TOYS "R" US, INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Rights Agent
Rights Agreement
Dated as of January 7, 1998
TABLE OF CONTENTS
Section
Page
Section 1. Certain Definitions.......................................... 1
Section 2. Appointment of Rights Agent.................................. 5
Section 3. Issuance of Rights Certificates.............................. 6
Section 4. Form of Rights Certificates.................................. 7
Section 5. Countersignature and Registration............................ 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.......................................... 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.................................................... 11
Section 8. Cancellation and Destruction of Rights Certificates.......... 12
Section 9. Availability of Common Stock................................. 12
Section 10. Common Stock Record Date..................................... 14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
of Number of Rights.......................................... 14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares... 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets
Cash Flow or Earning Power................................... 22
Section 14. Fractional Rights and Fractional Shares...................... 25
Section 15. Rights of Action............................................. 26
Section 16. Agreement of Rights Holders.................................. 27
Section 17. Rights Certificate Holder Not Deemed a Stockholder........... 27
Section 18. Concerning the Rights Agent.................................. 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent.... 28
Section 20. Duties of Rights Agent....................................... 29
Section 21. Change of Rights Agent...................................... 31
Section 22. Issuance of New Rights Certificates......................... 32
Section 23. Redemption and Termination.................................. 32
Section 24. Exchange.................................................... 34
Section 25. Notice of Certain Events.................................... 35
Section 26. Notices..................................................... 36
Section 27. Supplements and Amendments.................................. 36
Section 28. Successors.................................................. 37
Section 29. Determinations and Actions by the Board of
Directors, etc.............................................. 37
Section 30. Benefits of this Agreement.................................. 38
Section 31. Severability................................................ 38
Section 32. Governing Law............................................... 38
Section 33. Counterparts................................................ 39
Section 34. Descriptive Headings........................................ 39
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 7, 1998 (the "Agreement"),
between TOYS "R" US, INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Rights Agent").
On January 7, 1998, (the "Rights Dividend Declaration Date") the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of Common
Stock outstanding as of the close of business on January 22, 1998 (the "Record
Date"), and authorized the issuance of one Right for each share of Common
Stock issued (whether as an original issuance or from the Company's treasury)
between the Record Date and the earliest of the Distribution Date or the
Expiration Date (as such terms are hereinafter defined), each Right initially
representing the right to purchase one share of Common Stock of the Company
upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
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 Stock of the Company then outstanding, but shall not include the
Company, any Subsidiary (as such term is hereinafter defined) of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company,
or any entity holding Common Stock 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 Stock by the Company which,
by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of the
Common Stock of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Stock of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner
of any additional Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, a Person
who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1(a), shall not be deemed to be an
Acquiring Person if such Person has reported or is required to report such
ownership (but less than 25%) on Schedule 13G under the Exchange Act (or any
comparable or successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report) which Schedule 13D does not state any
intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of
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such Schedule (other than the disposition of Common Stock) and, within 10
Business Days of being requested by the Company to advise it regarding same,
certifies to the Company that such Person acquired shares of Common Stock in
excess of 14.9% inadvertently or without knowledge of the terms of the Rights
and who, together with all Affiliates and Associates, thereafter does not
acquire additional shares of Common Stock while the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding; provided, however, that
if the Person requested to so certify fails to do so within 10 Business Days,
then such Person shall become an Acquiring Person immediately after such 10
Business Day period.
(b) "Adjustment Shares" shall have the meaning specified in
Section 11(a)(ii) hereof.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(d) 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, beneficially owns (as determined pursuant
to Rule 13d-3 under the Exchange Act, as in effect on the date of this
Agreement);
(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 or upon the
satisfaction of any conditions or both) pursuant to any agreement, arrangement
or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise;
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 (whether such right is
exercisable immediately or only after the passage of time or upon the
satisfaction of any conditions or both) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise; 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
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made pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso
to Section 1(d)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00. P.M.,
New York City time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(g) "Closing Price" shall mean for each day the last sale price
or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the securities in question 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
securities in question are listed or admitted to trading or, if the securities
in question 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
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the
securities in question are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
selected by the Board of Directors of the Company and making a market in the
securities in question. If on any such date no market maker is making a
market in the securities in question, the fair value of such securities on
such date as determined in good faith by the Board of Directors of the Company
shall be used. If the securities in question are not publicly held or not as
listed or traded, "current market price" per share shall mean the fair value
per share as determined in good faith by the Board of Directors of the
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Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(h) "Common Stock" shall mean the common stock, par value $.10
per share, of the Company.
(i) "common stock equivalents" shall have the meaning specified
in Section 11(a)(iii) hereof.
(j) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(k) "Distribution Date" shall mean the earlier of
(i) the tenth day after the Stock Acquisition Date, or
(ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors of the Company prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Stock for or pursuant to the terms of
any such plan) of, or the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Stock for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of Common Stock aggregating 15% or
more of the then outstanding Common Stock (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights).
(l) "Expiration Date" shall mean the earliest of (i) the close of
business on the tenth anniversary of the Record Date (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section
23 hereof or (iii) the time at which the Rights are exchanged pursuant to
Section 24 hereof.
(m) "Person" shall mean any individual, firm, corporation,
limited liability company, partnership or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(n) "Principal Party" shall have the meaning specified in Section
13(b) hereof.
(o) "Purchase Price" shall have the meaning specified in Section
4(a) and Section 7(b) hereof, as modified by Section 13(a) hereof.
(p) "Redemption Price" shall have the meaning specified in
Section 23(a) hereof.
(q) "Rights Certificates" shall have the meaning specified in
Section 3(a) hereof.
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(r) "Securities Act" shall have the meaning specified in Section
9(d) hereof.
(s) "Section 11(a)(ii) Event" shall have the meaning specified in
Section 11(a)(ii) hereof.
(t) "Section 11(a)(ii) Trigger Date" shall have the meaning
specified in Section 11(a)(iii) hereof.
(u) "Section 13 Event" shall have the meaning specified in
Section 13(a) hereof.
(v) "Spread" shall have the meaning specified in Section
11(a)(iii) hereof.
(w) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed or amended pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(x) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by such Person or any entity otherwise controlled by such Person.
(y) "Substitution Period" shall have the meaning specified in
Section 11(a)(iii) hereof.
(z) "Summary of Rights" shall have the meaning specified in
Section 3(b) hereof.
(aa) "Trading Day" shall mean a day on which the principal
national securities exchange on which the securities in question are listed or
admitted to trading is open for the transaction of business or, if such
securities are not listed or admitted to trading on any national securities
exchange, a Business Day.
(bb) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
Section 2. Appointment of Rights Agent
---------------------------
The Company hereby appoints the Rights Agent to act as agent for
the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall, prior to the Distribution Date, also be the holders of the
Common Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable, upon
ten days prior written notice to the Rights Agent. In the event the Company
5
appoints one or more co-Rights Agents, the respective duties of the Rights
Agent and any co-Rights Agents shall be as the Company shall determine.
Section 3. Issuance of Rights Certificates
-------------------------------
(a) Until the Distribution Date, the Rights will be evidenced by
the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and the
Rights will be transferred with and only with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by first-
class mail, insured, postage prepaid, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
Section 11(a)(i) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed, and
cash is paid in lieu of any fractional Rights. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) The Company will send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, upon the written request of any holder
of Common Stock, as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record Date or issued
subsequent to the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates for the Common Stock and the registered holders
of the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date,
the transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
(c) Subject to Section 22 hereof, Rights shall be issued in
respect of all shares of Common Stock which are outstanding on the Record Date
and which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear the
following legend:
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This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Toys
"R" Us, Inc. and the Rights Agent thereunder (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices
of Toys "R" Us, Inc. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
Toys "R" Us, Inc. will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge, promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to any Person who becomes an Acquiring
Person (as defined in the Rights Agreement) shall become null and
void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone
and the registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates. In the event that the Company
purchases or acquires any shares of Common Stock after the Record Date but
prior to the Distribution Date, any rights associated with such Common Stock
shall be deemed to be canceled and retired so that the Company shall not be
entitled to exercise any Rights associated with such Common Stock which are no
longer outstanding.
Section 4. Form of Rights Certificates
---------------------------
(a) The Rights Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in 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. Subject to
the provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of shares of Common
Stock as shall be set forth therein at the price set forth in Section 7(b)
hereof (such exercise price, the "Purchase Price"), but the number of such
shares that may be purchased upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
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(b) Any Rights Certificate issued pursuant to Section 3(a),
Section 11(i) or Section 22 hereof that represents Rights beneficially owned
by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any Associate or
Affiliate of such Acquiring Person) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any Associate or Affiliate of such Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
agreement, arrangement or understanding (whether or not in writing) regarding
the transferred Rights or (B) a transfer which the Board of Directors has
determined is part of a plan, arrangement or understanding (whether or not in
writing) which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall (to the extent feasible)
contain the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby shall
become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. Countersignature and Registration
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President or any of its Executive Vice Presidents either manually or by
facsimile signature, and shall be attested by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer of the Company, either
manually or by facsimile signature. The Rights Certificates shall not be
valid for any purpose unless countersigned by the Rights Agent. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent, and
issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf of
the Company by any person who holds any such office at the actual date of the
execution of such Rights Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
8
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the date of each of the
Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
---------------------------------------------------------
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date, any
Rights Certificate or Rights Certificates (other than Rights Certificates
representing Rights that have been exchanged pursuant to Section 24 hereof),
may be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock (or, following a Triggering
Event, Common Stock, cash, property, debt securities or other assets, or any
combination thereof, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be transferred,
split up, combined or exchanged at the principal office of the Rights Agent.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer, split up, combination or exchange of
any such surrendered Rights Certificate until the registered holder thereof
shall have completed and signed the form of assignment and related certificate
on the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e), Section 14 and Section 24 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange
of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
related certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price for the
total number of shares of Common Stock (or cash, property, debt securities or
other assets, or any combination thereof, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(b) On its face, each Rights Certificate shall entitle the holders
thereof to purchase, for each Right, one share of Common Stock, or other
securities or property as provided herein, at the price per share of $175 (the
"Purchase Price"), and the Purchase Price and the number of shares of Common
Stock or other securities or consideration to be acquired upon exercise of a
Right shall be subject to adjustment as provided in Sections 11 and 13(a)
hereof. The Purchase Price shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and related certificate duly
executed, accompanied by payment with respect to each Right as exercised, of
the Purchase Price per share of Common Stock (or cash, property, equity or
debt securities or other assets, or any combination thereof, as the case may
be) to be purchased and an amount equal to any applicable transfer tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Common Stock (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of shares of Common Stock to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Company shall have elected to deposit
the total number of shares of Common Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of shares of Common Stock
as are to be purchased (in which case certificates for the shares of Common
Stock represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct the depositary agent to
comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or,
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt thereof, promptly deliver such cash, if any, to or
10
upon the order of the registered holder of such Rights Certificate. In the
event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such
Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by: (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
Associate or Affiliate of an Acquiring Person) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate of an Acquiring Person) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise from and after such occurrence.
The Company shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or any other Person as a result
of its failure to make any determinations hereunder with respect to an
Acquiring Person or its Affiliates, Associates or transferees of any of them.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
11
Section 8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Availability of Common Stock
----------------------------
(a) In the event that there shall not be a sufficient number of
shares of Common Stock authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon the exercise or exchange
of Rights pursuant to Section 11; provided, however, that if the Company is
unable to cause the authorization of additional shares of Common Stock, then
the Company shall, or in lieu of seeking any such authorization, the Company
may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (A) upon surrender of a Right, pay cash equal to the Purchase
Price in lieu of issuing shares of Common Stock and requiring payment
therefor, (B) upon due exercise of a Right and payment of the Purchase Price
for each share of Common Stock as to which such Right is exercised, issue
equity and/or debt securities having a value equal to the value of the shares
of Common Stock which otherwise would have been issuable pursuant to
Section 11, which value shall be determined by a nationally recognized
investment banking firm selected by the Board of Directors of the Company or
(C) upon due exercise of a Right and payment of the Purchase Price for each
share of Common Stock as to which such Right is exercised, distribute a
combination of shares of Common Stock, cash and/or other equity and/or debt
securities having an aggregate value equal to the value of the shares of
Common Stock which otherwise would have been issuable pursuant to section 11,
which value shall be determined by a nationally recognized investment baking
firm selected by the Board of Directors of the Company. To the extent that
any legal or contractual restrictions (pursuant to agreements or instruments
in effect prior to the Distribution Date to which it is party) prevent the
Company from paying the full amount payable in accordance with the foregoing
sentence, the Company shall pay to holders of the Rights as to which such
payments are being made all amounts which are not then restricted on a pro
rata basis as such payments become permissible under such legal or contractual
restrictions until such payments have been paid in full.
12
(b) So long as the shares of Common Stock and/or other securities
issuable and deliverable upon the exercise of the Rights may be listed on any
national securities exchange or automated quotation system, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares of Common Stock issued or reserved for such issuance
to be so listed, upon official notice of issuance, on the principal national
securities exchange, if any, on which the Common Stock is otherwise listed or,
if the principal market for the Common Stock is not on any national securities
exchange, to be eligible for quotation on the Nasdaq National Market or any
successor thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or, if required by law, the Distribution Date, a
registration statement (a "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such Registration Statement to become effective as soon as practicable after
such filing, and (iii) cause such Registration Statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily suspend,
for a period of time not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this Section 9(c), the exercisability
of the Rights in order to prepare and file such Registration Statement and
permit it to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect, in each case with prompt written notice
to the Rights Agent. In addition, if the Company shall determine that a
Registration Statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until such
time as a Registration Statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction has not been obtained, the exercise thereof is not permitted
under applicable law or a Registration Statement has not been declared
effective.
(e) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon exercise of the Rights shall, at 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.
13
(f) From and after the Distribution Date, the Company further
covenants and agrees that it will pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any certificates for
Common Stock and/or other securities, as the case may be, upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of Common
Stock and/or other securities, as the case may be, in respect of a name other
than that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for transfer or exercise, or to issue or deliver any
certificates for Common Stock and/or other securities, as the case may be, in
a name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Common Stock Record Date.
------------------------
Each Person in whose name any certificate for Common Stock and/or
other securities, as the case may be, is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Common Stock and/or other securities, as the case may be,
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the Common Stock and/or other securities, as the case may be,
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 on which the Common Stock and/or other
securities, as the case may be, transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares of Number
of Rights.
-----------------------------------------------------------------
The Purchase Price, the number and kind 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.
14
(a) (i) In the event the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (A) declare a
dividend on the Common Stock payable in shares of Common Stock, (B) subdivide
the outstanding Common Stock, (C) combine the outstanding Common Stock into a
smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
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 Stock transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon
exercise of a Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of a right. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this Agreement, in the
event (a "Section 11(a)(ii) Event") any Person (other than an employee benefit
plan of the Company or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan)
shall, at any time after the Rights Dividend Declaration Date, become an
Acquiring Person, then, promptly following the occurrence of such event,
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof and payment of the then current Purchase Price
in accordance with the terms of this Agreement, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of shares of Common
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product by
fifty percent (50%) of the current market price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock
which is authorized by the Company's Restated Certificate of Incorporation but
not outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
15
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right (subject to Section 7(e) hereof), make adequate provision to substitute
for the Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (referred to herein
as "common stock equivalents"), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value (less the amount of any reduction in the Purchase
Price), where such aggregate value has been determined by the Board of
Directors of the Company based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the Company;
provided, however, that if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein as
the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full
of the Rights, the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such thirty (30) day
period, as it may be extended, referred to herein as the "Substitution
Period"). To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentence of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the Substitution
Period in order to seek such stockholder approval for such authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of each Adjustment Share shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the per share or per unit value of any
common stock equivalent shall be deemed to equal the current market price (as
so determined) per share of the Common Stock on such date.
16
(b) If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Common Stock or common stock
equivalents, or securities convertible into Common Stock or common stock
equivalents, at a price per share of Common Stock or per share of common stock
equivalents (or having a conversion price per share, if a security convertible
into Common Stock or common stock equivalents) less than the current market
price (as determined pursuant to Section 11(d) hereof) per share of Common
Stock on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date,
plus the number of shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock and/or common stock equivalents
to be offered (and/or the aggregate initial conversion price of the
convertible securities to be offered) would purchase at such current market
price, and the denominator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of additional shares of
Common Stock and/or common stock equivalents to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of a Right. In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights; provided, however, that if at the time of
such determination there exists an Acquiring Person, the current market value
of such consideration on such date shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights.
Shares of Common Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) If the Company shall fix a record date for a distribution to
all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Common
Stock, but including any dividend payable in stock other than Common Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
17
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
Common Stock on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of such
convertible securities, subscription rights or warrants applicable to each
share of Common Stock and the denominator of which shall be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Common Stock. 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 be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of any security (a "Security", for purposes of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
Closing Prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the "current market price" per
share of the Security on any date shall be deemed to be the average of the
daily Closing Prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date; provided, however,
that in the event that the current market price per share of the Security is
determined during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in shares
of such Security or securities convertible into shares of such shares (other
than the Rights), or (B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above, after the ex-
dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"current market price" shall be properly adjusted to take into account ex-
dividend trading.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Common Stock shall be determined in the
same manner as set forth in Section 11(d)(i) hereof. If the current market
price per share of Common Stock cannot be determined in the manner provided
above or if the Common Stock is not publicly held or listed or traded in a
manner described in subsection (g) of Section 1 hereof, the "current market
price" per share of Common Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes; provided, however, that if at the
time of such determination there exists an Acquiring Person, the "current
market value" of the Common Stock on such date shall be determined by a
18
nationally recognized investment banking firm selected by the Board of
Directors, which determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a share of Common Stock or other security, as the case may be, or to such
other figure as the Board of Directors may deem appropriate. 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 (3) years from
the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than Common Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Common
Stock shall apply on like terms to any such other shares; provided, however,
that the Company shall not be liable for its inability to reserve and keep
available for issuance upon exercise of the Rights pursuant to Section
11(a)(ii) a number of shares of Common Stock greater than the number then
authorized by the Restated Certificate of Incorporation of the Company but not
outstanding or reserved for other purposes.
(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 shares of Common Stock
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 Sections 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 of Common Stock (calculated to the nearest ten-
thousandth) obtained by (i) multiplying (x) the number of shares of Common
Stock for which a Right may be exercised immediately prior to this adjustment
by (y) the Purchase Price in effect immediately prior to such adjustment of
19
the Purchase Price, and (ii) dividing the product as 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 shares of Common Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of shares of Common
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (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 Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the exercise of
the Rights, the Rights 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 Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value attributable to the
number of shares of Common Stock issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock at such adjusted Purchase
Price.
20
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of the number of shares of Common Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number
of shares of Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares or securities
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 the Board of Directors of the Company, in its good faith
judgment, shall determine to be advisable in order that any (i) consolidation
or subdivision of the Common Stock, (ii) issuance wholly for cash of any
shares of Common Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Common Stock or securities which by their terms
are convertible into or exchangeable for shares of Common Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Common Stock shall
not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a consolidation with a Subsidiary of the Company in a transaction which
does not violate the provisions of Section 11(o) hereof), (ii) merge with or
into any other Person (other than a merger with a Subsidiary of the Company in
a transaction which does not violate the provisions of Section 11(o) hereof),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in
one transaction or a series of related transactions, assets, earning power or
cash flow aggregating fifty percent (50%) or more of the assets, earning power
or cash flow of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than a sale or transfer to the Company and/or
any of its Subsidiaries in one or more transactions each of which does not
violate the provisions of Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitute, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
21
(o) The Company covenants and agrees that, after the earlier of
the Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary
to take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights of holders of Rights
Certificates under this Agreement, including rights to purchase securities of
the Principal Party following a Section 13 Event which has occurred or may
thereafter occur, as set forth in Section 13 hereof. Upon exercise of a
Rights Certificate under Section 11(a)(ii), the Rights Agent shall return such
Rights Certificate duly marked to indicate that such exercise has occurred.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or
Section 13 hereof, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent and with each
transfer agent for the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate in accordance
with Section 26 hereof. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
Earning Power.
-----------------------------------------------------------------
(a) In the event (a "Section 13(a) Event") that, following the
Stock Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving corporation
of such consolidation or merger, (y) any Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other property,
or (z) the Company shall sell, or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets, earning power or cash flow aggregating fifty
percent (50%) or more of the assets, earning power or cash flow of the Company
and its Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or any Subsidiary of the Company in one or more transactions each
22
of which complies with Section 11(o) hereof), then, and in each such case,
proper provision shall be made so that: (i) each holder of a Right (other
than Rights that heretofore became null and void pursuant to Section 7(e)
hereof) shall thereafter have the right to receive, upon the exercise thereof
and payment of the then current Purchase Price in accordance with the terms of
this Agreement (or, if any Section 11(a)(ii) event has occurred prior to the
first occurrence of a Section 13(a) Event, at the Purchase Price in effect
immediately prior to the first occurrence of a Section 11(a)(ii) event), such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of common stock of the Principal Party (as such term is
hereinafter defined), free and clear of any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of
shares of Common Stock for which a Right is exercisable immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and (2)
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by fifty percent (50%) of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the common stock
of such Principal Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its common stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of common stock thereafter deliverable upon the
exercise of the Rights: and (v) the provisions of Section 11(a) (ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x)
or (y) of the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are as issued,
the Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z)
of the first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets, earning power or cash flow
transferred pursuant to such transaction or transactions;
23
provided, however, that in any such case, (1) if the common stock of such
Person is not, at such time and has not been continuously over the preceding
twelve (12) month period, registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary or Affiliate of another Person
the common stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (2) in case such Person is a Subsidiary
or Affiliate, directly or indirectly, of more than one Person, the common
stock 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
stock having the greatest aggregate market value and (z) in case such Person
is owned, directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (x) and (y) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such ventures and the Principal Parties in each
such chain shall bear the obligations set forth in this Section 13 in the same
ratio as their direct or indirect interests in such Person bear to the total
of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have sufficient
authorized and unissued shares of common stock not reserved for other purposes
to permit the full exercise of the Rights in accordance with this Section 13,
and unless prior thereto the Company and each Principal Party (and any Person
who may become a Principal Party as a result of such consolidation, merger,
sale or transfer) shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger, sale or transfer of assets
mentioned in paragraph (a) of this Section 13, the Principal Party, at its own
expense, will:
(i) prepare and file a Registration Statement under the
Securities Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best efforts
to cause such Registration Statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the Expiration
Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate;
(iii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on the Nasdaq National Market; and
24
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(a)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
If the Company elects not to issue fractional rights, then in lieu of such
fractional Rights, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this 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 of
the Rights for any day shall be the last sale price, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices, 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 as 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 of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
25
provided an amount in cash equal to the same fraction of the current market
price of one share of Common Stock. For purposes of this Section 14(b), the
current market price of one share of Common Stock shall be as determined
pursuant to Section 11(d)(ii) hereof for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market price of one share of Common Stock.
For purposes of this Section 14(c), the current market price of one share of
Common Stock shall be the Closing Price of one share of Common Stock (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional shares upon exercise of a Right except as permitted by this Section
14.
Section 15. Rights of Action.
----------------
All rights of action in respect of this Agreement, other than
rights of action vested in the Rights Agent pursuant to Sections 18 and 20 of
this Agreement, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, the registered holders of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, the registered holders of the
Common Stock), may, in such holder's behalf and for such holder's benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, such holder's right to
exercise the Rights evidenced by such Rights Certificate (or, prior to the
Distribution Date, certificates for Common Stock) in the manner provided in
such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject to
this Agreement. Holders of Rights shall be entitled to recover from the
Company the reasonable costs and expenses, including attorneys' fees, incurred
by them in any action to enforce the provisions of this Agreement.
26
Section 16. Agreement of Rights 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be affected by any notice to the
contrary; and
(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, the Company
must use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
--------------------------------------------------
No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
shares of Common Stock 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 Rights Certificate be construed to confer
upon the holder of any Rights evidenced by either a certificate for Common
Stock or by any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
27
or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such certificate for Common
Stock or Rights Certificate, as the case may be, shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising directly or
indirectly therefrom.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document reasonably believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
(c) The Rights Agent shall not be liable for consequential
damages under any provision of this Agreement or for any consequential damages
arising out of any act or failure to act hereunder.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
28
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and
in all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel selected by
it (who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
or any Affiliate or Associate thereof and the determination of "current market
price") be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board,
the Chief Executive Officer, the President, any Executive Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
29
(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
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11, Section 13 or Section 24 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after 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
shares of Common Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or other securities
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 Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President, any
Executive Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though 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.
30
(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, however, reasonable care
was exercised in the selection and continued employment thereof.
(j) 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.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, split up, combination or exchange, the
certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice
in writing mailed to the Company by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Rights Certificate (who shall, with such notice, submit such holder's Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation or
other legal business entity organized and doing business under the laws of the
United States or of any state thereof, in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of a corporation or other
31
legal business entity described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and the transfer agent of the
Common Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates or, if prior to the Distribution Date, to the
registered holders of Common Stock. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the
Rights Certificates to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be approved by the
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold pursuant to the exercise
of stock options or under any employee plan or arrangement, granted or awarded
as of the Distribution Date, or upon the exercise, conversion or exchange of
securities issued by the Company hereinafter but prior to the Distribution
Date, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
--------------------------
(a) Subject to Section 27 hereof, the Board of Directors of the
Company may, at its option, at any time on or before the earlier of (i) the
close of business on the tenth Business Day following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have occurred prior to the
32
Record Date, the close of business on the tenth Business Day following the
Record Date), or (ii) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price").
If, following the occurrence of a Stock Acquisition Date and following the
expiration of the right of redemption hereunder but prior to the occurrence of
any event specified in Section 13 hereof, (A) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number of shares of
Common Stock in one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, which did not
result in the occurrence of any event specified in Section 13 hereof such that
such Person is thereafter a Beneficial Owner of 10% or less of the outstanding
Common Stock and (B) there are no other Persons, immediately following the
occurrence of the event described in clause (A) of this sentence, who are
Acquiring Persons, then the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company's right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the "current market price," as defined in Section 11(d)(i) hereof,
of the Common Stock at the time of redemption) or any other form of
consideration, or any combination of any of the foregoing, 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, evidence of which shall have
been furnished to the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights
by mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
(c) Notwithstanding the provisions of Section 23(a) hereof, in
the event that a majority of the Board of Directors of the Company is elected
by stockholder action by written consent, or is comprised of persons elected
at a meeting of stockholders who were not nominated by the Board of Directors
of the Company in office immediately prior to such meeting, then for a period
of one hundred and twenty (120) days following the effectiveness of such
33
election, the Rights shall not be redeemed if such redemption is reasonably
likely to have the purpose or effect of allowing any Person to become an
Acquiring Person or otherwise facilitating the occurrence of a Triggering
Event or a transaction with an Acquiring Person.
Section 24. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
subsidiary of the Company, any employee benefit plan of the Company or any
such Subsidiary, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of fifty percent (50%) or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Company.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that there shall not be sufficient Common Stock
issued but not outstanding or authorized but unissued to permit any exchange
of Rights as contemplated in accordance with this Section 24, the Company
shall take all such action as may be necessary to authorize additional shares
of Common Stock for issuance upon exchange of the Rights.
34
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock,
there shall be paid to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this subsection
(e), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of Common Stock or to make any other distribution to the holders
of Common Stock (other than a regular quarterly cash dividend out of earnings
or retained earnings of the Company, including the initiation thereof), or
(ii) to offer to the holders of Common Stock rights or warrants to subscribe
for or to purchase any additional shares of Common Stock or shares of stock of
any class or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one transaction or
a series of related transactions, of fifty percent (50%) or more of the
assets, earning power or cash flow of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company and/or any
of its subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), (v) to effect the liquidation, dissolution or winding
up of the Company, or (vi) to declare or pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Rights Certificate and to the Rights Agent, to
the extent feasible and in accordance with Section 26 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 shares of Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to the record date
for determining holders of the shares of Common Stock for purposes of such
action, and in the case of any such other action, at least twenty (20) days
35
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock whichever
shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate and to the Rights Agent, to the extent
feasible and in accordance with Section 26 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 26. Notices.
-------
Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights Certificates to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Toys "R" Us, Inc.
000 Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
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 Rights Certificates to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock) shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments.
--------------------------
Prior to the Distribution Date, 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
36
shares of Common Stock. From and after the Distribution Date, 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 necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates; provided, from and after
the Distribution Date, this Agreement may not be supplemented or amended to
lengthen any time period hereunder pursuant to clause (iii) of this sentence
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock. Notwithstanding anything contained herein to the contrary, this
Agreement may not be amended at a time when the Rights are not redeemable.
Section 28. 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 29. Determinations and Actions by the Board of Directors, etc.
----------------------------------------------------------
For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the rules
promulgated under the Exchange Act as in effect on the date hereof. The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including 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
or made by the Board of Directors of the Company in good faith, shall (i) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
37
the Rights and all other parties, and (ii) not subject the Board of Directors
of the Company to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock) any legal or equitable right, remedy or claim
under this Agreement: but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders
of the Common Stock).
Section 31. 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; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid, void or
unenforceable language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the Board of
Directors of the Company.
Without limiting the foregoing, if any provision of this
Agreement requiring that a determination be made by less than the entire Board
of Directors is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, such determination shall then be made by
the entire Board of Directors.
Section 32. Governing Law.
-------------
This Agreement, each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts made and to be performed
entirely within such State.
38
Section 33. 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 34. 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.
39
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.
TOYS "R" US, INC.
By:
-----------------------------
Name:
Title:
Attest:
-----------------
Name:
Title:
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By
-----------------------------
Name:
Title:
Attest:
---------------------
Name:
Title:
Exhibit A
{Form of Rights Certificate}
Certificate No. R- Rights
------------------
NOT EXERCISABLE AFTER JANUARY 22, 2008 OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS "BENEFICIALLY OWNED" BY AN
"ACQUIRING PERSON" OR ANY "AFFILIATE" OR "ASSOCIATE" THEREOF (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
SHALL BECOME NULL AND VOID. {THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE "BENEFICIALLY OWNED" BY A PERSON WHO WAS OR BECAME AN
"ACQUIRING PERSON" OR AN "AFFILIATE" OR "ASSOCIATE" OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.}*
Rights Certificate
TOYS "R" US, INC.
This certifies that , or registered assigns,
----------------------
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of January 7, 1998 (as from time to time
amended or supplemented, the "Rights Agreement"), between Toys "R" Us, Inc., a
Delaware corporation (the "Company"), and American Stock Transfer & Trust
Company (the "Rights Agent"), to purchase from the Company at any time prior
to 5:00 P.M. (New York City time) on January 22, 2008 (the "Final Expiration
Date"), unless earlier redeemed or exchanged by the Company, at the office or
offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one share of the Common Stock (the "Common Stock") of the
Company, at a price of $175 (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of January 22 1998, based on the
Common Stock as constituted at such date and may be adjusted in accordance
with the provisions of the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentences.
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Affiliate
or Associate or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Common Stock or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate
or Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of shares of Common Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. The Rights evidenced by this
Rights Certificate may be transferred, in whole or in part, upon surrender of
this Rights Certificate at the principal office of the Rights Agent designated
for such purpose, with the Form of Assignment and related Certificate duly
executed. If the Rights evidenced by this Rights Certificate shall be
transferred or exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for the
number of whole Rights not transferred or exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may generally be redeemed by the Company at its
option at a redemption price of $.01 per Right at any time on or before the
earlier of the close of business on (i) the tenth Business Day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement) and (ii) the Final Expiration Date. The foregoing
notwithstanding, the Rights generally may not be redeemed for one hundred and
twenty (120) days following a change in a majority of the Board as a result of
a proxy contest.
The Company is not obligated to issue fractional shares of Stock
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 Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ----------, -----
ATTEST: TOYS "R" US, INC.
-------------------------- By----------------------------
Secretary Title
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By -------------------
Authorized Signature
{Form of Reverse Side of Rights Certificate}
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED -------------------------- hereby sells, assigns and
transfers unto ---------------------------------------------------------
------------------------------------------------------------------------
(Please print name and address of transferee)
------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ---------------------
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:-----------, ----
-----------------------------
Signature
Signature Guaranteed:
----------------------
Signatures must be guaranteed by an eligible guarantor institution
(a bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate { } is { } is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it { } did { } did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:________________, _____ ____________________________
Signature
Signature Guaranteed:
_______________________________
Signatures must be guaranteed by an eligible guarantor institution
(a bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: TOYS "R" US, INC.
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of Common
Stock issuable upon the exercise of the Rights (or such consideration or other
securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of and deliverable to:
Please insert social security or other identifying number
______________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
__________________________________________________________
(Please print name and address)
__________________________________________________________
__________________________________________________________
Dated:________________, _____
____________________________
Signature
Signature Guaranteed:
______________________
Signatures must be guaranteed by an eligible guarantor institution
(a bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate { } are { )
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it { } did { } did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated:________________, _____
_________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(a bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever.
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
Dividend of Rights to Purchase Common Stock
On January 7, 1998, the Board of Directors of Toys "R" Us, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of common stock, par value $.10 per share, of the Company (the "Common
Stock") to stockholders of record at the close of business on January 22, 1998
(the "Record Date"). After the Distribution Date, each Right entitles the
registered holder to purchase from the Company one share of Common Stock of the
Company at a price of $175 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent").
Distribution of the Rights; Rights Certificates
Until the Distribution Date (or earlier redemption or expiration of
the Rights), which is defined below, the Rights will be evidenced, with respect
to any of the Common Stock certificates outstanding prior to the Distribution
Date, by such Common Stock certificates. Until the Distribution Date, (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Stock, (ii) new Common Stock
certificates issued after the Record Date upon transfer, replacement or new
issuance of Common Stock will be deemed to be issued with Rights and will
contain a notation incorporating the Rights Agreement by reference and (iii)
the transfer of any certificate for Common Stock will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. Only Common Stock issued prior to the Distribution Date will be
issued with Rights.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date. From and after the Distribution Date, such separate Rights
Certificates alone will evidence the Rights. .
Definition of Distribution Date
"Distribution Date" shall mean the earlier of (i) the tenth day
following the date of a public announcement that a person, together with persons
affiliated or associated with it, has acquired beneficial ownership of 15%
or more of the outstanding Common Stock or (ii) the tenth Business Day
following the earlier of the commencement of, or the first public
announcement of the intent to commence, a tender offer or exchange offer by a
person other
than the Company if, upon consummation of the offer, such person, together with
persons affiliated or associated with it, would be the beneficial owner of
15% or more of the outstanding Common Stock.
Exercise and Expiration of the Rights
The Rights are not exercisable until the Distribution Date. The
Rights will expire at the close of business on January 22, 2008 (the "Final
Expiration Date"), unless earlier redeemed or exchanged by the Company as
described below.
Adjustment of the Purchase Price
The Purchase Price payable and the number of shares of Common Stock
or number and kind of 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 Stock, (ii) upon the grant to holders of the
Common Stock of certain rights, options or warrants to subscribe for Common
Stock (or shares having the same rights, privileges and preferences as the
shares of Common Stock)
at less than the current market price of the Common Stock or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness,
securities, cash or assets (excluding regular periodic dividends out of
earnings or retained earnings) or of subscription rights or warrants (other than
those referred to above). With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments require an
adjustment of at least 1% in the Purchase Price. No fractional shares of
Common Stock will be issued upon the exercise of any Right or Rights, and in
lieu thereof an adjustment in cash will be made based on the current market
price of the Common Stock on the last trading day prior to the date of
exercise.
Effect of a Triggering Event
Any of the events described in the succeeding second and fourth
paragraphs are defined as a "Triggering Event."
"Acquiring Person" shall mean any Person (as such term is defined
in the Rights Agreement) who or which, together with all Affiliates and
Associates (as such terms are defined in the Rights Agreement) of such Person,
shall be the Beneficial Owner (as such term is defined in the Rights Agreement)
of 15% or more of the Common Stock of the Company then outstanding, but shall
not include the Company, any Subsidiary (as such term is defined in the Rights
Agreement) of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common Stock 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 Stock by
the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 15% or more of the Common Stock of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15% or
more of the Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Stock of the Company, then
such Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, (i) if a Person who would otherwise be an Acquiring Person but
reports its ownership (but less than 25%) on Schedule 13G under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act") or on Schedule 13D
under the Exchange Act which Schedule 13D does not state any intention to
control or influence the management of the Company, or (ii) if a Person who
would otherwise be an "Acquiring Person" has become such inadvertently, and
such Person, together with all affiliates and associates, certifies to the
Company that it does not intend to control or influence the management of the
Company and does not acquire additional shares of Common Stock, then in the
case of either (i) or (ii) such Person shall not be deemed to be an "Acquiring
Person".
In the event that a person, together with persons affiliated or
associated with it, becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, except as provided below, shall thereafter have
the right to receive, upon exercise thereof, Common Stock (or, in certain
circumstances as determined by the Company, other securities, cash, or other
property) having a value of two times the Purchase Price. Notwithstanding any
of the foregoing, following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances set forth in
the Rights Agreement) were, beneficially owned by any Acquiring Person (or by
certain related parties and transferees) will be null and void. Rights are not
exercisable following the occurrence of the event set forth above until such
time as the Rights are no longer redeemable by the Company, as set forth below.
For example, at an exercise price of $175 per Right, each Right not
owned by an Acquiring Person (or by certain related parties and transferees)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $350 worth of Common Stock (or other consideration, as noted
above) for $175.
In the event that, at any time following the Stock Acquisition Date,
which is defined below, (i) the Company is acquired in a merger or other
business combination transaction in which the Company is not the surviving
corporation (other than a merger which follows an offer described in the second
preceding paragraph), or (ii) fifty percent (50%) or more of the Company's
assets, cash flow or earning power is sold or transferred, proper provision
shall be made so that each holder of a Right (other than Rights that theretofore
become null and void as described in the second preceding paragraph) shall
thereafter have the right to receive, upon exercise thereof, common stock of
the acquiring company having a value equal to two times the exercise price of
the Right.
Redemption of the Rights
At any time until the close of business on the tenth Business Day
following the date of a public announcement that a person has become an
Acquiring Person (the "Stock Acquisition Date"), the Company may redeem all,
but not less than all, of the then outstanding Rights at a redemption price
of $.01 per Right (the "Redemption Price"). Immediately upon the action of
the Board of Directors of the Company ordering redemption of the Rights, the
Rights will terminate and the only right of the holder of Rights will be to
receive the Redemption Price. The foregoing notwithstanding, the Rights
generally may not be redeemed for one hundred and twenty (120) days following
a change in the majority of the Board of Directors of the Company as a result of
a proxy contest.
Exchange of the Rights
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding shares of Common Stock, the Board of Directors
may exchange the Rights (other than Rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one
share of Common Stock per Right (subject to adjustment).
Amendment of the Rights Agreement
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. Thereafter,
the provisions of the Rights Agreement may be amended by the Board of Directors
of the Company in order to (i) cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with
any other provisions herein, (iii) shorten or lengthen any time period under
the Rights Agreement, or (iv) make changes that will not adversely affect the
interests of the holders of Rights; provided such lengthening described in (iii)
above is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights; and further provided, that no
amendment may be made at such time as the Rights are not redeemable.
Exercise of the Right Entitles the Right Holder to the Rights of a Stockholder
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending on the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.
Copy of the Rights Agreement available
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy
of the Rights Agreement will be available free of charge from the Company to
stockholders submitting written requests therefore to: 000 Xxxx Xxxx, Xxxxxxx,
Xxx Xxxxxx 00000, Attention: Chief Financial Officer. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is incorporated herein by reference.
