EXHIBIT 4.1
Charming Shoppes, Inc.
and
American Stock Transfer & Trust Company
as Rights Agent
AMENDED AND RESTATED
RIGHTS AGREEMENT
Dated as of February 1, 2001
Table of Contents
Section Page
Section 1. Certain Definitions -2-
Section 2. Appointment of Rights Agent -5-
Section 3. Issue of Rights Certificates -5-
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
-10-
Section 8. Cancellation and Destruction of Rights Certificates -12-
Section 9. Reservation and Availability of Capital Stock; Registration of
Securities -12-
Section 10. Capital Stock Record Date -13-
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights -14-
Section 12. Certificate of Adjusted Purchase Price or Number of Shares -23-
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -23-
Section 14. Fractional Rights and Fractional Shares -26-
Section 15. Rights of Action -28-
Section 16. Agreement of Rights Holders -28-
Section 17. Rights Certificate Holder Not Deemed a Shareholder -29-
Section 18. Concerning the Rights Agent -29-
Section 19. Merger or Consolidation or Change of Name of Rights Agent -30-
Section 20. Duties of Rights Agent -30-
Section 21. Change of Rights Agent -32-
Section 22. Issuance of New Rights Certificates -33-
Section 23. Redemption and Termination -34-
Section 24. Notice of Certain Events -35-
Section 25. Notices -36-
Section 26. Supplements and Amendments -36-
Section 27. Successors -37-
Section 28. Determinations and Actions by the Board of Directors, etc -37-
Section 29. Benefits of this Agreement -37-
Section 30. Severability -38-
Section 31. Governing Law -38-
Section 32. Counterparts -38-
Section 33. Descriptive Headings -38-
RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as
February 1, 2001 (the "Agreement"), between CHARMING SHOPPES,
INC., a Pennsylvania corporation (the Company), and American
Stock Transfer & Trust Company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on April 27, 1989, the Mellon Bank (East)
National Association (as the rights agent) and the Company
entered into a Rights Agreement (the "Original Rights Agreement")
dated as of April 27, 1989.
WHEREAS, on April 27, 1989, the Board of Directors of
the Company authorized and declared a dividend distribution of
one Right (as defined in the Original Rights Agreement) for each
share of common stock of the Company outstanding at the close of
business on May 11, 1989 and authorized the issuance of one Right
(as defined in the Original Rights Agreement), with each Right
(as defined in the Original Rights Agreement) initially
representing the right to purchase one three-hundredth of a
Preferred Share (as defined in the Original Rights Agreement) of
the Company having the rights, powers and preferences set forth
in the form of a resolution of the Board of Directors; and
WHEREAS, the Original Rights Agreement and all Rights
outstanding thereunder expired in accordance with the terms of
the Original Rights Agreement at the close of business on April
26, 1999; and
WHEREAS, the Board of Directors of the Company
authorized and declared a dividend distribution payable effective
immediately following the close of business on April 26, 1999
(the "Rights Dividend Declaration Date") of one Right (defined
below) for each Common Share (as hereinafter defined) of the
Company outstanding at the close of business on April 12, 1999
(the "Record Date") with each Right initially representing the
right-to purchase one three-hundredth of a Preferred Share (as
hereinafter defined) of the Company having the rights, powers and
preferences set forth in the form of the Resolution of the Board
of Directors attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth (the "Rights");
and
WHEREAS, the Rights will be held by the Rights Agent
under this Agreement as trustee for the shareholders of the
Company until the Distribution Date; and
WHEREAS, the Board of Directors of the Company has
considered whether approval of this Agreement and the
distribution of the Rights is in the best interests of the
Company and all other pertinent factors; and
WHEREAS, the Board of Directors of the Company has
concluded that approval of this Agreement and the distribution of
the Rights is in the best interests of the Company because the
existence of the Rights will help (i) reduce the risk of coercive
two-tiered, front-end loaded or partial offers that may not offer
fair value to all shareholders, (ii) mitigate against market
accumulators who through open market and/or private purchases may
achieve a position of substantial influence or control without
paying to selling or remaining shareholders a fair control
premium, (iii) deter market accumulators who are simply
interested in putting the Company into "play" (iv) restrict self-
dealing by a substantial shareholder, and (v) preserve the Board
of Directors' bargaining power and flexibility to deal with third-
party acquirors and to otherwise seek to maximize values for all
shareholders.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, and intending to be
legally bound hereby, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(1) "Acquiring Person" shall mean any Person who or which
together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 20% or more of the Common Shares then
outstanding but shall not include the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan.
(2) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended and in effect on the date hereof (the "Exchange Act").
(3) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own" any securities:
(1) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options,
or otherwise; Provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for payment, purchase
or exchange, or (B) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by
such Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights') or pursuant to Section
11(i) hereof in connection with an adjustment made with respect
to any Original Rights;
(2) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial" ownerships of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including without limitation pursuant to any
agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own" any security
under this subparagraph (ii) as a result of an oral or written
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(3) that are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates)
has any agreement, arrangement or understanding (whether or not
in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso
to subparagraph (ii) of this paragraph (c)) or disposing of any
voting securities of the Company,
provided, however, that nothing in this paragraph (c) shall cause
a Person engaged in business as an underwriter of securities to
be the "Beneficial Owner" of, or to "beneficially own" any
securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
(4) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to
close.
(5) "Close of business" an any given date shall mean 5:00 P.M.,
New York, New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New
York, New York time, on the next succeeding Business Day.
(6) "Common Share" shall mean the shares of Common Stock, par
value $.10 per share, of the Company and, to the extent that
there are not a sufficient number of Common Shares authorized to
permit the full exercise of the Rights, shares of any other class
or series of the Company designated for such purpose containing
terms substantially similar to the terms of the Common Shares,
except that "Common Share" when used with reference to any Person
other than the Company shall mean the shares of capital stock of
such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or
direct the management, of such Person.
(7) Intentionally left blank.
(8) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(9) "Expiration Date" shall have the meaning set forth in
Section 7(a).
(10) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(11) "Preferred Share" shall mean a share of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the
Company and, to the extent that there are not a sufficient number
of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, shares of any other
series of Series Preferred Stock of the Company designated for
such purpose containing terms substantially similar to the terms
of the Series A Junior Participating Preferred Stock.
(12) "Preferred Share Fraction" shall mean one three-hundredth of
a Preferred Share.
(13) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) (A), (B) or (C) hereof.
(14) "Section 13 Event" shall mean any event described in clauses
(x), (y) or (z) of Section 13(a) hereof.
(15) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section
13(d) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(16) "Subsidiary" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
(17) "Trading Day" shall have the meaning set forth-in Section
11(d)(i) hereof.
(1)
(18) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
Unless otherwise specified, where reference is made in
this Agreement to sections of, and the General Rules and
Regulations under, the Exchange Act, such reference shall mean
such sections and rules as amended from time to time and any
successor provisions thereto.
Section 2. Appointment of Rights Agent.
(1) The Company hereby appoints the Rights Agent to act as agent
for the Company and trustee for the beneficial owners of the
Rights (who, in accordance with Section 3 hereof, shall prior to
the Distribution Date also be the holders of the Common Shares)
in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
(2) On the Record Date, the Company will deliver a Rights
Certificate to the Rights Agent, registered in the name of the
Rights Agent as trustee for the beneficial owners of the Rights
represented thereby, for that number of Rights equal to the
number of Common Shares issued and outstanding on the Record
Date, and the Rights Agent shall hold the Rights represented
thereby in trust for the beneficial owners in accordance with the
provisions of this Agreement.
Section 3. Issue of Rights Certificates.
(1) Until the earlier of (i) the close of business on the tenth
day after a Stock Acquisition Date involving an Acquiring Person
that has become such in a transaction as to which the Board of
Directors has not made the determination referred to in Section
11(a)(ii)(B) hereof, or (ii) the close of business on such date
as may be fixed by the Board of Directors of the Company by
notice to the Rights Agent and publicly announced by the Company,
which date shall not be later than 65 days after the date that a
tender or exchange offer by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the "Beneficial Owner"
of 20% or more of the Common Shares then outstanding (the earlier
of (i) and (ii) being herein referred to as the "Distribution
Date"), (x) beneficial interests in the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Shares registered in the names of
the holders of the Common Shares (which certificates for Common
Shares shall be deemed also to be certificates for beneficial
interests in the Rights) and not by separate certificates, and
(y) the Rights and beneficial interests therein will be
transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the Company).
As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Shares as of the close of
business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the
"Rights Certificates"), evidencing one Right for each Common
Share so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per Common Share
has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights certificates, the Company shall make
the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates. Upon the distribution of the Rights
Certificates as provided in this subsection (a), the trust
created hereby shall cease.
(2) As promptly as practicable following the Record Date the
Company will send a copy of a Summary of Rights, in substantially
the form of Exhibit C hereto (the "Summary of Rights"), by first-
class, postage prepaid mail, to each record holder of the Common
Shares as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company. With
respect to certificates for the Common Shares outstanding as of
the Record Date, until the Distribution Date, beneficial
interests in the Rights will be evidenced by such certificates
for the Common Shares and the registered holders of the Common
Shares shall also be the registered holders of the beneficial
interests in the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined
in Section 7 hereof), the transfer of any certificates
representing Common Shares in respect of which Rights have been
issued shall also constitute the transfer of the Rights
associated with such Common Shares. Certificates issued after
the Record Date upon the transfer of Common Shares outstanding on
the Record Date shall bear the legend set forth in subsection
(c).
(3) Except as provided in Section 22 hereof, Rights shall be
issued in respect of all Common Shares that are issued (whether
originally issued or delivered from the Company's treasury) after
the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date. Certificates representing such Common
Shares shall also be deemed to be certificates for beneficial
interests in the associated Rights, and shall bear the following
legend:
"This certificate also evidences a
beneficial interest in and entitles
the holder hereof to certain rights
as set forth in the Rights
Agreement between Charming Shoppes,
Inc. (the "Company") and American
Stock Transfer & Trust Company (the
"Rights Agent") dated as of April
26, 1999 (the "Rights Agreement"),
and as the same may be amended from
time to time, the terms of which
are hereby incorporated herein by
reference and a copy of which is on
file at the principal offices of
the Company. Under certain
circumstances, as set forth in the
Rights Agreement, such Rights will
be evidenced by separate
certificates and beneficial
interests therein will no longer be
evidenced by this certificate. The
Company will mail to the holder of
this certificate a copy of the
Rights Agreement, as in effect on
the date of mailing, without charge
promptly after receipt of a written
request therefor. Under certain
circumstances set forth in the
Rights Agreement, Rights issued to,
or held by, any Person who is, was
or becomes-an Acquiring Person or
any Affiliate or Associate thereof
(as such terms are defined in the
Rights Agreement), whether
currently held by or on behalf of
such Person or by any subsequent
holder, may become null and void."
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii)
the Expiration Date, beneficial interests in the Rights
associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Shares shall also be the registered
holders of beneficial interests in the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of beneficial interests in the Rights associated with
the Common Shares represented by such certificates.
Section 4. Form of Rights Certificates.
(1) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed,
shall entitle the holders thereof to purchase such number of
Preferred Share Fractions as shall be set forth therein at the
price set forth therein (such exercise price per Preferred Share
Fraction, the "Purchase Price"), but the amount of securities
purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(2) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights that the Company knows
are beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing oral or written plan,
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the
Company has determined is part of an oral or written plan,
agreement, arrangement or understanding that has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
"The Rights represented by this Rights
Certificate are or were beneficially owned by
a Person who was or became an Acquiring
Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined
in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented
hereby may become null and void in the
circumstances specified in Section 7(e) of
such Agreement."
Section 5. Countersignature and Registration.
(1) The Rights Certificates shall-be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the Person who
signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on
behalf of the Company by any Person who, at the actual date of
the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although
at the date of the execution of this Agreement any such Person
was not such an officer.
(2) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration
and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates, the
Certificate number and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(1) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on
the Expiration Date, any Rights Certificate or Certificates may
be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered
holder to purchase a like number of Preferred Share Fractions
(or, following a Triggering Event, Common Shares or other
securities, cash or other assets, as the case may be, as the
Rights Certificate or Certificates surrendered then entitled such
holder or former holder in the case of a transfer). Any
registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Certificate shall make such
request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such
Purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(2) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(1) Subject to subsection (e), the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in
whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office or offices
of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price (except as provided in
Section 11(q) hereof) with respect to the total number of
Preferred Share Fractions (or Common Shares, other securities,
cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable (except as provided in
Section 11(q) hereof), at or prior to the earliest of (i) the
close of business on April 25, 2009 (the "Final Expiration
Date"), (ii) the consummation of a transaction contemplated by
Section 13(d) hereof, or (iii) the time at which the Rights are
redeemed or terminated as provided in Section 23 hereof (the
earlier of (i), (ii) and (iii) being herein referred to as the
"Expiration Date").
(2) The Purchase Price for each Preferred Share Fraction
pursuant to the exercise of a Right shall initially be $20.00,
and shall be subject to adjustment from time to time as provided
in Sections 11 and 13(a) hereof and shall be payable in
accordance with subsection (c).
(3) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect
to each Right so exercised, of the Purchase Price per Preferred
Share Fraction (or Common Shares, other securities, cash or other
assets, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k) and Section 14(b) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is
the transfer agent for such Shares) certificates for the total
number of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit
some or all of the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of Preferred Share Fractions as are to
be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made, at the election of the holder of
the Rights Certificate, (x) in cash or by certified bank check or
money order payable to the order of the Company, or (y) by
delivery of Rights if and to the extent authorized by Section
11(q) hereof. In the event that the Company is obligated to
issue other securities of the Company (including Common Shares)
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.
(4) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section
14 hereof.
(5) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing oral or written plan,
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of them
Company has determined is part of an oral or written plan,
agreement, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no holder of
such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or
otherwise; provided, however, that the Rights held by an
Acquiring Person, an Affiliate or Associate of an Acquiring
Person or the transferees of such Persons referred to above shall
not be voided unless the Acquiring Person in question or an
Affiliate or Associate of such Acquiring Person shall be involved
in the transaction giving rise to the Section 11(a)(ii) Event.
The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of
Rights Certificates' or other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.
(6) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section
7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of election to
purchase set forth on-the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy
such canceled Rights Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock;
Registration of Securities.
(1) The Company covenants and agrees that it will cause to be
reserved and kept available for issuance upon the exercise of
outstanding Rights as many of its authorized and unissued
Preferred Shares (and, following the occurrence of a Triggering
Event, out of its authorized and unissued Common Shares and/or
other securities or out of its authorized and issued shares held
in its treasury), which together shall at all times after the
Distribution Date be sufficient to permit the exercise in full of
all outstanding Rights.
(2) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares or other
securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares and other
securities reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(3) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement
or statements under the Securities Act of 1933 (the "Act"), with
respect to the securities purchasable upon exercise of the Rights
on an appropriate form or forms, (ii) cause such registration
statement or statements to become effective as soon as
practicable after such filing, and (iii) cause such registration
statement or statements to remain effective (with a prospectus at
all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of
this subsection (c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to-
become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction
unless the requisite qualification in such jurisdiction shall
have been obtained.
(4) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
(and, following a Triggering Event, Common Shares or other
securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such shares or other
securities (subject to payment of the Purchase Price), be duly
and validly authorized and issued and, with respect to Preferred
Shares, Common Shares or other shares of capital stock, fully
paid and nonassessable.
(5) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes
and charges that may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a
number of Preferred Share Fractions (or Common Shares or other
securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax
that may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or
delivery of a number of Preferred Share Fractions (or Common
Shares or other securities, as the case may be) in respect of a
name other than that of the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of Preferred Share
Fractions (or Common Shares or other securities, as the case may
be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Capital Stock Record Date. Each Person in whose
name any certificate for a number of Preferred Share Fractions
(or Common Shares or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such Preferred
Share Fractions (or Common Shares or other securities, as the
case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase
Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date
upon which the applicable transfer books of the Company are
closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on
which the applicable transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and
kind of shares and other securities covered by each Right and the
number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(1) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on any
security of the Company payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
Preferred Shares or capital stock, as the case may be, issuable
on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled
to receive, upon payment of the adjusted Purchase Price, the
aggregate number and kind of Preferred Shares or capital stock,
as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when the Preferred
Share transfer books were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event:
(1) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the Stock Acquisition Date,
directly or indirectly, (1) shall merge into the Company or
otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or combination
and the Common Shares of the Company or other equity securities
of the Company shall remain outstanding, (2) shall, in one
transaction or a series of transactions, transfer any assets to
the Company or to any of its Subsidiaries in exchange (in whole
or in part) for Common Shares, for shares of other equity
securities of the Company, or for securities exercisable for or
convertible into shares of equity securities of the Company
(Common Shares or otherwise) or otherwise obtain from the
Company, with or without consideration, any additional shares of
such equity securities or securities exercisable for or
convertible into shares of such equity securities (other than
pursuant to a pro rata distribution to all holders of Common
Shares), (3) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of assets in one
transaction or a series of transactions, to, from or with (as the
case may be) the Company or any of its Subsidiaries, on terms and
conditions less favorable to the Company than the Company would
be able to obtain in arm's-length negotiation with an
unaffiliated third party, other than pursuant to a Section 13
Event, (4) shall sell, purchase, lease, exchange, mortgage,
pledge, transfer or otherwise acquire or dispose of assets having
an aggregate fair market value of more than $5,000,000 in one
transaction or a series of transactions, to, from or with (as the
case may be) the Company or any of the Company's Subsidiaries
(other than incidental to the lines of business, if any, engaged
in as of the date hereof between the Company and such Acquiring
Person or Associate or Affiliate), other than pursuant to a
Section 13 Event, (5) shall receive any compensation from the
Company or any of the Company's Subsidiaries other than
compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its Subsidiaries')
past practices, or (6) shall receive the benefit, directly or
indirectly (except proportionately as a shareholder and except if
resulting from a requirement of law or governmental regulation),
of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries, or
(2) any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend Declaration
Date become the Beneficial Owner of 20% or more of the Common Shares
then outstanding, unless the event causing the 20% threshold to be
crossed is a Section 13 Event, or is an acquisition of Common Shares
pursuant to a tender offer or an exchange offer for all outstanding
Common Shares at a price and on terms that provide fair value to all
shareholders, as determined by at least a majority of the Board of
Directors of the Company, after taking into consideration all factors
that such members of the Board of Directors deem relevant,
including, without limitation, the long-term prospects and value of
the Company and the prices and terms that such members of the Board
of Directors believe, in good faith, could reasonably be achieved if
the Company or its assets were sold on an orderly basis designed to
realize maximum value, or
(3) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries, other than a
Section 13 Event or series of such Events (whether or not with or
into or otherwise involving an Acquiring Person) that has the
effect, directly or indirectly, of increasing by more than its
proportionate share, the outstanding shares of any class of
equity securities of the Company or any of the Company's
Subsidiaries that is directly or indirectly beneficially owned by
any Acquiring Person or any Associate or Affiliate of any
Acquiring Person,
then, promptly following the first occurrence of a
Section 11(a)(ii) Event, proper provision shall be made
so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of
this Agreement, in lieu of a number of Preferred Share
Fractions, such number of Common Shares of the Company
as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the then number of
Preferred Share Fractions for which a Right was
exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall
thereafter be referred to as the "Purchase Price" for
each Right and for all purposes of this Agreement) by
50% of the current market price (determined pursuant to
Section 11(d) hereof) per Common Share on the date of
such first occurrence (such number of shares, the
"Adjustment Shares").
(iii) In the event that the number of Common
Shares that are authorized by the Company's Articles
but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of
this Section 11(a), the Company shall: (A) determine
the excess of the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current
Value") over the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares of the same or a different class or other
equity securities of the Company (including, without
limitation, preferred shares or units of preferred
shares that a majority of the Board of Directors of the
Company in office at the time has deemed (based, among
other things, on the dividend and liquidation rights of
such preferred shares) to have substantially the same
economic value as Common Shares (such preferred shares,
hereinafter referred to as "common share equivalents"),
(4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such
aggregate value has been determined by a majority of
the Board of Directors of the Company in office at the
time after considering the advice of a nationally
recognized investment banking firm selected by the
Board of Directors of the Company; provided, however,
if the Company shall not have made adequate provision
to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and
(y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common
Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set
forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may
seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended,
the "Substitution Period"). To the extent that the
Company determines that some action need be taken
pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company shall provide, subject
to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and may suspend
the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof.
The Company shall make a public announcement when the
exercisability of the Rights has been temporarily
suspended, and again when such suspension is no longer
in effect. For purposes of this Section 11(a)(iii),
the value of the Common Shares shall be the current
market price (as determined pursuant to Section 11(d)
hereof) per Common Share on the Section 11(a)(ii)
Trigger Date and the value of any common share
equivalent shall be deemed to have the same value as
the Common Shares on such date.
(2) In case the Company shall fix a record date for the issuance
of rights, options or warrants to holders of any security of the
Company entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record
date) Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred
Share or per equivalent preferred share (or having a conversion
price per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the current market
price (as determined pursuant to Section 11(d) hereof) per
Preferred Share on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number
of Preferred Shares that the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of
which shall be the number of Preferred Shares outstanding on such
record date, plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for subscription
or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Company, the Rights Agent and the holders of the
Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if
such record date had not been fixed.
(3) In case the Company shall fix a record date for a
distribution to all holders of Preferred Shares (including any
such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly
dividend out of the earnings or retained earnings of the
Company), assets (other than a regular quarterly dividend
referred to above or dividend payable in Preferred Shares, but
including any dividend payable in stock other than Preferred
Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per
Preferred Share on such record date, less the then fair market
value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to a Preferred
Share and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per
Preferred Share. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such
distribution is not so 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.
(4) (i) For the purpose of any computation hereunder,
other than computations made pursuant to section 11(a)(iii)
hereof, the "current market price" per Common Share on any date
shall be deemed to be the average of the daily closing prices per
Common Share for the thirty (30) consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date,
and for purposes of computations made pursuant to section
11(a)(iii) hereof, the "current market price" per Common Share on
any date shall be deemed to be the average of the daily closing
prices per Common Share for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the
event that the current market price per Common Share is
determined during a period following the announcement by the
issuer of such Common Share of (A) a dividend or distribution on
such Common Share payable in Common shares or securities
convertible into Common Shares (other than the Rights), or (B)
any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth above,
after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or
reclassification, then, and in each such case, the current market
price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each Trading Day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect
to securities listed on the principal national securities
exchange on which the Common Shares are listed or admitted to
trading or, if the Common Shares 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 Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the
Common Shares, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Common
Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a
Business Day. If the Common Shares are not publicly held or not
so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per Preferred Share shall be
determined in the same manner as set forth above for
the Common Shares in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the current
market price per Preferred Share cannot be determined
in the manner provided above or if the Preferred Shares
are not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the
"current market price" per Preferred Share shall be
conclusively deemed to be an amount equal to 300 (as
such number may be appropriately adjusted for such
events as stock splits, stock dividends and
recapitalizations with respect to the Common Shares
occurring after the date of this Agreement) multiplied
by the current market price per Common Share. If
neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, "current market
price" per Preferred Share shall mean the fair value
per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. For all
purposes of this Agreement, the "current market price"
of a Preferred Share Fraction shall be equal to the
current market price of one Preferred Share divided by
300.
(5) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a Common Share or one-millionth of a
Preferred Share, as the case may be. Notwithstanding the first
sentence of this subsection (e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction that mandates such
adjustment, or (ii) the Expiration Date.
(6) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be Subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k), (m) and (q), and the provisions of Sections
7, 9, 10, 13 and 14 hereof with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(7) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price,
the number of Preferred Share Fractions purchasable from time to
time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(8) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in subsections (b) and
(c), each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of Preferred Share
Fractions (calculated to the nearest one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of Preferred
Share Fractions covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the
product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(9) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of Preferred Share Fractions
purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of Preferred Share Fractions for which
a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth of a Preferred Share) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. The
record date for the adjustment may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Rights Certificates on the record
date specified in the public announcement.
(10) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Share Fractions issuable upon
the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price
per Preferred Share Fraction and the number of Preferred Share
Fractions that were expressed in the initial Rights Certificates
issued hereunder.
(11) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value,
if any, of the number of Preferred Share Fractions issuable upon
exercise of the Rights, the Company shall take any corporate
action that may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue such number
of fully paid and nonassessable Preferred Share Fractions at such
adjusted Purchase Price.
(12) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of Preferred
Share Fractions and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
number of Preferred Share Fractions and other capital stock or
securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares (fractional
or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(13) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their
good faith judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for
cash of any Preferred Shares at less than the current market
price, (iii) issuance wholly for cash or Preferred Shares or
securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
(14) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), (ii) merge with or
into any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer),
in one transaction, or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o) hereof), if (x) at the time
of or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(15) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 26 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(16) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Rights
Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding Common Shares payable in
Common Shares, (ii) subdivide the outstanding Common Shares, or
(iii) combine the outstanding Common Shares into a smaller number
of shares, the number of Rights associated with each Common Share
then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each Common Share
following any such event shall equal the result obtained by
multiplying the number of Rights associated with each Common
Share immediately prior to such event by a fraction the numerator
of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.
(17) In the event that the Rights become exercisable following a
Section 11(a)(ii) Event, the Company, by action of a majority of
the Board of Directors of the Company in office at the time, may
permit the Rights, subject to Section 7(e) hereof, to be
exercised for 50% of the Common Shares (or cash or other
securities or assets to be substituted for the Adjustment Shares
pursuant to subsection (a)(iii)) that would otherwise be
purchasable under subsection (a), in consideration of the
surrender to the Company of the Rights so exercised and without
other payment of the Purchase Price. Rights exercised under this
subsection (g) shall be deemed to have been exercised in full and
shall be canceled.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section
11 and Section 13 hereof, the Company shall (a) promptly prepare
a certificate setting forth such adjustment and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent, and with each transfer agent for the
Preferred Shares and the Common Shares, a copy of such
certificate, and (c) mail a brief summary thereof to each holder
of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing Common Shares) in
accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have
knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(1) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or
merge with or into, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation or
merger and, in connection with such consolidation or merger, all
or part of the outstanding Common Shares shall be changed into or
exchanged for stock or other securities of any other Person or
cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof),
then, and in each such case and except as contemplated by
subsection (d), proper provision shall be made so that:
(1) each holder of a Right, except as provided in Section 7(e)
hereof or subsection (e), shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, non assessable and
freely tradeable Common Shares of the Principal Party (as such
term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of Preferred Share Fractions
for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13
Event, multiplying the number of such shares for which a Right
was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that
product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50% of the
current market price (determined pursuant to Section 11(d)(i)
hereof) per Common Share of such Principal Party on the date of
consummation of such Section 13 Event,
(2) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
(3) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event;
(4) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its
Common Shares) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its Common Shares thereafter deliverable
upon the exercise of the Rights; and
(5) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(2) "Principal Party" shall mean
(1) in the case of any transaction described in clause (x) or
(y) of the first sentence of subsection (a), the Person that is
the issuer of any securities into which Common Shares of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to
such merger or consolidation; and
(2) in the case of any transaction described in clause (z) of
the first sentence of subsection (a), the Person that is the
party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common
Shares of such Person are not at such time and have not been
continuously over the preceding twelve (12) month period
registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, "Principal
Party" shall refer to such other Person, and (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Shares of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the
greatest aggregate market value.
(3) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number-of authorized shares of its Common Shares that
have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this section 13 and further providing
that, as soon as practicable after the date of any Section 13
event, the Principal Party will
(1)
(1) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(2) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights
that have not theretofore been exercised shall thereafter become
exercisable solely in the manner described in Section 13(a).
(4) Notwithstanding anything in this Agreement to the contrary,
Section 13 (other than this subsection (d)) shall not be
applicable to, and the term "Section 13 Event" shall not include,
a transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transaction is consummated with a Person, or
Persons who acquired Common Shares pursuant to a tender offer or
exchange offer for all outstanding Common Shares that complies
with the, provisions of Section 11(a)(ii)(B) hereof (or a wholly
owned Subsidiary of any such Person or Persons), (ii) the price
per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose
shares were purchased pursuant to such tender offer or exchange
offer and (iii) the form of consideration being offered to the
remaining holders of Common Shares pursuant to such transaction
is the same as the form of consideration paid pursuant to such
tender or exchange offer. Upon consummation of any such
transaction contemplated by this subsection (d), all Rights
hereunder shall expire
(5) In the event that the Rights become exercisable under
subsection (a) (except as provided in subsection (d)), the
Company, by action of a majority of the Board of Directors of the
Company in office at the time, may agree with the Principal Party
that the Principal Party shall permit the Rights to be exercised
for 50% of the Common Shares of the Principal Party that would
otherwise be purchasable under subsection (a), in consideration
of the surrender to the Principal Party, as the successor to the
Company under subsection (a) (ii), of the Rights so exercised and
without other payment of the Purchase Price. Rights exercised
under this subsection (e) shall be deemed to have been exercised
in full and shall be canceled.
Section 14. Fractional Rights and Fractional Shares.
(1) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates that
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For
purposes of this subsection (a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined
in good faith by the Board of Directors of the Company shall be
used.
(2) The Company shall not be required to issue fractions of
Preferred Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares, except
in each case for fractions which are integral multiples of
Preferred Shares. In lieu of fractional Preferred Shares that are
not integral multiples of Preferred Shares, the Company may pay
to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a Preferred
Share. For purposes of this subsection (b), the current market
value of one Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such
exercise.
(3) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of Common Shares upon
exercise of the Rights or to distribute certificates that
evidence fractional Common Shares. In lieu of fractional Common
Shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Common Share. For purposes of this
subsection (c), the current market value of one Common Share
shall be the closing price of one Common Share (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(4) The holder of a Right or a beneficial interest in a Right by
the acceptance thereof expressly waives his right to receive any
fractional Rights or any fractional Common Shares upon exercise
of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect
of this Agreement other than those vested in the Rights Agent in
Section 18, are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered
holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights or beneficial interests therein, it is
specifically acknowledged that the holders of Rights or
beneficial interests therein would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right or a beneficial interest in a Right by accepting the same
consents and agrees with the Company and the Rights Agent and
with every other such holder that:
(1) prior to the Distribution Date, beneficial interests in the
Rights will be transferable only in connection with the transfer
of Common Shares;
(2) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or Offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(3) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name
a Rights Certificate (or, prior to the Distribution Date the
associated Common Share certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Share certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the contrary; and
(4) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or
other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of Preferred Share Fractions or
any other securities of the Company (including the Common Shares)
that may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(1) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the
premises.
(2) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or certificate
for Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(1) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate trust or
stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency and trust created by this
Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(2) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates or beneficial
interests in the Rights, by their acceptance thereof, shall be
bound:
(1) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the written opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(2) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the
identity of any Acquiring Person and the determination of the
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 President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(3) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(4) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same
(except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(5) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or Section 13 hereof
or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt
of a Certificate furnished pursuant to Section 12, describing any
such adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any Common
Shares or Preferred Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable:
(6) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(7) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights
Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this
Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission
of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such
application (which date shall not be less than five Business Days
after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
(8) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the
Rights Agent under this Agreement, and none of such actions shall
constitute a breach of trust. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(9) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(10) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(11) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof,
the Rights Agent shall not take any further action with respect
to such requested exercise or transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30) days' prior written
notice mailed to the Company and to each transfer agent of the
Common Shares and Preferred Shares by registered or certified
mail, and to the holders of the Rights Certificates by first-
class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' prior written
notice mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares
and Preferred Shares, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall
be (a) a corporation organized, doing business and in good
standing under the laws of the United States or of any state,
having a principal office in the State of New York or the
Commonwealth of Pennsylvania, that is authorized by law to
exercise corporate trust and stock transfer powers and is subject
to supervision or examination by federal or state authority and
that has at the time of its-appointment as Rights Agent a
combined capital and surplus adequate in the judgment of a
majority of the Board of Directors of the Company in office at
the time to assure the performance of its duties hereunder and
the protection of the interests of the Company and the holders of
Rights or beneficial interests therein, or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares and Preferred
Shares and mail a notice thereof in writing to the registered
holders of the Rights Certificates or, prior to the Distribution
Date, to the registered holders of the Common Shares. Failure to
give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance,
sale or delivery of Common Shares following the Distribution Date
and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to Common Shares so issued, sold
or delivered pursuant to the exercise of stock options, stock
appreciation rights grants or awards outstanding on the
Distribution Date under any benefit plan or arrangement for
employees or directors, or upon the exercise, conversion or
exchange of securities outstanding on the Record Date or
hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
Section 23. Redemption and Termination.
(1) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the close of business on the
tenth day following a Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth day following the Record
Date), or (ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of
$.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") and the
Company may, at its option, pay the Redemption Price either in
Common Shares (based on the "current market price", as defined in
Section 11(d)(i) hereof, of the Common Shares at the time of
redemption) or cash. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company's right of redemption hereunder has
expired.
(2) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to
all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent
for the Common Shares. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be
made.
(3) In deciding whether or not to exercise the Company's right
of redemption hereunder, the directors of the Company shall act
in good faith, in a manner they reasonably believe to be in the
best interests of the Company and with such care, including
reasonable inquiry, skill and diligence, as a Person of ordinary
prudence would use under similar circumstances.
Section 24. Notice of Certain Events.
Section 1.
(1) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a
regular quarterly dividend out of earnings or retained earnings
of the Company), or (ii) to offer to the holders of Preferred
Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Preferred Shares,
if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii)
above at least twenty (20) days prior to the record date for
determining holders of Preferred Shares for purposes of such
action, and in the case of any such other action, at least twenty
(20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of Preferred
Shares, whichever shall be the earlier.
(2) Upon the occurrence of a Section 11(a)(ii) Event, (i) the
Company shall as soon as practicable thereafter give to each
holder of a Right, to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event
to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Shares shall
be deemed thereafter to refer to Common Shares and/or, if
appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Charming Shoppes, Inc.
000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date to the
holder of certificates representing Common Shares) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments.
(1) Prior to the Distribution Date the Company may, and the
Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any
holders of Common Shares. From and after the Distribution Date
the Company may, and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective 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 that the Company may deem necessary or
desirable and that shall not adversely affect the interests of
the holders of Rights Certificates; provided, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the
Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the
Company that states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the beneficial owners of
Rights shall be deemed coincident with the interests of the
holders of Common Shares.
(2) In deciding whether or not to supplement or amend this
Agreement, the directors of the Company shall act in good faith,
in a manner they reasonably believe to be in the best interests
of the Company and with such care, including reasonable inquiry,
skill and diligence, as a Person of ordinary prudence would use
under similar circumstances, and they may consider the effects of
any action upon employees, suppliers and customers of the Company
and upon communities in which offices or other establishments of
the Company are located, and all other pertinent factors.
Section 27. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which
any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of
Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board or to the Company,
or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend or supplement the
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by
the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered
holders of the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
Jurisdiction or other Authority to be invalid, void or
unenforceable for any purpose or under any set of circumstances
or as applied to any Person, such invalid, void or unenforceable
term, provision, covenant or restriction shall continue in effect
to the maximum extent possible for all other purposes, under all
other circumstances and as applied to all other Persons; and the
remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated; provided, however,
that notwithstanding anything in this Agreement to the contrary,
if any such term, provision, covenant or restriction is held by
such Court or authority to be invalid, void or unenforceable and
the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of
business on the tenth day following the date of such
determination by the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the Commonwealth of Pennsylvania
and for all purposes shall be governed by and construed in
accordance with the laws of such jurisdiction applicable to
contracts made and to be performed entirely within such
jurisdiction.
Section 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction
of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
CHARMING SHOPPES, INC.
By_________________________________
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By_________________________________
Name:______________________________
Title:_____________________________
