Exhibit 1
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RIGHTS AGREEMENT
by and between
XXXXXXXX STORES INC.
and
NORWEST BANK MINNESOTA, N.A.
as
Rights Agent
Dated as of October 9, 1998
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TABLE OF CONTENTS
Page
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PREAMBLE...................................................................1
Section 1. Certain Definitions.........................................1
Section 2. Appointment of Rights Agent.................................5
Section 3. Issue of Rights Certificates................................5
Section 4. Form of Rights Certificates.................................7
Section 5. Countersignature and Registration...........................8
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates..................................8
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights..............................................9
Section 8. Cancellation and Destruction of Rights Certificates........11
Section 9. Reservation and Availability of Capital Stock..............11
Section 10. Preferred Stock Record Date................................13
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights..............................13
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares...........................................21
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power....................................21
Section 14. Fractional Rights and Fractional Shares....................24
Section 15. Rights of Action...........................................25
Section 16. Agreement of Rights Holders................................25
Section 17. Rights Certificate Holder Not Deemed a Shareholder.........26
Section 18. Concerning the Rights Agent................................26
Section 19. Merger or Consolidation or Change of Name of
Rights Agent...............................................27
Section 20. Duties of Rights Agent.....................................27
Section 21. Change of Rights Agent.....................................29
Section 22. Issuance of New Rights Certificates........................30
Section 23. Redemption.................................................30
Section 24. Notice of Certain Events...................................32
Section 25. Notices....................................................33
Section 26. Supplements and Amendments.................................33
Section 27. Successors.................................................34
Section 28. Determinations and Actions by the Board of
Directors, etc.............................................34
Section 29. Benefits of this Rights Agreement..........................35
Section 30. Severability...............................................35
Section 31. Governing Law..............................................35
Section 32. Counterparts...............................................35
Section 33. Descriptive Headings.......................................35
Exhibit A - Form of Certificate of Designation, Preferences
and Rights of Series A Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Series A Preferred Stock
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT is made as of October 9, effective as
of October 25, 1998, between XXXXXXXX STORES INC., a Michigan corporation
(the "Company"), and NORWEST BANK MINNESOTA, N.A., a national banking
association (the "Rights Agent"), and replaces in its entirety the Rights
Agreement between the Company and the Rights Agent dated October 4, 1988,
which terminates October 25, 1998.
PREAMBLE
The Board of Directors of the Company has authorized and
declared a dividend of one Series A Preferred Stock Purchase Right (the
"Rights") on each common share, $1 par value, of the Company (the "Common
Shares") outstanding at the close of business on October 25, 1998 (the
"Record Date"), and has authorized the issuance of one Right with respect to
each new Common Share that shall become outstanding between October 25, 1998,
and the earlier of the Distribution Date or the Expiration Date (as such
terms are defined in Sections 3 and 7 hereof); provided, however, that Rights
may be issued with respect to Common Shares that shall become outstanding
after the Distribution Date and before the Expiration Date in accordance with
the provisions of Section 22 of this Rights Agreement. Each Right represents
the right to purchase one one-hundredth of a share of Series A Preferred
Stock, $1 par value, having the rights, powers and preferences set forth in
the form of Certificate of Designation, Preferences and Rights of Series A
Preferred Stock (the "Preferred Stock"), attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth.
ACCORDINGLY, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more of
the Common Shares then outstanding or was such a Beneficial Owner at any time
after the date of this Rights Agreement, whether or not such Person continues
to be the Beneficial Owner of 20% or more of the Common Shares then
outstanding, but shall not include (i) the Company, (ii) any corporation or
other Person of which a majority of the voting power of the voting equity
securities or a majority of the equity interest is owned, directly or
indirectly, by the Company (each, a "Subsidiary"), (iii) any employee benefit
plan of the Company or any Subsidiary of the Company, or (iv) any Person or
entity holding Common Shares for or pursuant to the terms of any such
employee benefit plan. Notwithstanding the foregoing,
(i) no Person shall be deemed to be an "Acquiring
Person" as a result of an acquisition of Common Shares by the
Company which, by reducing the number of Common Shares outstanding,
increases the proportionate number of shares beneficially owned by
such Person, together with all Affiliates and Associates of such
Person, to 20% or more of the Common Shares then outstanding;
provided, however, that if a Person, together with all Affiliates or
Associates of such Person, shall become the Beneficial Owner of 20%
or more of the Common Shares then outstanding by reason of an
acquisition of Common Shares by the Company and shall, after such
share acquisition by the Company, become the Beneficial Owner of any
additional Common Shares and, immediately after becoming the
Beneficial Owner of such additional Common Shares, such Person
shall, together with all Affiliates and Associates of such Person,
be the Beneficial Owner of 20% or more of the Common Shares then
outstanding, then such Person shall be deemed to be an Acquiring
Person.
(ii) no Person shall be deemed to be an "Acquiring
Person" if such Person, together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 20% or more of the
then outstanding Common Shares as a result of the acquisition of
Common Shares that the Board of Directors has specifically
permitted, authorized or approved in advance, provided, however,
that if after such permitted acquisition, such Person, together with
all Affiliates and Associates of such Person, acquires additional
Common Shares not so specifically permitted, authorized or approved
in advance by the Board of Directors which, together with all Common
Shares beneficially owned by the Person, together with all
Affiliates or Associates of such Person, totals 20% or more of the
Common Shares then outstanding, then such Person shall be deemed to
be an Acquiring Person.
(iii) no Person shall be deemed to be an
"Acquiring Person" if (A) in such Person's reports on Schedule 13G
or Schedule 13D under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), such Person does not state any
intention to, or reserve the right to, control or influence the
control of the Company, (B) upon request of the Company, such Person
certifies that such Person, together with all Affiliates and
Associates of such Person, became the Beneficial Owner of 20% or
more of the Common Shares then outstanding inadvertently or without
knowledge of the terms of this Rights Agreement, (C) upon request of
the Company, such Person agrees not to acquire any additional Common
Shares, (D) the Board of Directors of the Company determines in good
faith (upon approval by a majority of the Disinterested Directors)
that such Person, who would otherwise be an Acquiring Person as
defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and (E) such Person divests as
promptly as practicable a sufficient number of Common Shares so that
such Person, together with all Affiliates and Associates of such
Person, is no longer the Beneficial Owner of 20% or more of the
Common Shares then outstanding, then such Person shall not be deemed
an Acquiring Person, unless and until such Person subsequently meets
the definition of an Acquiring Person.
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(iv) no Person shall be deemed to be an "Acquiring
Person" if such Person, together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 20% or more of the
Common Shares then outstanding as a result of an acquisition of
Common Shares pursuant to a tender offer or exchange offer that is
for all outstanding Common Shares (other than Common Shares held by
the Person making the offer, or any Affiliate or Associate of such
Person) at a price and on terms determined in good faith, before the
purchase of shares under such tender offer or exchange offer, by at
least a majority of the Disinterested Directors who are not officers
of the Company to be (A) fair to shareholders (taking into account
all factors that such directors deem relevant, including, without
limitation, prices that could reasonably be achieved if the Company
or its assets were sold on an orderly basis designed to realize
maximum value), and (B) otherwise in the best interests of the
Company and its shareholders (other than any 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 (a
"Permitted Offer").
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Rights
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, beneficially owns
or has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights that are subject to this Rights Agreement),
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;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
vote or dispose of or "beneficial ownership" (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act) of (including pursuant to any agreement, arrangement
or understanding, whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy or consent given in response to a
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations
under the Exchange Act (the "Rules"), or (B) is made in connection
with, or is to otherwise participate in, a proxy or consent
solicitation made, or to be made, pursuant to, and in
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accordance with, the applicable provisions of the Rules, in either
case described in clause (A) or (B) above, whether or not such
agreement, arrangement or understanding is also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or understanding
(whether or not in writing) (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 as set forth in clauses (A) or
(B) as described in the proviso to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of the Company.
Notwithstanding the foregoing, any agreement, arrangement or understanding
(whether or not in writing), or any communications or discussions, among two
or more Persons with respect to any matter relating to the management,
operation or conduct of the business of the Company, and including discussing
or agreeing on, or communicating with respect to, a position with respect to
any such matter and communicating such discussion, communication, agreement
or position to other Persons including shareholders of the Company or to the
Company shall not constitute an "agreement, arrangement or understanding" for
purpose of this Section l(c). Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially under this
definition.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the state of the
principal office of the Rights Agent are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall mean 5:00
p.m., local time in the city of the principal office of the Rights Agent, on
such date; provided, however, that if such date is not a Business Day, it
shall mean 5 p.m., local time in such city, on the next succeeding Business
Day.
(f) "Common Shares" when used with reference to the Company
shall mean the Common Shares, $1 par value, of the Company. "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
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(h) "Disinterested Director" shall mean (i) any member of
the Board of Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a nominee or representative of an Acquiring Person or of
any Affiliate or Associate thereof, and was a member of the Board prior to
the date of this Rights Agreement, or (ii) any Person who subsequently
becomes a member of the Board, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a nominee or representative of an Acquiring Person or of any
Affiliate or Associate thereof, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of the
Disinterested Directors.
(i) "Interested Shareholder" shall mean any Acquiring
Person or any Affiliate or Associate of an Acquiring Person or any other
Person in which any such Acquiring Person, Affiliate or Associate has an
interest, or any other Person acting directly or indirectly on behalf of or
in concert with any such Acquiring Person, Affiliate or Associate.
(i) "Person" shall mean any individual, firm, corporation,
limited liability company, association, partnership, joint-venture, trust or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(j) "Principal office" when referring to the office of the
Rights Agent shall mean the office of the Rights Agent at which such Rights
Agent conducts its shareholder services business.
(k) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such (including, without limitation, the first date on
which any filing with any governmental authority disclosing that an Acquiring
Person has become such is made available to the public); provided that, if
such person is determined not to have become an Acquiring Person pursuant to
Section 1(a), then no Shares Acquisition Date shall be deemed to have
occurred.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights in accordance with the terms and conditions set forth in this
Rights Agreement, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or
(ii) the close of business on the tenth day (or such later date as may be
determined by action of the Company's Board of Directors) after the date of
the commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of
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the Company or of any Subsidiary of the Company or any Person or entity
holding Common Shares for or pursuant to the terms of any such employee
benefit plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any Person
or entity holding Common Shares for or pursuant to the terms of any such
employee benefit 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 Rights 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 paragraph (b) of this Section 3) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates for
Common Shares shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and (y) the right to receive Rights
Certificates will be transferable only in connection with the transfer of the
underlying Common Shares (including a transfer to the Company); provided,
however, that if a tender offer or exchange offer is terminated before the
occurrence of a Distribution Date, then no Distribution date shall occur as a
result of such tender offer or exchange offer. As soon as practicable after
the Rights Agent is notified in writing by the Company of the occurrence of
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Rights Agent will send or cause to be sent, by
first-class, postage prepaid mail, to each record holder of the Common Shares
as of the close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto (the "Rights Certificate"),
evidencing one Right for each Common Share so held, subject to adjustment as
provided herein. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) On October 26, 1998, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Series A Preferred Stock, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Shares as of the close of business on
October 25, 1998, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Shares outstanding as of
October 25, 1998, until the Distribution Date, the Rights will be evidenced
by such certificates for Common Shares registered in the names of the holders
thereof. Until the Distribution Date (or, if earlier, the Expiration Date),
the surrender for transfer of any certificates representing Common Shares
outstanding on October 25, 1998, shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares issued after October 25,
1998, but prior to the earlier of the Distribution Date or the Expiration
Date (as such terms are defined in this Section 3 and Section 7 hereof) shall
also be deemed to represent the related Rights and shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Xxxxxxxx
Stores Inc. (the "Company") and Norwest Bank Minnesota, N.A. (the
"Rights Agent") dated as of October 9, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of the
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Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights
Agreement after receipt of a written request therefor. Under certain
circumstances, Rights issued to, or held by, any Person who is, was
or becomes an Acquiring Person or an Affiliate or Associate thereof
(as such terms are 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 Company purchases or acquires any Common Shares after
October 25, 1998 but before the Distribution Date, any Rights associated with
such Common Shares shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with Common Shares
which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Rights Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and
on their face shall entitle the holders thereof to purchase such number of
one one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (the "Purchase Price"), but the number
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 Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined
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is part of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred
to in this sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby are null and void as
specified in Section 7 (e) of such Rights Agreement.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, Vice Chairman of the Board or any Vice President, either manually
or by facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, each Rights Certificate's
number, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7
(e) and Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date (as defined in Section 7(a) hereof), any Rights Certificate or Rights
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a share of Preferred Stock
(or, following an event described in Section 11(a)(ii) or Section 13(a)
hereof, Common Shares, other securities, cash and/or other assets, as
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the case may be) as the Rights Certificate or Rights Certificates surrendered
then entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company or the Rights Agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security (which may include a surety bond)
reasonably satisfactory to them, and, at the Company's request, reimbursement
to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
(a) Subject to Section 7(e) hereof, the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein, including, without limitation, the restrictions
on exercisability set forth in Section 11(a)(iii) and Section 23(a) hereof)
in whole or in part at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent at
the principal office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the
total number of one one-hundredths of a share of Preferred Stock (or other
securities or property, as the case may be) as to which the Rights are
exercised, at or prior to the earlier of (i) the close of business on October
25, 2008 (the "Final Expiration Date"), or (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof (the earlier of (i) and (ii)
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock purchasable upon the exercise of a Right shall
initially be $100, shall be subject to adjustment from time to time as
provided in the next sentence and in Section 11 and Section 13
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hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below. Anything in this Rights Agreement to
the contrary notwithstanding, in the event that at any time after the date of
this Rights Agreement and before the Distribution Date, the Company 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 a Right 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
before such event by a fraction the numerator of which shall be the total
number of Common Shares outstanding immediately before 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 Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment of the Purchase Price for each one
one-hundredth of a share of Preferred Stock (or other securities or property,
as the case may be) to be purchased and an amount equal to any applicable
transfer tax in cash, or by certified check , cashier's check or money order
payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of one one-hundredths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14, (iii) promptly
after receipt of such certificates, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order
of the registered holder of such Rights Certificate. If the Company is
obligated to issue other securities or property (including Common Shares) of
the Company pursuant to Section 11(a), the Company will make all arrangements
necessary so that such other securities or property is available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Rights Agreement to
the contrary, from and after the first occurrence of an event described in
Section 11(a)(ii), any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a
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transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and any
holder of such Rights shall thereupon have no rights whatsoever with respect
to such Rights, whether under any provision of this Rights Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with,
but shall have no liability to any holder of Rights Certificates or any other
Person as a result of its failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Rights Agreement to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side
of the Rights Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company other than upon the exercise thereof. At
the option of the Rights Agent, the Rights Agent shall deliver all cancelled
Rights Certificates to the Company within approximately one and one-half
years after the cancellation date.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that, until the
occurrence of an event described in Section 11(a)(ii), it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of an event described in
Section 11(a)(ii) or Section 13(a) hereof, out of its authorized and unissued
Common Shares and/or other securities), the number of shares of Preferred
Stock (and, following the occurrence
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of an event described in Section 11(a)(ii) or Section 13(a) hereof, Common
Shares and/or other securities) that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) If the shares of Preferred Stock (and, following the
occurrence of an event described in Section 11(a)(ii) or Section 13(a)
hereof, Common Shares and/or other securities) issuable upon the exercise of
Rights may be listed on any national securities exchange or association, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed
on such exchange or association upon official notice of issuance upon such
exercise.
(c) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-hundredths of a
share of Preferred Stock (and, following the occurrence of an event described
in Section 11(a)(ii) or Section 13(a) hereof, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares or other securities (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable shares or securities.
(d) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Rights Certificates or of any shares of Preferred Stock (or Common Shares
and/or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates for a number
of one one-hundredths of a share of Preferred Stock (or Common Shares and/or
other securities, as the case may be) in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise, or to issue or deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (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 Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts to (i) file, as
soon as practicable following the occurrence of an event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date,
as the case may be, a registration statement under the Securities Act of
1933, as amended (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 earlier of (a) the date as of which the
Rights are no longer exercisable for such securities, and (b) the date of the
expiration of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days, the exercisability of the Rights in order to
prepare and file a registration statement under the Act and permit it to
become
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effective. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Rights Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification or exemption in such jurisdiction shall have been obtained and
until a registration statement under the Act (if required) shall have been
declared effective.
Section 10. Preferred Stock Record Date. Each person in whose name
any certificate for a number of one one-hundredths of a share of Preferred
Stock (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 such fractional shares of Preferred Stock (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
Rights 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 Stock (or Common Shares and/or other securities, as the case
may be) transfer books of the Company are closed, such person shall be deemed
to have become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding business day on
which the Preferred Stock (or Common Shares and/or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Rights Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide
the outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation, merger or other business combination in which the
Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof,
the Purchase Price in effect at the time of the record date for such
dividend or on the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of Preferred
Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate
number and kind of shares of Preferred Stock or capital stock, as
the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the
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Preferred Stock transfer books of the Company were open, such holder
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii) hereof,
the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event, any Person, alone or together
with its Affiliates and Associates, shall, at any time after the
date of this Rights Agreement, become an Acquiring Person, then, and
in each such case, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e)
hereof), shall thereafter have a right to receive, upon exercise
thereof at the then current Purchase Price, in accordance with the
terms of this Rights Agreement, in lieu of shares of Preferred
Stock, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which
a Right was exercisable immediately before the first occurrence of
an event described in Section 11(a)(ii), and dividing that product
by (y) 50% of the current per share market price of the Common
Shares (determined pursuant to Section 11(d)) 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). Notwithstanding the
foregoing, upon the occurrence of an event listed above in this
subparagraph (ii), any Rights that are or were on or after the
earlier of the Distribution Date or the date any Person, alone or
together with its Affiliates and Associates, shall, at any time
after the date of this Rights Agreement, become an Acquiring Person,
beneficially owned by the Acquiring Person or any Associate or
Affiliate of the Acquiring Person shall become void and any holder
of such Rights shall thereafter have no right to exercise such
Rights under any provision of this Rights Agreement. Any Rights
Certificate issued pursuant to Section 3 hereof that represents
Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Rights Certificate issued at any time upon
the transfer of any Rights to an Acquiring Person or any Associate
or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate, and any Rights Certificate issued pursuant
to Section 6 or this Section 11 to any of the foregoing upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the legend
set forth in Section 4(b) hereof.
(iii) In lieu of issuing Common Shares in
accordance with Section 11(a)(ii) hereof, the Company may, if
two-thirds of the Disinterested Directors determine that such action
is necessary or appropriate and not contrary to the interest of
holders of Rights (and, in the event that the number of Common
Shares which are authorized by the Company's articles of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of
-14-
this Section 11(a) and the Rights become so exercisable, the Company
shall): (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value"),
over (2) the Purchase Price (such excess, the "Spread") and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) Common Shares
or other equity securities of the Company (including, without
limitation, shares, or units or fractions of shares, of preferred
stock which the Board of Directors of the Company has deemed to have
the same value as Common Shares (such shares, or units or fractions
of shares, of preferred stock are referred to in this Rights
Agreement as "common share equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the Board of
Directors of the Company based upon the advice of a recognized
expert selected by the Board of Directors of the Company; provided,
however, if the Company shall be required to make adequate provision
to deliver value pursuant to clause (B) above, and shall not have
done so within thirty (30) days following the later of the first
occurrence of an event described in Section 11(a)(ii) hereof or the
first date that the right to redeem the Rights pursuant to Section
23 hereof, as such date may be amended pursuant to Section 26
hereof, shall expire, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Rights Certificate and
without requiring payment of the Purchase Price, Common Shares (to
the extent available) and then, if necessary, cash, securities
and/or assets that in the aggregate have a value equal to the
Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional Common
Shares could be authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may be extended
to the extent necessary, but not to more than ninety (90) days
following the first occurrence of an event described in Section
11(a)(ii) hereof, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such
period as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action is to be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the current per share market price of Common
Shares (as determined pursuant to Section 11(d) hereof) on the later
of the date of the first occurrence of an event described in Section
11(a)(ii) hereof and the first date that the right to redeem the
Rights pursuant to Section 23 hereof, as such date may be amended
pursuant to Section 26 hereof, shall expire and the value of any
"Common Shares equivalents" shall be deemed to have the same value
as the Common Shares on such date.
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(b) In the event the Company shall fix a record date for
the issuance of rights or warrants to all holders of Preferred Stock
entitling them (for a period expiring within forty-five (45) calendar days
after such record date) to subscribe for or purchase shares of Preferred
Stock (or shares having the same rights, privileges and preferences as shares
of Preferred Stock ("equivalent preferred stock")), or securities convertible
into Preferred Stock or equivalent preferred stock at a price per share of
Preferred Stock or equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or equivalent
preferred stock) less than the current per share market price of the
Preferred Stock (as defined in Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of
shares of Preferred Stock and/or equivalent preferred stock so to be offered
(and/or the aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of
Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be
paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had
not been fixed.
(c) In the event the Company shall fix a record date for
the making of a distribution to all holders of the Preferred Stock (including
any such distribution made in connection with a consolidation, merger or
other business combination in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other than a
regular periodic cash dividend or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
per share market price of the Preferred Stock (as defined in Section 11(d))
on such record date, less the fair market value (as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred Stock
and the denominator of which shall be such current per share market price of
the Preferred Stock (as defined in Section 11(d)). Such adjustments shall be
made successively whenever such a record date is fixed; and in the event
-16-
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, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"current per share market price" of any security 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, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof,
the "current per share market price" of any security on any date
shall be deemed to be the average of the daily closing prices per
share of such security for ten (10) consecutive Trading Days (as
such term is hereinafter defined) immediately following 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 (other than the Rights which
are the subject of this Rights Agreement) or (B) any subdivision,
combination or reclassification of such security, and prior to the
expiration of thirty (30) Trading Days or ten (l0) Trading Days, as
set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current 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
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 Quotation
System ("NASDAQ") or such other system then in use, or, if on any
such date the security is 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 security selected
by the Board of Directors of the Company. If on any such date no
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 Company 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. If the security is not publicly held or not so listed or
traded, "current per share market price" shall mean the fair value
per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement
filed with the Rights Agent.
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(ii) For the purpose of any computation hereunder,
the "current per share market price" of Preferred Stock shall be
determined in the same manner as set forth in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the current
market price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the "current per share market price" of Preferred
Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the
Common Shares occurring after the date of this Rights Agreement)
multiplied by the current per share market price of the Common
Shares. If neither the Common Shares nor the Preferred Stock is
publicly held or so listed or traded, "current per share market
price" of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Rights Agreement, the "current market price" of one
one-hundredth of a share of Preferred Stock shall be equal to the
"current per share market price" of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest ten-thousandth of a share of
Common Shares or the nearest one-millionth of a share of Preferred Stock or
any other 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 years from the date of the transaction
which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Stock, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained
in Section 11(a), (b), (c), (g), (h), (i), (j), (k), and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
-18-
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a share of Preferred Stock (calculated
to the nearest one-millionth) obtained by (i) multiplying (x) the number of
one one-hundredths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of a
share of Preferred Stock 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-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest 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 Company shall make a
public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10) days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i) the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of
the holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price
per one one-hundredth of a share of Preferred Stock and the number of one
one-hundredths of a share of Preferred Stock which were expressed in the
initial Rights Certificates issued hereunder.
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(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-hundredths of a share of Preferred Stock, Common Shares or other
securities issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue such number of fully
paid and nonassessable one one-hundredths of a share of Preferred Stock,
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 Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any (i) consolidation or subdivision
of the Preferred Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current per share market price, (iii)
issuance wholly for cash of any shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends, or (v) issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction that does not
violate Section 11(o)), (ii) merge with or into any other Person (other than
a Subsidiary of the Company in a transaction that does not violate Section
11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o)), if (x) at the
time of or immediately after such consolidation, merger, business
combination, sale or transfer there are any charter or bylaw provision 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)
before, simultaneously with, or immediately after, such consolidation,
merger, business combination, sale or transfer, the shareholders of the
Person who
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constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) shall have received a distribution of Rights previously owned
by such Person or any of its Affiliates or Associates. The Company shall not
consummate any such consolidation, merger, business combination, sale or
transfer unless prior thereto the Company 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 Company covenants and agrees that, after the
Distribution Date, it will; not, except as permitted by Section 23 or Section
27, 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.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 or 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Shares a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing Common Shares) in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed to have
knowledge or such adjustment unless and until it shall have received such
certificate.
Section 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 Company shall consolidate
with, or merge with and into, or enter into any other business combination
with, any Interested Shareholder or, if in such merger, consolidation or
other business combination all holders of Common Shares are not treated
alike, any other Person, and the Company shall not be the continuing or
surviving corporation of such consolidation, merger or other business
combination, (y) the Company shall consolidate with, or merge with, or enter
into any other business combination with, any Interested Shareholder or, if
in such merger, consolidation or other business combination all holders of
Common Shares are not treated alike, any other Person, and the Company shall
be the continuing or surviving corporation of such consolidation, merger or
other business combination (other than, in the case of any transaction
described in (x) or (y), a merger, consolidation or other business
combination which would result in all of the securities generally entitled to
vote in the election of directors ("voting securities") of the Company
outstanding immediately before such transaction continuing to represent
(either by remaining outstanding or be being converted into securities of the
surviving entity) all of the voting securities of the Company or such
surviving entity outstanding immediately after such merger, consolidation or
other business combination and the holders of such securities not having
changed as a result of such merger, consolidation or other business
combination), or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions,
-21-
assets or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any
Interested Shareholder or Interested Shareholders or, if in such transaction
all holders of Common Shares are not treated alike, any other Person (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which does not violate Section 11(o)), then, and in each such case
(except as provided in Section 13(d)), 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 the then
current Purchase Price in accordance with the terms of this Rights Agreement
and in lieu of Preferred Stock, such number of validly authorized and issued,
fully paid, nonassessable and freely tradable Common Shares of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable immediately prior to the first occurrence of an
event described in clauses (x), (y) or (z) of this Section 13(a) (a "Section
13 Event") (or, if an event described in Section 11(a)(ii) has occurred prior
to the Section 13 Event, multiplying the number of such one one-hundredths of
a share of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of such an event described in Section 11(a)(ii)
by the Purchase Price in effect immediately prior to such first occurrence),
and dividing that product (which, following the Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of
this Rights Agreement) by (2) 50% of the current per share market price
(determined pursuant to Section 11(d)(i) hereof) of the Common Shares of such
Principal Party on the date of consummation of such Section 13 Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Rights Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; 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 its Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
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
Company are converted in such merger, consolidation or other
business combination, and if no securities are so issued, the Person
that is the other party to such merger, consolidation or other
business combination (including, if applicable, the Company 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;
-22-
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, "Principal Party" shall
refer to such other Person; (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) After the Shares Acquisition Date, the Company shall
not consummate any such consolidation, merger, business combination, sale or
transfer unless the Principal Party shall have a sufficient number of
authorized Common Shares which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section
13 and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of any
consolidation, merger, business combination or sale or transfer of assets
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
will use its best efforts to cause such registration statement to
(A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the
Rights under the securities or "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 and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or business combinations or sales or other transfers. In
the event that a Section 13 Event shall occur at any time after the
occurrence of an event described in Section 11(a)(ii) hereof, the Rights
which have not theretofore been exercised shall thereafter become exercisable
in the manner described in Section 13(a).
-23-
(d) Notwithstanding anything in this Rights 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 Shares 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 described in this Section 13(d), all Rights hereunder shall
expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional
Rights that would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purpose of
this Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have otherwise been 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 principal national securities exchange on which
the Rights are listed or admitted to trading or, if the Rights are not listed
or admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions in integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions in integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one share of
Preferred Stock. For purposes of this Section 14(b) , the current market
value of one one-hundredth of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to
-24-
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date
of such exercise divided by 100.
(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 shares of Preferred Stock) or
other securities upon the exercise of a Right, the Company shall not be
required to issue fractions of shares or units of such Common 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 Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a
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) for the Trading
Day immediately before 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-hundredth of a share of Preferred Stock.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any factional Rights or any fractional
shares (other than fractions in integral multiples of one one-hundredth of a
share of Preferred Stock) upon exercise of a Right, except as permitted by
this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Rights Agreement, excepting the rights of action given to the Rights
Agent under Section 18, are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his or her own behalf and for his or her own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his or her right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Rights 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 Rights Agreement and will be
entitled to specific performance of the obligations hereunder and will be
entitled to injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Rights Agreement.
Section 16. Agreement of Rights Holders. Every holder of Rights by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of Rights that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Shares;
-25-
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accomplished by a proper instrument of transfer and with the appropriate
forms and certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Rights 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 Rights Certificates or the
associated Common Shares certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Rights Agreement to
the contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Rights Agreement by
reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must, subject to the good faith
determination of its Board of Directors, use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive
dividends or other distributions or to exercise preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Rights Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for,
and to hold it harmless against, any
-26-
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 Rights Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon
any Rights Certificate or certificate for Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights 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 Rights Agreement, any of
the Rights Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly set forth in this Rights Agreement, and no
implied duties or obligations shall be read into this Rights Agreement
against the Rights Agent. The Rights Agent shall
-27-
perform its duties and obligations upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Rights 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 Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Vice Chairman of the Board, a Vice President, the
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Rights 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 Rights
Agreement or in the Rights Certificates (except as to its countersignature
thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the rights becoming void pursuant to
Section 7(e)) or any adjustment required under the provisions of Sections 11
or 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced
by Rights Certificates after actual notice of any such adjustment); nor shall
it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Common Shares or Preferred Stock
to be issued pursuant to this Rights Agreement or any Rights Certificate or
as to whether any Common Shares or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
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(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Rights 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 Vice Chairman of the Board, a
Vice President, the Treasurer, the Secretary or any Assistant Secretary of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith or any lack of action in
accordance with the instructions of any such officer or for any delay in
acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Rights Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with
and receiving written instructions from the Company. The Rights Agent shall
not be charged with knowledge that any Rights are null and void pursuant to
the provisions of Section 7(e) unless the Rights Agent has received a written
certificate to such effect from the Company.
(k) No provision of this Rights Agreement shall require the
Rights Agent to independently determine whether any Right Certificate issued
pursuant to this Rights Agreement is required pursuant to Section 4(b) to
contain the legend specified in section 4(b) and the Rights Agent shall have
no liability to any holder of Rights Certificates or other Person as a result
of the failure of any Right Certificate to contain such legend other than a
Right Certificate issued to a Person identified in a written certificate from
the Company as an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
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Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Rights Agreement upon thirty (30) days' notice in writing mailed to the
Company and to each transfer agent of the Common Shares and Preferred Stock
by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days' notice in writing, mailed
to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state
thereof in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares and Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Rights 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 Rights Certificates. Notwithstanding any
of the provisions of this Rights Agreement or of the Rights Certificate to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price per share and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and before the Expiration Date,
the Company (i) shall, with respect to Common Shares so issued and sold
pursuant to the exercise of stock options or under any employee plan or
arrangements, or upon the exercise, conversion or exchange of securities,
notes or debentures issued by the Company, including, without limitation, the
Company's 6-3/4% Convertible Subordinated Debentures due 2011, and (ii) may,
in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the
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appropriate number of Rights in connection with such issuance or sale;
provided, however, that (a) the Company shall not be obligated to issue any
such Rights Certificates if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (b) no Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) (i) The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the earlier of
(A) the date that any Person, alone or together with its Affiliates
and Associates, shall, at any time after the date of this Rights
Agreement, become an Acquiring Person, or (B) the Final Expiration
Date, cause the Company to redeem all but not less than all the then
outstanding Rights at a redemption price of $0.0l per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price"); and
(ii) In addition, the Board of Directors of the
Company may, at its option, at any time (A) following a period of 60
days after the later of (I) the occurrence of an event described in
Section 11(a)(ii), and (II) the effective date of an appropriate
registration statement under the Act pursuant to Section 9, but (B)
before any Section 13 Event, redeem all but not less than all of the
then outstanding Rights at the Redemption Price (x) in connection
with any merger, consolidation, business combination or sale or
other transfer (in one transaction or in a series of related
transactions) of assets or earning power aggregating more than 50%
of the earning power of the Company and its subsidiaries (taken as a
whole) 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) an Interested Shareholder or (y) (I) if
and for so long as the Acquiring Person is not thereafter the
Beneficial Owner of 10% of the Common Shares, and (II) at the time
of redemption no other Persons are Acquiring Persons;
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth in clauses
(i) and (ii) below, then there must be Disinterested Directors then in office
and such authorization shall require the concurrence of two-thirds of such
Disinterested Directors: (i) such authorization occurs on or after the time a
Person becomes an Acquiring Person; or (ii) such authorization occurs on or
after the date of a change (resulting from a proxy or consent solicitation)
in a majority of the directors in office at the commencement of such
solicitation if any Person who is a participant in such solicitation has
stated (or, if upon the commencement of such solicitation, a majority of the
Board of Directors of the Company has determined in good faith) that such
Person (or any of such Person's Affiliates or Associates) intends to take, or
may consider taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of an event described in
Section 11(a)(ii) or Section 13(a) hereof unless, concurrent with such
solicitation, such Person (or one or more of such Person's Affiliates or
Associates) is making a cash tender
-31-
offer pursuant to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding Common Shares not
beneficially owned by such Person (or by such Person's Affiliates or
Associates). Neither the Board of Directors, the Disinterested Directors nor
the Company shall have any liability to any Person as a result of the
redemption of Rights pursuant to the terms hereof, other than the obligation
of the Company to pay $0.01 per Right upon redemption.
(b) Immediately upon the date for redemption set forth (or
determined in the manner specified) in a resolution of the Board of Directors
of the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Within 10 days after
such date for redemption set forth in a resolution of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Shares. Any 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. The Company
may, at its option, discharge all of its redemption obligations with respect
to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Rights 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, before the Distribution Date, on the registry books of the
Transfer Agent of the Common Shares, and upon such action, all outstanding
Rights and Rights Certificates shall be null and void without any further
action by the Company.
(c) The Company 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), of the Common Share at the time of redemption)
or cash; provided that if the Company elects to pay the Redemption Price in
Common Shares, the Company shall not be required to issue any fractional
Common Shares and the number of Common Shares issuable to each holder of
Rights shall be rounded down to the next whole share.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or
to make any other distribution to the holders of Preferred Stock (other than
a regular periodic cash dividend), or (ii) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock), or (iv) to effect any
consolidation, merger or other business combination into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of
-32-
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company
and/or any of its Subsidiaries in one or more transactions each of which does
not violate Section 11(o)), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, in accordance with Section 25 hereof, a
notice of such proposed action to the extent feasible, 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, business combination, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock 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 Stock
whichever shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) of this Rights Agreement shall occur, then, in any such case, (i)
the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii)
all references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer also to Common Shares and/or, if appropriate, other
securities of the Company.
(c) Notwithstanding anything in this Rights Agreement to
the contrary, prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient notice to the
holders of securities of the Company, including the Rights, for purposes of
this Rights Agreement and no other notice need be given.
Section 25. Notices. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Xxxxxxxx Stores Inc.
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
-00-
Xxxxxxx Xxxx Xxxxxxxxx, N.A.
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, XX 00000
Attention: Administration Manager
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate or,
if before the Distribution Date, to the holder of certificates representing
Common Shares shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution
Date, the Company may, in its sole and absolute discretion, and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Rights Agreement without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date, the Company
may, and the Rights Agent shall, if the Company so directs, supplement or
amend this Rights Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder (which shortening or lengthening shall be effective
only if there are Disinterested Directors and shall require the concurrence
of two-thirds of such Disinterested Directors if (A) such supplement or
amendment occurs on or after the time a Person becomes an Acquiring Person,
or (B) such supplement or amendment occurs on or after the date of a change
(resulting from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if any Person
who is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of Directors of
the Company has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider taking, any action
which would result in such Person becoming an Acquiring Person or which would
cause the occurrence of an event described in Section 11(a)(ii) or Section
13(a) hereof unless, concurrent with such solicitation, such Person (or one
or more of its Affiliates or Associates) is making a cash tender offer
pursuant to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding Common Shares not
beneficially owned by such Person (or by its Affiliates or Associates), or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided,
however, that this Rights Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or
the benefits to, the holders of Rights. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26,
the Rights Agent shall execute
-34-
such supplement or amendment unless such supplement or amendment adversely
affects the rights, obligations, duties or immunities of the Rights Agent
under Section 18 or Section 20, in which case it may but shall not be
required to execute such supplement or amendment. Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Shares.
Section 27. Successors. All the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Rights 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 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 as of the date hereof. The Board of Directors of the Company (and,
where specifically provided for herein, the Disinterested Directors) shall
have the exclusive power and authority to administer this Rights Agreement
and to exercise all rights and powers specifically granted to the Board, or
the Company (or, where specifically provided for herein, the Disinterested
Directors), or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Rights Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made by
the Board (or, where specifically provided for herein, by the Disinterested
Directors) in good faith (provided that the decision to redeem the rights
shall be in the sole discretion of the Board or where specifically provided
for herein, by the Disinterested Directors), shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights
Certificates and all other parties, and (y) not subject the Board or the
Disinterested Directors to any liability to the Company, holders of the
Rights Certificates or any other party.
Section 29. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the Common Shares)
any legal or equitable right, remedy or claim under this Rights Agreement;
but this Rights Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or
-35-
invalidated. If any term provision, covenant or restriction of this Rights
Agreement is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable as a result of any requirement that
decisions be made, or actions taken by, Disinterested Directors, or otherwise
by excluding some directors of the Company from Board decisions, such
provision shall be deemed modified to the extent necessary to make it valid
and enforceable, to require that such decision be made, or action be taken
by, the Company's Board of Directors.
Section 31. Governing Law. This Rights Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Michigan 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 32. Counterparts. This Rights Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
Attest: XXXXXXXX STORES INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ P. Xxxxxx Xxxxx
------------------------ ---------------------
Xxxxxxx X. Xxxxxxxxx, P. Xxxxxx Xxxxx,
Secretary Chairman of the Board
Attest: NORWEST BANK MINNESOTA, N.A.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
------------------------ ---------------------
Title: Vice President
------------------
-36-
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF PREFERRED STOCK
of
XXXXXXXX STORES INC.
Pursuant to Section 302 of the
Michigan Business Corporation Act
We, J. R. XXXXXX, Chairman of the Board, and XXXXXXX X.
XXXXXXXXX, Secretary, of XXXXXXXX STORES INC., a corporation organized and
existing under the Michigan Business Corporation Act (the "Corporation"), in
accordance with the provisions of Section 302 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation, the Board of Directors on October
4, 1988, adopted the following resolution: .
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation in accordance with the
provisions of its Articles of Incorporation, the Board of Directors hereby
creates a series of preferred stock, $1 par value, of the Corporation and
hereby states the designation and number of shares, and voting power,
preferences and relative, participating, optional and other special rights,
and the qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Preferred Stock" (the "Preferred Stock") and the
number of shares constituting such series shall be one hundred thousand
(100,000). Such number of shares may be increased or decreased by resolution
of the Board of Directors.
Section 2. Dividends And Distributions.
(A) The holders of shares of Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for such purpose,
cumulative preferential dividends in cash on the 15th day of March,
June, September and December in each year (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 Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the
greater of (a) $11 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 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, $1 par
value, of the Corporation (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 Preferred Stock. In the event
the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination of the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater or lesser number
of shares of Common Stock, as the case may be, then in each such
case the amount to which holders of shares of 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 Preferred Stock as provided in paragraph (A) of
this Section immediately after 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 dividend of $11 per
share on the Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of
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 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 Preferred Stock in an amount less
than the total amount 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 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.
-2-
Section 3. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, then,
subject to the provisions of the Restated Articles of Incorporation of the
Corporation, the holders of shares of Preferred Stock shall be entitled to
receive, from the assets of the Corporation available for distribution to
shareholders, an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment
plus an amount equal to the greater of (a) $22 per share or (b) an aggregate
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to l00 times the aggregate amount to be distributed per share to
holders of shares of Common Stock. All such preferential amounts shall be
paid or set apart for payment before the payment or setting apart for payment
of any amount for, or the distribution of any assets of the Corporation to,
the holders of shares of any class of stock ranking junior to the Preferred
Stock as to assets, or the holders of shares of any series of preferred stock
ranking junior as to assets to shares of Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the aggregate amount to which holders of shares of Preferred Stock were
entitled immediately prior to such event under clause (b) of the next
preceding sentence of this Section 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 Common Stock that were outstanding immediately prior to such
event.
Section 4. Redemption. The shares of Preferred Stock shall not
be redeemable.
Section 5. Voting Rights. The holders of shares of Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall
at any time declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of 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.
-3-
(B) Except as otherwise provided herein or by law, the
holders of shares of Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) (i) If at any time dividends on any Preferred Stock
shall be in arrears in an amount equal to six quarterly
dividends 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 Preferred Stock then outstanding
shall have been declared and paid or set apart for payment.
During each default period, the holders of Preferred Stock,
voting as a class, shall have the right to elect two (2)
Directors.
(ii) During any default period, such voting right
of the holders of Preferred Stock may be exercised
initially at a special meeting called pursuant to
subparagraph (iii) of this Section 5(C) or at any annual
meeting of shareholders, and thereafter at annual meetings
of shareholders, provided that neither such voting right
nor the right of the holders of Preferred Stock as
hereinafter provided to increase in certain cases the
authorized number of Directors shall be exercised unless
the holders of 25% 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 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.
(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 shareholder or shareholders
owning in the aggregate not less than 10% of the total
number of shares of Preferred Stock outstanding 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, the President, a Vice President
or the Secretary 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
-4-
address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 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 shareholder
or shareholders owning in the aggregate not less than 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 shareholders.
(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 5) be filled by 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 have 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.
(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 Restated
Articles of Incorporation or Bylaws irrespective of any
increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 5 (such number being subject,
however, to change thereafter in any manner provided by law
or in the Restated Articles of Incorporation or Bylaws).
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 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.
-5-
Section 6. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the 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
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 Preferred Stock; provided
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior 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 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 Preferred Stock, except dividends paid
ratably on the 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; or
(iii) purchase or otherwise acquire for
consideration any shares of Preferred Stock, or any shares
of stock ranking on a parity with the 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 6, purchase or otherwise acquire
such shares at such time and in such manner.
Section 7. Reacquired Shares. Any shares of Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled 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.
-6-
Section 8. Consolidation, Merger, Etc. In case 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 case
the shares of 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 100 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. In the event the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Preferred Stock
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.
Section 9. Amendment. The Restated Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of
two-thirds or more of the outstanding shares of Preferred Stock, voting
together as a single class.
Section 10. Fractional Shares. The 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 have the benefit of all other rights of
holders of the Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of
perjury.
Dated: October 7, 1988
/s/ J. R. Xxxxxx
------------------------------
J. R. Xxxxxx
Chairman of the Board
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxxx
Secretary
-7-
[Form of Rights Certificate] Exhibit B
Certificate No. ________ ________ Rights
NOT EXERCISABLE AFTER OCTOBER 25, 2008, OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $0.0l PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE NULL AND VOID AS
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
RIGHTS CERTIFICATE
XXXXXXXX STORES INC.
This certifies that ________________ , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement dated as of October 9, 1998 (the "Rights Agreement")
between XXXXXXXX STORES INC., a Michigan corporation (the "Company"), and
NORWEST BANK MINNESOTA, N.A., a national banking association (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
local time in the city of the office of the Rights Agent designated for such
purpose, on October 25, 2008, unless the Rights evidenced hereby shall have
been previously redeemed by the Company, at such office of the Rights Agent
designated for such purpose, or such office of any successor Rights Agent,
one one-hundredth of a fully paid, nonassessable share of Series A Preferred
Stock (the "Preferred Stock") of the Company, at a purchase price of $100 per
one one-hundredth of a share of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of one one-hundredths of a share of
Preferred Stock which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per one one-hundredth of a share of Preferred
Stock set forth above, are the number and Purchase Price as of October 25,
1998, based on the Preferred Stock as constituted at such date.
--------
* The portion of the legend in brackets shall be inserted only if
applicable.
Upon the occurrence of an event described in Section 11(a)(ii) of
the Rights Agreement, if the Rights evidenced by this Rights 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 before 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 an event
described in Section 11(a)(ii) of the Rights Agreement.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, and the obligations, duties
and immunities hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and
the office of the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredths of a share of
Preferred Stock or other securities as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Company at its
option at the redemption price of $0.0l per Right (subject to adjustment as
provided in the Rights Agreement). Under certain circumstances set forth in
the Rights Agreement, the decision to redeem shall require the concurrence of
two-thirds of the Disinterested Directors.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
-2-
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares
of Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company, including the right
to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of _______________________ .
[SEAL]
ATTEST XXXXXXXX STORES INC.
________________________________ By ________________________________
Secretary
Its ______________________
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By ________________________________
Title ____________________
-3-
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights
Certificate.)
FOR VALUE RECEIVED, ________________________________ hereby
sells, assigns and transfers unto
-----------------------------------------------------------------------------
(Please print name and address of transferee)
-----------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney,
to transfer the Rights Certificate on the books of the Company, with full
power of substitution.
Dated:_________________________ , 19__
_______________________________
Signature
Signature Guaranteed:
The signature should be guaranteed
by an eligible institution (Banks,
Stockbrokers, Savings and Loan
Associations and Credit Unions with
membership in an approved signature
guarantee medallion program).
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] 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 of any such Acquiring Person (as such terms are defined in
the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement).
Dated: ______________________
_______________________________
Signature
Signature Guaranteed:
The signature should be guaranteed by
an eligible institution (Banks,
Stockbrokers, Savings and Loan
Association and Credit Unions with
membership in an approved signature
guarantee medallion program).
NOTICE
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
-2-
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights represented
by this Rights Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Rights Certificate to purchase
Preferred Stock issuable upon the exercise of such Rights (or such other
securities of the Company or of any other person that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of:
-----------------------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------------------
Please insert social security or other tax identifying number: ______________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the
balance of remaining Rights shall be registered in the name of and delivered
to:
-----------------------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------------------
Please insert social security or other tax identifying number: ______________
Dated: ___________________________
__________________________
Signature
Signature Guaranteed:
The signature should be guaranteed by
an eligible institution (Banks,
Stockbrokers, Savings and Loan
Associations and Credit Unions with
membership in an approved signature
guarantee medallion program).
-3-
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement).
Dated: _________________________
_______________________________
Signature
Signature Guaranteed:
The signature should be guaranteed
by an eligible institution (Banks,
Stockbrokers, Savings and Loan
Associations and Credit Unions with
membership in an approved signature
guarantee medallion program).
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED STOCK
On August 27, 1998, the Board of Directors of Xxxxxxxx Stores Inc. (the
"Company"), declared a dividend of one Series A Preferred Stock Purchase
Right (a "Right"), on each outstanding common share, $1 par value (the
"Common Shares"), of the Company. The dividend is payable to the shareholders
of record at the close of business on October 25, 1998 (the "Record Date")
and with respect to Common Shares issued thereafter until the Distribution
Date (as defined below). Each Right, when it becomes exercisable, entitles
the registered holder to purchase from the Company one one-hundredth of a
share of Series A Preferred Stock, $1 par value (the "Preferred Stock"), of
the Company at a price of $100 per one one-hundredth of a share of Preferred
Stock (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Norwest Bank Minnesota, N.A., as Rights
Agent (the "Rights Agent").
Initially, the Rights will be evidenced by the certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will become exercisable and separate from the Common
Shares upon the earlier to occur of: (i) the first date of public
announcement that a person or group of affiliated or associated persons,
other than the Company, any subsidiary, or an employee benefit plan of the
Company, has acquired, or obtained the right to acquire, beneficial ownership
of 20% or more of the outstanding Common Shares (except pursuant to a
Permitted Offer, as defined hereafter, certain acquisitions of Common Shares
by the Company, certain inadvertent acquisitions, and certain acquisitions
specifically permitted by the Company's Board of Directors) or (ii) 10 days
(or such later date as the Company's Board of Directors may determine)
following the commencement of, or a public announcement of an intention to
commence (which remains in effect for five business days) a tender offer or
exchange offer, the consummation of which would result in a person or group
becoming an Acquiring Person (as defined hereafter), the earlier 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 Person". The date that a person or group becomes an
Acquiring Person is the "Shares Acquisition Date".
The Rights Agreement also 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 transfer of any certificates for Common
Shares, with or without such notation, will also constitute the transfer of
the Rights associated with the Common Shares represented by such
certificates. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date (and to each initial record holder of
certain Common Shares issued after the Distribution Date), and, thereafter,
such separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on October 25, 2008 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed by the Company as described below.
In the event that any person becomes an Acquiring Person (except pursuant to
a tender or exchange offer for all outstanding Common Shares at a price and
on terms which a majority of the Company's Disinterested Directors who are
not officers of the Company determines to be fair to shareholders and
otherwise in the best interests of the Company and its shareholders, other
than the Acquiring Person, (a "Permitted Offer")), each holder of a Right
will thereafter have the right (the "Flip-In Right") to receive upon
exercise, at the then current exercise price of the Right, that number of
Common Shares (or in certain circumstances, one one-hundredths of a share of
Preferred Stock or other securities, property or assets of the Company)
having an average market value during a specified time period equal to two
times the exercise price of such Right. In other words, the Rights holders,
other than the Acquiring Person and certain others, may purchase Common
Shares at a 50% discount. Notwithstanding the foregoing, following the
occurrence of a person becoming an Acquiring Person, any 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 immediately become null and void.
Alternatively, in the event that, at any time on or following the Shares
Acquisition Date, (i) the Company is a party to a merger or other business
combination transaction in which the holders of all of the outstanding Common
Shares immediately before 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 Company's assets or earning power are 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, any other person if in such
transaction all holders of Common Shares are not treated alike, then each
holder of a Right (except Rights that have been voided as set forth above)
shall thereafter have the right (the "Flip-Over Right") to receive, upon
exercise, at the then current exercise price of the Right, common shares of
the acquiring or surviving company having an average market value during a
specified time period equal to two times the exercise price of the Right. In
other words, the Rights holders, other than the Acquiring Person and certain
others, may purchase the acquiring or surviving company's common shares at a
50% discount.
The Purchase Price payable, and the number of one one-hundredths of a share
of Preferred Stock, Common Shares, or other securities or property issuable,
upon exercise of the Rights, are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination, or reclassification of, the Preferred Stock, (ii) upon the grant
to holders of the Preferred Stock of certain rights or warrants to subscribe
for Preferred Stock at a price, or securities convertible into Preferred
Stock with a conversion price, less than the then current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock
-2-
of evidences of indebtedness or assets (excluding regular periodic cash
dividends) or of subscription rights or warrants (other than those referred
to above). The number of outstanding Rights and the exercise price of the
Rights are also subject to adjustment in the event of 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, before 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 the
Purchase Price. The Company will not be required to issue fractional shares
of Preferred Stock (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock) or fractional Common Shares and,
in lieu thereof, an adjustment in cash may be made based on the market price
of the Preferred Stock on, or an average price ending immediately before, the
last trading date before the date of exercise.
At any time before the earlier to occur of (i) a person becoming an Acquiring
Person, or (ii) the expiration of the Rights, the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"). Additionally, until 60 days after the later of the date
holders of Rights begin to have Flip-In Rights and the effective date of a
registration statement under the Securities Act of 1933 with respect to
securities issuable upon exercise of such Flip-In Rights, but before holders
of Rights begin to have Flip-Over Rights, the Company may redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price;
provided that such redemption is (i) in connection with a merger or other
business combination transaction or series of transactions involving the
Company in which all holders of Common Shares are treated alike but not
involving an Acquiring Person, or (ii) at a time when no other persons are
Acquiring Persons and the Acquiring Person is not the beneficial owner of 10%
of the Common Shares. The Redemption Price may, at the option of the Company,
be paid in cash or Common Shares. Under certain circumstances the decision to
redeem shall require the concurrence of two-thirds of the Disinterested
Directors (any member of the Board prior to the date of the Rights Agreement,
and any person subsequently elected to the Board if such person is
recommended or approved by a majority of the Disinterested Directors,
excluding the Acquiring Person, affiliate or associate). Immediately upon the
date for redemption set in a resolution of the Board of Directors ordering
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights should not
be taxable to shareholders or to the Company, shareholders will recognize
taxable income if the Rights are redeemed and may, depending on the
circumstances, recognize taxable income when the Rights become exercisable or
are exercised. Shareholders are encouraged to consult their own tax advisors
concerning the tax treatment in their particular situation.
The provisions of the Rights Agreement may be amended by the Board of
Directors of the Company without the consent of the Rights holders, except
that no amendment to adjust the time period regarding redemption shall be
made at a time when the Rights are not redeemable. From and after the
Distribution Date no amendment may be adopted which adversely affects the
interests of the Rights holders (excluding the Acquiring Person).
-3-
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on the Rights being redeemed or a
substantial number of Rights being acquired, and under certain circumstances
the Rights beneficially owned by such a person or group may become void. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors because, if the Rights would become
exercisable as a result of such merger or business combination, the Board of
Directors may, at its option, at any time prior to the time that any Person
becomes an Acquiring Person, redeem all (but not less than all) of the then
outstanding Rights at the Redemption Price.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights Plan is not intended to be complete
and is qualified in its entirety by reference to the Rights Agreement, which
is incorporated herein by reference.
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