Exhibit 10
Material Contracts (a)
________________________________________________________________
CHOCK FULL O'NUTS CORPORATION
AND
IBJ SCHRODER BANK & TRUST COMPANY
RIGHTS AGENT
______________________________________
Rights Agreement
Dated as of December 30, 1987
______________________________________________________________
Table of Contents
Section Page
1 Certain Definitions 3
2 Appointment of Rights Agent 7
3 Issue of Rights Certificates 8
4 Form of Rights Certificates 11
5 Countersignature and Registration 12
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates 14
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights 15
8 Cancellation and Destruction of
Rights Certificates 20
9 Reservation and Availability of
Common Stock 20
10 Common Stock Record Date 23
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights 24
12 Certificate of Adjusted Purchase
Price or Number of Shares 39
13 Consolidation, Merger or Sale
or Transfer of Assets or
Earning Power 40
14 Additional Covenant 45
15 Fractional Rights and Fractional
Shares 46
16 Rights of Action 48
(i)
Section Page
17 Agreement of Rights Holders 49
18 Rights Certificate Holder Not
Deemed a Shareholder 50
19 Concerning the Rights Agent 50
20 Merger or Consolidation or Change of
Name of Rights Agent 51
21 Duties of Rights Agent 53
22 Change of Rights Agent 57
23 Issuance of New Rights Certificate 59
24 Redemption and Termination 60
25 Notice of Certain Events 62
26 Notices 64
27 Supplements and Amendments 65
28 Determination and Actions by the
Board of Directors, etc 66
29 Successors 67
30 Benefits of this Agreement 67
31 Serverability 68
32 Governing Law 68
33 Counterparts 68
34 Descriptive Headings 68
Exhibit A -- Form of Rights Certificate A-1
Exhibit B -- Form of Summary of Rights B-1
(ii)
RIGHTS AGREEMENT
This Agreement, dated as of December 30, 1987, between Chock
Full O'Nuts Corporation, a New York Corporation (the "Company"), and IBJ
Schroder Bank & Trust Company, a New York banking corporation (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, on December 30, 1987, the Board of Directors of the
Company authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of Common Stock, $0.25 par value per
share, of the Company (the "Common Stock") outstanding on January 22, 1988
(the Record Date), and contemplate the issuance, prior to the Expiration
Date (as hereinafter defined), of one Right (subject to adjustment as
provided herein) (i) for each share of Common Stock of the Company issued
between the Record Date and the later of the Stock Acquisition Date and the
Distribution Date (as such terms are hereinafter defined) and (ii) for each
share of Common Stock reserved for issuance upon conversion of the Company's
8% Convertible Subordinated Debentures due 2006 and the Company's 7%
Convertible Senior Subordinated Debentures due 2012 (the "Convertible
Debentures") and issued upon conversion of the Convertible Debentures at any
time after the Record Date (whether before or after the later of the Stock
Acquisition
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Date and the Distribution Date), each Right representing the right to
purchase one share of Common Stock of the Company upon the terms and subject
to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto hereby agree as
follows:
Section 1. Certain Definitions For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of the Company, shall be
the Beneficial Owner (as such term is hereafter defined) of securities
representing 20% or more of the Voting Power (as such term is hereinafter
defined), or who was such a Beneficial Owner at any time after the date
hereof, whether or not such Person continues to be the Beneficial Owner of
securities representing 20% or more of the Voting Power, but shall not
include (i) the Company, (ii) any subsidiary of the Company (as such term is
hereinafter defined), (iii) any employee benefit plan of the Company or any
of its subsidiaries, (iv) any entity holding securities of the Company
organized, appointed or established by the Company or any of its subsidiaries
for or pursuant to the terms of any such plan, or (v) any Person who or
which, together with all
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Affiliates and Associates of such Person, was the Beneficial Owner of
securities representing 20% or more of the Voting Power on the date hereof
until such time as such Person who or which, together with all Affiliates
and Associates of such Person, without the prior approval of the Company,
acquires Beneficial Ownership of securities representing an additional 2% of
the Voting Power at any time subsequent to the date hereof.
(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 Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this 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 beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to acquire
(whether such right or obligation is exercisable or effective
immediately or only after the passage of time) pursuant to any
agreement, arrangement of understanding (whether or not in writing) or
upon the exercise of conversion
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rights, exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," securities
tendered pursuant to a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associated until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote 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 clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also
then reportable by such person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficial owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such
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Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in
clause (B) of subparagraph (ii) of this paragraph (c) or disposing of
any securities of the company.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the
next succeeding Business day.
(f) "Common Stock" shall mean the Common Stock, $0.25 per value, of
the Company, except that "Common Stock" when used with reference to stock
issued by any Person other than the Company shall mean the capital stock
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person or,
if such Person is a subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has
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issued and outstanding such capital stock, equity securities or equity
interests.
(g) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(h) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(i) A "subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting equity
securities or voting interests is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(k) "Voting Power" shall mean the voting power of all
securities of the Company then outstanding generally entitled to vote for
the election of directors of the Company.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights
Agents and any Co-Rights Agents shall be as the Company shall determine.
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Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Stock Acquisition
Date or (ii) the tenth day after the date of the commencement of, or first
public announcement of the intent of any Person (other than the Company, any
subsidiary of the Company, or any employee benefit plan of the Company or any
of its subsidiaries) to commence (which intention to commence remains in
effect for five business days after such announcement), a tender or exchange
offer which would result in such Person becoming an Acquiring Person, or such
later date as may be fixed by the Board of Directors of the Company by notice
to the Rights Agent and publicly announced by the Company (including any such
date which is on or after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of the Section 3) by the certificates for Common
Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights (and the right
to receive certificates therefor) will be transferable only in connection
with the transfer of the underlying shares of Common Stock. As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the close
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of business on the Distribution Date, at the address of such holder shown on
the records of the Company, a certificate for Rights, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights Certificates.
As soon as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit B (the Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the close of business
on the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of
the Record Date, until the Distribution Date (or earlier redemption,
expiration or termination of the Rights), the Rights will be evidenced by
such certificates for the Common Stock together with the Summary of Rights
and the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the Distribution Date (or earlier
redemption, expiration or termination of the Rights), the surrender for
transfer of any of the certificates for the Common Stock outstanding on the
Record Date, even without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
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(b) Prior to the Expiration Date (as such term is
hereinafter defined), certificates issued for Common Stock (including,
without limitation, certificates issued upon transfer or exchange of Common
Stock or certificates issued upon conversion of the Convertible Debentures
of the Company) after the Record Date, but prior to the later of the Stock
Acquisition Date and the Distribution Date, shall be deemed also to be
certificates for Rights, and shall have impressed, printed, stamped, written
or otherwise affixed onto them the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in a Rights Agreement between
Chock Full O'Nuts Corporation and IBJ Schroder Bank & Trust Company
(the "Rights Agent"), dated as of December 30, 1987 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of Chock Full O'Nuts
Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights may be redeemed, may expire or may be evidenced by
separate certificates and will no longer be evidenced by this certificate.
Chock Full O'Nuts Corporation will mail to the holder of this certificate a
copy of the Rights Agreement without charge within five days after receipt of
a written request therefor. Under certain circumstances, Rights issued to
Acquiring Persons (as defined in the Rights Agreement) or certain related
persons and any subsequent holder of such Rights may become null and void
with respect to certain rights set forth in Section II (a) (ii) and
Section 13 (a) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be
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evidenced by such certificates alone, and the surrender for transfer of any
of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Prior to the Expiration Date (as such term is
hereinafter defined), certificates issued for Common Stock, upon conversion
of the Convertible Debentures of the Company after the later of the Stock
Acquisition Date and the Distribution Date, shall, as soon as practicable
after the Distribution Date, be accompanied by one Rights Certificate
evidencing one Right for each share of Common Stock so issued.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase shares and of assignment to be printed on the reverse
thereof) shall each be substantially in the form set forth in Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation 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 23 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date, and on their face shall
entitle
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the holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the price per share set forth therein (the
"Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3 hereof that represents Rights beneficially owned by 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 Section 11 upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence,
shall contain the following legend:
The Rights represented by this Rights Certificate
were issued to a Person who was an Acquiring person or
an Affiliate or an Associate of an Acquiring Person.
This Rights Certificate and the Rights represented
hereby may become void to the extent provided by,
and under certain circumstances as specified in,
Section 7 (e) of the Rights Agreement.
The provisions of Section 7 (e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company
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by its Chairman of the Board, the Vice Chairman of the Board, any President
or any Vice President, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary 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 any case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, 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 one of its offices in New York, New York, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names
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and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights Certificates and
the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificate; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Subject to the provisions of Section 15 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of
business on the Expiration Date, any Rights Certificate or Certificates may
be transferred, split up, combined or exchanged for another Rights
Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate 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. Thereupon the Rights Agent shall countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights Certificates,
as the case may be, as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection
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with any transfer, split up, combination or exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) The registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided
herein and subject to the prior compliance by the Company with the
provisions of the last paragraph of Section 9 hereof) in whole or in part at
any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent as the principal office of
the Rights Agent, together with payment of the Purchase Price for each share
of Common Stock (or other securities, cash or other assets, as the case may
be as to which the Rights are exercised,
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at or prior to the earliest of (i) the close of business on December 30, 1997
(the "Final Expiration Date"), (ii)the consummation of a transaction
contemplated by Section 13(d) hereof, or (iii) the time at which the Rights
are redeemed as provided in Section 24 hereof (such earliest time being
herein referred to as the "Expiration Date"). Notwithstanding any other
provision of this Agreement, any Person who prior to the later of the Stock
Acquisition Date or the Distribution Date becomes a record holder of shares
of Common Stock (or any Person who after the Record Date (whether before or
after the later of the Stock Acquisition and the Distribution Date) becomes
a record holder of shares of Common Stock upon conversion of the Convertible
Debentures of the Company) may exercise all of the rights of an registered
holder of a Rights Certificate with respect to the Rights associated with
such shares of Common Stock in accordance with and subject to the provisions
of this Agreement, including the provisions of Section 7 (e) hereof, as of
the date such Person becomes a record holder of shares of Common Stock.
(b) The Purchase Price for each share of Common
Stock pursuant to the exercise of a Right shall initially be $30.00, shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
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(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the appropriate form of election to
purchase duly executed, accompanied by payment of the Purchase Price for the
shares (or other securities or property) to be purchased and an amount equal
to any applicable transfer tax (as determined by the Rights Agent) in cash,
or by certified check or bank draft payable to the order of the Company, the
Rights Agent shall, subject to Section 21 (k), thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Common Stock (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of shares of Common Stock to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
or (B) if the Company, in its sole discretion, shall have elected to deposit
the shares of Common Stock issuable upon exercise of the Rights hereunder
into a depository, requisition from the depository agent depository receipts
representing such number of shares of Common Stock as are to be purchased
(in which case certificates for the shares of Common Stock represented by
such receipts shall be deposited by the transfer agent with the depository
agent) and the Company will direct the depository agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in
accordance with Section 15, (iii) promptly after receipt of such certificates
or depository receipts,
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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. In the event that the Company is obligated to issue
other securities of the Company, and/or distribute other property pursuant
to Section 11 (a), the Company will make all arrangements necessary so that
such other securities and/or property are available for distribution by the
Rights agent, if and when appropriate. In addition, in the case of an
exercise of the Rights by a holder pursuant to Section 11 (a) (ii), the
Rights Agent shall return such Rights Certificate to the registered holder
thereof after imprinting, stamping or otherwise indicating thereon that the
rights represented by such Rights Certificate no longer include the rights
provided by Section 11 (a)(ii) of the Rights Agreement and if less than all
the Rights represented by such Rights Certificate were so exercised, the
Right Agent shall indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided by
Section 11 (a)(ii).
(d) In case the registered holder of any 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
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Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, if an Acquiring Person or an Associate or Affiliate of an
Acquiring Person engages in or there occurs one or more of the transactions
set forth in Section 11 (a)(ii) or Section 13 (a) on or after the time the
Acquiring Person became such, then any Rights that are or were on or after
the earlier of the Distribution Date or the Stock Acquisition Date
beneficially owned by an Acquiring Person or any Associate or Affiliate shall
become void with respect to the rights provided under Section 11 (a)(ii) and
Section 13 (a) and any holder of such Rights shall thereafter have no right
to exercise such Rights under the provisions of Section 11 (a)(ii) and
Section 13 (a).
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7 unless the
certificate contained in the appropriate form of election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
exercise shall have been properly completed and duly executed by the
registered holder thereof and the Company shall have been provided with such
additional evidence of the identity of
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the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably requests.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this 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 otherwise than upon
the exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Common Stock.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock, or any
authorized and issued shares of Common Stock held in its treasury, the number
of shares of Common Stock that will be sufficient to permit the exercise in
full of all outstanding Rights and, subject to
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Section 11 (a)(iii) hereof, after the occurrence of an event specified in
Section 11, shall so reserve and keep available a sufficient number of shares
of Common Stock (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the shares of Common Stock (or other securities)
issuable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares (or other
securities)reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock (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, with respect to shares of Common Stock or other securities, fully paid
and nonassessable.
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 certificates for shares of Common Stock (or other
securities, as the case may be) upon the exercise of Rights. The Company
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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 in respect of the issuance or delivery of the shares of Common
Stock (or other securities, as the case may be) in a name other than that of,
the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares
of Common Stock (or other securities, as the case may be), in a name other
than that of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, as soon
as practicable following the Stock Acquisition Date, 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 date of the
expiration of the rights provided by Section 11 (a)(ii). The Company will
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also take such action as may be appropriate under the blue sky laws of the
various states.
Section 10. Common Stock Record Date. Each person in whose name any
certificate for shares of Common Stock (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Common Stock (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 presented and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such presentation and payment is a date upon which the Common Stock transfer
books of the Company are closed, such person shall be deemed to have become
the record holder of such shares on, and such certificates shall be dated,
the next succeeding Business Day on which the Common Stock transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate, as such, 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.
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Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights. The Purchase Price, the number 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 that the Company shall at
any time after the date of this Agreement (A)
declare a dividend on the Common Stock payable
in shares of Common Stock, (B) subdivide the
outstanding Common Stock, (C) combine the
outstanding Common Stock into a smaller number
of shares or (D) issue any shares of its capital
stock in a reclassification of the Common Stock
(including any such reclassification in connection
with a consolidation or merger in which the Company
is the continuing or surviving corporation), except
as otherwise provided in this Section 11 (a) and
in Section 7 (e), the Purchase Price in effect at
the time of the record date for such dividend or
of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of
capital stock and other securities which, if such Right
had been exercised immediately prior to such date and
at a time when the Common Stock
- - -24-
transfer books of the Company were open, he would
have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs
which would require an adjustment under both
Section 11 (a)(i) and Section 11 (a)(ii), the
adjustment provided for in this Section 11 (a)(i)
shall be in addition to, and shall be made prior to
any adjustment required pursuant to Section 11 (a)(ii).
(ii) In the event that any Person (other than the
Company, any subsidiary of the Company, any employee
benefit plan of the Company or any to its subsidiaries or
any entity holding securities of the Company organized,
appointed or established by the Company or any of its
subsidiaries for or pursuant to the terms of any such
plan), alone or together with its Affiliates and
Associates, shall become an Acquiring Person (except
pursuant to a tender or exchange offer for all
outstanding shares of Common Stock at a price and on
terms determined by at least a majority of the members
of the Board of Directors who are not Acquiring
Persons or Affiliates or Associates of an Acquiring
Person to be both adequate and otherwise in the best
interests of the Company and its various constituents,
including without limitation,
-25-
the long-term and short-term interests of the
Company and its shareholders (other than the
Person or an Affiliate or Associate thereof on
whose behalf the offer is being made) (a "Permitted
Offer")), then proper provision shall be made so that
each holder of a Right, except as provided in
Section 7(e) hereof, shall, for a period of 60 days
after the later of the occurrence of any such event
and the effective date of an appropriate registration
statement pursuant toSection 9, have a right to
receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this
Agreement, such number of shares of Common Stock of
the Company as shall equal the result obtained
by (x) multiplying the then current Purchase Price
by the then number of shares of Common Stock for
which a Right is then exercisable and dividing
that product by (y) 50% of the current market
price per one share of Common Stock (determined
pursuant to Section 11 (d) on the date of the
occurrence of the event set forth in this subparagraph
(ii) (such number of shares being referred to as the
"number of 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
-26-
apply and no adjustment shall be made pursuant to
this Section 11 (a)(ii).
(iii) In the event that there shall not
be sufficient treasury shares or authorized but
unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon
exercise of the Rights; provided, however, that if
the Company is unable to cause the authorization of
a sufficient number of additional shares of Common
Stock, then, in the event the Rights become so
exercisable, the Board of Directors may, but shall
not be required to, with respect to each Right,
(A) pay cash in an amount equal to the Purchase
Price, in lieu of issuing shares of Common Stock
and requiring payment therefore; or (B) issue debt
or equity securities or a combination thereof, having
a value equal to the Current Value of the Common Stock
(as defined hereinafter), where the value of such
securities shall be determined by a majority of the
members of the Board of Directors after considering
the advice of a nationally recognized investment
banking firm selected by a majority of the members of
the Board of Directors of the Company, and require
the payment of the Purchase
-27-
Price; or (C) deliver any combination of cash,
property, Common Stock and/or securities having a
value equal to the Current Value of the Common Stock,
and require payment of all or any requisite portions
of the Purchase Price. The Current Value shall be the
product of the current market price per share of
Common Stock (determined pursuant to Section 11 (d) on
the date of the occurrence of the event described
above in subparagraph (ii) multiplied by the number of
shares of Common Stock for which the Right otherwise
would be exercisable if there were sufficient shares
of Common Stock available. To the extent that the
Company determines that some action need be taken
pursuant to clauses (A), (B) or (C) of the proviso
of this Section 11 (a)(iii), a majority of the
members of the Board of Directors may suspend the
exercisability of the Rights for a period of up to 60
days following the date on which the event describe in
Section 11(a)(ii) shall have occurred, in order to
seek any authorization of additional shares of Common
Stock and/or to decide the appropriate form of
distribution to be made pursuant to the above
proviso 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.
-28-
(b) If the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Stock (or securities
convertible into Common Stock) at a price per share of Common Stock (or
having a conversion price per share, if a security convertible into Common
Stock) less than the current market price (as defined in Section 11 (d)) per
share of Common Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding on such
record date, plus the number of shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock 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 share of Common Stock outstanding
on such record date, plus the number of additional shares of Common 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
determined
-29-
reasonably and with good faith to the holders of Rights by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent. Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such 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) If the Company shall fix a record date for the
making of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash
(other than regular cash dividends out of the earned surplus of the Company),
assets (other than a dividend payable in Common Stock) or subscription rights
or warrants (excluding those referred to in Section 11 (b)), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price
(as defined in Section 11 (d)) per share of Common Stock on such record date,
less the fair market value (as determined reasonably and with good faith to
the holders of Rights by the
-30-
Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or warrants distributable in
respect of one share of Common Stock and the denominator of which shall be
the current market price per share of Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would be in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder
the "current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such Common
Stock for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of
Common Stock or (B) any subdivision, combination or reclassification of such
Common Stock, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for
such
-31-
subdivision, combination or reclassification, then, and in each such case,
the "current market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of
the Company. If on any such date no market maker is making a market in the
Common
-32-
Stock, the fair value of such shares on such date as determined reasonably
and with good faith by the Board of Directors of the Company shall be used
and shall be binding on the Rights Agent. The term, "Trading Day" shall mean
a day on which the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open for the transaction
of business or, if the shares of Common Stock are not listed admitted to
trading on any national securities exchange, a Business Day. If the Common
Stock is not publicly held or not so listed or traded, "current market price"
per share shall mean the fair value per share determined reasonably and with
good faith to the holders of Rights by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent.
(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 the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11
(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest thousandth of a share
of Common Stock, 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
-33-
date of the transaction which mandates such adjustment or (ii) the
Expiration Date.
(f) If as a result of any provision of
Section 11(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Common 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 shares contained in Section 11(a) through (c), inclusive,
and the provisions of Sections 7, 9, 10, 13 and 15 hereof with respect to the
Common 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 shares of Common Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11 (i), upon each adjustment of the Purchase
Price as a result of the calculations made in 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 shares of Common
-34-
Stock (calculated to the nearest thousandth)obtained by (i) multiplying (x)
the number of shares of Common Stock 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 shares of Common Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the
number of shares of Common Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest 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 10 days later
-35-
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 15 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 holder 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 shares of Common Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number
of shares which were expressed in the initial Rights Certificates issued
-36-
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of
the shares of Common Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock at such adjusted Purchase Price.
(l) 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 shares of Common Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
-37-
(m) Anything to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company
in its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, issuance wholly for cash of
any shares of Common Stock at less than the current market price, issuance
wholly for cash of shares of Common Stock or securities which by their terms
are convertible into or exchangeable for shares of Common Stock, stock
dividends or issuance of rights, options or warrants referred to hereinabove
in this Section 11, hereafter made by the Company to holders of its Common
Stock shall not be taxable to such shareholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the outstanding Common
Stock, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately
-38-
adjusted so that the number of Rights thereafter associated with each share
of Common Stock following any such event shall equal the result obtained by
multiplying the number of Rights associated with each share of Common Stock
immediately prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to
the occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(o) The exercise of Rights under Section 11 (a)(ii)
shall only result in the loss of rights under Section 11 (a)(ii) to the
extend so exercised and shall not otherwise affect the rights represented by
the Rights under this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained.
-39-
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person, (y) any Person shall
consolidate with the Company, or merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger
(other than, in the case of either transaction described in (x) or (y), a
merger or consolidation which would result in all of the Voting Power
represented by the securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Power
represented by the securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation and the holders
of such securities not having changed as a result of such merger or
consolidation), or (z) the Company shall sell, mortgage or otherwise transfer
(or one or more of its subsidiaries shall sell, mortgage or otherwise
transfer), in one or more transactions, assets or earning power of the
Company and it subsidiaries (taken as a whole) to any other Person, then,
and in each such case, proper provision shall be made so that (i) following
the Distribution Date, each holder of a Right, subject to Section 7 (e),
shall have the right to receive, upon the
-40-
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, such number of shares of freely tradeable Common
Stock of the Principal Party (as hereinafter defined), free and clear of
liens, rights of call or first refusal, encumbrances or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of shares of Common Stock for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 11 (a)(ii) hereof) and dividing that product by (2) 50%
of the current market price per share of the Common Stock of such Principal
Party (determined pursuant to Section 11 (d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of
-41-
Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in (x) or (y) of the first sentence of
Section 13 (a), the Person that is the issuer
of any securities into which shares of Common
Stock of the Company are converted in such
merger or consolidation, and if no securities
are so issued, the Person that is the other
party to the merger or consolidation
(including, if applicable, the Company, if it
is the surviving corporation); and
(ii) in the case of any transaction described
in (z) of the first sentence in Section 13
(a), the Person that is the party receiving
the greatest portion of the assets or earning
power transferred pursuant to such transaction
or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect subsidiary of Affiliate of another Person
the Common Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; (2) in case of such Person is a subsidiary,
directly or indirectly, or
-42-
Affiliate of more than one Person, the shares of Common Stock of two or more
of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (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 ventures and the Principal Parties in each
such chain shall bean the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock that have
not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and each Principal Party and each other Person who may become a
Principal Party as a result of such consolidation, merger, sale or transfer
shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraph (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date
of any
-43-
consolidation, merger, sale or transfer of assets mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense will:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, will use its best
efforts to cause such registration statement to become effective as soon
as practicable after such filing and will use its best efforts to cause
such registration statement to 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 blue sky laws of such jurisdictions as may be necessary
or appropriate; and
(iii) deliver to holders fo the Rights historical
financila statements for the Principal Party and each of its Affiliates which
comply in all material respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other
-44-
transfers. The rights under this Section 13 shall be in addition to the
rights to exercise Rights and adjustments under Section 11 (a)(ii)d and shall
survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a transaction described
in subparagraphs (x) and (y) of Section 13 (a) if: (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a Permitted Offer (or a wholly owned subsidiary of any such
Person or Persons); (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of considering being offered to the
remaining holders of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this subsection (d), all
Rights hereunder shall expire.
Section 14. Additional Covenants.
(a) After the Stock Acquisition Date, the Company
covenants and agrees that it shall not (i) consolidate with, (ii) merge with
or into, or (iii) sell or transfer to, in one or more transactions, assets
or earning power aggregating more that 50% of the assets or earning power of
the Company and
-45-
its subsidiaries taken as a whole, any other Person, if at the time of or
after such consolidation, merger or sale there are any charter or by-law
provisions or any rights, warrants or other instruments or securities
outstanding, agreements in effect or any other action taken which would
diminish or otherwise eliminate the benefits intended to be afforded by
the Rights. The Company shall not consummate any such consolidation, merger
or sale 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 subsection.
(b) The Company covenants and agrees that, after
the Stock Acquisition Date, it will not, except as permitted by Section
24 or Section 27 hereof, take any action the purpose or effect of which is
to diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 15. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11 (n), 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 would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right.
-46-
For the purpose of this Section 15 (a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, 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 reasonably and with good faith to the
holders of Rights by the Board of Directors of the Company shall be used and
shall be binding on the Rights Agent.
(b) The Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Common Stock.
In lieu of fractional shares of Common Stock, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a share of Common Stock. For purposes
-47-
of this Section 15 (b), the current market value of a share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to Section 11 (d)(ii) hereof) for the Trading Day immediately prior to the
date of such exercise.
(c) Except as otherwise expressly provided herein,
the holder of a Right by the acceptance of the Rights expressly waive his
right to receive any fractional Rights or any fractional shares upon exercise
of a Right.
Section 16. Rights of Action. All rights of action in
respect of the Agreement are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate in
this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy as law for any breach of this
Agreement and
-48-
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. Holders of Rights shall
be entitled to recover the reasonable costs and expenses, including
attorney's fees, incurred by them in any action to enforce the provisions of
this Agreement.
Section 17. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder
of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent
if surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the
-49-
associated Common Stock certificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 18. 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
shares of Common Stock, or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights 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 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions
thereof.
Section 19. Concerning the Rights Agent. 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 fees and expenses
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and counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. Such rights to
indemnification shall survive any change of the Rights Agent as described in
Section 22 hereof.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it
in connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to
be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 20. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it
-51-
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall
be a party, or any corporation succeeding to the corporate trust business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
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 such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates in this Agreement.
In case of 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 price name and deliver
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Rights Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent has
no duties other than as expressly set forth in this Rights Agreement. The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
selected by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person) 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
-53-
deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, any Vice Chairman of the Board, any President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates (except as to the fact that it has
countersigned the Rights Certificates) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement of 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 convenant or condition contained by this
-54-
Agreement or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 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 be
responsible for any determination by the Board of Directors of the Company of
the current market value of the Rights or Common Stock pursuant to the
provisions of Section 15 hereof; nor shall it by any act hereunder by deemed
to make any representation or warranty as to the authorization or reservation
of any shares of Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Common Stock or other securities will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Rights Agent shall be under no liability for
interest accrued on any monies received by it pursuant to the exercise of
Rights or otherwise.
(g) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
(h) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
-55-
of its duties hereunder and certificates delivered pursuant to any provision
hereof from the Chairman of the Board, any Vice Chairman of the Board, any
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and is authorized to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such
officer.
(i) 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 peculiarly interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(j) 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, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or
to the holders of the Rights resulting from any
-56-
such act, omission, default, neglect or misconduct, provided reasonable care
was exercised in the selection and continued employment thereof.
(k) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in
the exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(l) 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 of transfer without
first consulting with the Company.
Section 22. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock by registered or certified mail, and
to holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days'
-57-
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and each transfer agent of the Common 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 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 Right Certificate may apply to
any court of competent jurisdiction for the appointment of an new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing business under
the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York), in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority and which has at
the time of its appointment as Rights
-58-
Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of the Common 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 22, 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 23. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price per share and the
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number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of the
Agreement.
Section 24. Redemption and Termination.
(a)(i) The Board of Directors of the Company may,
at its option, at any time prior to the earlier of (x) the time that any
person becomes an Acquiring Person or (y) 5:00 P.M., New York City time, on
the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.05 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").
(ii) In addition, the Board of Directors of the
Company may redeem all but not less than all of the then outstanding Rights
at the Redemption Price following the occurrence of a Stock Acquisition Date
but prior to any event described in Section 13(a) either (x) in connection
with any event specified in Section 13 (a) in which all holders of Common
Stock are treated alike and not involving an Acquiring Person, or an
Affiliate or Associate of any Acquiring Person or any other Person in which
such Acquiring Person, Affiliate or Associate has any interest, or any other
Person acting directly or indirectly on behalf of or in association with any
such Acquiring Person, Affiliate or Associate, or (y) following the
occurrence of an event set forth in, and the
-60-
expiration of any period during which the holder of Rights may exercise the
rights under, Section 11(a)(ii) if and for as long as the Acquiring Person
is not thereafter the Beneficial Owner of securities representing 20% or more
of the Voting Power, and at the time of redemption there are no other Persons
who are Acquiring Persons.
(b) In the case of a redemption permitted under
Section 24(a)(i), immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights evidence of which shall
have been filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. In the case of a redemption permitted only under Section
24(a)(ii), evidence of which shall have been filed with the Rights Agent,
the right to exercise the Rights will terminate and represent only the right
to receive the Redemption Price only after ten Business Days following the
giving of notice of such redemption to the holders of such Rights if no event
set forth in Section 11 (a)(ii) shall have occurred, and, if such event
shall have occurred, upon the later of ten Business Days following the giving
of such notice or the expiration of any period during which the rights under
Section 11(a)(ii) may be exercised. Within ten days after the
-61-
action of the Board of Directors ordering any such redemption of the Rights,
the Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to the Rights
Agent and 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 Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing payment of
the Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the Transfer Agent of the
Common Stock, and upon such action, all outstanding Rights Certificate shall
be null and void without any further action by the Company.
Section 25. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any
-62-
other distribution to the holders of Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company)
or (b) to offer to the holders of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or shares
of stock of any class or any other securities, rights or options, or (c) to
effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Common Stock), or (d) to effect any consolidation or merger 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 more than 50% of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to, any other Person, or (e) 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 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rites or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause
-63-
(a) or (b) above at least 20 days prior to the record date for determining
holders of the shares of Common Stock for purposes of such action, and in the
case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the shares of Common Stock whichever shall be the earlier.
In case the event set forth in Section 11 (a)(ii) of the
Agreement shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders
of Rights under Section 11 (a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights 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:
Chock Full O'Nuts Corporation
370 Lexington Avenue
New York, New York 10017
Attention: Chairman of the Board
Subject to the provisions of Section 22, any notice or demand authorized by
this Agreement to be given or made by the Company
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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:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. The Company and the
Rights Agent may from time to time supplement or amend this Agreement without
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein,
(iii) prior to the Distribution Date, to change or supplement the provisions
hereunder which the Company may deem necessary or desirable or (iv) following
the Distribution Date, to change or supplement the provisions hereunder in
any manner which shall not adversely affect the interests of the holdings of
Rights
-65-
Certificates. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment unless the Rights Agent shall have determined in
good faith that such supplement or amendment would adversely affect its
interests under this Agreement. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock. Any supplement or amendment
of this Rights Agreement shall be in writing and signed on behalf of the
Company and the Rights Agent.
Section 28. Determination and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock or any other securities of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3 (d)(l)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board, or the Company, or a may be necessary or advisable in
the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the
-66-
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem 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 in good
faith, 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 to any liability to the holders of the Rights
Certificates.
Section 29. Successors. All the convenants and provisions
of this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this
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 Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates and prior
to the Distribution Date, the Common Stock).
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Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York 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 to be performed entirely within such
State.
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: CHOCK FULL O'NUTS CORPORATION
[Seal]
_______________________ _____________________________
Name: Martin J. Cullen Name: Leon Pordy, M.D.
Title: Vice President, Title: Chairman of the Board
Treasurer and and Chief Executive
Secretary Officer
Attest: IBJ SCHRODER BANK & TRUST
COMPANY
[Seal]
_________________________ By__________________________
Name: Perry A. Polhemus Name:
Title: Assistant Secretary Title:
- - -69-
Exhibit A
[Form of Rights Certificate]
Certificate No. R- ______________Rights
NOT EXERCISABLE AFTER December 30, 1997, OR EARLIER
UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE
RIGHTS AGREEMENT OR IF NOTICE OF REDEMPTION IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY AT $.05 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID TO THE EXTENT PROVIDED IN AND UNDER
THE CIRCUMSTANCES SPECIFIED IN SECTION 7 (e) OF THE
RIGHTS AGREEMENT]*
Rights Certificate
CHOCK FULL O'NUTS CORPORATION
This certifies that , or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of December 30, 1987 (the
"Rights Agreement") between Chock Full O'Nuts Corporation, a New York
corporation (the "Company"), and IBJ Schroder Bank & Trust
_______________________________
* The portion of the legend in brackets shall be
inserted only if applicable.
A-1
Company (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. (New York time) on December 30, 1997 at the principal
office of the Rights Agent in New York, one fully paid, nonassessable Common
Share, $.25 par value (the "Common Share") of the Company, at a purchase
price of $30.00 per share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the appropriate Form of Election to
Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchase upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of January 22, 1988, based on the Common Shares
as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and
the number of Common Shares 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 Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities
A-2
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates. Copies of the Rights Agreements are on file at the principal
office of the Company and are also available upon written request to the
Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the Rights agent,
may be exercised for another Rights Certificate or Rights Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number of Common Shares 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 (other
than pursuant to Section 11 (a)(ii) of the Rights Agreement, the holder shall
be entitled to receive this Rights Certificate duly marked to indicate that
such exercise has occurred as set forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at
a reemption price of $.05 per Right. Subject to the provisions of the Rights
Agreement, the Company
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at its option, may elect to mail payment of the redemption price to the
registered holder of the Right at the time of redemption, in which event
this certificate may become void without any further action by the Company.
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of Common Shares or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in th
e Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
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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 January__, 1988.
ATTEST: [Seal] CHOCK FULL O'NUTS CORPORATION
__________________________ By__________________________
Martin J. Cullen Leon Pordy, M.D.
Vice President, Chairman of the Board
Treasurer and Secretary and Chief Executive
Officer
Countersigned
IBJ SCHRODER BANK & TRUST COMPANY
__________________________________
Authorized Signature
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[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 sell, assigns and transfers unto_______________________________
______________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney, to transfer the within Rights Certificate
on the books of the within-named Company, with full power of substitution.
Dated:___________________, 19___
______________________
Signature
Signature Guaranteed:
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Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidence by this Rights Certificate [ ]
are [ ] are not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date:_________________, 19 __ _____________________________
Signature
NOTICE
The signature to the foregoing Assignment 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.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires
to exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To CHOCK FULL O' NUTS CORPORATION:
The undersigned hereby irrevocably elects to exercise
________________Rights represented by this Rights Certificate to purchase
the shares of Common Stock (or such other securities of the Company)
issuable upon the exercise of the Rights and requests that certificates
for such shares be issued in the name of and delivered to:
________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________
(Please print name and address)
________________________________________________________________
The Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to Section 11 (a)(ii) of
the Rights Agreement shall be returned to the undersigned unless such person
requests that the Rights Certificate be registered in the name of the
delivered to :
________________________________________________________________
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a name other
than the undersigned)
________________________________________________________________
(Please print name and address)
________________________________________________________________
________________________________________________________________
Date:____________, 19__ __________________________________
Signature
Signature Guaranteed:
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Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:___________________, 19__ ________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase 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.
A-9
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To CHOCK FULL O' NUTS CORPORATION:
The undersigned hereby irrevocable elects to exercise
_________________Rights represented by this Rights Certificate to purchase
the shares of Common Stock (or such other securities of the Company or any
other Person) issuable upon the exercise of the Rights and requests that
certificates for such shares be issued in the name of:
________________________________________________________________
(Please insert social security or other identifying number)
________________________________________________________________
(Please print name and address)
________________________________________________________________
The Rights Certificate indicating the balance, if any, of
such Rights which may still be exercised pursuant to Section 11(a)(ii) of
the Rights Agreement shall be returned to the undersigned unless such person
requests that the Rights Certificate be registered in the name of and
delivered to:
________________________________________________________________
Please insert social security or other identifying number
(complete only if Rights Certificate is to be registered in a name
other than the undersigned)
________________________________________________________________
(Please print name and address)
________________________________________________________________
________________________________________________________________
Dated: _______________, 19__ __________________________________
Signature
Signature Guaranteed:
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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 and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Date: _______________, 19__ _____________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase 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.
A-11
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On December 30, 1987, the Board of Directors of CHOCK FULL
O' NUTS CORPORATION (the "Company") declared a dividend distribution of one
Right for each outstanding share of common stock, $.25 par value (the "Common
Stock"), of the Company to shareholders of record at the close of business on
January 22, 1988 (the "Record Date"). Except as set forth below, each Right,
when exercisable, entitles the registered holder to purchase from the Company
one share of Common Stock at a price of $30 per share (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 IBJ
Schroder Bank & Trust Company as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) a public
announcement that, without the prior consent of the company, (A) a person or
group of affiliated or associated persons has acquired, or obtained the right
to acquire, after December 30, 1987, beneficial ownership of securities
having 20% or more of the voting power of all outstanding voting securities
of the Company, or B) a person or group of affiliated or associated persons
that, on December 30, 1987, beneficially owned securities having 20% or more
of the Company's voting power, has acquired, or obtained the right to
acquire, after December 30, 1987, beneficial ownership of securities
representing an additional 2% or more of the Company's voting power (any suc
h person or group referred to in clauses (A) or (B) being an "Acquiring
Person" and such date being the "Stock Acquisition Date") or (ii) the tenth
day following the commencement of (or a public announcement of an intention
to make) a tender offer or exchange offer which would result in any person or
group and related persons becoming an Acquiring Person, without the prior
consent of the Company or such later date as may be fixed by the Board of
Directors of the Company (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of
the Common Stock certificates outstanding as of the Record Date, by such
Common Stock certificate together with this Summary of Rights. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred only in conjunction with the corresponding transfer of the Common
Stock certificates. From as soon as practicable after the Record Date and
until the later of the Stock Acquisition Date or the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record
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Date (including Common Stock issued at any time after the Record Date upon
conversion of the Company's outstanding 8% Convertible Subordinated
Debentures due 2006 and 7% Convertible Senior Debentures due 2012) upon
transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the later of the
Stock Acquisition Date or the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates
for Common Stock outstanding (with or without this Summary of Rights
attached) will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date, and the separate
Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
the rights will expire on the earliest of (i) December 30, 1997, (ii)
consummation of a merger transaction with a person or group who acquired
Common Stock pursuant to a Permitted Offer (as defined below) and who is
offering the same price per share and form of consideration paid in the
Permitted Offer, or (iii) redemption by the Company as described below.
The Purchase Price payable, and the number of shares of
Common Stock 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 Common Stock, (ii) upon the grant to holders of the
Common Stock of certain rights or warrants to subscribe for Common Stock,
certain convertible securities or securities having the same or more
favorable rights, privileges and preferences as the Common Stock at less than
the current market price of the Common Stock or (iii) upon the distribution
to holders of the Common Stock of evidences of indebtedness or assets
(excluding regular cash dividends out of earned surplus and dividends
payable in Common Stock) or of subscription rights or warrants (other than
those referred to above).
In the event that a person becomes an Acquiring Person
(unless pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms determined by at least a majority of the
members of the Board of Directors of the Company, who are not an Acquiring
Person or an affiliate or associate of an Acquiring Person, to be both
adequate and otherwise in the best interests of the Company and its various
constituents including, without limitation, both the long term and short
term interests of the Company and its
B-2
shareholders (a "Permitted Offer")), proper provision shall be made so that
each holder of a Right will for a 60 day period thereafter have the right to
receive upon exercise that number of shares of Common Stock having a market
value of two times the then current exercise price of the right, subject to
the availability of a sufficient number of authorized but unissued shares
(such right being called the "Subscription Right").
In the event that after a Stock Acquisition Date the Company
is acquired in a merger or other business combination transaction involving
the Company or 50% of more of its assets or earning power are sold (in one
transaction or a series of transactions), proper provision shall be made so
that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company (or, in the event
there is more than one acquiring company, the acquiring company receiving
the greatest portion of the assets or earning power transferred) which at the
time of such transaction would have a market value of two times the exercise
price of the Right (such right being called the "Merger Right").
The holder of a Right will continue to have the Merger Right
whether or not such holder exercises the Subscription Right. Upon the
occurrence of any of the events giving rise to the exercisability of the
Subscription Right or the Merger Right, any Rights that are or were at any
time owned by an Acquiring Person engaging in any of such transactions or
receiving the benefits thereof on or after the time the Acquiring Person
becomes such shall become void insofar as they relate to the Subscription
Right or the Merger Right.
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments require an adjustment of
at least 1% in such Purchase Price. No fractions of shares will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the date of
exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may
redeem the Rights in whole, but not in part at a price of $.05 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of
the Board of Directors. Additionally, the Company may thereafter redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price
provided than such redemption is incidental to a merger or other business
combination transaction or series of transactions involving the Company but
not involving an
B-3
Acquiring Person or any person who was an Acquiring Person or following an
event giving rise to, and the expiration of the exercise period for, the
Subscription Right if and for as long as no person beneficially owns
securities representing 20% or more of the voting power of the Company's
voting securities. The redemption of Rights described in the preceding
sentence shall be effective only as of such time when the Subscription Right
is not exercisable, and in any event, only after 10 business days prior
notice. Upon the effective date of the redemption of the Rights, the right
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
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 does no purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
B-4