1
================================================================================
RIGHTS AGREEMENT,
Dated as of December 19, 1994
By and Between
Federated Department Stores, Inc.
and
The Bank of New York,
as Rights Agent
================================================================================
2
TABLE OF CONTENTS
-----------------
Page
----
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Transfer, Split Up, Combination, and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost, or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8. Cancellation and Destruction of Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. Company Covenants Concerning Securities and
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10. Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Adjustment of Purchase Price, Number and Kind
of Securities, or Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Certificate of Adjusted Purchase Price or
Number of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14. Fractional Rights and Fractional Securities . . . . . . . . . . . . . . . . . . . . 27
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19. Merger or Consolidation or Change of Name
of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(i)
3
Page
----
22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 35
23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
27. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
28. Successors; Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
(ii)
4
RIGHTS AGREEMENT
----------------
This RIGHTS AGREEMENT, dated as of December 19, 1994 (this
"Agreement"), is made and entered into by and between Federated Department
Stores, Inc., a Delaware corporation (the "Company"), and The Bank of New York,
a New York banking corporation (the "Rights Agent").
RECITALS
--------
A. A plan of reorganization of R.H. Macy & Co. (a predecessor to
the Company, "Macy") and certain of its subsidiaries (as amended, the "Plan of
Reorganization") proposed by Federated Department Stores, Inc. (a predecessor
to the Company, "Old Federated") and Macy was confirmed by the United States
Bankruptcy Court for the Southern District of New York on December 8, 1994.
B. Pursuant to the Plan of Reorganization and the related
Agreement and Plan of Merger (the "Merger Agreement") between Old Federated and
Macy, Old Federated was merged with Macy (the "Merger").
C. The Plan of Reorganization provides for the execution and
delivery of this Agreement by the Company, and this Agreement has been approved
and adopted by the Board of Directors of Old Federated, on behalf of the
Company, effective as of the effective time of the Merger.
D. The Plan of Reorganization, the Merger Agreement, and this
Agreement contemplate that each Common Share (as hereinafter defined) issued
pursuant to the Plan of Reorganization or the Merger Agreement will be
accompanied by one right (a "Right"), each Right initially representing the
right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), on the terms and subject to the conditions herein set forth.
E. This Agreement further contemplates the issuance of one Right
with respect to each Common Share issued or delivered by the Company (whether
originally issued or delivered from the Company's treasury) after the date
hereof but prior to the earlier of the Distribution Date (as hereinafter
defined) and the Expiration Date (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
5
(a) "ACQUIRING PERSON" means any Person (other than the Company or
any Subsidiary of the Company or any employee benefit or stock ownership plan
of the Company or of any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) who or which, together
with all Affiliates and Associates of such Person, is the Beneficial Owner of
20% or more of the then-outstanding Common Shares; PROVIDED, HOWEVER, that a
Person will not be deemed to have become an Acquiring Person solely as a result
of a reduction in the number of Common Shares outstanding unless and until (i)
such time as such Person or any Affiliate or Associate of such Person
thereafter becomes the Beneficial Owner of any additional Common Shares, other
than as a result of a stock dividend, stock split, or similar transaction
effected by the Company in which all holders of Common Shares are treated
equally, or (ii) any other Person who is the Beneficial Owner of any Common
Shares thereafter becomes an Affiliate or Associate of such Person; PROVIDED,
FURTHER, HOWEVER, that a Person will not be deemed to have become an Acquiring
Person solely by reason of such Person, and the Affiliates and Associates of
such Person, receiving, or having the right to receive, Common Shares or
securities that are convertible into, or exercisable or exchangeable for,
Common Shares pursuant to the Plan of Reorganization unless and until such time
on or after the Effective Date (as such term is defined in the Plan of
Reorganization) as (A) such Person or any Affiliate or Associate of such Person
becomes the Beneficial Owner of additional Common Shares representing 1% or
more of the then-outstanding Common Shares other than pursuant to the Plan of
Reorganization or as a result of a stock dividend, stock split, or similar
transaction effected by the Company in which all holders of Common Shares are
treated equally or (B) any other Person who is the Beneficial Owner of Common
Shares representing 1% or more of the then-outstanding Common Shares becomes an
Affiliate or Associate of such Person.
(b) "AFFILIATE" and "ASSOCIATE" will have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
(c) A Person will be deemed the "BENEFICIAL OWNER" of, and to
"BENEFICIALLY OWN," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to the Plan of Reorganization or any
agreement, arrangement, or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, warrants,
options, or other rights (in each case, other than upon exercise or
exchange of the
-2-
6
Rights); PROVIDED, HOWEVER, that a Person will not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or
dispose of, including pursuant to any agreement, arrangement, or
understanding (whether or not in writing); or
(iii) of which any other Person is the Beneficial Owner, if
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement, or understanding (whether or not in writing)
with such other Person (or any of such other Person's Affiliates or
Associates) with respect to acquiring, holding, voting, or disposing
of any securities of the Company;
PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial Owner of, or
to beneficially own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement, or understanding (whether or
not in writing) which (1) arises solely from a revocable proxy given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report), or (B) if such beneficial ownership
arises solely as a result of such Person's status as a "clearing agency", as
defined in Section 3(a)(23) of the Exchange Act; PROVIDED, FURTHER, HOWEVER,
that nothing in this paragraph (c) will cause a Person engaged in business as
an underwriter of securities to be the Beneficial Owner of, or to beneficially
own, any securities acquired through such Person's participation in good faith
in an underwriting syndicate until the expiration of 40 calendar days after the
date of such acquisition, or such later date as the Board of Directors of the
Company may determine in any specific case.
(d) "BUSINESS DAY" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of New York (or such other
state in which the principal office of the Rights Agent is located) are
authorized or obligated by law or executive order to close.
(e) "CLOSE OF BUSINESS" on any given date means 5:00 P.M., Eastern
Time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it means 5:00 P.M., Eastern time, on the next succeeding Business Day.
-3-
7
(f) "COMMON SHARES" when used with reference to the Company means
the shares of Common Stock, par value $.01 per share, of the Company; PROVIDED,
HOWEVER, that, if the Company is the continuing or surviving corporation in a
transaction described in Section 11(a)(ii) or Section 13(a)(ii), "Common
Shares" when used with reference to the Company means the capital stock or
equity security with the greatest aggregate voting power of the Company.
"Common Shares" when used with reference to any corporation or other legal
entity other than the Company, including an Issuer, means the capital stock or
equity security with the greatest aggregate voting power of such corporation or
other legal entity.
(g) "COMPANY" means Federated Department Stores, Inc., a Delaware
corporation and the successor by merger of Old Federated and Macy.
(h) "DISTRIBUTION DATE" means the earliest of: (i) the Close of
Business on the tenth Business Day (or, unless the Distribution Date has
previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the Share Acquisition Date, (ii) the Close of
Business on the tenth Business Day (or, unless the Distribution Date has
previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the date of the commencement of a tender or
exchange offer by any Person (other than the Company or any Subsidiary of the
Company or any employee benefit or stock ownership plan of the Company or of
any Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan), if upon the consummation thereof such
Person would be the Beneficial Owner of 20% or more of the outstanding Common
Shares, and (iii) the Close of Business on the tenth Business Day after the
first date of public announcement by the Company (by press release, filing made
with the Securities and Exchange Commission, or otherwise) of the first
occurrence of a Triggering Event.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "EXPIRATION DATE" means the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23, and (iii) the time at which all exercisable
Rights are exchanged as provided in Section 27.
(k) "FINAL EXPIRATION DATE" means the tenth anniversary of the
date hereof.
(l) "FLIP-IN EVENT" means any event described in clauses (A), (B),
or (C) of Section 11(a)(ii).
-4-
8
(m) "FLIP-OVER EVENT" means any event described in clauses (i),
(ii), or (iii) of Section 13(a).
(n) "ISSUER" has the meaning set forth in Section 13(b).
(o) "NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotation System.
(p) "PERSON" means any individual, firm, corporation, or other
legal entity, and includes any successor (by merger or otherwise) of such
entity.
(q) "PREFERRED SHARES" means shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the form of Certificates of Designation
of Series A Junior Participating Preferred Stock attached to this Agreement as
Exhibit A.
(r) "PURCHASE PRICE" means initially $62.50 per one one-hundredth
of a Preferred Share, subject to adjustment from time to time as provided in
this Agreement.
(s) "REDEMPTION PRICE" means $0.03 per Right, subject to
adjustment by resolution of the Board of Directors of the Company to reflect
any stock split, stock dividend, or similar transaction occurring after the
date hereof.
(t) "RIGHT" has the meaning set forth in the Recitals to this
Agreement.
(u) "RIGHT CERTIFICATES" means certificates evidencing the Rights,
in substantially the form of Exhibit B attached hereto.
(v) "RIGHTS AGENT" means The Bank of New York, a New York banking
corporation, unless and until a successor Rights Agent has become such pursuant
to the terms of this Agreement, and thereafter, "Rights Agent" means such
successor Rights Agent.
(w) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(x) "SHARE ACQUISITION DATE" means the first date of public
announcement by the Company (by press release, filing made with the Securities
and Exchange Commission, or otherwise) that an Acquiring Person has become
such.
(y) "SUBSIDIARY" when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of
the voting equity securities or equity interests is owned, directly or
indirectly, by such
-5-
9
Person; PROVIDED, HOWEVER, that for purposes of Section 13(b), "Subsidiary"
when used with reference to any Person means any corporation or other legal
entity of which at least 20% of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such
Person.
(z) "TRADING DAY" means any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to
trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, a
Business Day.
(aa) "TRIGGERING EVENT" means any Flip-in Event or Flip-over Event.
2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3, will also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time
to time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to
this Agreement, such Co-Rights Agent will be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution Date,
(i) the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates), (ii)
the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates.
(b) Rights will be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the date hereof but prior to the
-6-
10
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares will have stamped on, impressed on, printed on,
written on, or otherwise affixed to them the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
which the Common Shares may from time to time be listed or quoted, or to
conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Federated
Department Stores, Inc. and The Bank of New York, a New York banking
corporation (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Federated Department Stores, Inc. The
Rights are not exercisable prior to the occurrence of certain events
specified in the Rights Agreement. Under certain circumstances, as
set forth in the Rights Agreement, such Rights may be redeemed, may
expire, may be amended, or may be evidenced by separate certificates
and no longer be evidenced by this Certificate. Federated Department
Stores, Inc. will mail to the holder of this Certificate a copy of the
Rights Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances as set forth in the
Rights Agreement, Rights beneficially owned by an Acquiring Person or
any Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) may become null and void.
(c) As promptly as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send), by first-class, insured, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate
evidencing one Right for each Common Share so held, subject to adjustment. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
form of election to purchase, the form of assignment, and the form of election
to purchase without the payment of cash to be printed on the reverse thereof)
will be substantially in the form set forth as Exhibit B hereto with
-7-
11
such changes, marks of identification or designation, and such legends,
summaries, or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
transaction reporting system on which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the provisions of Section
22, the Right Certificates, whenever issued, on their face will entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as are set forth therein at the Purchase Price set forth therein, but the
Purchase Price, the number and kind of securities issuable upon exercise of
each Right, and the number of Rights outstanding will be subject to adjustment
as provided herein.
5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates
will be executed on behalf of the Company by its Chairman of the Board, any
Vice Chairman, its President, or any Vice President, either manually or by
facsimile signature, and will have affixed thereto the Company's seal or a
facsimile thereof which will be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates will be manually countersigned by the Rights Agent and will not be
valid for any purpose unless so countersigned. In case any officer of the
Company who signed any of the Right Certificates ceases to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right 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 Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, is a proper officer of
the Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such
books will show the names and addresses of the respective holders of the Right
Certificates, the number of Rights
-8-
12
evidenced on its face by each of the Right Certificates, and the date of each
of the Right Certificates.
6. TRANSFER, SPLIT UP, COMBINATION, AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN RIGHT CERTIFICATES. (a)
Subject to the provisions of Sections 7(d) and 14, at any time after the Close
of Business on the Distribution Date and prior to the Expiration Date, any
Right Certificate or Right Certificates representing exercisable Rights may be
transferred, split up, combined, or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of one one-hundredths of a Preferred Share (or other securities, as the case
may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine, or exchange any
such Right Certificate must make such request in writing delivered to the
Rights Agent and must surrender the Right Certificate or Right Certificates to
be transferred, split up, combined, or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d) and 14, the
Company will prepare, execute, and deliver to the Rights Agent, and the Rights
Agent will countersign and deliver, a Right Certificate or Right Certificates,
as the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination, or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Right 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 Right Certificate if
mutilated, the Company will prepare, execute, and deliver a new Right
Certificate of like tenor to the Rights Agent and the Rights Agent will
countersign and deliver such new Right Certificate to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed, or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date and prior to the Expiration Date, upon
surrender of the Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office or
offices of the
-9-
13
Rights Agent designated for such purpose, together with payment in cash, in
lawful money of the United States of America by certified check or bank draft
payable to the order of the Company, equal to the sum of (i) the exercise price
for the total number of securities as to which such surrendered Rights are
exercised and (ii) an amount equal to any applicable transfer tax required to
be paid by the holder of such Right Certificate in accordance with the
provisions of Section 9(c). In lieu of the cash payment referred to in the
immediately preceding sentence, following the occurrence of a Triggering Event,
the registered holder of a Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part upon
surrender of the Right Certificate as described above together with an election
to exercise such Rights without payment of cash on the reverse side thereof
duly completed. With respect to any Rights as to which such an election to
exercise Rights without the payment of cash is made, the holder will receive a
number of Common Shares or other securities having a value equal to the
difference between (i) the value of the Common Shares or other securities that
would have been issuable upon payment of the cash amount as described above and
(ii) the amount of such cash payment. For purposes of this Section 7(a), the
value of any security will be the current per share market price thereof (or of
the security as to which such security is deemed for purposes of this Agreement
to be an equivalent), determined pursuant to the applicable provisions of
Section 11(d), on the date of the first occurrence of a Triggering Event.
(b) Upon receipt of a Right Certificate representing exercisable
Rights with the form of election to purchase duly executed, accompanied by
either payment as described above or a duly completed election to exercise
without payment of cash, the Rights Agent will promptly (i) requisition from
any transfer agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all such
requests), or, if the Company elects to deposit Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one one-
hundredths of a Preferred Share as are to be purchased (and the Company hereby
irrevocably authorizes and directs such depositary agent to comply with all
such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be), cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (iii) when appropriate,
requisition from the Company or any transfer agent therefor (or make available,
if the Rights Agent is the transfer
-10-
14
agent) certificates representing the number of equivalent common shares to be
issued in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii), (iv) when appropriate, after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder, (v) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of the issuance of fractional
shares in accordance with the provisions of Section 14 or in lieu of the
issuance of Common Shares in accordance with the provisions of Section
11(a)(iii), (vi) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate, and (vii) when
appropriate, deliver any due bill or other instrument provided to the Rights
Agent by the Company for delivery to the registered holder of such Right
Certificate as provided by Section 11(l).
(c) In case the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, the Company will prepare,
execute, and deliver a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised and the Rights Agent will countersign and
deliver such new Right Certificate to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will be obligated to undertake any
action with respect to any purported transfer, split up, combination, or
exchange of any Right Certificate pursuant to Section 6 or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate has (i) completed and signed the certificate following the
form of assignment or the form of election to purchase, as applicable, set
forth on the reverse side of the Right Certificate surrendered for such
transfer, split up, combination, exchange, or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company has
reasonably requested.
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination, or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
permitted by this Agreement. The Company will deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent will so
-11-
15
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will
deliver all canceled Right Certificates to the Company, or will, at the written
request of the Company, destroy such canceled Right Certificates, and in such
case will deliver a certificate of destruction thereof to the Company.
9. COMPANY COVENANTS CONCERNING SECURITIES AND RIGHTS. The
Company covenants and agrees that:
(a) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other
securities) issuable upon the exercise of the Rights may be listed on
a national securities exchange, it will endeavor to cause, from and
after such time as the Rights become exercisable, all securities
reserved for issuance upon the exercise of Rights to be listed on such
exchange upon official notice of issuance upon such exercise.
(b) It will take all such action as may be necessary to
ensure that all Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) delivered
upon exercise of Rights, at the time of delivery of the certificates
for such securities, will be (subject to payment of the Purchase
Price) duly and validly authorized and issued, fully paid, and
nonassessable securities.
(c) It will pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Right Certificates and of any
certificates representing securities issued upon the exercise of
Rights; PROVIDED, HOWEVER, that the Company will not be required to pay
any transfer tax or charge which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or
the issuance or delivery of certificates or depositary receipts
representing securities issued upon the exercise of Rights in a name
other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise, or to issue or deliver any
certificates or depositary receipts representing securities issued
upon the exercise of any Rights until any such tax or charge has been
paid (any such tax or charge being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established
to the Company's reasonable satisfaction that no such tax is due.
(d) It will use its best efforts (i) to file on an
appropriate form, as soon as practicable following the
-12-
16
later of the first occurrence of a Triggering Event or the
Distribution Date, a registration statement under the Securities Act
with respect to the securities issuable upon exercise of the Rights,
(ii) to cause such registration statement to become effective as soon
as practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such
securities and (B) the Expiration Date. The Company will also take
such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection
with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time after the date set forth in clause (i)
of the first sentence of this Section 9(d), the exercisability of the
Rights in order to prepare and file such registration statement and to
permit it to become effective. Upon any such suspension, the Company
will issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
In addition, if the Company determines that a registration statement
should be filed under the Securities Act or any state securities laws
following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights in each relevant jurisdiction until
such time as a registration statement has been declared effective and,
upon any such suspension, the Company will issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding anything in this
Agreement to the contrary, the Rights will not be exercisable in any
jurisdiction if the requisite registration or qualification in such
jurisdiction has not been effected or the exercise of the Rights is
not permitted under applicable law.
(e) Notwithstanding anything in this Agreement to
contrary, after the Distribution Date it will not, except as permitted
by Section 23 or Section 26, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably
foreseeable that such action will eliminate or otherwise diminish the
benefits intended to be afforded by the Rights.
(f) In the event that the Company is obligated to issue
other securities of the Company and/or pay cash pursuant to Sections
11, 13, or 14, it will make all arrangements necessary so that such
other securities
-13-
17
and/or cash are available for distribution by the Rights Agent, if and
when appropriate.
10. RECORD DATE. Each Person in whose name any certificate
representing Preferred Shares (or Common Shares and/or other securities, as the
case may be) is issued upon the exercise of Rights will for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate will be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Shares
(or Common Shares and/or other securities, as the case may be) transfer books
of the Company are closed, such Person will be deemed to have become the record
holder of such securities on, and such certificate will be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate will not be entitled to any rights of a stockholder of the Company
with respect to securities for which the Rights will be exercisable, including
without limitation the right to vote, to receive dividends or other
distributions, or to exercise any preemptive rights, and will not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SECURITIES,
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities
issuable upon exercise of 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 at any time
after the date of this Agreement (A) declares a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivides the
outstanding Preferred Shares, (C) combines the outstanding Preferred
Shares into a smaller number of Preferred Shares, or (D) issues any
shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), 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/or the number
and/or kind of shares of capital stock issuable on such date upon
exercise of a Right, will be proportionately adjusted so that the
holder of any Right exercised after such time is entitled to receive
upon
-14-
18
payment of the Purchase Price then in effect the aggregate number and
kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, the holder
of such Right would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination, or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) or
Section 13, the adjustment provided for in this Section 11(a)(i) will
be in addition to, and will be made prior to, any adjustment required
pursuant to Section 11(a)(ii) or Section 13.
(ii) Subject to the provisions of Section 27, in the event
that:
(A) any Person, at any time on or after the date
of this Agreement, becomes an Acquiring Person (other
than pursuant to any transaction set forth in Section
13(a)); or
(B) any Acquiring Person or any Affiliate or
Associate of any Acquiring Person, at any time on or
after the date of this Agreement at which, for any
reason, the adjustments provided for in this Section
11(a)(ii) have not been theretofore effected and are not
then continuing in effect pursuant to Section
11(a)(ii)(A), directly or indirectly, (1) merges into the
Company or otherwise combines with the Company and the
Company is the continuing or surviving corporation of
such merger or combination (other than in a transaction
subject to Section 13), (2) merges or otherwise combines
with any Subsidiary of the Company, (3) in one or more
transactions (other than in connection with the exercise
or exchange of Rights or the exercise or conversion of
securities exercisable for or convertible into shares of
any class of capital stock of the Company or any of its
Subsidiaries) transfers any assets to the Company or any
of its Subsidiaries in exchange (in whole or in part) for
shares of any class of capital stock of the Company or
any of its Subsidiaries or for securities exercisable for
or convertible into
-15-
19
shares of any class of capital stock of the Company or
any of its Subsidiaries, or otherwise obtains from the
Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of
capital stock of the Company or any of its Subsidiaries
or securities exercisable for or convertible into shares
of any class of capital stock of the Company or any of
its Subsidiaries (other than as part of a pro rata
distribution to all holders of such shares of any class
of capital stock of the Company, or any of its
Subsidiaries), (4) sells, purchases, leases, exchanges,
mortgages, pledges, transfers, or otherwise disposes (in
one or more transactions), to, from, with, or of, as the
case may be, the Company or any of its Subsidiaries
(other than in a transaction subject to Section 13),
assets, including securities, on terms and conditions
less favorable to the Company than the Company would be
able to obtain in arm's-length negotiation with an
unaffiliated third party, (5) receives any compensation
from the Company or any of its Subsidiaries other than
compensation as a director or for full-time employment as
a regular employee, in either case, at rates in
accordance with the Company's (or its Subsidiaries') past
practices, or (6) receives the benefit, directly or
indirectly (except proportionately as a stockholder), of
any loans, advances, guarantees, pledges, or other
financial assistance or any tax credits or other tax
advantage provided by the Company or any of its
Subsidiaries; or
(C) during such time as there is an Acquiring
Person and at any time on or after the date of this
Agreement at which, for any reason, the adjustments
provided for in this Section 11(a)(ii) have not been
theretofore effected and are not then continuing in
effect pursuant to Section 11(a)(ii)(A), there is any
reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its
Subsidiaries, or any other transaction or series of
transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise
involving an Acquiring Person), other than a transaction
subject to Section 13, which has the effect, directly or
indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any
class of equity securities or of securities exercisable
for or convertible into equity securities of the Company
or any of its Subsidiaries of which an Acquiring Person,
or any Affiliate or Associate of any Acquiring Person, is
the Beneficial Owner;
-16-
20
then, and in each such case, proper provision will be made so that
each holder of a Right, except as provided below, will thereafter has
a right to receive, upon exercise thereof in accordance with the terms
of this Agreement at an exercise price per Right equal to the product
of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event, in
lieu of Preferred Shares, such number of Common Shares as equals the
result obtained by (x) multiplying the then-current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the first occurrence of a
Triggering Event, and dividing that product by (y) 50% of the current
per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of the first occurrence of a Triggering
Event. Notwithstanding anything in this Agreement to the contrary,
from and after the later of the Distribution Date and the first
occurrence of a Flip-in Event, (1) any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person) will be void and any
holder of such Rights will thereafter have no right to exercise such
Rights under any provision of this Agreement, (2) no Right Certificate
will be issued pursuant to this Agreement that represents Rights
beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof, (3) no Right Certificate will be issued at any time
upon the transfer of any Rights to any Acquiring Person or any
Affiliate or Associate thereof or to any nominee of any Acquiring
Person or Affiliate or Associate thereof, and (4) any Right
Certificate delivered to the Rights Agent for transfer to any
Acquiring Person or any Affiliate or Associate thereof will be
canceled.
(iii) Upon the occurrence of a Flip-in Event, if there are
not sufficient Common Shares authorized but unissued or issued but not
outstanding to permit the issuance of all the Common Shares issuable
in accordance with Section 11(a)(ii) upon the exercise of a Right, the
Board of Directors of the Company will use its best efforts promptly
to authorize and, subject to the provisions of Section 9(d), make
available for issuance additional Common Shares or other equity
securities of the Company having equivalent voting rights and an
equivalent value (as determined in good faith by the Board of
Directors of the Company) to the Common Shares (for purposes of this
Section 11(a)(iii), "equivalent common shares"). In the event that
equivalent common shares are so authorized, upon the exercise of a
Right in accordance with the provisions of Section 7, the
-17-
21
registered holder will be entitled to receive (A) Common Shares, to
the extent any are available, and (B) a number of equivalent common
shares, which the Board of Directors of the Company has determined in
good faith to have a value equivalent to the excess of (x) the
aggregate current per share market value of all the Common Shares
issuable in accordance with Section 11(a)(ii) upon the exercise of a
Right (the "Exercise Value") over (y) the aggregate current per share
market value of any Common Shares available for issuance upon the
exercise of such Right; PROVIDED, HOWEVER, that if at any time after
90 calendar days after the first occurrence of a Flip-in Event, there
are not sufficient Common Shares and/or equivalent common shares
available for issuance upon the exercise of a Right, then the Company
will be obligated to deliver, upon the surrender of such Right and
without requiring payment of the Purchase Price, Common Shares (to the
extent available), equivalent common shares (to the extent available)
and then cash (to the extent permitted by applicable law and any
agreements or instruments to which the Company is a party in effect
immediately prior to the first occurrence of any Flip-in Event), which
securities and cash have an aggregate value equal to the excess of (1)
the Exercise Value over (2) the product of the then-current Purchase
Price multiplied by the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event. To the extent that any legal or
contractual restrictions prevent the Company from paying the full
amount of cash payable in accordance with the foregoing sentence, the
Company will pay to holders of the Rights as to which such payments
are being made all amounts which are not then restricted on a pro rata
basis and will continue to make payments on a pro rata basis as funds
become available until the full amount due to each such Rights holder
has been paid.
(b) In the event that the Company fixes a record date for the
issuance of rights, options, or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or securities having
equivalent rights, privileges, and preferences as the Preferred Shares (for
purposes of this Section 11(b), "equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a price per
Preferred Share or equivalent preferred share (or having a conversion price per
share, if a security convertible into Preferred Shares or equivalent preferred
shares) less than the current per share market price of the Preferred Shares
(determined pursuant to Section 11(d)) on such record date, the Purchase Price
to be in effect after
-18-
22
such record date will be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which is
the number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current per share market price and the
denominator of which is the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all of which is
in a form other than cash, the value of such consideration will be as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
Preferred Shares owned by or held for the account of the Company will not be
deemed outstanding for the purpose of any such computation. Such adjustment
will be made successively whenever such a record date is fixed, and in the
event that such rights, options, or warrants are not so issued, the Purchase
Price will be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In the event that the Company fixes a record date for the
making of a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Preferred Shares), or subscription rights,
options, or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date will be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which is the current per share market price of
the Preferred Shares (as determined pursuant to Section 11(d)) on such record
date or, if earlier, the date on which Preferred Shares begin to trade on an
ex-dividend or when-issued basis for such distribution, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination will be described in a statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, cash, assets, or stock
so to be distributed or of such subscription rights, options or warrants
applicable to one Preferred Share, and the denominator of which is such current
per share market price of the Preferred Shares. Such adjustments will be made
successively whenever such a record date is fixed; and in the
-19-
23
event that such distribution is not so made, the Purchase Price will again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of Common Shares on any date will be deemed to
be the average of the daily closing prices per share of such Common Shares for
the 30 consecutive Trading Days immediately prior to such date;PROVIDED,
HOWEVER, that in the event that the current per share market price of the
Common Shares is determined during a period following the announcement by the
issuer of such Common Shares of (A) a dividend or distribution on such Common
Shares payable in such Common Shares or securities convertible into such Common
Shares (other than the Rights) or (B) any subdivision, combination, or
reclassification of such Common Shares, 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 subdivision, combination, or reclassification, then,
and in each such case, the current per share market price will be appropriately
adjusted to take into account ex-dividend trading or to reflect the current per
share market price per Common Share equivalent. The closing price for each day
will be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Shares are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Shares are listed or admitted
to trading or, if the Common Shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the Common Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Shares selected by the Board of
Directors of the Company. If the Common Shares are not publicly held or not so
listed or traded, or are not the subject of available bid and asked quotes,
"current per share market price" will mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred
-20-
24
Shares will be determined in the same manner as set forth above for
Common Shares in Section 11(d)(i), other than the last sentence
thereof. If the current per share market price of the Preferred
Shares cannot be determined in the manner provided above, the "current
per share market price" of the Preferred Shares will be conclusively
deemed to be an amount equal to the current per share market price of
the Common Shares multiplied by one hundred (as such number may be
appropriately adjusted to reflect events such as stock splits, stock
dividends, recapitalizations, or similar transactions relating to the
Common Shares occurring after the date of this Agreement). If neither
the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, or the subject of available bid and asked quotes,
"current per share market price" of the Preferred Shares will mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent. For all purposes of this
Agreement, the current per share market price of one one-hundredth of
a Preferred Share will be equal to the current per share market price
of one Preferred Share divided by one hundred.
(e) Except as set forth below, no adjustment in the Purchase Price
will be required unless such adjustment would require an increase or decrease
of at least 1% in such price; PROVIDED, HOWEVER, that any adjustments which by
reason of this Section 11(e) are not required to be made will be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 will be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of a Common Share or
other security, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 will be made no later
than the earlier of (i) three years from the date of the transaction which
requires such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a), the holder of any Right thereafter exercised becomes entitled to receive
any securities of the Company other than Preferred Shares, thereafter the
number of such other securities so receivable upon exercise of any Right will
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Shares contained in this Section 11, and the provisions of Sections 7, 9, 10,
and 13 with respect to the Preferred Shares will apply on like terms to any
such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price
-21-
25
hereunder will evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredths of a Preferred Share issuable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment
as provided herein.
(h) Unless the Company has 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 Section 11(c) with respect to a
distribution of subscription rights, options, or warrants applicable to
Preferred Shares, each Right outstanding immediately prior to the making of
such adjustment will thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a Preferred Share
issuable upon exercise of a Right immediately prior to this adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment
of the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company will make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, will be at least 10 calendar
days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company will, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to the provisions of Section 14, the
additional Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, will cause to be distributed to
such holders of record in
-22-
26
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
are entitled after such adjustment. Right Certificates so to be distributed
will 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
will be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase
Price or the number or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares or below the then par value, if any, of any other
securities of the Company issuable upon exercise of the Rights, the Company
will 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 Preferred Shares or such other securities, as the case may
be, at such adjusted Purchase Price.
(l) In any case in which this Section 11 otherwise requires that
an adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or
other 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 delivers to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional Preferred Shares or other securities upon the occurrence of the
event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary,
the Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board of Directors of the
Company determines to be advisable in order that any (i) consolidation or
subdivision of the Preferred
-23-
27
Shares, (ii) issuance wholly for cash of Preferred Shares at less than the
current per share market price therefor, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
stockholders.
(n) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company at any time after the date of this Agreement and
prior to the Distribution Date (i) declares a dividend on the outstanding
Common Shares payable in Common Shares, (ii) subdivides the outstanding Common
Shares, (iii) combines the outstanding Common Shares into a smaller number of
shares, or (iv) issues any shares of its capital stock in a reclassification of
the outstanding Common Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), the number of Rights associated with each
Common Share then outstanding, or issued, or delivered thereafter but prior to
the Distribution Date, will be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
equals the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction the numerator
of which is the total number of Common Shares outstanding immediately prior to
the occurrence of the event and the denominator of which is the total number of
Common Shares outstanding immediately following the occurrence of such event.
The adjustments provided for in this Section 11(n) will be made successively
whenever such a dividend is paid or such a subdivision, combination or
reclassification is effected.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SECURITIES. Whenever an adjustment is made as provided in Section 11 or
Section 13, the Company will promptly (a) prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
Preferred Shares and the Common Shares a copy of such certificate, and (c) if
such adjustment is made after the Distribution Date, mail a brief summary of
such adjustment to each holder of a Right Certificate in accordance with
Section 25.
13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event that:
(i) following the Share Acquisition Date, the Company
consolidates with, or merges with or into, any other Person and the
Company is not the continuing or
-24-
28
surviving corporation of such consolidation or merger; or
(ii) following the Share Acquisition Date, any Person
consolidates with the Company, or merges with or into the Company, and
the Company is the continuing or surviving corporation of such merger
or consolidation and, in connection with such merger or consolidation,
all or part of the Common Shares is changed into or exchanged for
stock or other securities of any other Person or cash or any other
property; or
(iii) following the Share Acquisition Date, the Company,
directly or indirectly, sells or otherwise transfers (or one or more
of its Subsidiaries sells or otherwise transfers), in one or more
transactions, assets or earning power (including without limitation
securities creating any obligation on the part of the Company and/or
any of its Subsidiaries) representing in the aggregate more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons;
then, and in each such case, proper provision will be made so that (A) each
holder of a Right thereafter has the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement at an exercise price per
Right equal to the product of the then-current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event,
such number of validly authorized and issued, fully paid, nonassessable, and
freely tradeable Common Shares of the Issuer, free and clear of any liens,
encumbrances, and other adverse claims and not subject to any rights of call or
first refusal, as equals the result obtained by (x) multiplying the
then-current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is exercisable immediately prior to the first
occurrence of a Triggering Event and dividing that product by (y) 50% of the
current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d)), on the date of consummation of such Flip-over
Event; (B) the Issuer will thereafter be liable for, and will assume, by virtue
of the consummation of such Flip-over Event, all the obligations and duties of
the Company pursuant to this Agreement; (C) the term "Company" will thereafter
be deemed to refer to the Issuer; and (D) the Issuer will take such steps
(including without limitation the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) in connection
with such consummation as may be necessary to assure that the provisions hereof
are thereafter applicable, as nearly as reasonably may be possible, in relation
to its Common Shares thereafter deliverable upon the exercise of the Rights.
-25-
29
(b) For purposes of this Section 13, "Issuer" means (i) in the
case of any Flip-over Event described in Sections 13(a)(i) or (ii) above, the
Person that is the continuing, surviving, resulting, or acquiring Person
(including the Company as the continuing or surviving corporation of a
transaction described in Section 13(a)(ii) above), and (ii) in the case of any
Flip-over Event described in Section 13(a)(iii) above, the Person that is the
party receiving the greatest portion of the assets or earning power (including
without limitation securities creating any obligation on the part of the
Company and/or any of its Subsidiaries) transferred pursuant to such
transaction or transactions; PROVIDED, HOWEVER, that, in any such case, (A) if
(1) no class of equity security of such Person is, at the time of such merger,
consolidation, or transaction and has been continuously over the preceding
12-month period, registered pursuant to Section 12 of the Exchange Act, and (2)
such Person is a Subsidiary, directly or indirectly, of another Person, a class
of equity security of which is and has been so registered, the term "Issuer"
means such other Person; and (B) in case such Person is a Subsidiary, directly
or indirectly, of more than one Person, a class of equity security of two or
more of which are and have been so registered, the term "Issuer" means
whichever of such Persons is the issuer of the equity security having the
greatest aggregate market value. Notwithstanding the foregoing, if the Issuer
in any of the Flip-over Events listed above is not a corporation or other legal
entity having outstanding equity securities, then, and in each such case, (x)
if the Issuer is directly or indirectly wholly owned by a corporation or other
legal entity having outstanding equity securities, then all references to
Common Shares of the Issuer will be deemed to be references to the Common
Shares of the corporation or other legal entity having outstanding equity
securities which ultimately controls the Issuer, and (y) if there is no such
corporation or other legal entity having outstanding equity securities, (I)
proper provision will be made so that the Issuer creates or otherwise makes
available for purposes of the exercise of the Rights in accordance with the
terms of this Agreement, a kind or kinds of security or securities having a
fair market value at least equal to the economic value of the Common Shares
which each holder of a Right would have been entitled to receive if the Issuer
had been a corporation or other legal entity having outstanding equity
securities; and (II) all other provisions of this Agreement will apply to the
issuer of such securities as if such securities were Common Shares.
(c) The Company will not consummate any Flip-over Event, unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued
or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior to
-26-
30
such consummation the Company and the Issuer have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
subsections (a) and (b) of this Section 13 and further providing that as
promptly as practicable after the consummation of any Flip-over Event, the
Issuer will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities issuable
upon exercise of the Rights on an appropriate form, and use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(ii) take all such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights;
and
(iii) deliver to holders of the Rights historical financial
statements for the Issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under
the Exchange Act.
(d) The provisions of this Section 13 will similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Flip-over Event occurs at any time after the occurrence of a Flip-in
Event, except for Rights that have become void pursuant to Section 11(a)(ii),
the Rights which have not theretofore been exercised will thereafter become
exercisable in the manner described in Section 13(a).
14. FRACTIONAL RIGHTS AND FRACTIONAL SECURITIES. (a) The Company
will not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company will pay as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
otherwise would be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right is the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights otherwise would have been issuable. The closing price for
any day is 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
-27-
31
securities listed or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the- counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company will be used.
(b) The Company will not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement
provides that the holders of such depositary receipts have all the rights,
privileges, and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company may pay to any Person to whom
or which such fractional Preferred Shares would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of one Preferred
Share. For purposes of this Section 14(b), the current market value of one
Preferred Share is the closing price of the Preferred Shares (as determined in
the same manner as set forth for Common Shares in the second sentence of
Section 11(d)(i)) for the Trading Day immediately prior to the date of such
exercise; PROVIDED, HOWEVER, that if the closing price of the Preferred Shares
cannot be so determined, the closing price of the Preferred Shares for such
Trading Day will be conclusively deemed to be an amount equal to the closing
price of the Common Shares (determined pursuant to the second sentence of
Section 11(d)(i)) for such Trading Day multiplied by one hundred (as such
number may be appropriately adjusted to reflect events such as stock splits,
stock dividends, recapitalizations, or similar
-28-
32
transactions relating to the Common Shares occurring after the date of this
Agreement); provided further, however, that if neither the Common Shares nor
the Preferred Shares are publicly held or listed or admitted to trading on any
national securities exchange, or the subject of available bid and asked quotes,
the current market value of one Preferred Share will be determined in good
faith by the Board of Directors of the Company.
(c) Following the occurrence of a Triggering Event, the Company
will not be required to issue fractions of Common Shares or other securities
issuable upon exercise or exchange of the Rights or to distribute certificates
which evidence any such fractional securities. In lieu of issuing any such
fractional securities, the Company may pay to any Person to whom or which such
fractional securities would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of one such security. For
purposes of this Section 14(c), the current market value of one Common Share or
other security issuable upon the exercise or exchange of Rights is the closing
price thereof (as determined in the same manner as set forth for Common Shares
in the second sentence of Section 11(d)(i)) for the Trading Day immediately
prior to the date of such exercise or exchange; PROVIDED, HOWEVER, that if
neither the Common Shares nor any such other securities are publicly held or
listed or admitted to trading on any national securities exchange, or the
subject of available bid and asked quotes, the current market value of one
Common Share or such other security will be determined in good faith by the
Board of Directors of the Company.
15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the holder of any Common Shares), may in his own
behalf and for his own benefit enforce, and may institute and maintain any
suit, action, or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right
Certificate, Common Share certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under this Agreement,
-29-
33
and injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Agreement.
16. 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 are
transferable only in connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer;
(c) The Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent will be
affected by any notice to the contrary;
(d) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or
exchange of a Right, except as otherwise provided in Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree, or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory, or administrative agency or commission, or
any statute, rule, regulation, or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; PROVIDED, HOWEVER, that the
Company will use its best efforts to have any such order, decree, or
ruling lifted or otherwise overturned as soon as possible.
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right Certificate will be entitled
-30-
34
to vote, receive dividends, or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may at any time
be issuable upon the exercise of the Rights represented thereby, nor will
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of Directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 24), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate have been exercised in accordance
with the provisions of this Agreement or exchanged pursuant to the provisions
of Section 27.
18. CONCERNING THE RIGHTS AGENT. (a) The Company will pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, suit, action, proceeding, or expense,
incurred without negligence, bad faith, or willful misconduct on the part of
the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.
(b) The Rights Agent will be protected and will incur no liability
for or in respect of any action taken, suffered, or omitted by it in connection
with its administration of this Agreement in reliance upon any Right
Certificate or certificate evidencing Preferred Shares or 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.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
will be the successor to the Rights Agent under
-31-
35
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent succeeds to the
agency created by this Agreement, any of the Right Certificates have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates have not been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates will have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent changes and
at such time any of the Right Certificates have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any
of the Right Certificates have not been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates will have the full force
provided in the Right Certificates and in this Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, will be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
will 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 deems it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by any one of the Chairman of the Board, the President, or any
Vice President of the Company and delivered to the Rights Agent, and
such certificate will be full authorization to the Rights Agent for
any action taken or suffered in
-32-
36
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent will be liable hereunder only for
its own negligence, bad faith, or willful misconduct.
(d) The Rights Agent will not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements
and recitals are and will be deemed to have been made by the Company
only.
(e) The Rights Agent will not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor will it
be responsible for any adjustment required under the provisions of
Sections 11 or 13 (including any adjustment which results in Rights
becoming void) 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 Right Certificates after actual notice of any
such adjustment); nor will it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation
of any shares of stock or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any shares of
stock or other securities will, when issued, be validly authorized and
issued, fully paid, and nonassessable.
(f) The Company will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances
as may reasonably be required by the Rights Agent for the carrying out
or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, or
any Vice President of the Company, and to apply to such officers for
advice or instructions in connection with its
-33-
37
duties, and it will 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.
(h) The Rights Agent and any stockholder, director,
officer, or employee of the Rights Agent may buy, sell, or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein will preclude the Rights Agent from acting
in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent will not be answerable or accountable for any act, default,
neglect, or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect, or
misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. The Rights Agent will not be under
any duty or responsibility to ensure compliance with any applicable
federal or state securities laws in connection with the issuance,
transfer, or exchange of Right Certificates.
(j) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise, transfer, split up, combination, or
exchange, 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 or 2
thereof, the Rights Agent will not take any further action with
respect to such requested exercise, transfer, split up, combination,
or exchange without first consulting with the Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and the Common Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the Rights Agent
resigns or is
-34-
38
removed or otherwise becomes incapable of acting, the Company will appoint a
successor to the Rights Agent. If the Company fails to make such appointment
within a period of 30 calendar days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who will, with such notice, submit his Right 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 a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
will be a corporation organized and doing business under the laws of the United
States or of the States of Ohio or 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 Agent a combined capital and surplus of at least $50 million. After
appointment, the successor Rights Agent will 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 will
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 will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the
Preferred Shares and the Common Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, will 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.
22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind of securities
issuable upon exercise of the Rights made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or sale by the
Company of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company (a) will, with respect to Common Shares so issued
or sold pursuant to the exercise or conversion of securities
-35-
39
issued prior to the Distribution Date which are exercisable for, or convertible
into Common Shares, and (b) may, in any other case, if deemed necessary,
appropriate or desirable by the Board of Directors of the Company, issue Right
Certificates representing an equivalent number of Rights as would have been
issued in respect of such Common Shares if they had been issued or sold prior
to the Distribution Date, as appropriately adjusted as provided herein as if
they had been so issued or sold; PROVIDED, HOWEVER, that (i) no such Right
Certificate will be issued if, and to the extent that, in its good faith
judgment the Board of Directors of the Company determines that the issuance of
such Right Certificate could have a material adverse tax consequence to the
Company or to the Person to whom or which such Right Certificate otherwise
would be issued and (ii) no such Right Certificate will be issued if, and to
the extent that, appropriate adjustment otherwise has been made in lieu of the
issuance thereof.
23. REDEMPTION. (a) Prior to the Expiration Date, the Board of
Directors of the Company may, at its option, redeem all but not less than all
of the then-outstanding Rights at the Redemption Price at any time prior to the
Close of Business on the later of (i) the Distribution Date and (ii) the Share
Acquisition Date.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights will be to receive the
Redemption Price, without interest thereon. Promptly after the action of its
Board of Directors ordering the redemption of the Rights, the Company will
publicly announce such action, and within 10 calendar days thereafter, the
Company will give notice of such redemption to the holders of the
then-outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Company; PROVIDED,
HOWEVER, that the failure to give, or any defect in, any such notice will not
affect the validity of the redemption of the Rights. Any notice which is
mailed in the manner herein provided will be deemed given, whether or not the
holder receives the notice. The notice of redemption mailed to the holders of
Rights will state the method by which the payment of the Redemption Price will
be made. The Company may, at its option, pay the Redemption Price in cash,
Common Shares (based upon the current per share market price of the Common
Shares (determined pursuant to Section 11(d)) at the time of redemption), or
any other form of consideration deemed appropriate by the Board of Directors of
the Company (based upon the fair market value of such other consideration,
determined by the Board of Directors of the Company in good faith) or any
combination thereof. If legal or contractual
-36-
40
restrictions prevent the Company from paying the Redemption Price (in the form
of consideration deemed appropriate by the Board of Directors) at the time of
redemption, the Company will pay the Redemption Price, without interest,
promptly after such time as the Company ceases to be so prevented from paying
the Redemption Price.
(c) At any time following the Share Acquisition Date, the Board of
Directors of the Company may relinquish the right to redeem the Rights under
this Section 23 by duly adopting a resolution to that effect. Immediately upon
adoption of such resolution, the rights of the Board of Directors of the
Company to redeem the Rights will terminate without further action and without
any notice. Promptly after adoption of such a resolution, the Company will
publicly announce such action; PROVIDED, HOWEVER, that the failure to give, or
any defect in, any such notice will not affect the validity of the action of
the Board of Directors of the Company.
24. NOTICE OF CERTAIN EVENTS. (a) In case, after the
Distribution Date, the Company proposes (i) to pay any dividend payable in
stock of any class to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular periodic
cash dividend), (ii) to offer to the holders of Preferred Shares rights,
options, or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights, or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, 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 assets or
earning power (including without limitation securities creating any obligation
on the part of the Company and/or any of its Subsidiaries) representing more
than 50% of the assets and earning power of the Company and its Subsidiaries,
taken as a whole, to any other Person or Persons, (v) to effect the
liquidation, dissolution, or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or reclassification of the Common Shares then, in each
such case, the Company will give to each holder of a Right Certificate, in
accordance with Section 25, a notice of such proposed action, which specifies
the record date for the purposes of such stock dividend, distribution, or
offering of rights, options, 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 Common Shares and/or Preferred Shares, if any
such date is to
-37-
41
be fixed, and such notice will be so given, in the case of any action covered
by clause (i) or (ii) above, at least 10 calendar days prior to the record date
for determining holders of the Preferred Shares for purposes of such action,
and, in the case of any such other action, at least 10 calendar days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, whichever
is the earlier.
(b) In case any Triggering Event occurs, then, in any such case,
the Company will as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 25, a notice of
the occurrence of such event, which specifies the event and the consequences of
the event to holders of Rights.
25. NOTICES. (a) Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company will 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:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, Ohio 45202
Attention: General Counsel
(b) Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent will 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:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: William Skinner
(c) Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
(or, if prior the Distribution Date, to the holder of any certificate
evidencing Common Shares) will 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.
26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the last sentence of this
-38-
42
Section 26, if the Company so directs, the Company and the Rights Agent will
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Shares upon action of the Board of
Directors of the Company. From and after the Distribution Date and subject to
the last sentence of this Section 26, if the Company so directs, the Company
and the Rights Agent will supplement or amend this Agreement without the
approval of any holders of Right Certificates upon action of the Board of
Directors of the Company in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, (iv) to change the Redemption Price to another amount
not less than $0.01 per Right, or (v) to supplement or amend the provisions
hereunder in any manner which the Company may deem desirable, including without
limitation the addition of other events requiring adjustment to the Rights
under Sections 11 or 13 or procedures relating to the redemption of the Rights,
which supplement or amendment will not, in the good faith determination of the
Board of Directors of the Company, adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person). Without limiting the generality or
effect of the foregoing, this Agreement may be supplemented or amended to
provide for such voting powers for the Rights and such procedures for the
exercise thereof, if any, as the Board of Directors of the Company may
determine to be appropriate. Upon the delivery of a certificate from an
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the Rights Agent will
execute such supplement or amendment; PROVIDED, HOWEVER, that the failure or
refusal of the Rights Agent to execute such supplement or amendment will not
affect the validity of any supplement or amendment adopted by the Company, any
of which will be effective in accordance with the terms thereof.
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment will be made which decreases the stated Redemption Price to an amount
less than $0.01 per Right or the period of time remaining until the Final
Expiration Date or which modifies a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable.
27. EXCHANGE. (a) The Board of Directors of the Company may, at
its option, at any time after the later of the Distribution Date and the first
occurrence of a Triggering Event, exchange all or part of the then-outstanding
and exercisable Rights (which will not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii)) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend, or similar transaction
-39-
43
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors will not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan), who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the then-outstanding Common Shares.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 27(a), and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right with respect to such Rights thereafter
of the holder of such Rights will be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. Promptly after the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 27(a), the
Company will publicly announce such action, and within 10 calendar days
thereafter will give notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent; PROVIDED, HOWEVER, that the failure to give, or any defect in,
such notice will not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided will be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange will be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at
its option, may substitute for any Common Share exchangeable for a Right, (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value which the
Board of Directors of the Company determines in good faith to be equal to the
current market value of one Common Share (determined pursuant to Section 11(d))
on the Trading Day immediately preceding the date of exchange pursuant to this
Section 27.
28. SUCCESSORS; CERTAIN COVENANTS. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the Rights
Agent will be binding on and inure to
-40-
44
the benefit of their respective successors and assigns hereunder.
29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will be
construed to give to any Person other than the Company, the Rights Agent, and
the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy, or
claim under this Agreement. This Agreement will be for the sole and exclusive
benefit of the Company, the Rights Agent, and the registered holders of the
Right Certificates (or prior to the Distribution Date, the Common Shares).
30. SEVERABILITY. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement will remain in
full force and effect and will in no way be affected, impaired, or invalidated.
31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder will be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes will be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
32. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to
be an original, and all such counterparts will together constitute but one and
the same instrument.
33. DESCRIPTIVE HEADINGS, ETC. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and will
not control or affect the meaning or construction of any of the provisions
hereof. Unless otherwise expressly provided, references herein to Articles,
Sections, and Exhibits are to Articles, Sections, and Exhibits of or to this
Agreement.
-41-
45
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.
[SEAL]
Attest: FEDERATED DEPARTMENT STORES, INC.
/s/ John R. Sims By: /s/ Dennis J. Broderick
- - --------------------------------- ----------------------------
John R. Sims Dennis J. Broderick
Assistant Secretary Senior Vice President
[SEAL]
Attest: THE BANK OF NEW YORK
/s/ Daniel M. Egan By: /s/ John I. Siverrsen
- - --------------------------------- ----------------------------
Name: Daniel M. Egan Name: John I. Siverrsen
Title: Assistant Treasurer Title: Vice President
-42-