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PETCO ANIMAL SUPPLIES, INC.
and
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
as Rights Agent
Rights Agreement
Dated as of September 14, 1998
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RIGHTS AGREEMENT
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Rights Agreement, dated as of September 14, 1998, between PETCO
ANIMAL SUPPLIES, INC., a Delaware corporation (the "Company"),
and American Stock Transfer and Trust Company, a New York
corporation, as Rights Agent (the "Rights Agent").
RECITALS
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WHEREAS, on September 10, 1998, the Board of Directors of the
Company adopted this Agreement, and has authorized and declared
a dividend of one preferred share purchase right (a "Right")
for each Common Share (as defined in Section 1.6) of the
Company outstanding at the close of business on September 22,
1998 (the "Record Date") and has authorized and directed the
issuance of one Right (subject to adjustment as provided
herein) with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date and the Expiration Date (as such terms are
defined in Sections 3.1 and 7.1), each Right initially
representing the right to purchase one one-hundredth (subject
to adjustment) of a share of Series A Junior Participating
Preferred Stock (the "Preferred Shares") of the Company having
the rights, powers and preferences set forth in the form of
Certificate of Designation attached hereto as Exhibit A, upon
the terms and subject to the conditions hereinafter set forth
provided, however, that Rights may be issued with respect to
Common Shares that shall become outstanding after the
Distribution Date and prior to the Expiration Date in
accordance with Section 22.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
1.1. "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates
and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding but shall not include (i) an Exempt
Person (as such term is hereinafter defined) or (ii) if, as of
the date hereof, any Person is the Beneficial Owner of 15% or
more of the Common Shares outstanding (an "Existing Holder"),
such Existing Holder shall not be or become an "Acquiring
Person" unless and until such time as such Existing Holder
shall become the Beneficial Owner of one or more additional
Common Shares of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding
Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), unless, upon
becoming the Beneficial Owner of such additional Common Shares,
such Existing Holder is not then the Beneficial Owner of 15% or
more of the Common Shares then outstanding. Notwithstanding
the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company
which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such
Person to 15% or more of the Common Shares of the Company then
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outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding solely by reason of share purchases by
the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of one or more additional
Common Shares of the Company (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding
Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person
shall be deemed to be an "Acquiring Person" unless upon
becoming the Beneficial Owner of such additional shares of
Common Stock such Person does not beneficially own 15% or more
of the shares of Common Stock then outstanding.
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1.1, has become such
inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (B) such Person was aware of the extent
of its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership
under this Agreement), and without any intention of changing or
influencing control of the Company, and such Person divests as
promptly as practicable a sufficient number of Common Shares so
that such Person would no longer be an Acquiring Person, as
defined pursuant to the foregoing provisions of this Section
1.1, then such Person shall not be deemed to be or have become
an "Acquiring Person" at any time for any purposes of this
Agreement. For all purposes of this Agreement, any calculation
of the number of Common Shares outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any
Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as in effect on the date
of this Agreement.
1.2. "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations, under the Exchange Act, as in effect on
the date of this Agreement.
1.3. A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the date of
this Agreement);
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to
acquire (whether such right is exercisable immediately, or only
after the passage of time, compliance with regulatory
requirements, fulfillment of a condition or otherwise) pursuant
to any agreement, arrangement or understanding, whether or not
in writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall
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not be deemed the Beneficial Owner of, or to beneficially own,
(w) 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, (x) securities which such
Person has a right to acquire upon the exercise of Rights at
any time prior to the time that any Person becomes an Acquiring
Person, (y) securities issuable upon the exercise of Rights
from and after the time that any Person becomes an Acquiring
Person if such Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3.1 or Section 22
("Original Rights") or pursuant to Section 11.9 or Section
11.15 with respect to an adjustment to Original Rights or (z)
securities which such Person or any of such Person's Affiliates
or Associates may acquire, does or do acquire or may be deemed
to have the right to acquire, pursuant to any merger or other
acquisition agreement between the Company and such Person (or
one or more of his Affiliates or Associates) if such agreement
has been approved by the Board of Directors of the Company
prior to such Person's becoming an Acquiring Person; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security under this clause (B) if the
agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations 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
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) and
with respect to which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing,
for the purpose of acquiring, holding, voting (except pursuant
to a revocable proxy or consent as described in the proviso to
Section 1.3(ii)(B)) or disposing of any securities of the
Company;
provided, however, that no Person who is an officer, director
or employee of an Exempt Person shall be deemed, solely by
reason of such Person's status or authority as such, to be the
"Beneficial Owner" of, to have "Beneficial Ownership" of or to
"beneficially own" any securities that are "beneficially owned"
(as defined in this Section 1.3), including, without
limitation, in a fiduciary capacity, by an Exempt Person or by
any other such officer, director or employee of an Exempt
Person.
1.4. "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order
to close.
1.5. "close of business" on any given date shall mean 5:00
p.m., California time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 p.m.,
California time, on the next succeeding Business Day.
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1.6. "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.0001 per
share, of the Company. "Common Shares" when used with
reference to any Person other than the Company shall mean the
capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or
direct the management, of such other Person or, if such Person
is a Subsidiary (as such term is hereinafter defined) of
another Person, the Person or Persons which ultimately control
such first-mentioned Person, and which has issued and
outstanding such capital stock, equity securities or equity
interest.
1.7. "Exempt Person" shall mean the Company, any Subsidiary of
the Company, in each case including, without limitation, its
fiduciary capacity, or any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity or trustee
holding shares of capital stock of the Company for or pursuant
to the terms of any such plan, or for the purpose of funding
other employee benefits for employees of the Company or any
Subsidiary of the Company.
1.8. "Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation,
unincorporated association, trust or other entity, and shall
include any successor (by merger or otherwise) of such entity.
1.9. "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition,
shall include, without limitation, the filing of a report
pursuant to Section 13(d) of the Exchange Act or pursuant to a
comparable successor statute) by the Company or an Acquiring
Person that an Acquiring Person has become such or that
discloses information which reveals the existence of an
Acquiring Person or such earlier date as a majority of the
Board of Directors shall become aware of the existence of an
Acquiring Person.
1.10. "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, of
record or beneficially, directly or indirectly, by such Person.
1.11. A "Trigger Event" shall be deemed to have occurred
upon any Person becoming an Acquiring Person.
1.12. The following terms shall have the meanings defined
for such terms in the Sections set forth below:
Term Section
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Adjustment Shares 11.1.2
common stock equivalent 11.1.3
Company Recitals
current per share market price 11.4
Current Value 11.1.3
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Distribution Date 3.1
equivalent preferred stock 11.2
Exchange Act 1.1
Exchange Consideration 27
Existing Holder 1.1
Expiration Date 7.1
Final Expiration Date 7.1
Nasdaq 9
Original Rights 1.3
Preferred Shares Recitals
Principal Party 13.2
Purchase Price 4
Record Date Recitals
Redemption Date 7.1
Redemption Price 23.1
Right Recitals
Right Certificate 3.1
Rights Agent Recitals
Security 11.4
Spread 11.1.3
Substitution Period 11.1.3
Summary of Rights 3.2
Trading Day 11.4
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3,
shall prior to the Distribution Date also be the holders of the
Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable. In the event the
Company appoints one or more co-Rights Agents, the respective
duties of the Rights Agent and any co-Rights Agent shall be as
the Company shall determine. Contemporaneously with such
appointment, if any, the Company shall notify the Rights Agent
thereof.
Section 3. Issuance of Right Certificates.
3.1. Rights Evidenced by Share Certificates. Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii)
the tenth Business Day after the date of the commencement of,
or first public announcement of the intent of any Person (other
than an Exempt Person) to commence, a tender or exchange offer
the consummation of which would result in any Person (other
than an Exempt Person) becoming the Beneficial Owner of Common
Shares aggregating 15% or more of the then outstanding Common
Shares of the Company (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights (unless
earlier expired, redeemed or terminated) will be evidenced
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(subject to the provisions of Section 3.2) by the certificates
for Common Shares registered in the names of the holders
thereof (which certificates for Common Shares shall also be
deemed to be Right Certificates) and not by separate
certificates, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection
with the transfer of the underlying Common Shares. The
preceding sentence notwithstanding, prior to the occurrence of
a Distribution Date specified as a result of an event described
in clause (ii) (or such later Distribution Date as the Board of
Directors of the Company may select pursuant to this sentence),
the Board of Directors may postpone, one or more times, the
Distribution Date which would occur as a result of an event
described in clause (ii) beyond the date set forth in such
clause (ii). Nothing herein shall permit such a postponement
of a Distribution Date after a Person becomes an Acquiring
Person, except as a result of the operation of the third
sentence of Section 1.1. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign and the Company (or, if
requested, the Rights Agent) will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an
Acquiring Person), at the address of such holder shown on the
records of the Company, one or more certificates for Rights, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right (subject to adjustment as
provided herein) for each Common Share so held. As of the
Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3.2. Summary of Rights. On the Record Date or as soon as
practicable thereafter, the Company will send or cause to be
sent a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form attached hereto as Exhibit C
(the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on the Record Date at the address of such holder shown
on the records of the Company. With respect to certificates
for Common Shares outstanding as of the close of business on
the Record Date, until the Distribution Date (or the earlier
Expiration Date), the Rights will be evidenced by such
certificates for Common Shares registered in the names of the
holders thereof together with a copy of the Summary of Rights
and the registered holders of the Common Shares shall also be
registered holders of the associated Rights. Until the
Distribution Date (or the earlier Expiration Date), the
surrender for transfer of any certificate for Common Shares
outstanding at the close of business on the Record Date, with
or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the
Common Shares represented thereby.
3.3. New Certificates After Record Date. Certificates for
Common Shares which become outstanding (whether upon issuance
out of authorized but unissued Common Shares, disposition out
of treasury or transfer or exchange of outstanding Common
Shares) after the Record Date but prior to the earliest of the
Distribution Date or the Expiration Date, shall have impressed,
printed, stamped, written or otherwise affixed onto them the
following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in an Agreement
between PETCO Animal Supplies, Inc. (the "Company") and
American Stock Transfer and Trust Company, as Rights
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Agent, dated as of September 14, 1998, as the same may be
amended from time to time (the "Agreement"), the terms of
which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as
set forth in the Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder
of this certificate a copy of the Agreement without charge
after receipt of a written request therefor. As described
in the Agreement, Rights which are owned by, transferred
to or have been owned by Acquiring Persons or Associates
or Affiliates thereof (as defined in the Agreement) shall
become null and void and will no longer be transferable.
With respect to such certificates containing the foregoing
legend, until the Distribution Date (or the earlier Expiration
Date), the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificates,
except as otherwise provided herein, shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases
or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights associated
with the Common Shares which are no longer outstanding.
Notwithstanding this Section 3.3, the omission of a legend
shall not affect the enforceability of any part of this
Agreement or the rights of any holder of the Rights.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase shares,
certification and assignment to be printed on the reverse
thereof) shall be substantially the same as Exhibit B hereto
and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any
stock exchange or trading system on which the Rights may from
time to time be listed or quoted, or to conform to usage.
Subject to the terms and conditions hereof, the Right
Certificates, whenever issued, shall be dated as of the Record
Date, and shall show the date of countersignature by the Rights
Agent, and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share
as shall be set forth therein at the price per one one-
hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a
Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its
Chairman of the Board of Directors, the Chief Executive
Officer, President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested
by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right
Certificates shall be countersigned, either manually or by
facsimile signature, by an authorized signatory of the Rights
9
Agent, but it shall not be necessary for the same signatory to
countersign all of the Right Certificates hereunder. No Right
Certificate shall be valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease 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, shall be a proper officer
of the Company to sign such Right Certificate, although at the
date of the execution of this Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates,
the certificate number of each of the Right Certificates and
the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 7.5,
Section 11.1.2 and Section 14, at any time after the close of
business on the Distribution Date, and at or prior to the close
of business on the Expiration Date, any Right Certificate or
Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11.1.2 or that
have been exchanged pursuant to Section 27) may be transferred,
split up or 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 as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up or combine or
exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender,
together with any required form of assignment and certificate
duly completed, the Right Certificate or Right Certificates to
be transferred, split up or combined or exchanged at the office
of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Right Certificates until the
registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse
side of such Right Certificate or Right Certificates and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company
may require payment from the holders of Right Certificates of a
sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up or
combination or exchange of such Right Certificates.
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Subject to the provisions of Section 11.1.2 , at any time after
the Distribution Date and prior to the Expiration Date, 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, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu
of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
7.1. Exercise of Rights. Subject to Section 11.1.2 and except
as otherwise provided herein, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election
to purchase and certification on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price for the total number of one one-
hundredths of a Preferred Share (or other securities, cash or
other assets) as to which the Rights are exercised, at or prior
to the time (the "Expiration Date") that is the earliest of (i)
the close of business on September 22, 2008 (the "Final
Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 (the "Redemption Date"),
(iii) the closing of any merger or other acquisition
transaction involving the Company pursuant to an agreement of
the type described in Sections 1.3(ii)(A)(z) and 13.3, at which
time the Rights are deemed terminated, or (iv) the time at
which the Rights are exchanged as provided in Section 27.
7.2. Purchase . The Purchase Price for each one one-hundredth
of a Preferred Share pursuant to the exercise of a Right shall
be initially $75.00, shall be subject to adjustment from time
to time as provided in Sections 11, 13 and 26 and shall be
payable in lawful money of the United States of America in
accordance with Section 7.3.
7.3. Payment Procedures. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to
purchase and certification duly executed, accompanied by
payment of the aggregate Purchase Price for the total number of
one one-hundredths of a Preferred Share to be purchased and an
amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with
Section 9, in cash or by certified or cashier's check or money
order payable to the order of the Company, the Rights Agent
shall thereupon promptly (i)(A) requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of
Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to
deposit the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depository agent,
requisition from the depositary agent depositary receipts
representing interests in such number of one one-hundredths of
a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
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depositary agent) and the Company hereby directs the depositary
agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
lieu of the issuance of fractional shares in accordance with
Section 14 or otherwise in accordance with Section 11.1.3,
(iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder and
(iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated
to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11.1.3, the
Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
7.4. Partial Exercise. In case the registered holder of any
Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14.
7.5. Full Information Concerning Ownership. Notwithstanding
anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the
occurrence of any purported exercise as set forth in this
Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise shall have been duly
completed and signed by the registered holder thereof and the
Company shall have been provided with such additional evidence
of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled
Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
The Company covenants and agrees that from and after the
Distribution Date it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares
(and, following the occurrence of a Trigger Event, out of its
authorized and unissued Common Shares or other securities or
out of its shares held in its treasury) the number of Preferred
Shares (and, following the occurrence of a Trigger Event,
12
Common Shares and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares (and, following the occurrence
of a Trigger Event, Common Shares and/or other securities)
issuable upon the exercise of Rights may be listed on any
national securities exchange or traded in the over-the-counter
market and quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("Nasdaq") (including
the National Market or Small Cap Market), the Company shall use
its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such
issuance to be listed or admitted to trading on such exchange
or quoted on Nasdaq upon official notice of issuance upon such
exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
(and, following the occurrence of a Trigger Event, Common
Shares and/or other securities) delivered upon exercise of
Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and
nonassessable shares.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit
the issuance of Preferred Shares upon the exercise of Rights,
to register and qualify such Preferred Shares under the
Securities Act and any applicable state securities or "Blue
Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and
qualifications to become effective as soon as possible after
such filing and keep such registration and qualifications
effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the
Expiration Date. The Company may temporarily suspend, for a
period of time not to exceed 90 days, the exercisability of the
Rights in order to prepare and file a registration statement
under the Securities Act and permit it to become effective.
Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have
been declared effective.
The Company further covenants and agrees that it will pay when
due and payable any and all Federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares
(or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates
for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) in a name other than that of,
the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any
certificates for Preferred Shares (or Common Shares and/or
other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights until
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any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for Preferred Shares (or Common
Shares and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares (or
Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a
date upon which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become
the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding
Business Day on which the Preferred 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 shall not
be entitled to any rights of a holder of Preferred Shares for
which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights. The Purchase Price, the number of
Preferred Shares or other securities or property purchasable
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.
11.1. Post-Execution Events.
11.1.1. Corporate Dividends, Reclassifications, Etc. In the
event the Company shall at any time after the date of this
Agreement (A) declare and pay a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as
otherwise provided in this Section 11.1, the Purchase Price in
effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of shares
of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred
Shares transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
14
Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both Section
11.1.1 and Section 11.1.2, the adjustment provided for in this
Section 11.1.1 shall be in addition to, and shall be made prior
to, the adjustment required pursuant to, Section 11.1.2.
11.1.2. Acquiring Person Events; Triggering Events. Subject
to Sections 23.1 and 27, in the event that a Trigger Event
occurs, then, from and after the first occurrence of such
event, each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at a
price per Right equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable (without giving
effect to this Section 11.1.2), in accordance with the terms of
this Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a Preferred Share for which a
Right is then exercisable (without giving effect to this
Section 11.1.2) and (y) dividing that product by 50% of the
current per share market price of the Common Shares (determined
pursuant to Section 11.4) on the first of the date of the
occurrence of, or the date of the first public announcement of,
a Trigger Event (the "Adjustment Shares"); provided that the
Purchase Price and the number of Adjustment Shares shall
thereafter be subject to further adjustment as appropriate in
accordance with Section 11.6. Notwithstanding the foregoing,
upon the occurrence of a Trigger Event, any Rights that are or
were acquired or beneficially owned by (1) any Acquiring Person
or any Associate or Affiliate thereof, (2) a transferee of any
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such,
or (3) a transferee of any Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) from the Acquiring Person to holders
of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of this
Section 11.1.2, and subsequent transferees, shall become void
without any further action, and any holder (whether or not such
holder is an Acquiring Person or an Associate or Affiliate of
an Acquiring Person) of such Rights shall thereafter have no
right to exercise such Rights under any provision of this
Agreement or otherwise. The Company shall not enter into any
transaction of the type described in this Section 11.1.2 if at
the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any arrangements
which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits intended
to be afforded by the Rights. From and after the Trigger
Event, no Right Certificate shall be issued pursuant to Section
3 or Section 6 that represents Rights that are or have become
void pursuant to the provisions of this paragraph, and any
Right Certificate delivered to the Rights Agent that represents
Rights that are or have become void pursuant to the provisions
of this paragraph shall be canceled.
15
The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11.1.2 are complied with, but shall
have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations
with respect to any Acquiring Person or its Affiliates,
Associates or transferees hereunder.
From and after the occurrence of an event specified in Section
13.1, any Rights that theretofore have not been exercised
pursuant to this Section 11.1.2 shall thereafter be exercisable
only in accordance with Section 13 and not pursuant to this
Section 11.1.2.
11.1.3. Insufficient Shares. The Company may at its option
substitute for a Common Share issuable upon the exercise of
Rights in accordance with the foregoing Section 11.1.2 a number
of Preferred Shares or fraction thereof such that the current
per share market price of one Preferred Share multiplied by
such number or fraction is equal to the current per share
market price of one Common Share. In the event that upon the
occurrence of one or more of the events listed in Section
11.1.2 above there shall not be sufficient Common Shares
authorized but unissued, or held by the Company as treasury
shares, to permit the exercise in full of the Rights in
accordance with the foregoing Section 11.1.2, the Company shall
take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the
Rights, provided, however, that if the Company determines that
it is unable to cause the authorization of a sufficient number
of additional Common Shares, then, in the event the Rights
become exercisable, the Company, with respect to each Right and
to the extent necessary and permitted by applicable law and any
agreements or instruments in effect on the date hereof to which
it is a party, shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), over (2) the Purchase Price (such
excess, the "Spread") and (B) with respect to each Right (other
than Rights which have become void pursuant to Section 11.1.2),
make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Preferred
Shares or other equity securities of the Company (including,
without limitation, shares, or fractions of shares, of
preferred stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the
Common Shares, the Board of Directors of the Company has deemed
in good faith to have substantially the same value as Common
Shares) (each such share of preferred stock or fractions of
shares of preferred stock constituting a "common stock
equivalent")), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing having an
aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors
of the Company based upon the advice of a nationally recognized
investment banking firm selected in good faith by the Board of
Directors of the Company; provided, however, that if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following
the first occurrence of one of the events listed in Section
11.1.2 above, then the Company shall be obligated to deliver,
to the extent necessary and permitted by applicable law and any
agreements or instruments in effect on the date hereof to which
it is a party, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Common Shares
(to the extent available) and then, if necessary, such number
or fractions of Preferred Shares (to the extent available) and
then, if necessary, cash, which shares and/or cash have an
16
aggregate value equal to the Spread. If the Board of Directors
of the Company shall determine in good faith that it is
unlikely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights,
the thirty (30) day period set forth above may be extended and
re-extended to the extent necessary, but not more than ninety
(90) days following the first occurrence of one of the events
listed in Section 11.1.2 above, in order that the Company may
seek stockholder approval for the authorization of such
additional shares (such period as may be extended, the
"Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the
second and/or third sentences of this Section 11.1.3, the
Company (x) shall provide that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of
this Section 11.1.3, the value of a Common Share shall be the
current per share market price (as determined pursuant to
Section 11.4) on the date of the occurrence of a Trigger Event
and the value of any "common stock equivalent" shall be deemed
to have the same value as the Common Shares on such date. The
Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to
receive Common Shares upon the exercise of the Rights among
holders of Rights pursuant to this Section 11.1.3.
11.2. Dilutive Rights Offering. In case the Company shall
fix 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 the same rights, privileges and preferences
as the Preferred Shares ("equivalent preferred stock")) or
securities convertible into Preferred Shares or equivalent
preferred stock at a price per Preferred Share or per share of
equivalent preferred stock (or having a conversion or exercise
price per share, if a security convertible into or exercisable
for Preferred Shares or equivalent preferred stock) less than
the current per share market price of the Preferred Shares (as
determined pursuant to Section 11.4) on such record date, the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares and
shares of equivalent preferred stock outstanding on such record
date plus the number of Preferred Shares and shares of
equivalent preferred stock which the aggregate offering price
of the total number of Preferred Shares and/or shares of
equivalent preferred stock to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current per share market price
and the denominator of which shall be the number of Preferred
Shares and shares of equivalent preferred stock outstanding on
such record date plus the number of additional Preferred Shares
and/or shares of equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
17
Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights.
Preferred Shares and shares of equivalent preferred stock owned
by or held for the account of the Company or any Subsidiary of
the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
11.3. Distributions. In case the Company shall fix a
record date for the making of a distribution to all holders of
the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation) of evidences of
indebtedness, cash, securities or assets (other than a regular
periodic cash dividend at a rate not in excess of 125% of the
rate of the last regular periodic cash dividend theretofore
paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the
average net income per share of the Company for the four
quarters ended immediately prior to the payment of such
dividend, or a dividend payable in Preferred Shares (which
dividend, for purposes of this Agreement, shall be subject to
the provisions of Section 11.1.1(A))) or convertible
securities, or subscription rights or warrants (excluding those
referred to in Section 11.2), the Purchase Price to be in
effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the current per share market price of the Preferred Shares (as
determined pursuant to Section 11.4) on such record date, less
the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the cash, assets, securities or evidences of
indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market
price of the Preferred Shares (as determined pursuant to
Section 11.4); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not
so made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record
date had not been fixed.
11.4. Current Per Share Market Value.
11.4.1. General. For the purpose of any computation
hereunder, the "current per share market price" of any security
(a "Security" for the purpose of this Section 11.4.1) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the
18
event that the current per share market price of the Security
is determined during any period following the announcement by
the issuer of such Security of (i) a dividend or distribution
on such Security payable in shares of such Security or
securities convertible into such shares or (ii) any
subdivision, combination or reclassification of such Security,
and prior to the expiration of thirty (30) Trading Days after
the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the "current per
share market price" shall be appropriately adjusted to reflect
the current market price per share equivalent of such Security.
The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if
the Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed
on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-
counter market, as reported by Nasdaq or such other system then
in use, or, if on any such date the Security is not quoted by
any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of
the Company. If on any such date no such market maker is
making a market in the Security, the fair value of the Security
on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities
exchange, a Business Day. If the Security is not publicly held
or not so listed or traded, or if on any such date the Security
is not so quoted and no such market maker is making a market in
the Security, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board
of Directors of the Company or, if at the time of such
determination there is an Acquiring Person, by a nationally
recognized investment banking firm selected by the Board of
Directors, which shall have the duty to make such determination
in a reasonable and objective manner, whose determination shall
be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
11.4.2. Preferred Shares. Notwithstanding Section 11.4.1,
for the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined
in the same manner as set forth above in Section 11.4.1 (other
than the last sentence thereof). If the current per share
market price of the Preferred Shares cannot be determined in
the manner described in Section 11.4.1, the "current per share
market price" of the Preferred Shares shall be conclusively
deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common
Shares occurring after the date of this Agreement) multiplied
by the current per share market price of the Common Shares (as
determined pursuant to Section 11.4.1). If neither the Common
Shares nor the Preferred Shares are publicly held or so listed
or traded, (as determined pursuant to Section 11.4.1). If
19
neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, or if on any such date neither the
Common Shares nor the Preferred Shares are so quoted and no
such market maker is making a market in either the Common
Shares or the Preferred Shares, "current per share market
price" of the Preferred Shares shall mean the fair value per
share as determined in good faith by the Board of Directors of
the Company, or, if at the time of such determination there is
an Acquiring Person, by a nationally recognized investment
banking firm selected by the Board of Directors of the Company,
which shall have the duty to make such determination in a
reasonable and objective manner, which determination shall be
described in a statement filed with the Rights Agent and shall
be conclusive for all purposes. For purposes of this
Agreement, the "current per share market price" of one one-
hundredth of a Preferred Share shall be equal to the "current
per share market price" of one Preferred Share divided by 100.
11.5. Insignificant Changes. No adjustment in the Purchase
Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price. Any
adjustments which by reason of this Section 11.5 are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one-hundred thousandth of a Preferred Share or the
nearest one-hundredth of a Common Share or other share or
security, as the case may be.
11.6. Shares Other Than Preferred Shares. If as a result
of an adjustment made pursuant to Section 11.1, the holder of
any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11.1, 11.2, 11.3, 11.5,
11.8, 11.9 and 11.13, and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.
11.7. Rights Issued Prior to Adjustment. All Rights
originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to
time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
11.8. Effect of Adjustments. Unless the Company shall have
exercised its election as provided in Section 11.9, upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11.2 and 11.3, each Right
outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one-hundred
thousandth of a Preferred Share) obtained by (i) multiplying
(x) the number of one one-hundredths of a Preferred Share
covered by a Right immediately prior to this adjustment by (y)
the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product
20
so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
11.9. Adjustment in Number of Rights. 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 shall 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
shall become that number of Rights (calculated to the nearest
one-hundredth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by
the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or
any day thereafter, but, if the Right Certificates have been
issued, shall be at least ten (10) days later than the date of
the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant
to this Section 11.9, the Company may, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14, the additional Rights to
which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the 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 shall be entitled after such
adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record
date specified in the public announcement.
11.10. Right Certificates Unchanged. Irrespective of any
adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price
per share and the number of one one-hundredths of a Preferred
Share which were expressed in the initial Right Certificates
issued hereunder.
11.11. Par Value Limitations. 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 other shares of capital stock issuable upon exercise
of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares or other such shares at such
adjusted Purchase Price.
11.12. Deferred Issuance. In any case in which this Section
11 shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event, the
21
Company may elect to defer until the occurrence of such event
the issuance to the holder of any Right exercised after such
record date of that number of Preferred Shares and shares of
other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares
and shares of other capital stock or other securities, assets
or cash of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver
to such holder a due ▇▇▇▇ or other appropriate instrument
evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such
adjustment.
11.13. Reduction in Purchase Price. Anything in this
Section 11 to the contrary notwithstanding, the Company shall
be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any consolidation
or subdivision of the Preferred Shares, issuance wholly for
cash of any of the Preferred Shares at less than the current
market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred
Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred
Shares shall not be taxable to such stockholders.
11.14. Company Not to Diminish Benefits of Rights. The
Company covenants and agrees that after the earlier of the
Shares Acquisition Date or Distribution Date it will not,
except as permitted by Section 23, Section 26 or Section 27,
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 substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
11.15. Adjustment of Rights Associated with Common Shares.
Notwithstanding anything contained in this Agreement to the
contrary, in the event that the Company shall at any time after
the date hereof and prior to the Distribution Date (i) declare
or pay any dividend on the outstanding Common Shares payable in
Common Shares, (ii) effect a subdivision or consolidation of
the outstanding Common Shares (by reclassification or otherwise
than by the payment of dividends payable in Common Shares), or
(iii) combine the outstanding Common Shares into a greater or
lesser number of Common Shares, then in any such case, the
number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date or in accordance with Section 22 shall be
proportionately adjusted so that the number of Rights
thereafter associated with each Common Share following any such
event shall equal the result obtained by multiplying the number
of Rights associated with each Common Share immediately prior
to such event by a fraction, the numerator of which shall be
the total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding
immediately following the occurrence of such event. The
adjustments provided for in this Section 11.15 shall be made
successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
22
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer
agent for the Common Shares or the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25.
The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
13.1. Certain Transactions. In the event that, from and
after the first occurrence of a Trigger Event, directly or
indirectly, (A) the Company shall consolidate with, or merge
with and into, any other Person and the Company shall not be
the continuing or surviving corporation, (B) any Person shall
consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger,
all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of the Company or any
other Person or cash or any other property, or (C) the Company
shall sell, exchange, mortgage or otherwise transfer (or one or
more of its Subsidiaries shall sell, exchange, mortgage or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or one or
more wholly-owned Subsidiaries of the Company in one or more
transactions each of which complies with Section 11.14), then,
and in each such case, proper provision shall be made so that
(i) each holder of a Right (other than Rights which have become
void pursuant to Section 11.1.2) shall thereafter have the
right to receive, upon the exercise thereof at a price per
Right equal to 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 Trigger Event (as subsequently adjusted
pursuant to Sections 11.1.1, 11.2, 11.3, 11.8, 11.9 and 11.12),
in accordance with the terms of this Agreement and in lieu of
Preferred Shares or Common Shares, such number of validly
authorized and issued, fully paid, non-assessable and freely
tradable Common Shares of the Principal Party (as such term is
hereinafter defined) not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (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 Trigger Event (as
subsequently adjusted pursuant to Sections 11.1.1, 11.2, 11.3,
11.8, 11.9 and 11.12) and (y) dividing that product by 50% of
the then current per share market price of the Common Shares of
such Principal Party (determined pursuant to Section 11.4) on
the date of consummation of such consolidation, merger, sale or
transfer; provided, that the price per Right so payable and the
number of Common Shares of such Principal Party so receivable
upon exercise of a Right shall thereafter be subject to further
adjustment as appropriate in accordance with Section 11.6 to
reflect any events covered thereby occurring in respect of the
Common Shares of such Principal Party after the occurrence of
23
such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9) in connection with
such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights; provided that,
upon the subsequent occurrence of any consolidation, merger,
sale or transfer of assets or other extraordinary transaction
in respect of such Principal Party, each holder of a Right
shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price as provided in this
Section 13.1, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive
had such holder, at the time of such transaction, owned the
Common Shares of the Principal Party receivable upon the
exercise of a Right pursuant to this Section 13.1, and such
Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary
to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants
and other property. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto
the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement
confirming that the requirements of this Section 13.1 and
Section 13.2 shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or
transfer of assets shall not result in a default by the
Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to this Section
13.1 and Section 13.2 and providing that, as soon as
practicable after executing such agreement pursuant to this
Section 13, the Principal Party, at its own expense, shall
(1) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and
the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such
registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause
such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and similarly comply
with applicable state securities laws;
(2) use its best efforts, if the Common Shares of the
Principal Party shall be listed or admitted to trading on the
New York Stock Exchange or on another national securities
exchange, to list or admit to trading (or continue the listing
of) the Rights and the securities purchasable upon exercise of
the Rights on the New York Stock Exchange or such securities
exchange, or, if the Common Shares of the Principal Party shall
not be listed or admitted to trading on the New York Stock
Exchange or a national securities exchange, to cause the Rights
and the securities receivable upon exercise of the Rights to be
authorized for quotation on Nasdaq or on such other system then
in use;
24
(3) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects
with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(4) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the
Principal Party subject to purchase upon exercise of
outstanding Rights.
In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or
by-laws or other instrument governing its corporate affairs,
which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights
pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to
in this Section 13, Common Shares or common stock equivalents
of such Principal Party at less than the then current market
price per share thereof (determined pursuant to Section 11.4)
or securities exercisable for, or convertible into, Common
Shares or common stock equivalents of such Principal Party at
less than such then current market price (other than to holders
of Rights pursuant to this Section 13), or (ii) providing for
any special payment, taxes or similar provision in connection
with the issuance of the Common Shares of such Principal Party
pursuant to the provision of Section 13, then, in such event,
the Company hereby agrees with each holder of Rights that it
shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal
Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
The Company covenants and agrees that it shall not, at any time
after the Trigger Event, enter into any transaction of the type
described in clauses (A) through (C) of this Section 13.1 if
(i) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction there are any
rights, warrants or other instruments or securities outstanding
or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights, (ii) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer or other
transaction, the stockholders of the Person who constitutes, or
would constitute, the Principal Party for purposes of Section
13.2 shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates or Associates or
(iii) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights. The
provisions of this Section 13 shall similarly apply to
successive transactions of the type described in clauses (A)
through (C) of this Section 13.1.
13.2. Principal Party. "Principal Party" shall mean:
(i) in the case of any transaction described in (A) or (B) of
the first sentence of Section 13.1: (i) the Person that is the
issuer of the securities into which the Common Shares are
converted in such merger or consolidation, or, if there is more
than one such issuer, the issuer the Common Shares of which
have the greatest aggregate market value of shares outstanding,
25
or (ii) if no securities are so issued, (x) the Person that is
the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person
the Common Shares of which have the greatest aggregate market
value of shares outstanding or (y) if the Person that is the
other party to the merger does not survive the merger, the
Person that does survive the merger (including the Company if
it survives) or (z) the Person resulting from the
consolidation; and
(ii) in the case of any transaction described in (C) of the
first sentence in Section 13.1, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or,
if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined,
whichever of such Persons is the issuer of Common Shares having
the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the
foregoing clause (A) or (B) of this Section 13.2, if the Common
Shares of such Person are not at such time or have not been
continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect Subsidiary of another Person the Common
Shares of which are and have been so registered, the term
"Principal Party" shall refer to such other Person, or (2) if
such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Shares of all of which are and have
been so registered, the term "Principal Party" shall refer to
whichever of such Persons is the issuer of Common Shares having
the greatest aggregate market value of shares outstanding, or
(3) if such Person is owned, directly or indirectly, by a joint
venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth
in clauses (1) and (2) above shall apply to each of the owners
having an interest in the venture as if the Person owned by the
joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear
the obligations set forth in this Section 13 in the same ratio
as its interest in such Person bears to the total of such
interests.
13.3. Approved Acquisitions. Notwithstanding anything
contained herein to the contrary, in the event of any merger or
other acquisition transaction involving the Company pursuant to
a merger or other acquisition agreement between the Company and
any Person (or one or more of such Person's Affiliates or
Associates) which agreement has been approved by the Board of
Directors of the Company prior to any Person becoming an
Acquiring Person, this Agreement and the rights of holders of
Rights hereunder shall be terminated in accordance with Section
7.1.
Section 14. Fractional Rights and Fractional Shares.
14.1. Cash in Lieu of Fractional Rights. The Company shall
not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights (except
prior to the Distribution Date in accordance with Section
11.15). In lieu of such fractional Rights, there shall be paid
to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14.1,
26
the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any
such date no such market maker is making a market in the
Rights, the current market value of the Rights on such date
shall be the fair value of the Rights as determined in good
faith by the Board of Directors of the Company, or, if at the
time of such determination there is an Acquiring Person, by a
nationally recognized investment banking firm selected by the
Board of Directors of the Company, which shall have the duty to
make such determination in a reasonable and objective manner,
which determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
14.2. Cash in Lieu of Fractional Preferred Shares. The
Company shall 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 or
exchange 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). Interests in 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 shall provide that the holders of such depositary
receipts shall 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 shall pay to the registered holders of Right
Certificates at the time such Rights are exercised or exchanged
as herein provided an amount in cash equal to the same fraction
of the current per share market price of one Preferred Share
(as determined in accordance with Section 14.1) for the Trading
Day immediately prior to the date of such exercise or exchange.
14.3. Cash in Lieu of Fractional Common Shares. The
Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional
Common Shares upon the exercise or exchange of Rights. In lieu
of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to
which such fractional Common Shares would otherwise be issuable
an amount in cash equal to the same fraction of the current
27
market value of a whole Common Share (as determined in
accordance with Section 14.1) for the Trading Day immediately
prior to the date of such exercise or exchange.
14.4. Waiver of Right to Receive Fractional Rights or
Shares. The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or
any fractional shares upon exercise or exchange of a Right,
except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, except 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 Common Shares), may, in his own behalf and for his own
benefit, enforce this Agreement, and may institute and maintain
any suit, action or proceeding against the Company to enforce
this Agreement, or otherwise enforce or act in respect of his
right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate
and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of, the obligations of any Person (including,
without limitation, the Company) subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) as of and after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer with all required certifications
completed; and
(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 Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common
Shares certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to
the contrary.
28
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate,
as such, any of the rights of a stockholder of the 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 shall have been exercised
in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees
to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder in accordance with a fee
schedule to be mutually agreed upon 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 also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
for the Preferred Shares or the Common Shares or for other
securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation or limited liability company
into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any
corporation or limited liability company resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation or
limited liability company succeeding to the corporate trust or
stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation or limited liability company
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 shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and
29
in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name;
and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
20.1. Legal Counsel. The Rights Agent may consult with
legal counsel selected by it (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in
accordance with such opinion.
20.2. Certificates as to Facts or Matters. Whenever in the
performance of its duties under this Agreement the Rights Agent
shall deem 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 of Directors, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the
Treasurer, the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by
it under the provisions of this Agreement in reliance upon such
certificate.
20.3. Standard of Care. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful
misconduct.
20.4. Reliance on Agreement and Right Certificates. The
Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or
in the Right Certificates (except as to its countersignature
thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been
made by the Company only.
30
20.5. No Responsibility as to Certain Matters. The Rights
Agent shall not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming
void pursuant to Section 11.1.2) or any adjustment required
under the provisions of Sections 3, 11, 13, 23 or 27 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 change or adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares
or other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares
will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
20.6. Further Assurance by Company. The Company agrees
that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out
or performing by the Rights Agent of the provisions of this
Agreement.
20.7. Authorized Company Officers. 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 of Directors, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice
President, the Treasurer, the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company, and to apply
to such officers for advice or instructions in connection with
its duties under this Agreement, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or for any
delay in acting while waiting for these instructions. Any
application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the
Rights Agent with respect to its duties or obligations under
this Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights
Agent shall not be liable to the Company for any action taken
by, or omission of, the Rights Agent in accordance with a
proposal included in any such application on or after the date
specified therein (which date shall not be less than three
business days after the date any such officer actually receives
such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking of any
such action (or the effective date in the case of omission),
the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken
or omitted.
20.8. Freedom to Trade in Company Securities. 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
31
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 shall preclude the
Rights Agent from acting in any other capacity for the Company
or for any other legal entity.
20.9. Reliance on Attorneys and Agents. The Rights Agent
may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents
or for any loss to the Company resulting from any such act,
omission, default, neglect or misconduct, provided that
reasonable care was exercised in the selection and continued
employment thereof.
20.10. Incomplete Certificate. If, with respect to any
Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has not been completed to
certify the holder is not an Acquiring Person (or an Affiliate
or Associate thereof), the Rights Agent shall not take any
further action with respect to such requested exercise or
transfer without first consulting with the Company.
20.11. Rights Holders List. At any time and from time to
time after the Distribution Date, upon the request of the
Company, the Rights Agent shall promptly deliver to the Company
a list, as of the most recent practicable date (or as of such
earlier date as may be specified by the Company), of the
holders of record of Rights.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the
Common Shares and/or Preferred Shares, as applicable, by
registered or certified mail. Following the Distribution Date,
the Company shall promptly notify the holders of the Right
Certificates by first-class mail of any such resignation. The
Company may remove the Rights Agent or any successor Rights
Agent upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Shares and/or Preferred
Shares, as applicable, by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the resigning, removed, or
incapacitated Rights Agent shall remit to the Company, or to
any successor Rights Agent designated by the Company, all
books, records, funds, certificates or other documents or
instruments of any kind then in its possession which were
acquired by such resigning, removed or incapacitated Rights
Agent in connection with its services as Rights Agent
hereunder, and shall thereafter be discharged from all duties
and obligations hereunder. Following notice of such removal,
resignation or incapacity, the Company shall appoint a
successor to such Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after
giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right
32
Certificate (who shall, 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, shall be a corporation organized
and doing business under the laws of the United States or of
the State of New York or the State of California (or 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 or California) in good standing, having an office
in the State of New York or the State of California, which is
authorized under such laws to exercise stock transfer or
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 $10 million. After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares
and/or Preferred Shares, as applicable, and, following the
Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
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 and the number or
kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance
with the provisions of this Agreement. In addition, in
connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the Expiration Date, the
Company shall, with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee
plan or arrangement, granted or awarded, or upon exercise,
conversion or exchange of securities hereinafter issued by the
Company, in each case existing prior to the Distribution Date,
issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom
such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption.
33
Section 23.1. Right to Redeem. The Board of Directors of the
Company may, at its option, at any time prior to a Trigger
Event, redeem all but not less than all of the then outstanding
Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend,
recapitalization or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred
to as the "Redemption Price"), and the Company may, at its
option, pay the Redemption Price in Common Shares (based on the
"current per share market price," determined pursuant to
Section 11.4, of the Common Shares at the time of redemption),
cash or any other form of consideration deemed appropriate by
the Board of Directors. The redemption of the Rights by the
Board of Directors may be made effective at such time, on such
basis and subject to such conditions as the Board of Directors
in its sole discretion may establish.
Section 23.2. Redemption Procedures. Immediately upon the
action of the Board of Directors of the Company ordering the
redemption of the Rights (or at such later time as the Board of
Directors may establish for the effectiveness of such
redemption), and without any further action and without any
notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. The
Company shall promptly give public notice of such redemption;
provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such
redemption. The Company shall promptly give, or cause the
Rights Agent to give, notice of such redemption to the holders
of the then outstanding Rights by mailing such notice to all
such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption
shall state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 27, and
other than in connection with the purchase, acquisition or
redemption of Common Shares prior to the Distribution Date.
Section 24. Notice of Certain Events. In case the Company
shall propose at any time after the earlier of the Shares
Acquisition Date and the Distribution Date (a) 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 at a rate not in excess of 125% of the rate of the
last regular periodic cash dividend theretofore paid or, in
case regular periodic cash dividends have not theretofore been
paid, at a rate not in excess of 50% of the average net income
per share of the Company for the four quarters ended
immediately prior to the payment of such dividends, or a stock
dividend on, or a subdivision, combination or reclassification
of the Common Shares), or (b) to offer to the holders of
Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, or (c) to
effect any reclassification of its Preferred Shares (other than
a reclassification involving only the subdivision of
outstanding Preferred Shares), or (d) to effect any
consolidation or merger into or with, or to effect any sale or
34
other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any
other Person (other than pursuant to a merger or other
acquisition agreement of the type described in Section
1.3(ii)(A)(z)), or (e) to effect the liquidation, dissolution
or winding up of the Company, or (f) to declare or pay any
dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares), then, in each such case, the
Company shall give to the Rights Agent and to each holder of a
Right Certificate, in accordance with Section 25, a notice of
such proposed action, which shall specify the record date for
the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Shares
and/or Common Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by
clause (a) or (b) above at least ten (10) 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 ten (10) days prior to the date of the taking
of such proposed action or the date of participation therein by
the holders of the Preferred Shares and/or Common Shares,
whichever shall be the earlier.
In case any event set forth in Section 11.1.2 or Section 13
shall occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to the Rights Agent and to
each holder of a Right Certificate, in accordance with Section
25, a notice of the occurrence of such event, which notice
shall describe the event and the consequences of the event to
holders of Rights under Section 11.1.2 and Section 13, and
(ii) all references in this Section 24 to Preferred Shares
shall be deemed thereafter to refer to Common Shares and/or, if
appropriate, other securities.
Notwithstanding anything in this Agreement to the contrary,
prior to the Distribution Date a filing by the Company with the
Securities and Exchange Commission shall constitute sufficient
notice to the holders of securities of the Company, including
the Rights, for purposes of this Agreement and no other notice
need be given.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
PETCO Animal Supplies, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Subject to the provisions of Section 21 and Section 24, 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 shall be sufficiently given or made
35
if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as
follows:
American Stock Transfer and Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
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, prior to the Distribution Date, to the
holder of any certificate representing Common Shares) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments. For so long as the
Rights are then redeemable, the Company may in its sole and
absolute discretion, and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement
in any respect without the approval of any holders of Rights or
Common Shares. From and after the time that the Rights are no
longer redeemable, the Company may, and the Rights Agent shall,
if the Company so directs, from time to time supplement or
amend this Agreement without the approval of any holders of
Rights (i) to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or
inconsistent with any other provisions herein, or (ii) to make
any other changes or provisions in regard to matters or
questions arising hereunder which the Company may deem
necessary or desirable, including but not limited to extending
the Final Expiration Date; provided, however, that no such
supplement or amendment shall adversely affect the interests of
the holders of Rights as such (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), and no
such supplement or amendment may cause the Rights again to
become redeemable or cause this Agreement again to become
amendable other than in accordance with this sentence; provided
further, that the right of the Board of Directors to extend the
Distribution Date shall not require any amendment or supplement
hereunder. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such
supplement or amendment. Without limiting the foregoing, at
any time prior to such time as any Person becomes an Acquiring
Person, the Company and the Rights Agent may amend this
Agreement to lower the thresholds set forth in Sections 1.1 and
3.1 to not less than the greater of (i) any percentage greater
than the largest percentage of the outstanding Common Shares
then known by the Company to be beneficially owned by any
Person (other than an Exempt Person) and (ii) 10%.
Section 27. Exchange.
27.1. Exchange of Common Shares for Rights. The Board of
Directors of the Company may, at its option, at any time after
the occurrence of a Trigger Event, exchange Common Shares for
all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant
to the provisions of Section 11.1.2) by exchanging at an
36
exchange ratio of that number of Common Shares having an
aggregate value equal to the Spread (with such value being
based on the current per share market price (as determined
pursuant to Section 11.4) on the date of the occurrence of a
Trigger Event) per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the date hereof (such amount per Right being hereinafter
referred to as the "Exchange Consideration"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Acquiring Person
shall have become the Beneficial Owner of 50% or more of the
Common Shares then outstanding. From and after the occurrence
of an event specified in Section 13.1, any Rights that
theretofore have not been exchanged pursuant to this Section
27.1 shall thereafter be exercisable only in accordance with
Section 13 and may not be exchanged pursuant to this Section
27.1. The exchange of the Rights by the Board of Directors may
be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish.
27.2. Exchange Procedures. Immediately upon the action of
the Board of Directors of the Company ordering the exchange for
any Rights pursuant to Section 27.1 and without any further
action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive the Exchange
Consideration. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange
shall state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the
number of Rights (other than the Rights that have become void
pursuant to the provisions of Section 11.1.2) held by each
holder of Rights.
27.3. Insufficient Shares. The Company may at its option
substitute, and, in the event that there shall not be
sufficient Common Shares issued but not outstanding or
authorized but unissued to permit an exchange of Rights for
Common Shares as contemplated in accordance with this Section
27, the Company shall substitute to the extent of such
insufficiency, for each Common Share that would otherwise be
issuable upon exchange of a Right, a number of Preferred Shares
or fraction thereof (or equivalent preferred stock, as such
term is defined in Section 11.2) such that the current per
share market price (determined pursuant to Section 11.4) of one
Preferred Share (or equivalent preferred share) multiplied by
such number or fraction is equal to the current per share
market price of one Common Share (determined pursuant to
Section 11.4) as of the date of such exchange.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
37
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 30. Determination and Actions by the Board of
Directors. The Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement
and to exercise the rights and powers specifically granted to
the Board of Directors of the Company or to the Company, or as
may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power
to (i) interpret the provisions of this Agreement and (ii) make
all determinations deemed necessary or advisable for the
administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights
or amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing)
that are done or made by the Board of Directors of the Company,
in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights, as such,
and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Heading. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
38
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first
above written.
PETCO ANIMAL SUPPLIES, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Sr. VP - Finance
AMERICAN STOCK TRANSFER AND TRUST
COMPANY
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
