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EXHIBIT B
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Form of Right Certificate
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FORM OF RIGHT CERTIFICATE
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Certificate No. R-_______ ________ Rights
NOT EXERCISABLE AFTER JULY 1, 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 ACQUIRING PERSONS
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 RIGHT CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT.) ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY SHALL BECOME VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(f) OF THE RIGHTS AGREEMENT.]*
RIGHT CERTIFICATE
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DRUG EMPORIUM, 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 Amended and Restated Rights Agreement dated as of June 30, 1998, as from
time to time amended or supplemented (the "Rights Agreement"), between Drug
Emporium, Inc., a Delaware corporation (the "Company"), and The Huntington
National Bank, a national banking association organized under the laws of the
United States (the "Rights Agent") to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 p.m. (Columbus, Ohio time) on July 1, 2008 (the "Final
Expiration Date") unless earlier redeemed or exchanged by the Company, at the
office of the Rights Agent designated for such purpose, or at the office of its
successors as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Preferred Stock, $1 par value (the "Preferred Shares"), of the
Company, at a purchase price of $15 per one one-hundredth of a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of Preferred Shares which may be purchased upon exercise thereof) set
forth above and the Purchase Price set forth above, are the number and Purchase
Price as of __________, based on the Preferred Shares 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 Right
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 who becomes a transferee after the
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* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
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Acquiring Person becomes such, 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 one one-hundredth of a Preferred Share or other securities which may
be purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, 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 principal executive offices of
Drug Emporium, Inc. and the above-mentioned offices of the Rights Agent and are
also available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
one one-hundredth of a Preferred Share or other securities as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. The Rights evidenced by this Right Certificate
may be transferred, in whole or in part, upon surrender of this Right
Certificate at the principal office or offices of the Rights Agent designated
for such purpose, with the Form of Assignment and related Certificate duly
executed. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate generally may be redeemed by the Company at its option at a
redemption price of $.01 per Right (subject to adjustment as provided in the
Rights Agreement) payable in cash. The foregoing notwithstanding, the Rights
generally may not be redeemed for one hundred and eighty (180) days following a
change in a majority of the Board of Directors as a result of a proxy contest.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or
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other distribution or exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________________, _____.
ATTEST: DRUG EMPORIUM, INC.
_____________________________________________ By:____________________________
Secretary President
Countersigned:
The Huntington National Bank, as Rights Agent
By:__________________________________________
Authorized Signature
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
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(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee.)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: __________________, _____
____________________________________
Signature
Signature Medallion Guaranteed:
______________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15.
________________________________________________________________________________
(To be completed if applicable)
CERTIFICATE
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The undersigned hereby certifies by checking the appropriate boxes
that:
1. this Right 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 Right 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 Medallion Guaranteed:
__________________________________________
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The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15.
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NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To: Drug Emporium, Inc.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights (or such 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 Preferred Shares (or such other securities)
be issued in the name of:
Please insert social security or other identifying number_______________________
________________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number_______________________
________________________________________________________________________________
(Please print name and address)
Dated:______________________, _____
____________________________________________
Signature
Signature Medallion Guaranteed:
______________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15.
________________________________________________________________________________
(To be completed if applicable.)
CERTIFICATE
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The undersigned hereby certifies by checking the appropriate boxes
that:
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1. the Rights evidenced by this Right 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 Right Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:________________________, _____ ___________________________________
Signature
Signature Medallion Guaranteed:
____________________________________________
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program) pursuant to
S.E.C. Rule 17Ad-15.
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in ever particular, without alteration or enlargement or any change whatsoever.
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EXHIBIT C
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Form of Summary of Rights
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SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
DIVIDEND OF RIGHTS TO PURCHASE PREFERRED SHARES
On May 11, 1988, the Board of Directors of Drug Emporium, Inc. (the
"Company"), declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of common stock, $.10 par value
(the "Common Shares"), of the Company, subject to shareholder approval. On June
21, 1988, the shareholders of the Company approved such Rights to be issued
pursuant to a Rights Agreement. The distribution was payable on July 1, 1988, to
the shareholders of record on that date. Each right entitles the registered
holder to purchase from the Company one one-hundredth of a share of a Series A
Preferred Stock, $1 par value, of the Company (the "Preferred Shares") at a
price of $15 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. On June 24, 1998, the Board determined it desirable and
in the best interests of the Company and its stockholders for the Company to
extend the benefits afforded by the Rights Agreement and to supplement and amend
certain provisions of such Rights Agreement and to implement such supplements
and amendments by executing the Agreement. The description and terms of the
Rights are now set forth in the Amended and Restated Rights Agreement between
the Company and The Huntington National Bank, as Rights Agent (the "Rights
Agent").
DISTRIBUTION OF THE RIGHTS; RIGHT 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 Share certificates outstanding prior to the Distribution Date,
by such Common Share 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 Shares, (ii) new Common Share certificates issued after
the Record Date upon transfer, replacement or new issuance of Common Shares will
be deemed to be issued with Rights and will contain a notation incorporating the
Rights Agreement by reference, and (iii) the surrender for transfer of any
certificate for Common Shares will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
DEFINITION OF DISTRIBUTION DATE
"Distribution Date" shall mean the earlier to occur of (i) 10 days
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 Shares, or (ii) 10 business days 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 Shares.
EXERCISE AND EXPIRATION OF RIGHTS
The Rights are not exercisable until the Distribution Date. The Rights
will expire on July 1, 2008, unless earlier redeemed or exchanged by the Company
as described below.
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ADJUSTMENT OF PURCHASE PRICE
The Purchase Price payable, and the number and kind of Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights, options or warrants to subscribe for Preferred Shares (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock) at less than the current market price of the Preferred Shares, or (iii)
upon the distribution to holders of the Preferred Shares of evidences of
indebtedness, cash or assets (excluding regular quarterly cash dividends out of
net profits or surplus) 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
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
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 who or which, together with
all persons affiliated or associated with it, shall be the beneficial owner of
15% or more of the Common Shares then outstanding, but shall not include the
Company, any subsidiary of the Company, any employee benefit plan of the Company
or of any subsidiary of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan.
In the event that a person, together with persons affiliated or
associated with it, becomes an Acquiring Person, except as a result of
repurchases of shares by the Company or certain inadvertent actions by
shareholders, 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 Shares (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 $15 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 $30 worth of Common Shares (or other
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consideration, as noted above) for $15. Assuming that the Common Shares had a
per share value of $5 at such time, the holder of each valid Right would be
entitled to purchase six Common Shares for $30.
In the event that, at any time following the Shares 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 or is a party to a consolidation or merger in which the Company
survives but the Common Shares are exchanged for securities of another person,
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 "Shares Acquisition Date"), the Company may redeem all,
but not less than all, 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.
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
Common Shares and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Shares, 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 Common Share 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) shorten or lengthen any
time period under the Rights Agreement, or (iii) make changes that will not
adversely affect the interests of the holders of Rights; provided such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights.
EXERCISE OF THE RIGHTS ENTITLES THE RIGHT HOLDER TO THE RIGHTS OF A SHAREHOLDER
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While
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the distribution of the Rights will not be taxable to shareholders or to the
Company, shareholders may, depending on the circumstances, recognize taxable
income in the event that the Rights become exercisable for Common Shares (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 Amended and Restated Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Registration on Form
8-A/A. A copy of the Rights Agreement will be available free of charge from the
Company upon request. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
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