supplements and Amendments.....................................31
Section 27. Successors.....................................................32
Section 28. Benefits of this Agreement.....................................32
Section 29. Severability...................................................32
Section 30. Governing Law..................................................32
Section 31. Counterparts...................................................32
Section 32. Descriptive Headings...........................................33
Section 35. Determination and Actions by the Board.........................33
RIGHTS AGREEMENT
Agreement, dated as of December 5, 1997, between The Pep Boys - Manny, Moe
& Xxxx, a Pennsylvania corporation (the "Company"), and First Union National
Bank, a national banking association, as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has announced and declared a dividend
of one right (a "Right") for each Common Share (as defined in Section 1(f)
hereof) of the Company outstanding on December 31, 1997 and has authorized the
issuance of one Right with respect to each Common Share that shall become
outstanding between December 31, 1997 and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are defined in
Sections 3 and 7 hereof), each Right initially representing the right to
purchase one Common Share.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding but shall not include (i) the Company, (ii) any
wholly-owned Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company or (iv) any entity holding shares of
capital stock of the Company for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person who becomes the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company shall, after such share
purchases by the Company, become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be deemed to be an "Acquiring
Person".
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations, as in effect
on the date of this
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Agreement, under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). (c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which 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
ownership" of (as determined pursuant to Rule 13d-3 under the Exchange Act),
including pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report);
(ii) which such Person or any of such Person's Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section 1(c)(ii)(B))
or disposing of any securities of the Company;
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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.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the Commonwealth of Pennsylvania or the
state in which the principal office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(e) "close of business" on any given date shall mean 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
(f) "Common Shares" when used with reference to the Company shall mean the
shares of Common Stock, par value $1.00 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or, if such Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(g) "Person" shall mean any individual, partnership, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(h) "Shares Acquisition Date" shall mean the earlier of the date of (i) the
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such or (ii) the public disclosure of facts by the Company or an Acquiring
Person indicating that an Acquiring Person has become such.
(i) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interests is owned, directly or indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
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The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Sec Issue of Right Certificates. (a) Until the earlier of (i) the close of
businesstion 3. Issue of Right Certificates. (a) Until the earlier of (i) the
close of business on the tenth day after the Shares Acquisition Date or (ii) the
close of business on the tenth day (or such later date as the Board of Directors
shall determine) after the date of the commencement of (within the meaning of
Rule 14d-2 under the Exchange Act), or first public announcement of the intent
of any Person to commence, a tender or exchange offer the consummation of which
would result in any Person's becoming an Acquiring Person (including any such
date which is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates referred to in clauses (i) and (ii) of this
Section 3(a) being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates for Common Shares shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. The Board of Directors of the Company may defer the
date set forth in clause (ii) of the preceding sentence to a specified later
dated or to an unspecified later dated, each to be determined (with the
concurrence of a majority of the Independent Directors (as such term is defined
in Section 23(a) hereof) following a Shares Acquisition Date) by action of the
Board of Directors of the Company. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit A hereto, evidencing one Right
for each Common Share so held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On or as soon as practicable after December 31, 1997, the Company will
send or cause to be sent a copy of a Summary of Rights to Purchase Common
Shares, in substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on December 31, 1997 at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Shares outstanding as of December 31, 1997, until the Distribution Date,
the Rights will be evidenced by such certificates for Common Shares registered
in the names of the holders thereof, together with a copy of the Summary of
Rights. Until the Distribution Date (or the earlier
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certificate for Common Shares outstanding on December 31, 1997, with or without
a copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(c) Certificates issued for Common Shares (including, without limitation,
certificates issued upon transfer or exchange of Common Shares) after December
31, 1997 but prior to the earliest of the Distribution Date, the Redemption Date
or the Final Exthe transfer of the Rights associated with the Common Shares
represented thereby.piration Date shall have impressed on, printed on, or
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between The Pep
Boys - Manny, Moe & Xxxx and First Union National Bank, dated as
of December 5, 1997, as amended (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of
The Pep Boys - Manny, Moe & Xxxx. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Pep Boys - Manny, Moe & Xxxx will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under certain
circumstances, Rights issued to Acquiring Persons or any
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
Section 4. Form of Right Certificates. Each Right Certificate (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A 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. Each Right Certificate
shall entitle the holder
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thereof to purchase such number of Common Shares as shall be set forth therein
at the price per share set forth therein (the "Purchase Price"), but the number
and kind of such shares and the Purchase Price shall be subject to adjustment as
provided herein. In addition, the Company shall have the right to attach a
certificate to any Right Certificate providing for the holder thereof to certify
whether or not such Person is or was an Acquiring Person or an Affiliate or
Associate thereof or whether such Person acquired the Rights evidenced by such
Right Certificate from any such Person. In the event the Company attaches such a
certificate to any Right Certificate, proper execution of such certificate shall
be a prerequisite to the exercise of the Rights associated therewith as set
forth in the applicable provisions of this Agreement.
Section 5. Countersignature and Registration. The Right 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, shall have
affixed thereto the Company's seal or a facsimile thereof and shall be attested
by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
an authorized signatory of 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 Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by an
authorized signatory of the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificates may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal offices, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
6
Subject to the provisions of Section 14 hereof, any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Common Shares as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent and shall surrender the Right Certificate or Right Certificates
to be transferred, split up, combined or exchanged at the principal office of
the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment from the holders
of Right Certificates 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 such Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's or the Rights
Agent's request, 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 Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price for each Common Share as to which the Rights are
exercised, at or prior to the earlier of (i) the close of business on December
31, 2007 (the "Final Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date").
(b) The Purchase Price for each Common Share pursuant to the exercise of a
Right shall initially be $125.00, shall be subject to adjustment from time to
time as provided in Sections
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11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Shares
(or make available, if the Rights Agent is the transfer agent) certificates for
the number of Common Shares to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of funds to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
promptly after receipt of such certificates, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt, promptly deliver such funds to or upon the order of
the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Common Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Common Shares, or any authorized and issued Common
Shares held in its treasury, the number of Common Shares that will be sufficient
to permit the exercise in full of all outstanding Rights.
So long as the Common Shares issuable upon the exercise of 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 reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all Common Shares delivered upon exercise of Rights
shall, the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or deliver of the Right Certificates or of
any Common Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates for the Common Shares in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates for Common
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. Common Shares Record Date. Each Person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Common Shares transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day
9
on which the Common Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate, as
such, 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 or to receive dividends or other distributions,
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 of Shares or Number of
Rights. The Purchase Price, the number of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of shares or (D) issue any shares of its capital
stock in a reclassification of the Common 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), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Common
Shares transfer books of the Company 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 Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this
Agreement, 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 shall remain
outstanding and not changed into or exchanged for stock or other
securities of any other Person or
10
the Company or cash or any other property, (2) shall, in one or
more transactions, other than in connection with the exercise of
Rights or in connection with the exercise or conversion of
securities exercisable or convertible into capital stock of the
Company or any of its Subsidiaries, transfer any assets to the
Company or any of its Subsidiaries in exchange (in whole or in
part) for shares of any class of capital stock of the Company or
any of its Subsidiaries or for securities exercisable for or
convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries or otherwise obtain from the
Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital
stock of the Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries (other
than as part of a pro rata distribution to all holders of such
shares of any class of capital stock of the Company or any of its
Subsidiaries), (3) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise dispose (in one or more
transactions) to, from or with, as the case may be, the Company
or any of its Subsidiaries, assets, including securities, on
terms and conditions less favorable to the Company in the
reasonable determination of a majority of the Independent
Directors then on the Board of Directors or, if at such time
there shall be only one Independent Director, by such sole
remaining Independent Director, than the Company would be able to
obtain in arm's-length negotiation with an unaffiliated third
party, (4) shall receive any compensation from the Company or any
of the Company's Subsidiaries other than compensation as a
director or for full-time employment as a regular employee, in
either case at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (5) shall receive the benefit,
directly or indirectly (except proportionately as a shareholder),
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 any tax credits or
other tax advantage provided by the Company or any of its
Subsidiaries, or
(B) 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 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 date hereof, become the Beneficial
Owner of 15% or more of the Common Shares then outstanding,
unless the event causing the 15% threshold to be crossed (1) is a
transaction set forth
11
in Section 13(a), (2) is an acquisition of Common Shares pursuant
to a tender offer or an exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a
majority of the Independent Directors then on the Board of
Directors or, if at such time there shall be only one Independent
Director, by such sole remaining Independent Director, to be (x)
at a price that is fair to shareholders (taking into account all
factors which such members of the Board deem relevant including,
without limitation, prices which could reasonably be achieved if
the Company or its assets were sold on an orderly basis designed
to realize maximum value) and (y) otherwise in the best interests
of the Company and its shareholders, or (3) is the result of an
acquisition of Common Shares by the Company which, by reducing
the number of Common Shares outstanding, increases the
proportionate number of Common Shares beneficially owned by such
Person to 15% or more of the Common Shares then outstanding;
provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the Common Shares then outstanding by
reason of Common Share purchases by the Company and shall
thereafter become the Beneficial Owner of any additional Common
Shares, then such Person shall be deemed to be the Beneficial
Owner of 15% or more of the Common Shares, or
(C) 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 Subsidiary of the Company (whether
or not with or into or otherwise involving an Acquiring Person)
which has the effect, directly or indirectly, of increasing by
more than 1% the proportionate share of the outstanding shares of
any class of equity securities or of securities exercisable for
or convertible into securities of the Company or any of its
Subsidiaries which is directly or indirectly owned by any
Acquiring Person or any Associate or Affiliate of any Acquiring
Person.
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof in accordance with the terms of this Agreement, such
number of Common Shares as shall equal the result obtained by (x) multiplying
the then-current Purchase Price by the number of Common Shares for which a Right
is then exercisable and (y) dividing that product by 50% of the current per
share market price of the Common Shares (determined pursuant to Section 11(d)
hereof) on the fifth day after the earlier of the date of the
12
occurrence of, or the date of the first public announcement of, any one of the
events listed above in this subparagraph (ii); provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). Notwithstanding the foregoing, upon the occurrence of any of
the events listed above in this subparagraph (ii), any Rights that are or were
on or after the earlier of the Distribution Date or Shares Acquisition Date
beneficially owned by the Acquiring Person or any Associate or Affiliate of the
Acquiring Person shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall not enter into any transaction of the kind listed in subparagraph (A) or
(C) of this subparagraph (ii) if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Any Right Certificate issued pursuant to Section 3
hereof that represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate thereof and any Right Certificate issued at any time upon
the transfer of any Rights to an Acquiring Person or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and
any Right Certificate issued pursuant to Section 6, 7(d) or 22 hereof or this
Section 11 upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain the following legend
(provided, however, that the Rights Agent shall not be responsible for affixing
such legend unless a responsible officer of the Rights Agent has actual
knowledge as to the foregoing circumstances or the Company has notified the
Rights Agent in writing thereof):
The Rights represented by this Right Certificate were issued to a
Person who was an Acquiring Person or an Affiliate or any
Associate of an Acquiring Person or a nominee thereof. This Right
Certificate and the Rights represented hereby may become void in
the circumstances specified in Section 11(a)(ii) of the Rights
Agreement.
The term "Responsible Officer," when used with respect to the Rights Agent
herein, shall mean the chairman of the board of directors, the vice Chairman of
the board, the president, each vice president, the secretary, the treasurer,
each assistant vice president, each corporate trust officer or any other officer
of the Rights Agent customarily performing functions similar to those performed
by the persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is
13
referred because of his knowledge of and familiarity with the particular
subject.
(iii) In the event that there shall not be sufficient treasury shares or
authorized but unissued Common Shares to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights. In the alternative, in such an event,
if deemed desirable by at least a majority of the Independent Directors then the
on the Board of Directors or, if at such time there shall be only one
Independent Director, by such sole remaining Independent Director, the Company
shall (A) determine the value of the Common Shares which each holder of a Right
would have been entitled to receive upon payment of the applicable Purchase
Price had there been a sufficient number of authorized but unissued Common
Shares to permit the exercise in full of the Rights (except as otherwise
provided herein) over the value of the Common Shares that the Company has
available for issuance upon exercise of the Rights (the "Spread"), and (B) make
adequate provision to substitute therefor, cash, Common Shares and/or other
equity securities of the Company, debt securities of the Company, other assets
or any combination of the foregoing (whichever substituted, the "Substitute
Consideration"). Such Substitute Consideration shall have an aggregate value
equal to the Spread, where such aggregate value has been determined by at least
a majority of the Independent Directors, as described above. To the extent that
action is taken pursuant to this Section 11(a)(iii), the Company shall provide
that such action shall apply uniformly to all outstanding Rights (except as
otherwise provided herein) and may suspend the exercisability of the Rights in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to this subsection.
Notwithstanding any other provision in this Agreement, the Company shall not be
obligated to pay Substitute Consideration in the event of any exercise of Rights
if and to the extent a determination is made by a majority of the Independent
Directors, as described above, (xxx) that such payment could be in violation of
applicable law, or (yyy) that such payment could result in a decrease in fair
market value per Common Share in excess of that which would have occurred if
sufficient Common Shares were authorized to permit exercise in full of the
Rights in accordance with Section 11(a)(ii) and such Rights were so exercised in
full for such Common Shares.
(b) In case the Company shall fix a record date for the issuance of rights
or warrants to all holders of Common Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Common Shares (or securities convertible into Common Shares) at a price
per Common Share (or having a conversion price per Common Share, if a security
convertible into Common Shares) less than the
14
current per share market price of the Common Shares (as defined in Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Common Shares outstanding on such record date plus the
number of Common Shares which the aggregate offering price of the total number
of Common 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 Common Shares
outstanding on such record date plus the number of additional Common 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 in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement delivered to the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights. Common
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event such
rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a cash dividend at a rate not in excess of 125% of the
rate of the last regular periodic cash dividend theretofore paid or a dividend
payable in Commons 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 per share market price of the Common Shares (as defined in
Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Common Share and the
denominator of which shall be such current per share market price of the Common
Shares. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
15
(d) For the purpose of any computation hereunder, the "current per share
market price" of the Common Shares on any date shall be deemed to be the average
of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current per share
market price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (i) a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then, and
in each such case, the "current per share market price" shall be appropriately
adjusted to reflect the current market price per Common Share equivalent. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the 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 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 the Nasdaq Stock Market
("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. 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 or
admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the State of New
York are not authorized or obligated by law or executive order to close. If the
Common Shares are not publicly held or not so listed or traded, "current per
share market price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement delivered to the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights.
16
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such 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 share as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10 and 13 hereof with respect to the Common 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 Common Shares
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 Section 11(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 shares (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the number of shares
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 substitution for any
adjustment in the number of Common Shares issuable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of Common Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right
17
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right 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 Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and 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 Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Shares issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Common Shares 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
issuing to the holder of any Right exercised after such record date the Common
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Common Shares and other capital stock or
securities of the Company, if any,
18
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 upon the occurrence of the event requiring
such adjustment.
(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 it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Shares, issuance
wholly for cash of any of the Common Shares at less than the current market
price, issuance wholly for cash of Common Shares or securities which by their
terms are convertible into or exchangeable for Common Shares, stock dividends or
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Common Shares shall not be
taxable to such shareholders.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 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
deliver to the Rights Agent and with each transfer agent for the Common Shares a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate in accordance with Section 25 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein and shall not be deemed to have knowledge of any such adjustment unless
and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Shares Acquisition Date, directly or
indirectly, (i) the Company shall consolidate with, or merge with and into, any
other Person, (ii) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Shares of the Company shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property, or (iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in
19
one or more transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person, then, and in each such case, and except as
contemplated by Section 13(d), proper provision shall be made so that (A) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof in accordance with the terms of
this Agreement, such number of validly authorized and fully paid, non-assessable
and freely tradable Common Shares of the Principal Party (as such term is
hereinafter defined) as shall be equal to the result obtained by (x) multiplying
the then-current Purchase Price by the number of Common Shares for which a Right
is then exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii)) and (y) dividing that product by 50% of the
current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (C) the term "Company" shall thereafter be deemed to refer to
such Principal Party; and (D) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean (i) in the case of any transaction
described in Section 13(a)(i) or (ii), the Person that is the issuer of any
securities into which Common Shares are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to such merger or consolidation, and (ii) in the case of any transaction
described in Section 13(a)(iii) 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, (A) if
the Common Shares of such Person are not at such time and have not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of another
Person the Common Shares of which are and have been so registered, "Principal
Party" shall refer to such other Person and (B) 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.
20
(c) (i) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized Common Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 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 Section 13(a) and (b) and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in Section 13(a), such Principal Party will (A) prepare and
file a registration statement under the Securities Act of 1933, as amended (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 (1) become effective as soon as practicable after
such filing and (2) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of the Expiration Date or the
Redemption Date, and (B) 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 Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(ii) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that an
event described in Section 13(a) shall occur at any time after the occurrence of
an event described in Section 11(a)(ii), the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in Section 13(a)(i) or (ii)
if (i) such transaction is consummated with a Person or Persons (or a Subsidiary
of any such Person or Persons) who acquired Common Shares pursuant to a tender
offer or exchange offer for all outstanding Common Shares which was approved by
at least a majority of Independent Directors in the manner described in Section
11(a)(ii)(B), (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 offer or exchange offer. Upon
21
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall
not be required to issue fractions of Rights or to distribute or cause the
Rights Agent to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with 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.
(b) The Company shall not be required to issue fractions of shares upon
exercise of the Rights or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Common Share. For purposes of this Section 14(b), the current
market value of a Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading day immediately prior to the date of such exercise.
22
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of any Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of any Common Shares), may, in his own behalf and for his own
benefit, enforce this Agreement, and may institute and maintain any suit, action
or proceeding against the Company to enforce this Agreement, or otherwise
enforce or act in respect of his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person (including, without limitation, the Company) subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer; and
(c) the Company may, and, upon appropriate instruction by the Company, the
Rights Agent shall, deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by anyone
other
23
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
(d) 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 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, that 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. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Common Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a 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 Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
in accordance with a fee schedule to be mutually agreed upon and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent and its directors, officers, employees
and agents 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 or such other indemnified party, for anything done or
omitted by the Rights Agent or such other indemnified party in connection with
the
24
acceptance and administration of this Agreement, including the costs and
expenses (including reasonable attorneys' fees) of defending against any claim
of liability in the premises.
The Rights Agent shall be fully 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 or the exercise or performance of its
duties hereunder in reliance upon any Right Certificate or certificate for
Common Shares or other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
instruction, 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, or
otherwise upon the advise of counsel as set forth in Section 20 hereof.
The indemnity provided in this Section 18 shall survive the expiration of
the Rights and the termination of this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
25
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written advice or 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
written advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) shall be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President or the 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 in conformity with
such certificate under the provisions of this Agreement.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of any provision of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor
26
shall it be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of 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 Right Certificate or as to whether any Common Shares will, when
so issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Right Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, any Vice President or the
Secretary of the Company, and to apply to any such officers for advice or
instructions in connection with its duties under this Rights Agreement, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or for any delay in
acting while awaiting instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed or be taken or omitted by the Rights
Agent under this Agreement and the date on or after which such action shall be
taken or such omission shall be effective. The Rights Agent shall not be liable
or any action taken by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though
27
it were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) At any time and from time to time after the Distribution Date, upon the
request of the Company, the Rights Agent shall promptly deliver to the Company a
list, as of the most recent practicable date (or as of such earlier date as may
be specified by the Company), of the holders of record of Rights.
(k) The Rights Agent undertakes only the express duties and obligations
imposed on it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent.
(l) Anything in this Agreement to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits).
(m) 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.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail. The Company shall promptly
notify the holders of the Right Certificates by first-class mail of any such
resignation. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Shares by registered or certified mail, and to the holders of the
28
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to such Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the Rights Agent or the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the State of New York or the
Commonwealth of Pennsylvania (or of any other state of the United States so long
as such corporation is authorized to do business as a banking institution in the
State of New York or the Commonwealth of Pennsylvania), in good standing, having
an office in the State of New York or the Commonwealth of Pennsylvania which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. 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 mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
29
Section 23. Redemption. (a) The Board of Directors of the Company may, at
its option, at any time prior to the close of business on the earlier of (x) the
tenth day following the Shares Acquisition Date (or such later date as a
majority of the Independent Directors shall determine, which determination to be
made prior to the close of business on the tenth day following the Shares
Acquisition Date) and (y) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided, however, that for
the purposes hereof the Board of Directors of the Company shall be entitled to
so redeem the Rights after the time at which a Person becomes an Acquiring
Person only if such redemption is approved by a majority of the Independent
Directors (as hereinafter defined) then on the Board of Directors, or, if at
such time there shall be only one Independent Director, by such sole remaining
Independent Director. "Independent Director" as used herein shall mean a
director who (i) is not an Acquiring Person, an Affiliate or Associate of any
Acquiring Person or a representative or nominee of an Acquiring Person and (ii)
either was a member of the Board of Directors of the Company prior to the date
hereof or who subsequently became a director of the Company and whose initial
election or initial nomination for election by the Company's shareholders
subsequent to such date was approved by a vote of a majority of the Board of
Directors of the Company, and by a majority of the Independent Directors then on
the Board of Directors or, if at such time there shall be only one Independent
Director, by such sole remaining Independent Director. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of an event described in Section 11(a)(ii) until such
time as the Company's right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, shares of Common Shares of
the Company (based on the current share market price of such Common Shares at
the time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, 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. Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any
30
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events. In case the Company shall propose (a)
to pay any dividend payable in stock of any class to the holders of Common
Shares or to make any other distribution to the holders of Common Shares (other
than a cash dividend at a rate not in excess of 125% of the rate of the last
regular periodic cash dividend theretofore paid), or (b) to offer to the holders
of Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Commons Shares other than a reclassification involving only the subdivision of
outstanding Common Shares), or (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Rights Agent and to each holder of a Right
Certificate, 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 the Common 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
(a) or (b) above at lease 20 days prior to the record date for determining
holders of the Common Shares for purposes of such action, and in the case of any
such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this Agreement
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a Right Certificate,
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.
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 Right Certificate to
or on the Company shall be sufficiently given or made if sent by hand delivery,
telecopy, facsimile transmission
31
or first-class mail, postage prepaid, addressed (until another address is
delivered in writing to the Rights Agent) as follows:
The Pep Boys - Manny, Moe & Xxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Union National Bank
NC 1153
1525 West X.X. Xxxxxx Boulevard, 3C3
Charlotte, North Carolina 28288-1153
Attention: Shareholder Services
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to holders of 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. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company 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 certificates
representing Common Shares and the Rights; provided, however, that if the effect
of such supplement or amendment would be to alter, amend or enlarge the scope or
extent of the Rights Agent's duties, liabilities or obligations under this
Agreement, such supplement or amendment shall only become effective with the
prior written consent of the Rights Agent. From and after the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company 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 or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
desirable, including, without limitation, the addition of other events requiring
adjustment to the Rights under Section 11(a)(ii) or 13 or procedures relating to
the redemption of the Rights,
32
which change, amendment or supplement shall not adversely affect the interests
of the holders of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of any such Person); 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, or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of Common Shares for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.
Section 27. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. 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 Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 29. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each Right 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 Commonwealth applicable to
contracts to be made and performed entirely within such Commonwealth.
33
Section 31. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 35. Determination and Actions by the Board. The Board (where
specifically provided for herein, acting by at least a majority of the
Independent Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (where specifically provided for herein, acting by at least
a majority of the Independent Directors) or to the Company (where specifically
provided for herein, acting by at least a majority of the Independent
Directors), or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (a) interpret
the provisions of this Agreement, and (b) make all calculations and
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (ii) below, all omissions with
respect to the foregoing) which are done, taken or made by the Board (where
specifically provided for herein, acting by at least a majority of the
Independent Directors) in good faith, shall (i) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (ii) not subject the Board or the Independent Directors to any
liability to the holders of the Rights.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE PEP BOYS - MANNY, MOE & XXXX
Attest:
By:/s/ Xxxxxxx X. XxXxxxx By:/s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------- -------------------------
Name: Xxxxxxx X. XxXxxxx Name: Xxxxxxxx X. Xxxxxxxxx
Title: Assistant Secretary Title: Chief Executive Officer
and President
[Seal]
FIRST UNION NATIONAL BANK
Attest:
By:/s/ Xxxx X. Xxxxxxx By:/s/ Xxxxxxx X. Xxxxx
---------------------- -----------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
[Seal]
35
Exhibit A
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 31, 2007 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. 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. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON
OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR A NOMINEE
THEREOF. THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OF THE RIGHTS AGREEMENT.]*
Right Certificate
THE PEP BOYS - MANNY, MOE & XXXX
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitled
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of December 5, 1997 (the "Rights Agreement") between The Pep
Boys - Manny, Moe & Xxxx, a Pennsylvania corporation (the "Company"), and First
Union National Bank, a national banking association, as Rights Agent (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(New York City time) on December 31, 2007, at the principal office of the Rights
Agent, or its successors as Rights Agent, one fully paid, non-assessable share
of Common Stock, par value $1.00 per share (the "Common Shares"), of the
Company, at a purchase price of $125.00 per share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of December 31, 1997, based on the Common Shares as
constituted at such date.
------------------
*The portion of the legend in brackets shall be inserted only if applicable as
provided under the Rights Agreement.
A-1
As provided in the Rights Agreement, the Purchase Price and the number of
Common Shares which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal offices of the Company and of
the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
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
A-2
Right Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-3
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ________________.
ATTEST: THE PEP BOYS - MANNY, MOE
& XXXX
___________________________ By___________________________
Corporate Secretary Name:
Title:
Countersigned:
FIRST UNION NATIONAL BANK
By____________________________
Authorized Signature
Date:____________________________
A-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
[To be executed by the registered holder if such holder desires
to transfer the Right Certificates.]
FOR VALUE RECEIVED ____________________________________
hereby sells, assigns and transfers unto ________________________
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[Please print name and address of transferee]
this Right Certificate and the Rights evidenced thereby, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ______________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution. Dated:___________________
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Signature
Signature Guaranteed:
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A-5
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is or was an Acquiring Person or an Affiliate or
Associate thereof.
Dated:___________________
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Signature
A-6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right
Certificate.)
To THE PEP BOYS - MANNY, MOE & XXXX:
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Right Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
Please insert social security
or other identifying number
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(Please print name and address)
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If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
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(Please print name and address)
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Dated:__________________
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Signature
A-7
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
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The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any person who is or was an Acquiring Person or an Affiliate or
Associate thereof.
Dated:_______________
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Signature
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NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Forms of Assignment
and Election is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an Assignment, will affix a legend to that effect on any Right
Certificates issued in exchange for this Right Certificate.
A-8
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
The Board of Directors of The Pep Boys - Manny, Moe & Xxxx (the "Company")
has declared a dividend distribution of one Right for each outstanding share of
common stock, par value $1.00 per share (the "Common Shares"), of the Company.
The distribution is payable on December 31, 1997 to shareholders of record on
that date. Each Right entitles the registered holder to purchase from the
Company one Common Share at a price of $125 per share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement"), dated as of December 5, 1997,
between the Company and First Union National Bank, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) ten days following a public announcement
that a person or group of affiliated or associated persons acquired, or obtained
the right to acquire, beneficial ownership of 15% or more of the Common Shares
(an "Acquiring Person") or (ii) ten days following the commencement or
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in any person's becoming an Acquiring Person
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of December 31, 1997, by such Common Share certificate with a
copy of this Summary of Rights attached thereto. The Rights Agreement provides
that, until the Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued after December
31, 1997 upon transfer or new issuance of the Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares, even without a copy of this
Summary of Rights attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on December 31, 2007, unless earlier redeemed by the Company as described
below.
The Purchase Price payable, and the number of Common 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 Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets (excluding
cash dividends at a rate not in excess of 125% of the rate of the last regular
periodic cash dividend theretofore paid or dividends payable in Common Shares)
or of subscription rights or warrants (other than those referred to above).
In the event that the Company were acquired in a merger or other business
combination transaction (except upon certain conditions, including the approval
of the Company's independent directors) or more than 50% of its assets or
earning power were sold, proper provision shall be made so that each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction would have
a market value of two times the exercise price of the Right. In the event that
the Company were the surviving corporation in a merger with an Acquiring Person
and its Common Shares were not changed or exchanged, or in the event that an
Acquiring Person engages in one of a number of self-dealing transactions
specified in the Rights Agreement, or in the event that, unless approved by the
Company's independent directors, any person becomes the beneficial owner of 15%
or more of the Common Shares, proper provision shall be made so that each holder
of a Right, other than Rights that were beneficially owned by the Acquiring
Person on the earlier of the Distribution Date or the date an Acquiring Person
becomes an Acquiring Person (which Rights will thereafter be void), shall
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of Common Shares having a
market value of two times the exercise price of the Right.
