RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of November 27, 1995
(the "Agreement"), between FAMILY BARGAIN CORPORATION, a
Delaware corporation (the "Corporation"), and CORPORATE
STOCK TRANSFER, INC. (the "Rights Agent").
The Board of Directors of the Corporation has
authorized and declared a dividend of one preferred share
purchase right (a "Right") for each Common Share (as
hereinafter defined) of the Corporation outstanding at 5:00
P.M., Eastern Standard Time, on December 8, 1995 (the
"Record Date"), each Right representing the right to
purchase one one-thousandth (subject to adjustment as
provided herein) of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions
herein set forth, and has further authorized and directed
the issuance of one Right with respect to each Common Share
that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with
respect to Common Shares that shall become outstanding after
the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance
with the provisions of Section 22 of this Agreement.
Accordingly, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby
agree as follows:
Section 1. Certain Definitions.Section 1.
Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 15 % or more
of the then outstanding Common Shares (other than as a
result of a Permitted Offer) or was such a Beneficial Owner
at any time after the date hereof, whether or not such
person continues to be the Beneficial Owner of 15 % or more
of the then outstanding Common Shares. Notwithstanding the
foregoing, (A) the term "Acquiring Person" shall not include
(i) the Corporation, (ii) any Subsidiary of the Corporation,
(iii) any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation, (iv) any Person or entity
organized, appointed or established by the Corporation for
or pursuant to the terms of any such plan acting in such
capacity, or (v) any Grandfathered Person, and (B) no Person
shall become an "Acquiring Person" (i) as a result of the
acquisition of Common Shares by the Corporation which, by
reducing the number of Common Shares outstanding, increases
the proportional number of shares beneficially owned by such
Person together with all Affiliates and Associates of such
Person, provided, that if (1) a Person would become an
Acquiring Person (but for the operation of this subclause
(i)) as
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a result of the acquisition of Common Shares by the
Corporation, and (2) after such share acquisition by the
Corporation, such Person, or an Affiliate or Associate of
such Person, becomes the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed an Acquiring
Person; or (ii) if (1) within five Business Days after such
Person would otherwise have become or, if such Person did so
inadvertently, after such Person discovers that such Person
would otherwise have become, an Acquiring Person (but for
the operation of this subclause (ii)), such Person notifies
the Board of Directors that such Person did so
inadvertently, and (2) within two Business Days after such
notification, such Person divests itself of a sufficient
number of Common Shares so that such Person is the
Beneficial Owner of such number of Common Shares that such
Person no longer would be an Acquiring Person.
(b) "Act" shall mean the Securities Act of 1933,
as amended and as in effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and as in effect on the
date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report); or
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(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities) relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to
Section l(d)(ii)(B)) or disposing of any securities of the
Corporation.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Corporation, shall
mean the number of such securities then issued and
outstanding together with the number of such securities not
then actually issued and outstanding which such Person would
be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than
a Saturday, Sunday or federal holiday.
(f) "Close of Business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(g) "Common Shares" when used with reference to
the Corporation shall mean the shares of Common Stock, par
value $.01 per share, of the Corporation or, in the event of
a subdivision, combination or consolidation with respect to
such shares of Common Stock, the shares of Common Stock
resulting from such subdivision, combination or
consolidation. "Common Shares" when used with reference to
any Person other than the Corporation shall mean the capital
stock (or equity interest) with the greatest combined
economic and voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned
Person.
(h) "Disinterested Directors" shall mean the
members of the Board of Directors who are not (i) officers
of the Corporation, (ii) Acquiring Persons or their
Affiliates or Associates or representatives of any of them,
or (iii) any Person who was directly or indirectly proposed
or nominated as a director of the Corporation by a
Transaction Person.
(i) "Distribution Date" shall have the meaning
set forth in Section 3 hereof.
(j) "Final Expiration Date" shall have the
meaning set forth in Section 7 hereof.
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(k) "Grandfathered Person" shall mean any of the
following:
(i) Xxxxxx Xxxxx and Xxxxxx X. Xxxxxx;
(ii) any current spouse of any Person
described in subparagraph (i) of this paragraph (k);
(iii) any brother or sister of any Person
described in subparagraph (i) of this paragraph (k);
(iv) any children, whether now living or
hereafter born, of any Person described in subparagraphs (i)
and (iii) of this paragraph (k);
(v) any estate of, or the executor or
administrator of any estate of, or any guardian or custodian
for, any Person described in subparagraph (i), (ii), (iii)
or (iv) of this paragraph (k) (so long as such executor,
administrator, guardian or custodian is acting in his or her
capacity as such);
(vi) any legal advisor of any Person
described in subparagraph (i), (ii), (iii), (iv), (v),
(vii), (viii) or (ix) of this paragraph (k) who is given a
revocable proxy of such Person with respect to shares of
which such Person is the Beneficial Owner or who is an
attorney-in-fact or agent of such Person;
(vii) any corporation or general or limited
partnership (whether now existing or hereafter formed) of
which no less than 80% of the outstanding voting or
partnership interests, respectively, are beneficially owned,
directly or indirectly, by one or more of the Persons
referred to in subparagraphs (i), (ii), (iii), (iv) and (v)
of this paragraph (k);
(viii) any trust of which one or more of the
Persons referred to in subparagraphs (i), (ii), (iii), (iv)
or (v) of this paragraph (k) is the Beneficial Owner,
directly or indirectly, of substantially all of the
beneficial interests therein; or
(ix) any Person (not otherwise referred to in
this paragraph (k)) who is a trustee or co-trustee of a
trust referred to in subparagraph (viii) of this paragraph
(k) (so long as such trustee or co-trustee is acting in his
or her capacity as such);
provided, however, that any Person referred to in
subparagraphs (i) through (ix) of this paragraph (k) shall
cease to be a Grandfathered Person, when such Person,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the then
outstanding Common Stock.
(l) "Interested Stockholder" shall mean any
Acquiring Person or any Affiliate or Associate of an
Acquiring Person or any other Person in which any such
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Acquiring Person, Affiliate or Associate has an interest
which represents in excess of 5% of the total combined
economic or voting power of such person, or any other Person
acting directly or indirectly on behalf of or in concert
with any such Acquiring Person, Affiliate or Associate.
(m) "Permitted Offer" shall mean a tender or
exchange offer for all outstanding Common Shares which is at
a price and on terms determined, prior to the purchase of
shares under such tender or exchange offer, by at least a
majority of the Disinterested Directors, to be adequate and
otherwise in the best interests of the Corporation, its
stockholders and its other relevant constituencies (other
than the Person or any Affiliate or Associate thereof on
whose behalf the offer is being made) taking into account
all factors that such Disinterested Directors may deem
relevant.
(n) "Person" shall mean any individual, firm,
partnership, corporation, trust, association, joint venture
or other entity, and shall include any successor (by merger
or otherwise) of such entity.
(o) "Preferred Shares" shall mean shares of
Series A Junior Participating Preferred Stock, with a par
value of $.01 per share, of the Corporation having the
relative rights, preferences and limitations set forth in
the Form of Certificate of Designation, Preferences and
Rights attached to this Agreement as Exhibit A.
(p) "Redemption Date" shall have the meaning set
forth in Section 7 hereof.
(q) "Section 11(a)(ii) Event" shall mean any
event described in Section 11(a)(ii) hereof.
(r) "Section 13 Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a) hereof.
(s) "Shares 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 the Exchange Act) by the Corporation or an
Acquiring Person that an Acquiring Person has become such.
(t) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the
voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
(u) "Transaction" shall mean any merger,
consolidation or sale of assets described in Section 13(a)
hereof or any acquisition of Common Shares of the
Corporation which would result in a Person becoming a
Transaction Person.
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(v) "Transaction Person" with respect to a
Transaction shall mean (x) any Person who (i) is or will
become an Acquiring Person if the Transaction were to be
consummated and (ii) directly or indirectly proposed or
nominated a director of the Corporation which director is in
office at the time of consideration of the Transaction, or
(y) an Affiliate or Associate of such a Person.
(w) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights AgentSection 2.
Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the
Corporation and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of Common Shares) in
accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The
Corporation may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issue of Right CertificatesSection 3.
Issue of Right Certificates. (a) Until the earlier to
occur of (i) the Shares Acquisition Date or (ii) the Close
of Business on the tenth Business Day (or such later date as
may be determined by action of the Corporation's Board of
Directors) after the date of the commencement by any Person
(other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or
of any Subsidiary of the Corporation or any Person or entity
organized, appointed or established by the Corporation for
or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person
(other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or
of any Subsidiary of the Corporation or any Person or entity
organized, appointed or established by the Corporation for
or pursuant to the terms of any such plan) to commence
(which intention to commence remains in effect for five
Business Days after such announcement), a tender or exchange
offer the consummation of which would result in any Person
becoming an Acquiring Person (including, in the case of both
(i) and (ii), any such date which is after the date of this
Agreement and prior to the issuance of the Rights), the
earlier of such dates being herein referred to as the
"Distribution Date," (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of
the holders thereof (which certificates shall also be deemed
to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with
the transfer of the underlying Common Shares (including a
transfer to the Corporation); provided, however, that if the
tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as
a result of such tender offer. As soon as practicable after
the Distribution Date, the Corporation will prepare and
execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent by first-class,
postage-prepaid mail, to each record holder of Common Shares
as of the close of business on the
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Distribution Date, at the address of such holder shown on
the records of the Corporation, a Right Certificate,
substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the
Record Date, the Corporation will send a copy of a Summary
of Rights to Purchase Preferred Shares, in substantially the
form of Exhibit C hereto (the "Summary of Rights"), by first-
class, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Record Date, at
the address of such holder shown on the records of the
Corporation. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with
a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the surrender for transfer of
any certificate for Common Shares outstanding on the Record
Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with such Common Shares.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired
Common Shares referred to in the last sentence of this
paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall be deemed also to be
certificates for Rights and shall bear the following legend:
This certificate also evidences and
entitles the holder hereof to
certain rights as set forth in a
Rights Agreement between Family
Bargain Corporation and Corporate
Stock Transfer, Inc., dated as of
November 27, 1995 (the "Rights
Agreement"), the terms of which are
hereby incorporated herein by
reference and a copy of which is on
file at the principal executive
offices of Family Bargain
Corporation. Under certain
circumstances, as set forth in the
Rights Agreement, such Rights will
be evidenced by separate
certificates and will no longer be
evidenced by this certificate.
Family Bargain Corporation will
mail to the holder of this
certificate a copy of the Rights
Agreement without charge after
receipt of a written request
therefor from such holder. Under
certain circumstances set forth in
the Rights Agreement, Rights issued
to, or held by, any Person who is,
was or
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becomes an Acquiring Person or an
Affiliate or Associate thereof (as
defined in the Rights Agreement)
and certain related persons,
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 Distribution Date, the Rights associated
with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the
Corporation purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed
Cancelled and retired so that the Corporation shall not be
entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Section 4. Form of Right CertificateSection 4.
Form of Right Certificate. (a) The Right Certificates (and
the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall 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 Corporation
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 Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the price
per one one-thousandth of a Preferred Share set forth
therein (the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights
which are null and void pursuant to Section 7(e) of this
Agreement and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this
Right Certificate are or were
beneficially owned by a Person who
was or became an Acquiring Person
or an Affiliate or Associate of an
Acquiring Person (as such terms are
defined in the Rights Agreement).
Accordingly, this
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Right Certificate and the Rights
represented hereby are null and
void.
Provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained
on any such Right Certificate.
Section 5. Countersignature and
RegistrationSection 5. Countersignature and Registration.
The Right Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice
Presidents, or its Treasurer, either manually or by
facsimile signature, shall have affixed thereto the
Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the
Corporation, either manually or by facsimile signature. The
Right Certificates shall be countersigned by the Rights
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Corporation who
shall have signed any of the Right Certificates shall cease
to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and
delivery by the Corporation, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued
and delivered by the Corporation with the same force and
effect as though the person who signed such Right
Certificates had not ceased to be such officer of the
Corporation; and any Right Certificate may be signed on
behalf of the Corporation by any person who, at the actual
date of the execution of such Right Certificate, shall be a
proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its office designated as
the appropriate place for surrender of such Right
Certificate for transfer, books for registration and
transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and
the certificate number and the date of each of the Right
Certificates.
Section 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right CertificateSection 6. Transfer, Split-Up,
Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificate. 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 earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates
may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of one one-
thousandths of a Preferred Share (or, following a Triggering
Event, other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Right Certificate
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or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Corporation shall be obligated to
take any action whatsoever with respect to the transfer of
any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of
such Right 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 Corporation 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 Right Certificate or Right
Certificates, as the case may be, as so requested. The
Corporation 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 Right Certificates.
Upon receipt by the Corporation and the Rights
Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and,
at the Corporation's request, reimbursement to the
Corporation and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the
Corporation will make and deliver a new Right Certificate of
like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of RightsSection 7. Exercise of Rights;
Purchase Price; Expiration Date of Rights. (a) Subject to
Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase 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 for the total number
of one one-thousandths of a Preferred Share (or other
securities, as the case may be) as to which such surrendered
Rights are exercised, at or prior to the earliest of (i) the
Close of Business on November 27, 2000 (the "Final
Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption
Date"), (iii) the time at which the Rights are exchanged as
provided in Section 24 hereof, or (iv) the consummation of a
transaction contemplated by Section 13(d) hereof.
(b) The Purchase Price for each one-thousandth of
a Preferred Share pursuant to the exercise of a Right shall
initially be $9.00, shall be subject to adjustment
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from time to time as provided in the next sentence and in
Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below. Anything in this
Agreement to the contrary notwithstanding, in the event that
at any time after the date of this Agreement and prior to
the Distribution Date, the Corporation shall (i) declare or
pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in
any such case, each Common Share outstanding following such
subdivision, combination or consolidation shall continue to
have one Right (subject to adjustment as provided herein)
associated therewith and the Purchase Price following any
such event shall be proportionately adjusted to equal the
result obtained by multiplying the Purchase Price
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. The adjustment provided for in
the preceding sentence shall be made successively whenever
such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election
to purchase and the certificate duly executed, accompanied
by payment of the Purchase Price for the Preferred Shares
(or other securities, as the case may be) to be purchased
and an amount equal to any applicable transfer tax required
to be paid by the holder of such Right Certificate in
accordance with Section 6 hereof by certified check,
cashier's check or money order payable to the order of the
Corporation, the Rights Agent shall thereupon promptly (i)
(A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be
purchased and the Corporation hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent (if the Corporation,
in its sole discretion, shall have elected to deposit the
Preferred Shares issuable upon exercise of the Rights
hereunder into a depositary) depositary receipts
representing such number of one one-thousandths of a
Preferred Share 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 Corporation will direct the
depositary agent to comply with such requests, (ii) when
appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuance 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 Right Certificate, registered in such name or names
as may be designated by such holder, and (iv) when
appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right
Certificate. In the event that the Corporation is obligated
to issue other
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securities (including Common Shares) of the Corporation
pursuant to Section 11(a) hereof, the Corporation will make
all arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate.
In addition, in the case of an exercise of the
Rights by a holder pursuant to Section 11(a)(ii), the Rights
Agent shall return such Right Certificate to the registered
holder thereof after imprinting, stamping or otherwise
indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by
Section 11(a)(ii) of the Rights Agreement and if less than
all the Rights represented by such Right Certificate were so
exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which
continue to include the rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such
Right Certificate or to his duly authorized assigns, subject
to the provisions of Section 14 hereof, or the Rights Agent
shall place an appropriate notation on the Right Certificate
with respect to those Rights exercised.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by
(i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a
transferee after the Acquiring Person becomes such, or (iii)
a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) 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 a
continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of
Directors of the Corporation has determined is part of a
plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Corporation 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 Right 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.
12
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Corporation
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 Right 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 Corporation shall reasonably request.
Section 8. Cancellation and Destruction of Right
CertificatesSection 8. Cancellation and Destruction of
Right Certificates. All Right Certificates surrendered for
the purpose of exercise (other than a partial exercise),
transfer, split up, combination or exchange shall, if
surrendered to the Corporation or to 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 Right Certificates shall be issued
in lieu thereof except as expressly permitted by any of the
provisions of this Rights Agreement. The Corporation shall
deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Right Certificates to the
Corporation, or shall, at the written request of the
Corporation, destroy such canceled Right Certificates, and
in such case shall deliver a certificate of destruction
thereof to the Corporation.
Section 9. Reservation and Availability of
Capital StockSection 9. Reservation and Availability of
Capital Stock. The Corporation covenants and agrees that at
all time prior to the occurrence of a Section 11(a)(ii)
Event it will cause to be reserved and kept available out of
its authorized and unissued Preferred Shares, or any
authorized and issued Preferred Shares held in its treasury,
the number of Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Rights and,
after the occurrence of a Section 11(a)(ii) Event, shall, to
the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in
full of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the
occurrence of a Section 11(a)(ii) Event, Common Shares, or
any other securities, as the case may be) issuable upon the
exercise of the Rights may be listed on any national
securities exchange, the Corporation shall use its best
efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance
upon such exercise.
The Corporation covenants and agrees that it will
take all such action as may be necessary to ensure that all
Preferred Shares (or Common Shares and/or other securities,
as the case may be) delivered upon exercise of Rights shall,
at the time of
13
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 fully paid and
non-assessable shares or securities.
The Corporation further covenants and agrees that
it will pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the
exercise of Rights. The Corporation shall not, however, be
required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to
a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares
(or Common Shares and/or other securities, as the case may
be) in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for
exercise, or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the
exercise of any Rights, until any such tax shall have been
paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction
that no such tax is due.
The Corporation shall use its best efforts to (i)
file, as soon as practicable following the Shares
Acquisition Date (or, if required by law, at such earlier
time following the Distribution Date as so required), a
registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act and the rules and regulations
thereunder) until the date of the expiration of the rights
provided by Section 11(a)(ii). The Corporation will also
take such action as may be appropriate under the blue sky
laws of the various states.
Section 10. Preferred Shares Record DateSection
10. Preferred Shares Record Date. Each Person in whose
name any certificate for Preferred Shares (or Common Shares
and/or other securities, as the case may be) is issued upon
the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares (or
Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made;
provided, however, that, if the date of such surrender and
payment is a date upon which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer
books of the Corporation are closed, such person shall be
deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next
14
succeeding Business Day on which the Preferred Shares (or
Common Shares and/or other securities, as the case may be)
transfer books of the Corporation are open.
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of RightsSection 11. Adjustment
of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Corporation shall at
any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller
number of Preferred 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 Corporation is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
of the Corporation were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or
together with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so
that each holder of a Right (except as provided below and in
Section 7(e) hereof) shall, for a period of 60 days after
the later of (i) the occurrence of any such event or
(ii) the effective date of an appropriate registration
statement under the Act pursuant to Section 9 hereof, have a
right to receive, upon exercise thereof at a price equal to
the then current Purchase Price, in accordance with the
terms of this Agreement, such number of Common Shares (or,
in the discretion of the Board of Directors, one one-
thousandths of a Preferred Share) as shall equal the result
obtained by (x) multiplying the then current Purchase Price
by the then number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event and
15
(y) dividing that product by 50% of the then current per
share market price" of the Corporation's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of
such first occurrence (such number of shares being referred
to as the "Adjustment Shares"); provided, however, that if
the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of
Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant
to this Section 11(a)(ii).
(iii) In the event that there shall not
be sufficient treasury shares or authorized but unissued
(and unreserved) Common Shares to permit the exercise in
full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and
the Board has determined to make the Rights exercisable into
fractions of a Preferred Share), notwithstanding any other
provision of this Agreement, to the extent necessary and
permitted by applicable law, each Right shall thereafter
represent the right to receive, upon exercise thereof at the
then current Purchase Price in accordance with the terms of
this Agreement, (x) a number of (or fractions of) Common
Shares (up to the maximum number of Common Shares which may
permissibly be issued) and (y) one one-thousandth of a
Preferred Share or a number of (or fractions of) other
equity securities of the Corporation (or, in the discretion
of the Board of Directors, debt) which the Board of
Directors of the Corporation has determined to have the same
aggregate current market value (determined pursuant to
Sections 11(d)(i) and (ii) hereof, to the extent applicable)
as one Common Share (such number of (or fractions of)
Preferred Shares (or other equity securities or debt of the
Corporation) being referred to as a "capital stock
equivalent"), equal in the aggregate to the number of
Adjustment Shares; provided, however, if sufficient Common
Shares and/or capital stock equivalents are unavailable,
then the Corporation shall, to the extent permitted by
applicable law, take all such action as may be necessary to
authorize additional Common Shares or capital stock
equivalents for issuance upon exercise of the Rights,
including the calling of a meeting of stockholders; and
provided, further, that if the Corporation is unable to
cause sufficient Common Shares and/or capital stock
equivalents to be available for issuance upon exercise in
full of the Rights, then each Right shall thereafter
represent the right to receive the Adjusted Number of Shares
upon exercise at the Adjusted Purchase Price (as such terms
are hereinafter defined). As used herein, the term
"Adjusted Number of Shares" shall be equal to that number of
(or fractions of) Common Shares (and/or capital stock
equivalents) equal to the product of (x) the number of
Adjustment Shares and (y) a fraction, the numerator of which
is the number of Common Shares (and/or capital stock
equivalents) available for issuance upon exercise of the
Rights and the denominator of which is the aggregate number
of Adjustment Shares otherwise issuable upon exercise in
full of all Rights (assuming there were a sufficient number
of Common Shares available) (such fraction being referred to
as the "Proration Factor"). The "Adjusted Purchase Price"
shall mean the product of the Purchase Price and the
Proration Factor. The Board of
16
Directors may, but shall not be required to, establish
procedures to allocate the right to receive Common Shares
and capital stock equivalents upon exercise of the Rights
among holders of Rights.
(b) In case the Corporation shall fix a record
date for the issuance of rights (other than the Rights),
options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights and
privileges as the Preferred Shares ("equivalent preferred
shares") or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price
per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the then current
per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record
date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the
number of Preferred Shares which 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
per share 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); provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Corporation issuable
upon exercise of one Right. In case such subscription price
may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration
shall be determined in good faith by the Board of Directors
of the Corporation, whose determination shall be described
in a statement filed with the Rights Agent and shall be
binding on the Rights Agent. Preferred Shares owned by or
held for the account of the Corporation 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, options or
warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Corporation shall fix a record
date for the making of a distribution to all holders of the
Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred
Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to
be
17
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 then current per share market price (as
determined pursuant to Section 11(d) hereof) of the
Preferred Shares on such record date, less the fair market
value (as determined in good faith by the Board of Directors
of the Corporation, whose determination shall be described
in a statement filed with the Rights Agent and shall be
binding on the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred
Share and the denominator of which shall be such current per
share market price of the Preferred Shares; provided,
however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Corporation
to be issued upon exercise of one Right. Such adjustments
shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation
hereunder, the "current per share market price" of any
security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the
thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per
share market price of the Security is determined during a
period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the
expiration of thirty (30) Trading Days after the ex-dividend
date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price
shall be appropriately adjusted to reflect the current
market price per share equivalent of such Security. The
closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is 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 Security is listed or
admitted to trading or, if the Security is 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 Quotations System
("NASDAQ") or such other system then in use, or, if on any
such date the Security is not
18
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 Security selected by the Board
of Directors of the Corporation. If on any such date no
such market maker is making a market in the Security, the
fair value of the Security on such date as determined in
good faith by the Board of Directors of the Corporation
shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which
the Security is listed or admitted to trading is open for
the transaction of business or, if the Security is not
listed or admitted to trading on any national securities
exchange, a Business Day. Subject to Section 11(d)(ii), if
any Security is not publicly held or so listed or traded,
"current per share market price" of such Security shall mean
the fair market value per share as determined in good faith
by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent.
(ii) For the purpose of any computation
hereunder, the "current per share market price" of the
Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the current per share market
price of the Preferred Shares shall be conclusively deemed
to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof), multiplied by one hundred. If neither the Common
Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by
the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent.
(e) Notwithstanding anything herein to the
contrary, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 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 one one-thousandth of a
Preferred Share or one ten-thousandth of any other share or
security, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of
(i) three (3) years from the date of the transaction which
mandates such adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof, the
holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the
Corporation other than Preferred Shares, thereafter the
number of other shares so receivable upon exercise of any
Right shall be
19
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) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the
Corporation subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-
thousandths of a Preferred Share purchasable from time to
time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Corporation shall have exercised
its election as provided in Section 11(i), upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of one one-
thousandths of a Preferred Share (calculated to the nearest
one ten-thousandth of a Preferred Share) obtained by (i)
multiplying (x) the number of Preferred Shares covered by a
Right immediately prior to this adjustment of the Purchase
Price by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Corporation 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
one one-thousandths of a Preferred Share purchasable upon
the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a
Preferred Share 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 one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The
Corporation shall make a public announcement of its election
to adjust the number of Rights, indicating the record date
for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least ten (10) days later than the date of the
public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Corporation shall, as
promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as
a result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such
20
holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Corporation, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided
for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-thousandths of a
Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par
value, if any, of the number of one one-thousandths of a
Preferred Share, Common Shares or other securities issuable
upon exercise of the Rights, the Corporation shall take any
corporate action which may, in the opinion of its counsel,
be necessary in order that the Corporation may validly and
legally issue such number of fully paid and nonassessable
one one-thousandths of a Preferred Share, Common Shares or
other securities at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Corporation may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised
after such record date the Preferred Shares, Common Shares
or other securities of the Corporation, if any, issuable
upon such exercise over and above the Preferred Shares,
Common Shares or other securities of the Corporation, if
any, issuable upon exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however,
that the Corporation shall deliver to such holder a due xxxx
or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence
of the event requiring such adjustment.
(m) Notwithstanding anything in this Section 11
to the contrary, the Corporation shall be entitled to make
such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly
for cash of Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of 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
21
Section 11, hereafter made by the Corporation to holders of
its Preferred Shares shall not be taxable to such
stockholders.
(n) The Corporation 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 Corporation in a transaction which does not violate
Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Corporation in a
transaction which does not violate 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 Corporation and
its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its
Subsidiaries in one or more transactions each of which does
not violate Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or
transfer there are any charter or by-law provisions or any
rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken,
which would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the
Person who 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. The
Corporation shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the
Corporation and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(n).
(o) The Corporation covenants and agrees that,
after the Distribution Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action the purpose of
which is to, or if at the time such action is taken it is
reasonably foreseeable that the effect of such action is to,
materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of Rights under Section
11(a)(ii) shall only result in the reduction of rights under
Section 11(a)(ii) to the extent so exercised and shall not
otherwise affect the rights represented by the Rights under
this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase
Price or Number of SharesSection 12. Certificate of
Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 or 13 hereof,
the Corporation shall promptly (a) prepare a certificate
setting forth such adjustment, and a brief statement of the
facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common
Shares and the Preferred Shares a copy of such certificate
and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance
22
with Section 26 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 such adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning PowerSection 13.
Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, on or following the
Shares Acquisition Date, directly or indirectly, (x) the
Corporation shall consolidate with, or merge with and into,
any Interested Stockholder or, if in such merger or
consolidation all holders of Common Shares are not treated
alike, any other Person, (y) the Corporation shall
consolidate with, or merge with, any Interested Stockholder
or, if in such merger or consolidation all holders of Common
Shares are not treated alike, any other Person, and the
Corporation shall be the continuing or surviving corporation
of such consolidation or merger (other than, in a case of
any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities
generally entitled to vote in the election of directors
("voting securities") of the Corporation outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities
of the surviving entity) all of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger or consolidation and the holders (and
relative percentage holdings of each such holder) of such
securities not having changed as a result of such merger or
consolidation), or (z) the Corporation 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
Corporation and its Subsidiaries (taken as a whole) to any
Interested Stockholder or Persons or, if in such transaction
all holders of Common Shares are not treated alike, any
other Person, (other than the Corporation or any Subsidiary
of the Corporation in one or more transactions each of which
does not violate Section 11(o) hereof), then, and in each
such case (except as provided in Section 13(d) hereof),
proper provision shall be made so that (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price,
in accordance with the terms of this Agreement and in lieu
of Preferred Shares, such number of freely tradeable Common
Shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall equal the result obtained
by (A) multiplying the then current Purchase Price by the
number of one one-thousandths of a Preferred Share for which
a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii))
and dividing that product by (B) 50% of the then current per
share market price of the Common Shares of such Principal
Party (determined pursuant to Section 11(d) hereof) on the
date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the
obligations and duties of the Corporation pursuant to this
Agreement; (iii) the term "Corporation" shall thereafter be
deemed to
23
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; and (iv) 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 the Common Shares thereafter deliverable
upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a),
the Person that is the issuer of any securities into which
Common Shares of the Corporation 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 (including, if applicable, the Corporation if
it is the surviving corporation); and
(ii) in the case of any transaction described
in clause (z) of the first sentence of Section 13(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 of the foregoing cases, (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; (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; and (3) in case such Person is
owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1)
and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party
were a "Subsidiary" of both or all of such joint venturers
and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio
as their direct or indirect interests in such Person bear to
the total of such interests.
(c) The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized
Common Shares which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the
Corporation and such Principal Party shall have executed and
delivered to the
24
Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the
date of any consolidation, merger, sale or transfer
mentioned in paragraph (a) of this Section 13, the Principal
Party at its own expense shall:
(i) 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 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 Final Expiration Date;
(ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon
exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or
other transfers. The rights under this Section 13 shall be
in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise
thereof.
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to 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
Permitted Offer (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 Permitted Offer; and (iii) the
form of consideration offered in such transaction is the
same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional
SharesSection 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue
fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value
of a whole Right. For the purposes of this Section 14(a),
the current market
25
value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed
or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors of
the Corporation. 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 Corporation shall be used.
(b) The Corporation shall not be required to
issue fractions of Preferred Shares (other than fractions
which are one one-thousandths or integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the
Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are
one one-thousandths or integral multiples of one one-
thousandth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-thousandth of a
Preferred Share may, at the election of the corporation, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Corporation and a depositary selected
by it; provided that such agreement shall provide that the
holders of such depositary receipts shall have the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by
such depositary receipts. In lieu of fractional Preferred
Shares that are not one one-thousandth or integral multiples
of one one-thousandth of a Preferred Share, the Corporation
shall pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current
market value of one Preferred Share. For the purposes of
this Section 14(b), the current market value of a 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.
(c) Following the occurrence of one of the
transactions or events specified in Section 11 giving rise
to the right to receive Common Shares, capital stock
equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Corporation
shall not be required to issue fractions of shares or units
of such Common
26
Shares, capital stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which
evidence fractions of such Common Shares, capital stock
equivalents or other securities. In lieu of fractional
shares or units of such Common Shares, capital stock
equivalents or other securities, the Corporation may pay to
the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value
of a share or unit of such Common Shares, capital stock
equivalents or other securities. For purposes of this
Section 14(c), the current market value shall be determined
in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise
and, if such capital stock equivalent is not traded, each
such capital stock equivalent shall have the value of one
one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of
the Right expressly waives his right to receive any
fractional Rights or any fractional share upon exercise of a
Right (except as provided above).
Section 15. Rights of ActionSection 15.
Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the
Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of
the Common Shares), without the consent of the Rights Agent
or of the holder of any other Right Certificate (or, prior
to the Distribution Date, of 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 Corporation to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations
of any Person subject to, this Agreement.
Section 16. Agreement of Right HoldersSection 16.
Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation
and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
the Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office or
27
offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof,
the Corporation and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the
associated Common Shares certificate made by anyone other
than the Corporation or the Rights Agent) for all purposes
whatsoever, and neither the Corporation 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
(d) notwithstanding anything in this Agreement to
the contrary, neither the Corporation 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 Corporation must use its best efforts
to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a
StockholderSection 17. Right Certificate Holder Not Deemed
a Stockholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of the Preferred Shares or any
other securities of the Corporation which may at any time be
issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a
stockholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or
other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights AgentSection
18. Concerning the Rights Agent. The Corporation 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 other disbursements incurred in the
administration and execution of this
28
Agreement and the exercise and performance of its duties
hereunder. The Corporation 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.
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 Right
Certificate or certificate for Common Shares or for other
securities of the Corporation, 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 AgentSection 19. Merger or Consolidation
or Change of Name of Rights Agent. Any corporation into
which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall
be a party, or any corporation succeeding to the stock
transfer or all or substantially all of the corporate trust
business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions
of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall
not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of
the predecessor or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and
in this Agreement.
In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right
Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its
prior name or in its changed name; and in all such cases
such Right
29
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights AgentSection 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
Corporation and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Corporation), and
the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including,
without limitation, the identity of an Acquiring Person and
the determination of the current market price of any
Security) be proved or established by the Corporation 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 any one of
the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the
Secretary of the Corporation 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.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates
(except its countersignature on such Right Certificates) or
be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the
Corporation only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Corporation 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
30
require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after
receipt of the certificate described in Section 12 hereof);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any Preferred Shares or Common Shares or
other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares
or Common Shares or other securities will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Corporation agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the
Secretary of the Corporation, and to apply to such officers
for advice or instructions in connection with its duties,
and shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such
officer. Any application by the Rights Agent for written
instructions from the Corporation 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 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
Corporation 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 instruction in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy,
sell or deal in any of the Rights or other securities of the
Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation or otherwise
act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the
Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its
31
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 Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer,
the certificate attached to the form of assignment or form
of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer
without first consulting with the Corporation.
Section 21. Change of Rights AgentSection 21.
Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in
writing mailed to the Corporation and to each transfer agent
of the Preferred Shares or Common Shares by registered or
certified mail, and to the holders of the Right Certificates
by first-class mail. The Corporation may remove the Rights
Agent or any successor Rights Agent upon sixty (60) days'
notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent
of the Preferred Shares or Common Shares by registered or
certified mail, and to holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the
Corporation shall appoint a successor to the Rights Agent.
If the Corporation shall fail to make such appointment
within a period of sixty (60) days after giving notice of
such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, shall be a
corporation organized and doing business under the laws of
the United States or any state of the United States, in good
standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000 (or
such lower number as approved by the Corporation's Board of
Directors). 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
32
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 Corporation shall file
notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Preferred Shares or Common
Shares and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to
give any notice provided for in this Section 21, however, or
any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates.
Section 22. Issuance of New Right
CertificatesNotwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this
Agreement.
In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and
prior to the earliest of the Redemption Date, the Final
Expiration Date and the consummation of a transaction
contemplated by Section 13(d) hereof, the Corporation (a)
shall with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures
issued by the Corporation, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors
of the Corporation, issue Right Certificates representing
the appropriate number of Rights in connection with such
issuance or sale; provided, however, that no Right
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 TerminationSection 23.
Redemption and Termination. (a) (i) The Board of
Directors of the Corporation may, at its option, redeem all
but not less than all the then outstanding Rights at a
redemption price of $.001 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"), at any time prior to the earlier
of (x) the occurrence of a Section 11(a)(ii) Event, or (y)
the Final Expiration Date, and the Corporation may, at its
option, pay the Redemption Price either in Common Shares
(based on the "current per share market price," as defined
in Section 11(d) hereof, of the Common Shares at the time of
redemption) or cash; provided, however, that if the
Corporation elects to pay the Redemption Price in Common
Shares, the Corporation shall not be required to issue any
33
fractional Common Shares and the number of Common Shares
issuable to each holder of Rights shall be rounded down to
the next whole share.
(ii) In addition, the Board of Directors of the
Corporation may, at its option, at any time following a
Shares Acquisition Date but prior to any Section 13 Event
redeem all but not less than all of the then outstanding
Rights at the Redemption Price in connection with any
Section 13 Event in which all holders of Common Shares are
treated alike and not involving (other than as a holder of
Common Shares being treated like all other such holders) a
Transaction Person.
(iii) Notwithstanding anything to the contrary
in this Agreement, including, without limitation, the
provisions of Section 23(a)(i) and (ii), in the event that a
majority of the Board of Directors of the Corporation is
comprised of (i) persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board
of Directors in office immediately prior to such meeting or
action by written consent, and/or (ii) successors of such
persons elected to the Board of Directors for the purpose of
either facilitating a Transaction with a Transaction Person
or circumventing directly or indirectly the provisions of
this Section 23(a)(iii), then (I) the Rights may not be
redeemed for a period of 365 days following the
effectiveness of such election if such redemption is
reasonably likely to have the purpose or effect of
facilitating a Transaction with a Transaction Person and
(II) the Rights may not be redeemed following such 365-day
period if (x) such redemption is reasonably likely to have
the purpose of facilitating a Transaction with a Transaction
Person and (y) during such 365-day period, the Corporation
enters into any agreement, arrangement or understanding with
any Transaction Person which is reasonably likely to have
the purpose or effect of facilitating a Transaction with any
Transaction Person.
(b) In the case of a redemption permitted under
Section 23(a)(i), immediately upon the date for redemption
set forth (or determined in the manner specified in) in a
resolution of the Board of Directors of the Corporation
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. In the case of a redemption
permitted only under Section 23(a)(ii), evidence of which
shall have been filed with the Rights Agent, the right to
exercise the Rights will terminate and represent only the
right to receive the Redemption Price upon the later of ten
Business Days following the giving of notice or the
expiration of any period during which the rights under
Section 11(a)(ii) may be exercised. The Corporation shall
promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for
redemption set forth in a resolution of the Board of
Directors ordering the redemption of
34
the Rights, the Corporation shall mail a notice of
redemption to all the holders of the then outstanding Rights
at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption
Price will be made. Neither the Corporation nor any of its
Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
(c) In the case of a redemption permitted under
Section 23(a)(i), the Corporation may, at its option,
discharge all of its obligations with respect to the Rights
by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement
and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as
they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the
Transfer Agent of the Common Shares, and upon such action,
all outstanding Rights and Right Certificates shall be null
and void without any further action by the Corporation.
Section 24. ExchangeSection 24. Exchange. (a)
The Board of Directors of the Corporation may, at its
option, at any time after the time that any Person becomes
an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 7(e) and Section 11(a)(ii) hereof) for Common Shares
of the Corporation at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction involving
either the Common Shares or the Preferred Shares occurring
after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other
than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or any such
Subsidiary, any entity holding Common Shares for or pursuant
to the terms of any such plan or any trustee, administrator
or fiduciary of such a plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Corporation ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right
to exercise such rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive
that number of Common Shares equal to the number of such
rights held by such holder multiplied by the Exchange Ratio.
The Corporation shall promptly give
35
public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Corporation
promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) and Section 11(a)(ii) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24,
the Corporation, at its option, may substitute Preferred
Shares (or equivalent preferred shares, as such term is
defined in Section 11(b) hereof) for some or all of the
Common Shares exchangeable for Rights, at the initial rate
of one-thousandth of a Preferred Share (or equivalent
preferred share) for each Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the
fraction of a Preferred Share delivered in lieu of each
Common Share shall have the same voting rights as one Common
Share.
(d) The Board of Directors of the Corporation
shall not authorize any exchange transaction referred to in
Section 24(a) hereof unless at the time such exchange is
authorized there shall be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized
but unissued to permit the exchange of Rights as
contemplated in accordance with this Section 24.
Section 25. Notice of Certain EventsSection 25.
Notice of Certain Events. (a) In case the Corporation
shall propose (i) to pay any dividend payable in stock of
any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred
Shares (other than a regularly quarterly cash dividend),
(ii) to offer to the holders of its 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, (iii) to effect any
reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with any other Person (other
than a Subsidiary of the Corporation in a transaction which
does not violate 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 or
more transactions, of 50% or more of the assets or earning
power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the
Corporation and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or
winding up of the
36
Corporation, then, in each such case, the Corporation shall
give to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of such proposed action to
the extent feasible and file a certificate with the Rights
Agent to that effect, which shall specify the record date
for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the
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 the 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 the Preferred
Shares, whichever shall be the earlier.
(b) In case of a Section 11(a)(ii) Event, then
(i) the Corporation shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of the occurrence of such
event, which notice shall describe such event and the
consequences of such event to holders of Rights under
Section 11(a)(ii) hereof and (ii) all references in the
preceding paragraph (a) to Preferred Shares shall be deemed
thereafter to refer also, if appropriate, to Common Shares
and/or, if appropriate, other securities of the Corporation.
Section 26. NoticesSection 26. Notices.
Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right
Certificate to or on the Corporation 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:
Family Bargain Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice
or demand authorized by this Agreement to be given or made
by the Corporation or by the holder of any Right Certificate
to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the
Corporation) as follows:
Corporate Stock Transfer, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Client Administration
37
Notices or demands authorized by this Agreement to be given
or made by the Corporation or the Rights Agent to the holder
of any Right 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
Corporation.
Section 27. Supplements and AmendmentsSection 27.
Supplements and Amendments. Prior to the Distribution Date,
the Corporation and the Rights Agent shall, if the
Corporation so directs, supplement or amend any provision of
this Agreement without the approval of any holders of
certificates representing Common Shares. From and after the
Distribution Date, the Corporation and the Rights Agent
shall, if the Corporation so directs, supplement or amend
this Agreement without the approval of any holders of Right
Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions
hereunder in any manner which the Corporation may deem
necessary or desirable and which shall not adversely affect
the interests of the holders of Right Certificates (other
than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, however, that 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 Corporation which states that
the proposed supplement or amendment is in compliance with
the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment, provided that such supplement
or amendment does not adversely affect the rights or
obligations of the Rights Agent under Section 18 or Section
20 of this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common
Shares. Notwithstanding anything contained in this Rights
Agreement to the contrary, in the event that a majority of
the Board of Directors of the Corporation is comprised of
(i) persons elected at a meeting or by written consent of
stockholders who were not nominated by the Board of
Directors in office immediately prior to such meeting or
written consent, and/or (ii) successors of such persons
elected to the Board of Directors for the purpose of either
facilitating a Transaction with a Transaction Person or
circumventing directly or indirectly the provisions of this
Section 27, then (I) for a period of 365 days following the
effectiveness of such action, this Rights Agreement shall
not be amended or supplemented in any manner reasonably
likely to have the purpose or effect of facilitating a
Transaction with a Transaction Person and (II) no amendments
or supplements may be made following such 365-day period if
(x) such amendment or supplement is reasonably likely to
have the purpose of facilitating a Transaction with a
Transaction Person and
38
(y) during such 365-day period, the Corporation enters into
any agreement, arrangement or understanding with any
Transaction Person which is reasonably likely to have the
purpose or effect of facilitating a Transaction with any
Transaction Person.
Section 28. Determination and Actions by the
Board of Directors, etc.Section 28. Determination and
Actions by the Board of Directors, etc. The Board of
Directors of the Corporation shall have the exclusive power
and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board, or
the Corporation, 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, without
limitation, a determination to redeem or not redeem the
Rights or to amend the Agreement and whether any proposed
amendment adversely affects the interests of the holders of
Right Certificates). For all purposes of this Agreement,
any calculation of the number of Common Shares or other
securities outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding Common Shares or any other securities 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 as
in effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect
to the foregoing) which are done or made by the Board in
good faith, shall (x) be final, conclusive and binding on
the Corporation, the Rights Agent, the holders of the Right
Certificates and all other parties, and (y) not subject the
Board to any liability to the holders of the Right
Certificates.
Section 29. SuccessorsSection 29. Successors.
All the covenants and provisions of this Agreement by or for
the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors
and assigns hereunder.
Section 30. Benefits of this AgreementSection 30.
Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than
the Corporation, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date,
the Common Shares).
Section 31. SeverabilitySection 31.
Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
39
Section 32. Governing LawSection 32. Governing
Law. This Agreement, each Right and each Right Certificate
issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State.
Section 33. CounterpartsSection 33.
Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive HeadingsSection 34.
Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of
the provisions hereof.
41
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and attested, all as of
the date and year first above written.Signatures
FAMILY BARGAIN CORPORATION
By:___________________________
Name:Xxxx X. Xxxxxx
Title: Chief Executive
Officer
CORPORATE STOCK TRANSFER, INC.
By:___________________________
Name:
Title:
42
____________________________________________________________
FAMILY BARGAIN CORPORATION
and
CORPORATE STOCK TRANSFER, INC., as
Rights Agent
Rights Agreement
Dated as of November 27, 1995
____________________________________________________________
TABLE OF CONTENTS
Page
Section 1. Certain Definitions................. 1
Section 2. Appointment of Rights Agent......... 6
Section 3. Issue of Right Certificates......... 6
Section 4. Form of Right Certificate........... 8
Section 5. Countersignature and Registration... 8
Section 6. Transfer, Split-Up, Combination
and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificate................... 9
Section 7. Exercise of Rights; Purchase
Price; Expiration Date of Rights.... 10
Section 8. Cancellation and Destruction of
Right Certificates.................. 12
Section 9. Reservation and Availability of
Capital Stock....................... 13
Section 10. Preferred Shares Record Date........ 14
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........... 22
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. 22
Section 14. Fractional Rights and Fractional
Shares.............................. 25
Section 15. Rights of Action.................... 26
Section 16. Agreement of Right Holders.......... 27
Section 17. Right Certificate Holder Not
Deemed a Stockholder................ 27
Section 18. Concerning the Rights Agent......... 28
i
Section 19. Merger or Consolidation or Change
of Name of Rights Agent............. 28
Section 20. Duties of Rights Agent.............. 29
Section 21. Change of Rights Agent.............. 31
Section 22. Issuance of New Right Certificates.. 32
Section 23. Redemption and Termination.......... 32
Section 24. Exchange............................ 34
Section 25. Notice of Certain Events............ 35
Section 26. Notices............................. 36
Section 27. Supplements and Amendments.......... 37
Section 28. Determination and Actions by the
Board of Directors, etc............. 38
Section 29. Successors.......................... 38
Section 30. Benefits of this Agreement.......... 38
Section 31. Severability........................ 38
Section 32. Governing Law....................... 38
Section 33. Counterparts........................ 39
Section 34. Descriptive Headings................ 39
Signatures 40
Exhibit A - Certificate of Designation, Preferences and
Rights of Series A Junior Participating
Preferred Stock of Family Bargain Corporation
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase
Preferred Shares
ii
Defined Term Cross Reference Sheet
Acquiring Person....................... Section 1(a)
Act.................................... Section 1(b)
Adjusted Number of Shares.............. Section 11(a)(iii)
Adjusted Purchase Price................ Section 11(a)(iii)
Adjustment Shares...................... Section 11(a)(ii)
Affiliate.............................. Section 1(c)
Agreement.............................. Preface
Associate.............................. Section 1(c)
beneficially own....................... Section 1(d)
Beneficial Owner....................... Section 1(d)
Business Day........................... Section 1(e)
capital stock equivalent............... Section 11(a)(iii)
Close of Business...................... Section 1(f)
Common Shares.......................... Section 1(g)
Corporation............................ Preface
current per share market price......... Section 11(d)(i)
Disinterested Directors................ Section 1(h)
Distribution Date...................... Section 1(i)
equivalent preferred shares............ Section 11(b)
Exchange Act........................... Section 1(c)
Exchange Ratio......................... Section 24(a)
Final Expiration Date.................. Section 1(j)
Grandfathered Person................... Section 1(k)
Interested Stockholder................. Section 1(l)
NASDAQ................................. Section 11(d)(i)
Permitted Offer........................ Section 1(m)
Person................................. Section 1(n)
Preferred Shares....................... Section 1(o)
Principal Party........................ Section 13(b)
Proration Factor....................... Section 11(a)(iii)
Purchase Price......................... Section 4(a)
Record Date............................ Preface
Redemption Date........................ Section 1(p)
Redemption Price....................... Section 23(a)(i)
Right.................................. Preface
Right Certificate...................... Section 3(a)
Rights Agent........................... Preface
Rights Agreement....................... Section 3(c)
Section 11(a)(ii) Event................ Section 1(q)
iii
Section 13 Event....................... Section 1(r)
Security............................... Section 11(d)(i)
Shares Acquisition Date................ Section 1(s)
Subsidiary............................. Section 1(t)
Summary of Rights...................... Section 3(b)
then outstanding....................... Section 1(d)
Trading Day............................ Section 11(d)(i)
Transaction............................ Section 1(u)
Transaction Person..................... Section 1(v)
Triggering Event....................... Section 1(w)
voting securities...................... Section 13(a)
iv
Exhibit A
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK OF FAMILY BARGAIN CORPORATION
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
We, __________________, President, and
__________________, Secretary of Family Bargain Corporation
(the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware,
in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY as follows:
That pursuant to the authority conferred upon the
Board of Directors by the Certificate of Incorporation of
the said Corporation, said Board of Directors on
December , 1995, voted to create a series of 25,000 shares
of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
RESOLVED, that pursuant to the authority granted
to and vested in the Board of Directors of this Corporation
in accordance with the provisions of the Corporation's
Certificate of Incorporation and Section 151(g) of the
General Corporation Law of the State of Delaware, the Board
of Directors hereby creates a series of Preferred Stock of
the Company and hereby states the designation and number of
shares, and fixes the relative rights, preferences and
limitations thereof (in addition to the provisions set forth
in the Corporation's Certificate of Incorporation which are
applicable to the Preferred Stock of all classes and series)
as follows:
Section 1. Designation and Amount. There shall
be a series of Preferred Stock, par value $.01 per share, of
the Corporation which shall be designated as "Series A
Junior Participating Preferred Stock," par value $.01 per
share, and the number of shares constituting such series
shall be 25,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors or by
resolution of the Executive Committee of the Board of
Directors; provided, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred
Stock to a number less than that of the shares then
outstanding plus the number of shares issuable upon exercise
of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the
Corporation.
1
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of
the holders of any shares of any series of Preferred Stock
ranking prior and superior to the Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock in preference to the holders of shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the
Corporation and any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of each fiscal
quarter of the Corporation in each year or such other dates
as the Board of Directors of the Corporation shall approve
(each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating
Preferred Stock in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or
(b) subject to the provision for adjustment hereinafter set
forth, 1000 times the aggregate per share amount of all cash
dividends, and 1000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation
shall at any time after December , 1995 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide (by a
stock split or otherwise) the outstanding Common Stock, or
(iii) combine (by a reverse stock split or otherwise) the
outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares
of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Stock as provided in paragraph (A) above at the time it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution
shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a
2
dividend of $1.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) So long as any shares of the Series A Junior
Participating Preferred Stock are outstanding, no dividends
or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on
the Common Stock unless, in each case, the dividend required
by this Section 2 to be declared on the Series A Junior
Participating Preferred Stock shall have been declared.
(D) The holders of the shares of the Series A
Junior Participating Preferred Stock shall not be entitled
to receive any dividends or other distributions except as
provided herein.
(E) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock unless the
date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly
Dividend Payment Date in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in
an amount less than the total of such dividends at the time
accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon,
which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares
of Series A Junior Participating Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preferred Stock shall entitle the holder
thereof to 1000 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide (by a stock split or
otherwise) the outstanding Common Stock, or (iii) combine
(by a reverse
3
stock split or otherwise) the outstanding Common Stock into
a smaller number of shares, then in each such case the
number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by
law, the holders of shares of Series A Junior Participating
Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to
a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A
Junior Participating Preferred Stock shall be in arrears in
an amount equal to at least six (6) full quarterly dividends
(whether or not declared and whether or not consecutive)
thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods
and for the current quarterly dividend period on all shares
of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart
for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in
an amount equal to at least six (6) full quarterly dividends
(whether or not declared and whether or not consecutive)
thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) Directors.
(ii) During any default period, such voting
right of the holders of Series A Junior Participating
Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be
exercised unless the holders of one-third (1/3) in number of
shares of Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of the holders
of Common Stock shall not affect the exercise by the holders
of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting, to elect two
(2) Directors. If the number which may be so elected at any
4
special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make
such increase in the number of Directors as shall be
necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default
period and during the continuance of such period, the number
of directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred
Stock shall, during an existing default period, have
previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten
percent (10%) of the total number of Preferred Stock
outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Preferred
Stock, which meeting shall thereupon be called by the
Chairman of the Board or the President of the Corporation.
Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to
this paragraph (C)(iii) shall be given to each holder of
record of Preferred Stock by mailing a copy of such notice
to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time
not earlier than 10 days and not later than 60 days after
such order or request or in default of the calling of such
meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder
or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the
date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of
Common Stock, and other classes of stock of the Corporation
if applicable, shall continue to be entitled to elect the
whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by a vote of a majority
of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director
whose office shall become vacant. References in this
paragraph (C) to Directors elected by the holders of a
particular class of stock shall include Directors elected by
such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
5
(v) Immediately upon the expiration of a
default period, (x) the right of the holders of Preferred
Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Preferred
Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the
Certificate of Incorporation or By-laws irrespective of any
increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law
or in the Certificate of Incorporation or By-laws). Any
vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series
A Junior Participating Preferred Stock shall have no special
voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior
Participating Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on
shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) Declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred
Stock;
(ii) Declare or pay dividends on or make any
other distributions on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) Redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Junior Participating Preferred Stock; or
6
(iv) Purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock or any shares of stock ranking on a parity
with the Series A Junior Participating Junior Preferred
Stock except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of
Series A Junior Participating Preferred Stock purchased or
otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding
Up.
(A) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred
Stock shall have received per share, the amount of $1.00,
plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date
of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be
made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1000 (as appropriately adjusted as set
forth in paragraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect
to the Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and
7
Common Stock,respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio
of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets
available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of
all other series of Preferred Stock, if any, which rank on a
parity with the Series A Junior Participating Preferred
Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event
there are not sufficient assets available to permit payment
in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
of shares, then in each case the Adjustment Number in effect
immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any
such event the shares of Series A Junior Participating
Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to the
Adjustment Number times the aggregate amount of stock,
securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series A
Junior Participating Preferred Stock shall not be
redeemable.
Section 9. Ranking. The Series A Junior
Participating Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
8
Section 10. Fractional Shares. Series A Junior
Participating Preferred Stock may be issued in fractions of
a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series A
Junior Participating Preferred Stock.
Section 11. Amendment. The Certificate of
Incorporation of the Corporation shall not be further
amended in any manner which would materially alter or change
the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders
of a majority or more of the outstanding shares of Series A
Junior Participating Preferred Stock, voting separately as a
class.
Section 12. Effective Date. This Amended
Certificate of Designation, Preferences and Rights of Series
A Junior Participating Preferred Stock of Family Bargain
Corporation shall be effective at 5:00 P.M., Eastern
Standard Time, on December , 1995.
9
IN WITNESS WHEREOF, I have executed and subscribed
this Certificate and do affirm the foregoing as true under
penalties of perjury this [ ]th day of December, 1995.
By:
---------------------------
President
Attest:
---------------------------
Secretary
10
Exhibit B
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER NOVEMBER __, 2000, OR
EARLIER IF REDEEMED BY THE CORPORATION. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
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 AN AFFILIATE OR ASSOCIATE THEREOF (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
SHALL BECOME NULL AND VOID.
Right Certificate
Family Bargain Corporation
This certifies that ___________, or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the
Rights Agreement, dated as of November __, 1995 (the "Rights
Agreement"), between Family Bargain Corporation, a Delaware
corporation (the "Corporation"), and Corporate Stock
Transfer, Inc. (the "Rights Agent"), to purchase from the
Corporation at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00
P.M., New York City time, on November __, 2000, unless the
Rights evidenced hereby shall have been previously redeemed
by the Corporation, at the principal office or offices of
the Rights Agent designated for such purpose, or at the
office of its successor as Rights Agent, one one-thousandth
of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, with a par value of $.01 per
share (the "Preferred Shares"), of the Corporation, at a
purchase price of $9.00 per one one-thousandth of a
Preferred Share (the
1
"Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly
executed. The number of Rights evidenced by this Right
Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of November __, 1995 based
on the Preferred Shares as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event
(as such term is defined in the Rights Agreement), if the
Rights evidenced by this Right Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate who becomes a
transferee after the Acquiring Person becomes such, or (iii)
under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, such
Rights shall become null and void and no holder hereof shall
have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a Preferred
Share or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the
happening of certain events, including Triggering Events (as
such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and
to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights
Agent, the Corporation and the holders of the Right
Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at
the principal executive offices of the Corporation and the
principal office or offices of the Rights Agent.
This Right Certificate, with or without other
Right Certificates, upon surrender at the principal office
of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares or other securities as
the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in
part, the
2
holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Certificate may be redeemed by
the Corporation at a redemption price of $.001 per Right
(subject to adjustment as provided in the Rights Agreement)
payable in Common Shares or cash.
The Corporation shall not be required to issue
fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value
of a whole Right as defined in the Rights Agreement.
The Corporation will not be required to issue
fractions of Preferred Shares (other than fractions which
are one one-thousandths or integral multiples of one one-
thousandth of a Preferred Share) upon exercise of the Rights
or to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are one one-
thousandths or integral multiples of one one-thousandth of a
Preferred Share). In lieu of fractional Preferred Shares
other than fractions that are multiples of one one-
thousandth of a Share, the Corporation will pay to the
registered holders of Right Certificates at the time such
Rights are exercised an amount in cash equal to the same
fraction of the current market value of one Preferred Share
as defined in the Rights Agreement.
No holder of this Right Certificate shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Shares or of any other
securities of the Corporation which may at any time be
issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of
a stockholder of the Corporation or any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends
or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
3
WITNESS the facsimile signature of the proper
officers of the Corporation and its corporate seal. Dated
as of _________, ______.
[SEAL]
ATTEST: FAMILY BARGAIN CORPORATION
Attest:
By By
--------------------------- ----------------------
Name: Name:
Title: Title:
Countersigned:
[RIGHTS AGENT]
By
--------------------------
Authorized Signatory
Name:
Title:
4
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
__________________________________________________ hereby
sells, assigns and transfers unto __________________________
____________________________________________________________
(Please print name and address of transferee)
____________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _________ Attorney, to transfer the within Right
Certificate on the books of the within-named Corporation,
with full power of substitution.
Dated: ____________, _____
____________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of
a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank, savings association, credit union or trust
company having an office or correspondent in the United
States or other eligible guarantor institution which is a
participant in a signature guarantee medallion program.
------------------------------------------------------------
The undersigned hereby certifies that (1) the
Rights evidenced by this Right Certificate are not being
sold, assigned or transferred by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and (2) after due inquiry and to the best
knowledge of the undersigned, the undersigned did not
acquire the Rights evidenced by this Right Certificate from
any Person who is or was an Acquiring Person or an Affiliate
or Associate thereof (as such terms are defined in the
Rights Agreement).
____________________
Signature
5
------------------------------------------------------------
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to
exercise Rights represented by this Right Certificate to
purchase the Preferred Shares, Common Shares or such other
securities issuable upon the exercise of such Rights at this
time as follows:
Please Insert
Number of
Rights To Be
Exercised
(i) Preferred Shares Exercise _______________
(ii) Section 11(a)(ii) Exercise _______________
(iii) Section 13 Exercise _______________
The undersigned requests that certificates for
such Preferred Shares, Common Shares or other securities be
issued in the name of:
Please insert social security
or other identifying number ________________________________
____________________________________________________________
(Please print name and address of transferee)
____________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate
for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number ________________________________
____________________________________________________________
(Please print name and address of transferee)
____________________________________________________________
6
Dated: _________, 19__
____________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of
a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank, savings association, credit union or trust
company having an office or correspondent in the United
States or other eligible guarantor institution which is a
participant in a signature guarantee medallion program.
7
Form of Reverse Side of Right Certificate -- continued.
------------------------------------------------------------
The undersigned hereby certifies that (1) the
Rights evidenced by this Right Certificate are not being
exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and (2)
after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights
evidenced by this Rights Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
____________________
Signature
------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment
and Election and certificates must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in
the Form of Assignment or the Form of Election to Purchase,
as the case may be, is not completed, the Corporation and
the Rights Agent will deem the Beneficial Owner of the
Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
8
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
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 AN AFFILIATE
OR ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT)
AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL
BECOME NULL AND VOID.
On November 27, 1995, the Board of Directors of
Family Bargain Corporation, a Delaware corporation (the
"Corporation"), declared a dividend distribution of one
preferred share purchase right (a "Right") for each
outstanding share of Common Stock, par value $.01 per share
(the "Common Shares"), of the Corporation. The dividend is
payable to the stockholders of record as of 5:00 P.M.,
Eastern Standard Time, on December 8, 1995 (the "Record
Date"), and with respect to Common Shares issued thereafter
until the Distribution Date (as defined below) and, in
certain circumstances, with respect to Common Shares issued
after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Corporation one one-
thousandth of a share of Series A Junior Participating
Preferred Stock, par value $.01 per share (the "Preferred
Shares") at a price of $9.00 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of November 27, 1995
(the "Rights Agreement"), between the Corporation and
Corporate Stock Transfer, Inc. (the "Rights Agent").
Initially, the Rights will be attached to all
certificates representing Common Shares then outstanding,
and no separate Right Certificates (as hereinafter defined)
will be distributed. The Rights will separate from the
Common Shares on the earliest to occur of (i) the first date
of public announcement that a person or "group" (other than
a Grandfathered Person, as hereinafter defined) has acquired
beneficial ownership of 15% or more of the outstanding
Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined); or (ii) 10 business days (or such
later date as the Board may determine) following the
commencement of, or announcement of an intention to
commence, a tender offer or exchange offer the consummation
of which would result in a person or group becoming an
Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "Distribution Date"). A person
or group whose acquisition of Common Shares causes a
Distribution Date pursuant to clause (i) above is an
"Acquiring
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Person." The first date of public announcement
that a person or group has become an Acquiring Person is
the "Shares Acquisition Date." "Disinterested Directors"
are directors who are not officers of the Corporation and
who are not Acquiring Persons or their affiliates, associates
or representatives of any of them, or any Person who directly
or indirectly proposed or nominated as a director of the
Corporation by a Transaction Person (as defined below).
Notwithstanding the foregoing, an Acquiring Person
does not include the following persons ("Grandfathered
Persons"): (i) Xxxxxx Xxxxx and Xxxxxx X. Xxxxxx; (ii) any
current spouse of any Person described in
clause (i); (iii) any brother or sister of any Person
described in clause (i); (iv) any children, whether now
living or hereafter born, of any Person described in
clauses (i) and (iii); (v) any estate of, or the executor or
administrator of any estate of, or any guardian or custodian
for, any Person described in clauses (i), (ii), (iii) or
(iv) (so long as such executor, administrator, guardian or
custodian is acting in his or her capacity as
such); (vi) any legal advisor of any Person described in
clauses (i), (ii), (iii), (iv), (v), (vii), (viii) or (ix)
who is given a revocable proxy of such Person with respect
to shares of which such Person is the Beneficial Owner or
who is an attorney-in-fact or agent of such
Person; (vii) any corporation or general or limited
partnership (whether now existing or hereafter formed) of
which no less than 80% of the outstanding voting or
partnership interests, respectively, are beneficially owned,
directly or indirectly, by one or more of the Persons
referred to in clauses (i), (ii), (iii), (iv) and
(v); (viii) any trust of which one or more of the Persons
referred to in clauses (i), (ii), (iii), (iv) or (v) is the
Beneficial Owner, directly or indirectly, of substantially
all of the beneficial interests therein; or (ix) any Person
(not otherwise referred to in this paragraph) who is a
trustee or co-trustee of a trust referred to in
clause (viii) (so long as such trustee or co-trustee is
acting in his or her capacity as such); provided, however,
that any Person referred to in clauses (i) through (ix)
shall cease to be a Grandfathered Person, when such Person,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the then
outstanding Common Stock.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights) new
Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed
to holders of record of the Common Shares as of the close of
business on the Distribution Date (and to each initial
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record holder of certain Common Shares issued after the
Distribution Date), and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the
Distribution Date and will expire at 5:00 P.M., New York
City time, on November 27, 2000, unless earlier redeemed by
the Corporation as described below.
In the event that any person becomes an Acquiring
Person (except pursuant to a Permitted Offer as defined
below), each holder of a Right will have (subject to the
terms of the Rights Agreement) the right (the "Flip-In
Right") to receive upon exercise the number of Common
Shares, or, in the discretion of the Board of Directors, of
one one-thousandth of a Preferred Share (or, in certain
circumstances, other securities of the Corporation) having a
value (immediately prior to such triggering event) equal to
two times the exercise price of the Right. Notwithstanding
the foregoing, following the occurrence of the event
described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate
or associate thereof will be null and void. A "Permitted
Offer" is a tender or exchange offer for all outstanding
Common Shares which is at a price and on terms determined,
prior to the purchase of shares under such tender or
exchange offer, by a Majority of Disinterested Directors to
be adequate (taking into account all factors that such
Disinterested Directors deem relevant) and otherwise in the
best interests of the Corporation, its stockholders and its
other relevant constituencies (other than the person or any
affiliate or associate thereof on whose basis the offer is
being made) taking into account all factors that such
directors may deem relevant.
In the event that, at any time following the
Shares Acquisition Date, (i) the Corporation is acquired in
a merger or other business combination transaction in which
the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are
not the holders of all of the surviving corporation's voting
power, or (ii) more than 50% of the Corporation's assets or
earning power is sold or transferred, in either case with or
to an Acquiring Person or any affiliate or associate or any
other person in which such Acquiring Person, affiliate or
associate has an interest or any person acting on behalf of
or in concert with such Acquiring Person, affiliate or
associate, or, if in such transaction all holders of Common
Shares are not treated alike, any other person, then each
holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right
(the "Flip-Over Right") to receive, upon exercise, common
shares of the acquiring company having a value equal to two
times the exercise price of the Right.
The Purchase Price payable, and the number of one-
thousandths of a Preferred Share or other securities
issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or
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a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the
Preferred Shares of certain rights or warrants to subscribe
for or purchase Preferred Shares at a price, or securities
convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred
Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred
to above).
The Purchase Price is also subject to adjustment
in the event of a stock split of the Common Shares or a
stock dividend on the Common Shares payable in Common Shares
or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the
Distribution Date.
With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments
require an adjustment of at least 1% in such Purchase Price.
No fractional one-thousandths of a Preferred Share will be
issued and in lieu thereof, an adjustment in cash will be
made based on the market price of the Preferred Shares on
the last trading day price to the date of exercise.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend
payment of $1.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 1000 times the
dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of
$1.00 per share; thereafter, and after the holders of the
Common Shares receive a liquidation payment of $0.001 per
share, the holders of the Preferred Shares and the holders
of the Common Shares will share the remaining assets in the
ratio of one thousand to 1 (as adjusted) for each Preferred
Share and Common Share so held, respectively. Finally, in
the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Preferred Share
will be entitled to receive one thousand times the amount
received per Common Share. These rights are protected by
customary antidilution provisions. In the event that the
amount of accrued and unpaid dividends on the Preferred
Shares is equivalent to at least six full quarterly
dividends, the holders of the Preferred Shares shall have
the right, voting as a class, to elect two directors in
addition to the directors elected by the holders of the
Common Shares until all cumulative dividends on the
Preferred Shares have been paid through the last quarterly
dividend payment date or until non-cumulative dividends have
been paid regularly for at least one year.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration
of the Rights, the Corporation may redeem the rights in
whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"),
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which redemption shall be effective upon the action of the
Board of Directors. Additionally, the Corporation may redeem
the then outstanding Rights in whole but not in part, at the
Redemption Price after the triggering of the Flip-in Right
and before the expiration of any period during which the
Flip-in Right may be exercised in connection with a merger or
other business combination transaction or series of transactions
involving the Corporation in which all holders of Common
Shares are treated alike but not involving a Transaction
Person (as defined below). Upon the effective date of the
redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
In the event that a majority of the Board of
Directors of the Corporation serving following a meeting of
stockholders or stockholder action by written consent are
not nominated by the Board of Directors serving immediately
prior to such meeting or action, then for 365 days following
such meeting or action the Rights may not be redeemed if
such redemption is reasonably likely to facilitate a
combination or sale of assets or earning power (a
"Transaction") with an Acquiring Person or affiliate or
associate thereof who has directly or indirectly proposed or
nominated a member of the Board who is in office at the time
the Transaction is being considered (a "Transaction
Person"). The Rights may not be redeemed thereafter if
during such 365 day period the Corporation enters into any
agreement reasonably likely to facilitate a Transaction with
a Transaction Person and the redemption is reasonably likely
to facilitate a Transaction with a Transaction Person.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the
Corporation, including, without limitation, the right to
vote or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders of the
Corporation, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events
thereafter.
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