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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
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For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
OFFICE DEPOT, INC.
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(Exact name of registrant as specified in its charter)
Delaware 59-2663954
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
2200 Old Germantown Road, Delray Beach, Florida 33445
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(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box./ /
If this Form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box./ /
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase Rights, New York Stock Exchange, Inc.
with respect to Common Stock,
par value $.01 per share
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
This document contains 68 pages.
--
The Exhibit Index is located on page 8.
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED:
Preferred Stock Purchase Rights
On September 3, 1996, the Board of Directors of Office Depot, Inc. (the
"Company") authorized the issuance of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.01 per share
(the "Common Shares"), of the Company. The distribution is payable to the
stockholders of record at the close of business on September 16, 1996 (the
"Record Date"), and with respect to all Common Shares that become outstanding
after the Record Date and prior to the earliest of the Distribution Date (as
defined below), the redemption of the Rights, the exchange of the Rights, and
the expiration of the Rights (and, in certain cases, following the Distribution
Date). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of a Junior Participating Preferred Stock, Series
A, par value $.01 per share, of the Company (the "Preferred Shares") at a price
of $95.00 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the expiration of the Company's
redemption rights following the date of public disclosure that a person or
group other than certain exempt persons (an "Acquiring Person"), together with
persons affiliated or associated with such Acquiring Person (other than those
that are exempt persons), has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding Common Shares (the
"Stock Acquisition Date") or (ii) the tenth business day after the date of
commencement or public disclosure of an intention to commence a tender offer or
exchange offer by a person other than an exempt person if, upon consummation of
the offer, such person could acquire beneficial ownership of 20% or more of the
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Share certificates
and not by separate certificates. The Rights Agreement provides that, until
the Distribution Date (or earlier redemption, exchange or expiration of the
Rights), the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after September 16, 1996,
upon transfer or new issuance of the Common Shares, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights) the surrender for
transfer of any certificate for Common Shares, with or without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date, and such separate Right Certificates alone will evidence
the Rights.
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The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on September 16, 2006 (the "Expiration Date"), unless earlier redeemed
or exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities, cash or other property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of
the Preferred Shares of certain rights, options or warrants to subscribe for
Preferred Shares or securities convertible into Preferred Shares at less than
the current market price of the Preferred Shares or (iii) upon the distribution
to holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained
earnings) or of subscription rights or warrants (other than those referred to
above). In addition, the Purchase Price payable and the number of Preferred
Shares purchasable, on exercise of a Right is subject to adjustment in the
event that the Company should (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision or combination of
the Common Shares into a different number of Common Shares.
In the event that a person becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights that are or
were beneficially owned by the Acquiring Person and certain related persons and
transferees (which will thereafter be void), shall thereafter have the right to
receive upon exercise of such Right that number of Common Shares (or other
securities) having at the time of such transaction a market value of two times
the exercise price of the Right. In the event that a person becomes an
Acquiring Person and the Company is involved in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Common Stock is changed or exchanged or in a transaction or transactions
in which 50% or more of its consolidated assets or earning power are sold,
proper provision shall be made so that each holder of a Right (other than such
Acquiring Person and certain related persons or transferees) shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right. In addition, the Company's
Board of Directors has the option of exchanging all or part of the Rights
(excluding void Rights) for an equal number of Common Shares in the manner
described in the Rights Agreement.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
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At any time prior to public disclosure that an Acquiring Person has become
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"), payable in
cash, shares (including fractional shares) of Common Stock or any other form of
consideration deemed appropriate by the Board of Directors. Immediately upon
action of the Board of Directors ordering redemption of the Rights, the ability
of holders to exercise the Rights will terminate and the only rights of such
holders will be to receive the Redemption Price.
At any time prior to a public disclosure that an Acquiring Person has
become such, the Board of Directors of the Company may amend or supplement the
Rights Agreement without the approval of the Rights Agent or any holder of the
Rights, except for an amendment or supplement which would change the Redemption
Price, provide for an earlier expiration date of the Rights or change the
Purchase Price. Thereafter, the Board of Directors of the Company may amend or
supplement the Rights Agreement without such approval only to cure ambiguity,
correct or supplement any defective or inconsistent provision or change or
supplement the Rights Agreement in any manner which shall not adversely affect
the interests of the holders of the Rights (other than an Acquiring Person or
an affiliate or associate thereof). Immediately upon the action of the Board
of Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000
times the dividend declared per Common Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment equal to the greater of $100 per share and 1,000 times the
payment made per Common Share. Each Preferred Share will have 1,000 votes per
share, voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received per
Common Share. These rights are protected by customary antidilution provisions.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group other than an exempt person that
attempts to acquire the Company on terms not approved by the Board, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time a person or
group other than an exempt person has acquired beneficial ownership of 20% or
more of the Common Shares, because until such time the Rights may generally be
redeemed by the Company at $.01 per Right.
On September 4, 1996, the Company entered into an Agreement and Plan of
Merger with Staples, Inc. ("Staples") and Marlin Acquisition Corp., a
wholly-owned subsidiary of Staples, pursuant to which Marlin Acquisition Corp.
would merge with and into the Company and the Company would become a
wholly-owned subsidiary of Staples (collectively, the "Merger"). Staples
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and its affiliates are exempt persons for purposes of the rights plan, and
therefore will not become Acquiring Persons by virtue of the Merger.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement attached as
Exhibit 1.1, which is incorporated in this Registration Statement on Form 8-A
by reference.
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Item 2. Exhibits
1.1 Rights Agreement dated as of September 4, 1996 between Office
Depot, Inc. and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, including the form of Certificate of Designation,
Preferences and Rights of Junior Participating Preferred Stock,
Series A attached thereto as Exhibit A, the form of Rights
Certificate attached thereto as Exhibit B and the Summary of
Rights attached thereto as Exhibit C.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
OFFICE DEPOT, INC.
By: /s/ Barry J. Goldstein
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Barry J. Goldstein
Vice President and Secretary
Date: September 6, 1996
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EXHIBIT INDEX
Exhibit No. Description Page No.
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1.1 Rights Agreement dated as of September 4, 1996 between 8
Office Depot, Inc. and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, including the form of
Certificate of Designation, Preferences and Rights of
Junior Participating Preferred Stock, Series A attached
thereto as Exhibit A, the form of Rights Certificate
attached thereto as Exhibit B and the Summary of Rights
attached thereto as Exhibit C.
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EXHIBIT 1.1
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OFFICE DEPOT, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 4, 1996
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Table of Contents
Page
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3. Issuance of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5. Execution, Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6. Transfer, Division, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . . . . . . . . . 14
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . . . . . . . . 16
Section 9. Reservation and Availability of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11. Adjustments to Purchase Price, Number of Shares or Number of Rights . . . . . . . . . . . . . 18
Section 12. Certification of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . 26
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17. Rights Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . 32
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 27. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 28. Benefits of this Agreement; Determinations and Actions by the Board of Directors . . . . . . . 38
Section 29. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 30. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 31. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 32. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 33. Grammatical Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Exhibit A -- Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
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RIGHTS AGREEMENT
Rights Agreement dated as of September 4, 1996, between Office
Depot, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a limited liability company organized under the
laws of State of New Jersey (the "Rights Agent").
RECITALS
The Board of Directors of the Company has authorized and
declared the payment of a dividend of one preferred share purchase right (the
"Right") for each share of Common Stock (as defined in Section 1) outstanding
on the Record Date (as defined in Section 1) and has authorized the issuance of
one Right for each share of Common Stock issued between the Record Date and the
Distribution Date (as defined in Section 1), and, in certain cases following
the Distribution Date. Each Right represents, as of the Record Date, the right
to purchase one one-thousandth of a share of Preferred Stock (as defined in
Section 1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth in this Agreement, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which,
together with all Affiliates and Associates of such Person, is (or has
previously been, at any time after the date of this Agreement, whether or not
such Person(s) continues to be) the Beneficial Owner of 20% or more of the
Common Stock then outstanding (determined without taking into account any
securities exercisable or exchangeable for, or convertible into, Common Stock,
other than any such securities beneficially owned by the Acquiring Person and
Affiliates and Associates of such Person). However, "Acquiring Person" shall
not include any Exempt Person.
A Person does not become an "Acquiring Person" solely as the
result of (i) an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the Common Stock then
outstanding as determined above, or (ii) such Person becoming the Beneficial
Owner of 20% or more of the Common Stock then outstanding as determined above
solely as a result of an Exempt Event; provided, however, that if a Person
becomes the Beneficial Owner of 20% or more of the Common Stock then
outstanding as determined above solely by reason of such a share acquisition by
the Company or any Subsidiary or the occurrence of such an Exempt Event and
such Person shall, after becoming the Beneficial Owner of such Common Stock,
become the Beneficial Owner of any additional shares of Common Stock by any
means whatsoever (other than as a result of the subsequent occurrence of an
Exempt Event, a stock dividend or a subdivision
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of the Common Stock into a larger number of shares or a similar transaction),
then such Person shall be deemed to be an "Acquiring Person."
(b) "Affiliate" of a Person has the meaning given to such
term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement; provided that, for purposes of this
Agreement, the term "Affiliate" shall not include any Person that is an Exempt
Person.
(c) "Associate" of a Person has the meaning given to such
term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement; provided that, for purposes of this
Agreement, the term "Associate" shall not include any Person that is an Exempt
Person.
(d) Except as provided below, a Person is the "Beneficial
Owner" of, and "beneficially owns," any securities:
(i) which such Person or any Affiliate or
Associate of such Person beneficially owns, directly or
indirectly;
(ii) which such Person or any Affiliate or
Associate of such Person has, directly or indirectly, the
right or obligation (whether or not then exercisable or
effective) to acquire pursuant to any agreement, arrangement
or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise;
provided, however, that a Person will not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any Affiliate or Associate of such
Person until such tendered securities are accepted for
purchase or exchange; and provided further, that prior to the
occurrence of a Triggering Event, a Person will not be deemed
the Beneficial Owner of, or to beneficially own, securities
obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or
Associate of such Person has, directly or indirectly, the
right (whether or not then exercisable) to vote, or to direct
the voting of, 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 pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote,
or to direct the voting of, such security (A) arises solely
from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the Exchange Act and applicable rules and
regulations thereunder and (B) is not also then reportable
under Item 6 (or any comparable or successor item) of Schedule
13D under the Exchange Act (or any comparable or successor
schedule or report);
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(iv) which such Person or any Affiliate or
Associate of such Person has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules of the
General Rules and Regulations under the Exchange Act or any
successor provision); or
(v) which are beneficially owned, directly or
indirectly, by any other Person or any Affiliate or Associate
of such other Person with whom such Person or any Affiliate or
Associate of such Person has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in subparagraph (iii) of this Section 1(d))
or disposing of any securities of the Company.
Nothing in this Section 1(d) shall cause a Person engaged in
business as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary,
for purposes of this Agreement, no Person is to be treated as the "Beneficial
Owner" of, or to "beneficially own," any securities owned by any other Person
that is an Exempt Person.
(e) "Business Combination" has the meaning set forth in
Section 13 of this Agreement.
(f) "Business Day" means 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.
(g) "Close of Business" on any given date means 5:00
p.m., New York, New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m. New York, New York time, on
the next succeeding Business Day.
(h) "Common Stock" when used in any context applicable
prior to a Business Combination means the Common Stock, par value $.01 per
share, of the Company (as the same may be changed by reason of any combination,
subdivision or reclassification of the Common Stock). "Common Stock" when used
with reference to any Person (other than the Company prior to a Business
Combination) means shares of capital stock of such Person (if such Person is a
corporation) of any class or series, or units of equity interests in such
Person (if such Person is not a corporation) of any class or series, the terms
of which shares or units do not limit (as a fixed amount and not merely in
proportional terms) the amount of dividends or income payable or distributable
on such shares or units or the amount of assets distributable on such shares or
units upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person and do not provide that such shares or units are subject to
redemption at the option of such Person, or any shares of capital stock or
units of equity interests into which the foregoing shall be reclassified or
changed; provided, however, that
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if at any time there are more than one such class or series of capital
stock of or equity interests in such Person, "Common Stock" of such Person will
include all such classes and series substantially in the proportion of the
total number of shares or other units of each such class or series outstanding
at such time.
(i) "Continuing Director" means (i) any member of the
Board of Directors of the Company, while such Person is a member of the Board
of Directors of the Company, who is not an Acquiring Person (as defined
herein), or an Affiliate or Associate of an Acquiring Person or a
representative, designee or nominee of an Acquiring Person or of any such
Affiliate or Associate, and who was a member of the Board of Directors of the
Company on the date of this Agreement, and (ii) any Person who becomes a member
of the Board of Directors of the Company after the date of this Agreement,
while such Person is a member of the Board of Directors of the Company, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative, designee or nominee of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election, or election,
to the Board of Directors of the Company is recommended or approved by a
majority of the Continuing Directors.
(j) "Current Market Price" per share of Common Stock,
Preferred Stock or Equivalent Shares on any date is the average of the daily
closing prices per share of such Common Stock, Preferred Stock or Equivalent
Shares for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date for the purpose of any computation
under this Agreement except computations made pursuant to Section 11(a)(iv),
and for the Trading Day immediately prior to such date for the purpose of any
computation under Section 11(a)(iv); provided, however, that in the event that
the Current Market Price per share of Common Stock, Preferred Stock or
Equivalent Shares is determined during a period following the announcement by
the issuer of such Common Stock, Preferred Stock or Equivalent Shares of (i) a
dividend or distribution on such Common Stock, Preferred Stock or Equivalent
Shares other than a regular quarterly cash dividend, or (ii) any subdivision,
combination or reclassification of such Common Stock, Preferred Stock or
Equivalent Shares, and prior to the expiration of 30 Trading Days after the
"ex-dividend" date for such dividend or distribution or the record date for
such subdivision, combination or reclassification, then, and in each such case,
the "Current Market Price" must be appropriately adjusted to take into account
such dividend, distribution, subdivision, combination or reclassification. The
closing price for each Trading Day shall be the last sale price, regular way,
on such day, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, on such day, 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 ("NYSE") or, if the Common Stock, Preferred Stock or Equivalent Shares
are not listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal United States national securities exchange on which the Common
Stock, Preferred Stock or Equivalent Shares are listed or admitted to trading
or, if the Common Stock, Preferred Stock or Equivalent Shares are not listed or
admitted to trading on any United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market on such day, as reported by
the
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National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") or such other system then in use. If on such day the Common Stock,
Preferred Stock or Equivalent Shares are not quoted by any such organization,
the average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Common Stock, Preferred Stock
or Equivalent Shares selected by a majority of the Continuing Directors (or if
no Continuing Directors are then in office, the Board of Directors of the
Company) shall be used. If no such market maker is making a market, the fair
market value of such shares on such day as determined in good faith by a
majority of the Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors of the Company) or the Board of Directors of the
issuer of such Common Stock, Preferred Stock or Equivalent Shares must be used,
which determination must be described in a statement filed with the Rights
Agent and is binding and conclusive for all purposes. The term "Trading Day"
means a day on which the principal United States national securities exchange
on which the Common Stock, Preferred Stock or Equivalent Shares are listed or
admitted to trading is open for the transaction of business or, if the Common
Stock, Preferred Stock or Equivalent Shares are not listed or admitted to
trading on any United States national securities exchange, but are traded in
the over-the-counter market and reported by Nasdaq, then any day for which
Nasdaq reports the high bid and low asked prices in the over-the-counter
market, or if the Common Stock, Preferred Stock or Equivalent Shares are not
traded in the over-the-counter market and reported by Nasdaq, then a Business
Day. If the Common Stock, Preferred Stock or Equivalent Shares have not been
so listed or admitted to trading for 30 or more Trading Days or traded in the
over-the-counter market and reported by Nasdaq for 30 or more Trading Days,
"Current Market Price" per share means the fair market value per share as
determined in good faith by a majority of the Continuing Directors (or, if no
Continuing Directors are then in office, the Board of Directors of the
Company), whose determination must be described in a statement filed with the
Rights Agent and will be final, binding and conclusive for all purposes.
(k) "Distribution Date" means the earlier of (i) the day
after the Company's right to redeem the Rights pursuant to Section 23(a)(i)
expires and (ii) the tenth Business Day after commencement or public disclosure
of an intention to commence (including, without limitation, any such
commencement or public disclosure which occurs on or after the date of this
Agreement and prior to the issuance of the Rights) a tender offer or exchange
offer by a Person if, after acquiring the maximum number of securities sought
pursuant to such offer, such Person, or any Affiliate or Associate of such
Person, would be an Acquiring Person. If there is at least one Continuing
Director then in office, the Board of Directors of the Company, with the
concurrence of a majority of the Continuing Directors then in office, may defer
the date set forth in clause (ii) of the preceding sentence to a specified
later date or to an unspecified later date to be determined by a subsequent
action or event.
(l) "Equivalent Shares" means any class or series of
capital stock of the Company, other than the Preferred Stock, which is entitled
to participate on a proportional basis with the Preferred Stock in dividends
and other distributions, including distributions upon the liquidation,
dissolution or winding up of the Company. In calculating the number of any
class or series of Equivalent Shares for purposes of Section 11, the number of
shares, or fractions of a share, of such
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9
class or series of capital stock that is entitled to the same dividend or
distribution as a whole share of Preferred Stock shall be deemed to be one
share.
(m) "Exchange Act" means the Securities Exchange Act of
1934, as amended, and any successor statute.
(n) "Exchange Date" means the time at which the Rights
are exchanged pursuant to Section 11(a)(iv).
(o) "Exempt Event" means with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock solely as a
result of the occurrence of a Triggering Event and the effect of such
Triggering Event on the last proviso of clause (ii) of the definition of
Beneficial Owner, other than a Triggering Event in which such Person becomes an
Acquiring Person.
(p) "Exempt Person" means (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person holding Common Stock for any
such employee benefit plan or for employees of the Company or of any Subsidiary
of the Company pursuant to the terms of any such employee benefit plan or (v)
Staples, Inc., a Delaware corporation, or any of its subsidiaries, affiliates
or associates, as such terms are defined in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(q) "Expiration Date" means the Close of Business
on September 16, 2006.
(r) "Person" means any individual, firm, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity, and shall include any "group" as that term is used in Rule
13d-5(b) under the Exchange Act (or any successor provision).
(s) "Preferred Stock" means the Company's Junior
Participating Preferred Stock, Series A, par value $.01 per share, having the
rights and preferences set forth in the Certificate of Designation, Preferences
and Rights of Junior Participating Preferred Stock, Series A, attached hereto
as Exhibit A.
(t) "Principal Party" means (i) in the case of any
Business Combination described in clause (i), (ii) or (iii) of the first
sentence of Section 13(a), (A) the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted or for which
they are exchanged in such Business Combination or, if there is more than one
such issuer, the issuer of the Common Stock which has the greatest aggregate
market value or (B) if no securities are so issued, the Person that survives or
results from the Business Combination or, if there is more than one such
Person, the Person the Common Stock of which has the greatest aggregate market
value, and (ii) in the case of any Business Combination described in clause
(iv) of the first sentence in Section 13(a), the Person that receives the
greatest portion of the assets or earning power transferred pursuant to
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10
such Business Combination or, if each Person that is a party to such Business
Combination 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 reasonably be determined, whichever of such Persons is the
issuer of the Common Stock which has the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act and such Person is a
direct or indirect Subsidiary of one or more other Persons, then (x) "Principal
Party" refers to whichever of such other Persons has Common Stock that is and
has been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act; (y) if the Common Stocks of two or more of such
other Persons are and have been so registered, "Principal Party" refers to
whichever of such other Persons is the issuer of the Common Stock which has the
greatest aggregate market value; or (z) if the Common Stock of none of such
other Persons has been so registered, "Principal Party" refers to whichever of
such other Persons (other than an individual) is the Person which has the
equity securities with the greatest aggregate market value. In case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth above apply to each of the chains of ownership having an
interest in such joint venture as if such Person were a Subsidiary of both or
all of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in Section 13 in the same ratio as their direct
or indirect interests in such Person bear to the total of such interests.
(u) "Purchase Price" with respect to each Right is
initially $95.00 per one one-thousandth of a share of Preferred Stock, shall be
subject to adjustment from time to time as provided in Sections 11 and 13, and
shall be payable in lawful money of the United States of America in cash or by
certified check or bank draft payable to the order of the Company.
(v) "Record Date" means the Close of Business on
September 16, 1996.
(w) "Redemption Date" means the time at which the Rights
are scheduled to be redeemed as provided in Section 23.
(x) "Redemption Price" has the meaning given to such
term in Section 23.
(y) "Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
(z) "Stock Acquisition Date" means the first date
(including, without limitation, any such date which is on or after the date of
this Agreement and prior to the issuance of the Rights) of public disclosure by
the Company, an Acquiring Person or otherwise that an Acquiring Person has
become such.
(aa) "Subsidiary" has the meaning given to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement.
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11
(bb) "Summary of Rights" means a summary of the Rights, in
substantially the form attached hereto as Exhibit C.
(cc) "Triggering Event" occurs when a Person becoming an
Acquiring Person.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be
issued in respect of and shall be evidenced by the certificates representing
the shares of Common Stock issued and outstanding on the Record Date and shares
of Common Stock issued or which become outstanding after the Record Date and
prior to the earliest of the Distribution Date, the Redemption Date, the
Exchange Date or the Expiration Date (which certificates for Common Stock shall
be deemed to also be certificates evidencing the Rights), and not by separate
certificates; (ii) the registered holders of such shares of Common Stock shall
also be the registered holders of the Rights associated with such shares; and
(iii) the Rights shall be transferable only in connection with the transfer of
shares of Common Stock, and the surrender for transfer of any certificate for
such shares of Common Stock shall also constitute the surrender for transfer of
the Rights associated with such shares. As soon as practicable after the
Company has notified the Rights Agent of the occurrence of the Distribution
Date, the Rights Agent shall mail, by first-class, insured, postage prepaid
mail, to each record holder of the Common Stock as of the Close of Business on
the Distribution Date, as shown by the records of the Company, at the address
of such holder shown on such records, one or more certificates evidencing the
Rights ("Rights Certificates"), in substantially the form of Exhibit B hereto,
evidencing one Right (as adjusted from time to time pursuant to this Agreement)
for each share of Common Stock so held. From and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(o) of this Agreement, at the time of distribution
of the Rights Certificates, the Company may make the necessary and appropriate
adjustments (in accordance with Section 14(a) of this Agreement) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights.
(b) As soon as practicable after the Record Date, the
Company will send a copy of the Summary of Rights by first-class, postage
prepaid mail, to each record holder of Common Stock as of the Close of Business
on the Record Date, as shown by the records of the Company, at the address of
such holder shown on such records.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued or sold by the Company after the Record Date but
prior to the earliest of the Distribution
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12
Date, the Redemption Date, the Exchange Date and the Expiration Date. In
addition, in connection with the issuance or sale of Common Stock by the
Company following the Distribution Date and prior to the earliest of the
Redemption Date, the Exchange Date and the Expiration Date, the Company shall,
with respect to Common Stock so issued or sold pursuant to (i) the exercise of
stock options issued prior to the Distribution Date or under any employee plan
or arrangement created prior to the Distribution Date, or (ii) upon the
exercise, conversion or exchange of securities issued by the Company prior to
the Distribution Date, issue Rights and Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (x) no such Rights and Rights 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 Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued, if,
and to the extent that, appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date or shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Office Depot, Inc. and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, dated as of September 4, 1996 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of Office Depot, Inc.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. Office Depot, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, Rights that were, are or become beneficially
owned by Acquiring Persons or their Associates or Affiliates
(as such terms are defined in the Rights Agreement) may become
null and void and the holder of any of such Rights (including
any subsequent holder) shall not have any right to exercise
such Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to
purchase shares and form of assignment to be printed on the reverse thereof)
shall be in substantially the form of 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
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the
- 11 -
13
Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Distribution Date, and on
their face shall entitle the holders thereof to purchase such number
of shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number of such securities
and the Purchase Price shall be subject to adjustment as provided in
this Agreement.
(b) Notwithstanding any other provision of this
Agreement, (i) any Rights Certificate issued pursuant to this Agreement that
represents Rights beneficially owned or formerly beneficially owned, on or
after the earlier of the Distribution Date and the Stock Acquisition Date, by a
Person known by the Company to be: (A) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person; (B) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee after the Acquiring Person
becomes such; or (C) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (x) a direct or
indirect transfer (whether or not for consideration) from the Acquiring Person
(or from an Associate or Affiliate of such Acquiring Person) to holders of
equity interests in such Acquiring Person (or to holders of equity interests in
an Associate or Affiliate of such Acquiring Person) or to any Person with whom
such Acquiring Person (or an Associate or Affiliate of such Acquiring Person)
has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (y) a direct or indirect transfer which a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors of the Company) has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) of this Agreement, or (ii) any Rights Certificate
issued pursuant to this Agreement upon transfer, exchange, replacement or
adjustment of any other Rights Certificate beneficially owned by a Person
referred to in this Section 4(b), shall contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of the Rights Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf
of the Company by the Company's Chairman of the Board, 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 Company's Secretary or an Assistant Secretary, either manually or by
facsimile signature. Each Rights Certificate shall be countersigned by the
Rights Agent either manually or,
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14
if permitted by the Company, by facsimile signature and shall not be
valid for any purpose unless so countersigned. In case any officer of
the Company who shall have signed a Rights Certificate shall cease to
be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights
Certificate nevertheless may be countersigned by the Rights Agent and
issued and delivered with the same force and effect as though the
Person who signed such Rights Certificate had not ceased to be such
officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
shall keep or cause to be kept, at its principal corporate trust office, books
for registration and transfer of the Rights Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced by each Rights Certificate,
and the certificate number and the date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of 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 earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, divided, combined or exchanged at the
principal corporate office of the Rights Agent. Thereupon the Rights Agent
shall countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. As a
condition to such transfer, division, combination or exchange, the Company may
require payment by the surrendering holder of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection therewith. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have duly completed and executed
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
(or such former or proposed Beneficial Owner) thereof or such Beneficial
Owner's Affiliates or Associates as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case
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15
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company will make
and deliver a new Rights Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Each Right shall entitle (except as otherwise
provided in this Agreement) the registered holder thereof, upon the exercise
thereof as provided in this Agreement, to purchase, for the Purchase Price, at
any time after the Distribution Date and prior to the earliest of the
Expiration Date, the Exchange Date and the Redemption Date, one one-thousandth
(1/1000) of a share of Preferred Stock, subject to adjustment from time to time
as provided in Sections 11 and 13.
(b) The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided in this
Agreement) in whole or in part (except that no fraction of a Right may be
exercised) at any time after the Distribution Date and prior to the earliest of
the Expiration Date, the Exchange Date and the Redemption Date, by surrendering
the Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal corporate
trust office of the Rights Agent, together with payment of the Purchase Price
for each one one-thousandth of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) as to which the Rights are exercised.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock (or, following a Triggering Event or a Business
Combination, other securities, cash or other assets, as the case may be) to be
purchased and an amount in cash, certified bank check or bank draft payable to
the order of the Company equal to any applicable transfer tax required to be
paid by the surrendering holder pursuant to Section 9(d), the Rights Agent
shall, subject to the provisions of this Agreement, thereupon promptly (i)(A)
requisition from any transfer agent for the Preferred Stock (or make available,
if the Rights Agent is the transfer agent for such shares) certificates for the
total number of one one-thousandths of a share of Preferred Stock (or other
securities, as the case may be) 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 shares of
Preferred Stock (or other securities, as the case may be) issuable upon
exercise of the Rights with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock (or other securities, as the case may be) as are to be
purchased (in which case certificates for the Preferred Stock (or other
securities, as the case may be) represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company shall direct
the depositary agent to comply with such request; (ii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the
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16
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder; and (iii) if appropriate, requisition from
the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 of this Agreement and, promptly after
receipt thereof, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate. In the event that the Company is
obligated to issue other securities (including shares of Common Stock) of the
Company, pay cash and/or distribute other property pursuant to this Agreement,
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.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Rights Certificate or to his duly authorized assigns, subject to
the provisions of Section 6 and Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, any Rights that are or were formerly beneficially owned on or after
the earlier of the Distribution Date or the Stock Acquisition Date by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
direct or indirect transferee of an Acquiring Person (or of an Associate or
Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee after the Acquiring Person becomes such, or (iii) a direct or
indirect transferee of an Acquiring Person (or of an Associate or Affiliate of
such Acquiring Person) who becomes or becomes entitled to be a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a direct or indirect transfer (whether or not for
consideration) from the Acquiring Person (or from an Associate or Affiliate of
such Acquiring Person) to holders of equity interests in such Acquiring Person
(or to holders of equity interests in any Associate or Affiliate of such
Acquiring Person) or to any Person with whom the Acquiring Person (or an
Associate or Affiliate of such Acquiring Person) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct
or indirect transfer which a majority of the Continuing Directors (or, if no
Continuing Directors are then in office, the Board of Directors of the Company)
determines is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall,
immediately upon the occurrence of a Triggering Event and without any further
action, be null and void and no holder of such Rights shall have any rights
whatsoever with respect to such Rights whether under this Agreement or
otherwise, provided, however, that, in the case of transferees under clause
(ii) or clause (iii) above, any Rights beneficially owned by such transferee
shall be null and void only if and to the extent such Rights were formerly
beneficially owned by a Person who was, at the time such Person beneficially
owned such Rights, or who later became, an Acquiring Person or an Affiliate or
Associate of such Acquiring Person. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b) are
complied with, but shall have no liability to any holder of a Rights
Certificate or to any other Person as a result of the Company's failure to
make, or any delay in making (including any such failure or delay by the
Continuing Directors and/or the Board of Directors of the Company) any
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17
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to the registered holder of a Rights
Certificate upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former or proposed Beneficial Owner) thereof or the Affiliates or Associates of
such Beneficial Owner (or former or proposed Beneficial Owner) as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, division, 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 Rights Certificates shall be issued in lieu thereof
except as expressly permitted by 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 Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Preferred
Stock.
(a) The Company covenants and agrees that it will cause
to be reserved and kept available at all times out of its authorized and
unissued shares of Preferred Stock or its authorized and issued shares of
Preferred Stock held in its treasury (and, following the occurrence of a
Triggering Event, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares of Common
Stock and/or other securities held in its treasury) free from preemptive rights
or any right of first refusal, a sufficient number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, shares of Common Stock
and/or other securities) to permit the exercise in full of all Rights from time
to time outstanding.
(b) The Company further covenants and agrees, so long as
the Preferred Stock (and, following the occurrence of a Triggering Event,
shares of Common Stock and/or other securities) issuable upon the exercise of
Rights may be listed on any United States national securities exchange, to use
its best efforts to cause, from and after the time that the Rights become
exercisable, all such shares and/or other securities reserved for such issuance
to be listed on such exchange upon official notice of issuance upon such
exercise.
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18
(c) The Company further covenants and agrees that it will
take all such action as may be necessary to ensure that all shares of Preferred
Stock (and, following the occurrence of a Triggering Event or a Business
Combination, shares of Common Stock and/or other securities) delivered upon the
exercise of Rights shall, at the time of delivery of the certificates for such
shares and/or such other securities (subject to payment of the Purchase Price),
be duly and validly authorized and issued, fully paid, nonassessable, freely
tradeable, not subject to liens or encumbrances, and free of preemptive rights,
rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the original issuance or delivery of
the Rights Certificates or of any certificates for shares of Preferred Stock
(or Common Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to (i) pay any transfer
tax which may be payable in respect of any transfer involved in the issuance or
delivery of any Rights Certificates or the issuance or delivery of any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) to a Person other than, or in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or (ii) transfer or deliver any Rights Certificate or
issue or deliver any certificates for shares of Preferred Stock (or Common
Stock and/or other securities as the case may be) upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) as soon as
practicable following a Triggering Event (provided the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) of this Agreement), or as soon as is
required by law following the Distribution Date, as the case may be, to prepare
and file a registration statement on an appropriate form under the Securities
Act with respect to the securities purchasable upon exercise of the Rights,
(ii) to cause such registration statement to become effective as soon as
practicable after such filing, and (iii) to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the earlier of (A) the date as of which Rights are no
longer exercisable for such securities and (B) the Expiration Date. The
Company shall also use its best efforts to take such action as may be necessary
or appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercise of the Rights.
The Company may temporarily suspend, for a period of time not to exceed 90 days
after the date of a Triggering Event described in clause (i) of the first
sentence of this paragraph of Section 9, the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall make 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
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19
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a registration statement has
been declared effective.
Section 10. Preferred Stock Record Date. Each Person in
whose name any certificate for shares of Preferred Stock (or Common Stock
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 Stock (or Common Stock and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock 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 (and/or such other
securities, as the case may be) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
open.
Section 11. Adjustments to Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number and kind of
securities, cash and other property obtainable upon exercise of each Right and
the number of Rights outstanding shall be subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event the Company shall at any time on
or after the date of this Agreement (A) pay a dividend or make a distribution
on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by
a stock split or otherwise) the outstanding Preferred Stock into a larger
number of shares, (C) combine (by a reverse stock split or otherwise) the
outstanding Preferred Stock into a smaller number of shares, or (D) issue any
securities in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the surviving corporation), then in each such event the Purchase
Price and the Redemption Price set forth in Section 23, as each is in effect at
the time of the record date for such dividend or distribution, or of the
effective date of such subdivision, combination or reclassification, shall be
proportionately adjusted by multiplying the Purchase Price and such Redemption
Price by a fraction the numerator of which shall be the total number of shares
of Preferred Stock outstanding immediately prior to the occurrence of such
event and the denominator of which shall be the total number of shares of
Preferred Stock outstanding immediately following the occurrence of such event.
If an event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering
Event, proper provision shall be made so that each holder of a Right, except as
otherwise provided in this Agreement, shall thereafter have the right to
receive, and the Company shall issue, upon exercise thereof at the then-current
Purchase Price required to be paid in order to exercise a Right in accordance
with the terms of this Agreement, in lieu of the number of one one-thousandths
of a share of Preferred Stock or other
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20
securities receivable upon exercise of a Right prior to the occurrence of the
Triggering Event, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then-current Purchase Price by
the number of one-thousandths of a share of Preferred Stock or other securities
for which a Right was then exercisable (without giving effect to such
Triggering Event) and (y) dividing that product by 50% of the Current Market
Price per share of Common Stock on the date of the occurrence of the Triggering
Event (such number of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction or event that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of Section
13 of this Agreement, then only the provisions of Section 13 of this Agreement
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii).
Upon the occurrence of such Triggering Event, the Purchase Price required to be
paid in order to exercise a Right shall be unchanged, and the Purchase Price
shall be appropriately adjusted to reflect, and shall thereafter mean, the
amount required to be paid per share of Common Stock upon exercise of a Right.
(iii) In lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii), the Company may, if a majority of the
Continuing Directors (or if no Continuing Directors are then in office, the
Board of Directors of the Company) determine that such action is necessary or
appropriate and not contrary to the interests of holders of Rights (and, in the
event that the number of shares of Common Stock which are authorized by the
Company's certificate of incorporation, but which are not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights, are
not sufficient to permit the exercise in full of the Rights in accordance with
Section 11(a)(ii), the Company shall) take one or more of the following
actions: (A) reduce the Purchase Price required to be paid in order to
exercise a Right by any amount (the "Reduction Amount," in which event the
number of Adjustment Shares and/or the amount of any Substitute Consideration
(as hereinafter defined) issuable in respect of each Right (the Adjustment
Shares, if any, and the Substitute Consideration, if any, issuable in respect
of a Right are herein collectively referred to as the "Total Consideration")
shall be reduced so that the aggregate value of the Total Consideration
issuable in respect of each Right is equal to the Current Value (as hereinafter
defined) less the Reduction Amount (herein the "Adjusted Current Value"),
and/or (B) make adequate provision with respect to each Right to substitute for
all or part of the Adjustment Shares otherwise obtainable upon exercise of a
Right: (1) cash, (2) other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock which a
majority of the Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors of the Company) have determined to have the same
value as shares of Common Stock (such shares or units of preferred stock being
referred to as "Common Stock Equivalents")), (3) debt securities of the
Company, (4) other assets, or (5) any combination of the foregoing
(collectively, "Substitute Consideration"), having an aggregate value which,
when added to the value of the Adjustment Shares (if any) in respect of which
no substitution is being made, is equal to the Adjusted Current Value. If a
majority of the Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors) determine to issue or deliver any equity
securities (other than Common Stock or Common Stock Equivalents), debt
securities and/or other assets pursuant to this Section 11(a)(iii), the value
of such securities and/or assets shall be determined by a majority of the
Continuing Directors (or if no Continuing Directors are then in office, the
Board of Directors of the Company)
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21
based upon the advice of a nationally recognized investment banking firm
selected by a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors of the Company). If the
Company is required to make adequate provision to deliver value pursuant to the
first sentence of this Section 11(a)(iii) and the Company shall not have made
such adequate provision to deliver value within ninety (90) days following the
first occurrence of a Triggering Event (the "Substitution Period"), then
notwithstanding any provision of Section 11(a)(ii) or this Section 11(a)(iii)
to the contrary, the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the excess of the
Current Value over the Purchase Price. If both Common Stock and cash are to be
delivered pursuant to the preceding sentence, amounts of both Common Stock and
cash shall be delivered upon surrender of each Right in a ratio of Common Stock
to cash that bears the same ratio as the total value of all Common Stock to be
delivered (as determined pursuant to this Section 11(a)(iii)) bears to the
total value of all cash to be delivered; provided, however, that the Company
may adjust such ratio to avoid issuing any fractional shares of Common Stock so
long as the method of adjustment is applied consistently to each holder of
Rights entitled to receive value thereon pursuant to this Section 11(a)(iii).
To the extent that the Company determines that some action is to be taken
pursuant to the first and/or third sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights but in no event to a time later than the
expiration of the Substitution Period. 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. Upon any change in the
Adjustment Shares obtainable upon exercise of a Right pursuant to this Section
11(a)(iii), the Purchase Price shall thereafter mean the amount, if any,
required to be paid upon exercise of a Right for the Adjustment Shares, if any,
and the Substitute Consideration, if any, then issuable or deliverable upon
exercise of a Right, and a majority of the Continuing Directors (or if no
Continuing Directors are then in office, the Board of Directors of the Company)
shall make any necessary provisions to ensure that the provisions of Section
11(e) shall thereafter apply as appropriate to the Total Consideration. For
purposes of this Section 11(a)(iii), (A) "Current Value" shall be the product
derived by multiplying (x) the number of Adjustment Shares issuable in respect
of each Right determined under Section 11(a)(ii), by (y) the Current Market
Price per share of Common Stock on the date of the Triggering Event, and (B)
the value of each share of Common Stock and each share or unit of any "Common
Stock Equivalent" shall be deemed conclusively to be equal to the Current
Market Price per share of the Common Stock on the date of the Triggering Event.
(iv) A majority of the Continuing Directors (or if no
Continuing Directors are then in office, the Board of Directors of the Company)
may, at their option, at any time and from time to time after the first
occurrence of a Triggering Event, cause the Company to exchange, 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 7(e)
hereof), shares of Common Stock or Common Stock Equivalents at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted
- 20 -
22
to reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Any partial exchange shall be effected
on a pro rata basis based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
Immediately upon the action of a majority of the Continuing
Directors (or if no Continuing Directors are then in office, the Board of
Directors of the Company) ordering the exchange of any Rights pursuant to this
Section 11(a)(iv) and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock and/or Common Stock Equivalents equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange and in addition, the Company shall
promptly mail a notice of any such exchange to all of the holders of such
Rights in accordance with Section 25 of this Agreement; provided, however, that
the failure to give, any delay in giving or any defect in, such notice shall
not affect the validity of such exchange. Each such notice of exchange will
state the method by which the exchange of the Common Stock or Common Stock
Equivalents for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. In the event that the
number of shares of Common Stock which is authorized but not outstanding or
reserved for issuance for a purpose other than exercise of the Rights is not
sufficient to permit any exchange of Rights as contemplated in accordance with
this Section 11(a)(iv), the Board of Directors of the Company shall take all
such action within its power as may be necessary to authorize additional shares
of Common Stock for issuance upon exchange of the Rights. The Company shall
not be required to issue fractions of shares of Common Stock or Common Stock
Equivalents or to distribute certificates which evidence fractional shares of
Common Stock or Common Stock Equivalents. In lieu of such fractional shares of
Common Stock or Common Stock Equivalents, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional shares of Common Stock or Common Stock Equivalents would otherwise
be issuable an amount in cash equal to the product derived by multiplying (x)
the subject fraction, by (y) the last sale price of the Company's Common Stock
on the fifth Trading Day following the public announcement of the exchange by
the Company, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices on such day, in either case on a when issued
basis (taking into account the exchange), as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE (or, if the Company' Common Stock is not so
listed or traded, then as determined in the manner provided under the
definition of "Current Market Price," adjusted to take into account the
exchange). For the purposes of this Section 11(a)(iv) the value of any Common
Stock Equivalent on any date shall be the same as the value of the Common
Stock, as determined pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date
of this Agreement fix a record date for the issuance of rights, options or
warrants to holders of Preferred Stock entitling them to subscribe for or
purchase Preferred Stock or Equivalent Shares (or securities convertible into
- 21 -
23
Preferred Stock or Equivalent Shares) at a price per share of Preferred Stock
or Equivalent Shares (or, in the case of a convertible security, having a
conversion price per share of Preferred Stock or Equivalent Shares) less than
the Current Market Price per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of
Preferred Stock and Equivalent Shares (if any) outstanding on such record date,
plus the number of shares of Preferred Stock or Equivalent Shares, as the case
may be, which the aggregate exercise and/or conversion price for the total
number of shares of Preferred Stock or Equivalent Shares, as the case may be,
which are obtainable upon exercise and/or conversion of such rights, options,
warrants or convertible securities would purchase at such Current Market Price,
and the denominator of which shall be the number of shares of Preferred Stock
and Equivalent Shares (if any) outstanding on such record date, plus the number
of additional shares of Preferred Stock or Equivalent Shares, as the case may
be, which may be obtained upon exercise and/or conversion of such rights,
options, warrants or convertible securities. 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 a majority of the Continuing Directors (or, if no Continuing Directors are
then in office, 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. Preferred Stock and Equivalent Shares 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 adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not issued following such
adjustment, the Purchase Price shall be readjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(c) In case the Company shall at any time after the date
of this Agreement fix a record date for the making of a distribution to holders
of Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options or warrants referred to in Section 11(b)), cash
(other than a regular periodic cash dividend at an annual rate not in excess
of: (x) 125% of the annual rate of the regular cash dividend paid on the
Preferred Stock during the immediately preceding fiscal year (or, if the
Preferred Stock was not outstanding during such preceding fiscal year, then
125% of the annual rate of the regular cash dividend paid on the Common Stock
during such year), or (y) in the event that a regular cash dividend was not
paid on the Preferred Stock (or Common Stock) during such preceding fiscal
year, 5% of the Current Market Value of the Preferred Stock on the date such
regular cash dividend was first declared), property, evidences of indebtedness,
or assets, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Current
Market Price per share of Preferred Stock on such record date, less the fair
market value (as determined in good faith by a majority of the Continuing
Directors (or if no Continuing Directors are then in office, by the Board of
Directors of the Company) whose determination shall be described in a statement
filed with the Rights Agent) of such securities, cash, property, evidences of
indebtedness or assets to be so
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24
distributed in respect of one share of Preferred Stock, and the denominator of
which shall be such Current Market Price per share of Preferred Stock on such
record date. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not made
following such adjustment, the Purchase Price shall be readjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) Except as provided below, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(d) 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, to the nearest ten-thousandth of a share of Common Stock, or to
the nearest ten-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which requires such adjustment or
(ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) of this Agreement, the holder of any Right
thereafter exercised shall become entitled to receive any securities of the
Company other than shares of Preferred Stock, thereafter the Purchase Price and
the number of such other securities so receivable upon exercise of any Right
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares
of Preferred Stock contained in this Section 11 and the provisions of Sections
7, 9, 10, 12, 13, 14 and 24 with respect to the shares of Preferred Stock shall
apply on like terms to any such other securities.
(f) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
shares of Preferred Stock or other securities, cash or other property
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided in this Agreement.
(g) Unless the Company shall have exercised its election
as provided in Section 11(h), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(a)(i), 11(b) and 11(c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one ten-millionth of a share of Preferred Stock) obtained by (i)
multiplying the number of one one-thousandths of a share of Preferred Stock
covered by a Right immediately prior to adjustment pursuant to this Section
11(g) by the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
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25
(h) The Company may elect, on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of shares of
Preferred Stock for which a Right may be exercised, to adjust the number of
Rights, in lieu of an adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right outstanding prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to such
adjustment by the Purchase Price in effect immediately after such adjustment.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least 10 days after the
date of the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(h) the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Rights Certificates on such record date a new Rights Certificate
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 Rights Certificates held by such holders
prior to the date of adjustment and upon surrender thereof (if required by the
Company), new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for in this Agreement (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Rights Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the
Purchase Price or the number or kind of shares issuable upon the exercise of
the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-thousandth of a share of
Preferred Stock and the number of shares of Preferred Stock which were
expressed in the initial Rights Certificates issued hereunder.
(j) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of one
one-thousandth of a share of Preferred 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 one one-thousandth shares of such Preferred
Stock at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require
that an adjustment be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuance
to the holder of any Right exercised after such record date the shares of
Preferred Stock and other securities, cash or property of the Company, if any,
issuable upon
- 24 -
26
such exercise over and above the shares of Preferred Stock and other
securities, cash or property of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or other securities, cash or
property upon the occurrence of the event requiring such adjustment.
(l) 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 combination or subdivision of the Preferred
Stock, issuance wholly for cash of any Preferred Stock at less than the Current
Market Price, issuance wholly for cash of Preferred Stock or securities which
by their terms are convertible into or exchangeable or exercisable for
Preferred Stock, stock dividends or issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock, shall not be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not
(i) consolidate with, (ii) merge with or into, or (iii) directly or indirectly
sell, lease, or otherwise transfer or dispose of (in one transaction or a
series of related transactions) assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries taken as
a whole, to any other Person if (A) at the time of or immediately after such
consolidation, merger, sale, lease, transfer or disposition there are any
rights, warrants, securities or other instruments outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (B) prior to, simultaneously with or
immediately after such consolidation, merger, sale, lease, transfer or
disposition the stockholders (or equity holders) of the Person who constitutes,
or would constitute, the Principal Party in such transaction shall have
received a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (C) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
Company shall not consummate any such consolidation, merger, sale, lease,
transfer or disposition unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the
Stock Acquisition Date it will not, except as permitted by Section 11(a)(iv),
26 or 29(b) of this Agreement, 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, directly or indirectly, diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary
notwithstanding, if the Company shall at any time prior to the Distribution
Date (i) pay a dividend or distribution on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
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27
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, and the Purchase Price under, and the number of one
one-thousandths of a share of Preferred Stock issuable in respect of, the
Rights, shall be proportionately adjusted, so that following such event one
Right (with the Purchase Price and the number of one one-thousandths of a share
proportionately adjusted thereunder) shall thereafter be associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date. For example, if the Company effects a
two-for-one stock split at a time when each Right (if it becomes exercisable)
would entitle the holder to purchase one one-thousandth of a share of Preferred
Stock for a Purchase Price of $"Z", then following such stock split each
previous Right would be split into two current Rights and thereafter each
current Right, upon becoming exercisable, would (subject to further adjustment)
entitle the holder to purchase one two-thousandth of a share of Preferred Stock
at a Purchase Price of 1/2 x $"Z".
Section 12. Certification of Adjustments. Whenever an
adjustment is made as provided in Sections 11 and 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 Preferred Stock a copy of
such certificate, and (c) mail a brief summary thereof to each holder of a
Rights Certificate (or, if no Rights Certificates have been issued, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 25. Notwithstanding the foregoing sentence, the failure of the Company
to give such notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment. Any adjustment to be made pursuant to
Sections 11 and 13 of this Agreement shall be effective as of the date of the
event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) A "Business Combination" shall be deemed to occur in
the event that, in or following a Triggering Event, (i) the Company shall,
directly or indirectly, consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(m) and Section 11(n) of this Agreement) in a transaction in
which the Company is not the continuing, resulting or surviving corporation of
such merger or consolidation, (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m) and Section 11(n) of
this Agreement) shall, directly or indirectly, consolidate with the Company, or
shall merge with and into the Company, in a transaction in which the Company is
the continuing, resulting or surviving corporation of such merger or
consolidation and, in connection with such merger or consolidation, all or part
of the Common Stock shall be changed (including, without limitation, any
conversion into or exchange for securities of the Company or of any other
Person, cash or any other property), (iii) the Company shall, directly or
indirectly, effect a share exchange in which all or part of the Common Stock
shall be changed (including, without limitation, any conversion into or
exchange for securities of any other Person, cash or any other property) or
(iv) the Company shall, directly or indirectly, sell, lease, exchange,
mortgage, pledge or otherwise transfer or dispose of (or one or more of its
Subsidiaries shall directly or indirectly sell, lease,
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28
exchange, mortgage, pledge or otherwise transfer or dispose of), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
any of its Subsidiaries in one or more transactions each and all of which
comply with Section 11(m) and Section 11(n) of this Agreement).
In the event of a Business Combination, proper provision shall
be made so that each holder of a Right (except as otherwise provided in this
Agreement) shall thereafter have the right to receive, upon the exercise
thereof at the Purchase Price immediately prior to the first occurrence of a
Triggering Event multiplied by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event (without giving effect to the Triggering
Event) in accordance with the terms of this Agreement, such number of shares of
Common Stock of the Principal Party as shall be equal to the result obtained by
(x) multiplying the Purchase Price immediately prior to the first occurrence of
a Triggering Event by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event (without giving effect to the Triggering
Event), and (y) dividing that product by 50% of the Current Market Price per
share of the Common Stock of such Principal Party immediately prior to the
consummation of such Business Combination. All shares of Common Stock of any
Person for which any Right may be exercised after consummation of a Business
Combination as provided in this Section 13(a) shall, when issued upon exercise
thereof in accordance with this Agreement, be duly and validly authorized and
issued, fully paid, nonassessable, freely tradeable, not subject to liens or
encumbrances, and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof of any
kind or nature whatsoever.
(b) After consummation of any Business Combination, (i)
the Principal Party shall be liable for, and shall assume, by virtue of such
Business Combination and without the necessity of any further act, all the
obligations and duties of the Company pursuant to this Agreement, (ii) the term
"Company" as used in this Agreement shall thereafter be deemed to refer to such
Principal Party, and (iii) such Principal Party shall take all steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9) in connection with
such Business Combination as necessary to ensure that the provisions of this
Agreement shall thereafter be applicable, as nearly as reasonably may be, in
relation to the shares of its Common Stock thereafter deliverable upon the
exercise of the Rights.
(c) The Company shall not consummate any Business
Combination unless prior thereto (i) the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have not been
issued or reserved for issuance (other than shares reserved for issuance
pursuant to this Agreement to the holders of Rights) to permit the exercise in
full of the Rights in accordance with this Section 13, (ii) the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the fulfillment of the Principal Party's
obligations and the terms as set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable on or after the
date of such Business Combination, the
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29
Principal Party, at its own expense, shall (A) prepare and file, if necessary,
a registration statement on an appropriate form under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights, (B) use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, (C) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act, (D) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the state securities or "blue sky" laws of such jurisdictions as may be
necessary or appropriate, (E) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a United States national
securities exchange, and (F) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights, (iii) the Company and the
Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms, and (iv) the Company and the Principal
Party shall have filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number of shares
of Common Stock of such issuer which may be purchased upon the exercise of each
Right after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly
apply to successive Business Combinations. In the event a Business Combination
shall be consummated at any time after the occurrence of a Triggering Event,
the Rights which have not theretofore been exercised shall thereafter be
exercisable for the consideration and in the manner described in Section 13(a).
Following a Business Combination, the provisions of Section 11(a)(ii) of this
Agreement shall be of no effect.
(e) Notwithstanding any other provision of this
Agreement, no adjustment to the number of shares of Preferred Stock (or
fractions of a share) or other securities, cash or other property for which a
Right is exercisable or the number of Rights outstanding or associated with
each share of Common Stock or any similar or other adjustment shall be made or
be effective if such adjustment would have the effect of reducing or limiting
the benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Sections 11 and 13, unless
the terms of this Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not
effect any Business Combination if at the time of, or immediately after such
Business Combination, there are any rights, options, warrants or other
instruments outstanding which would diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(g) Without limiting the generality of this Section 13,
in the event the nature of the organization of any Principal Party shall
preclude or limit the acquisition of Common Stock of
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30
such Principal Party upon exercise of the Rights as required by Section 13(a)
as a result of a Business Combination, it shall be a condition to such Business
Combination that such Principal Party shall take such steps (including, but not
limited to, a reorganization) as may be necessary to ensure that the benefits
intended to be derived under this Section 13 upon the exercise of the Rights
are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional
Rights or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, the Company may at its option pay to the
registered holders of the Rights Certificates with respect to which such
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall be the
closing price of a Right for the Trading Day immediately prior to the date on
which such fractional Rights otherwise would have been issuable. The closing
price for any Trading Day shall be the last sale price on such day, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on such day, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NYSE or, if the
Rights are not listed or admitted to trading on the NYSE, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal United States 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 United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices on such day in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on such day the Rights are not
quoted by any such system, the average of the closing bid and asked prices on
such day as furnished by a professional market maker making a market in the
Rights selected by a majority of the Continuing Directors (or if no Continuing
Directors are then in office, the Board of Directors of the Company). If on
such day no such market maker is making a market in the Rights, the current
market value of the Rights on such day shall be determined in good faith by a
majority of the Continuing Directors (or if no Continuing Directors are then in
office, the Board of Directors of the Company), whose determination shall be
described in a statement filed with the Rights Agent and shall be binding and
conclusive for all purposes.
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one one-thousandth of a share of Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock). Fractions of shares of
Preferred Stock 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
Stock. In lieu of fractional shares of Preferred Stock that are not
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31
integral multiples of one one-thousandth of a share of Preferred Stock, the
Company may at its option (i) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or in bearer form
(represented by a certificate) which shall entitle the holder to receive a full
one one-thousandth of a share of Preferred Stock upon the surrender of such
scrip or warrants aggregating a full one one-thousandth of a share of Preferred
Stock, or (ii) pay to the registered holders of Rights Certificates at the time
such Rights Certificates are exercised as provided in this Agreement an amount
in cash equal to the same fraction of the current market value of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of a share of Preferred Stock shall be the closing price of a share of
Preferred Stock (as determined pursuant to the second sentence of the
definition of "Current Market Price" in Section 1) for the Trading Day
immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions
of shares of Common Stock or Common Stock Equivalents or to distribute
certificates which evidence fractional shares of Common Stock or Common Stock
Equivalents. In lieu of such fractional shares of Common Stock or Common Stock
Equivalents, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock or
Common Stock Equivalents would otherwise be issuable an amount in cash equal to
the product derived by multiplying (x) the subject fraction, by (y) Current
Market Price of the Company's Common Stock.
(c) The holder of a Right by his acceptance thereof
expressly waives any right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as otherwise provided in this
Agreement).
Section 15. Rights of Action. Except as otherwise
provided, all rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, any registered holders of associated Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution
Date, any share of associated Common Stock), without the consent of the Rights
Agent or of the holder of any other Right, may, on his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
rights pursuant to this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders Concerning
Transfer and Ownership of Rights. Every holder of a Right by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
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32
(b) after the Distribution Date, the Rights Certificates
will be transferable on the registry books of the Rights Agent only if
surrendered at the principal corporate trust office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat
the Person in whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificate or the associated
Common Stock certificate made by anyone other than the Company, the transfer
agent for the Common Stock or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote or to
receive dividends or distributions or shall be deemed for any purpose the
holder of Preferred Stock or any other securities, cash or other property which
may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained in this Agreement or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company, including, without limitation, any
right (i) to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, (ii) to give or withhold consent to any
corporate action, (iii) to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 24), (iv) to receive
dividends, distributions or subscription rights, (v) to institute, as a holder
of Preferred Stock or other securities issuable on exercise of the Rights
represented by any Rights Certificate, any derivative action on behalf of the
Company, or otherwise, until and only to the extent that the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable 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, willful misconduct or breach
of this Agreement on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against any claim
of liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or
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33
document reasonably believed by it to be genuine and to be signed, executed
and, when necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21.
In case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificate so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificate either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this 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
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter (including, without limitation, the identity of any Acquiring Person
or any Affiliate or Associate of an Acquiring Person or the determination of
Current Market Price) 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 specifically prescribed in this Agreement) may be deemed
to be conclusively proved and established
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34
by a certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
the negligence, bad faith, willful misconduct or breach of this Agreement by it
or its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery of this Agreement (except the due execution and delivery of this
Agreement by the Rights Agent) or in respect of the validity or execution of
any Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change or adjustment in the terms of the Rights (including
the manner, method or amount thereof) provided for in Sections 3, 11, 13 or 23
or the ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights evidenced
by Rights Certificates after actual notice of any change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock, Common Stock or other securities to be issued pursuant to
this Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock, Common Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performance
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though the
Rights
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35
Agent were not serving as such under this Agreement. Nothing in this Agreement
shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents.
(j) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company.
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 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 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 Stock or
Preferred Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding any other provision
of this Agreement, in no event shall the resignation or removal of a Rights
Agent be effective until a successor Rights Agent shall have been appointed and
have accepted such appointment. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the State of
Connecticut (or of any other state of the United States so long as such
corporation is authorized to conduct a corporate trust or banking business in
the State of Connecticut) in good standing, which is authorized under such laws
to exercise corporate trust powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. 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 such purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Common Stock or Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
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provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
Certificates to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing new Rights in such form as may be approved by a
majority of the Continuing Directors (or if no Continuing Directors are then in
office, by the Board of Directors of the Company) to reflect any adjustment or
change in the Purchase Price per share and the number or kind or class of
securities, cash or other property purchasable under the Rights Certificates
made in accordance with the provisions of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the Stock Acquisition Date and
(ii) the Expiration Date, redeem all but not less than all of the
then-outstanding Rights at a redemption price of $.01 per Right (the
"Redemption Price") appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement. The
Company may, at its option, pay the Redemption Price in cash, shares (including
fractional shares) of Common Stock (based on the Current Market Price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) At the time and date of effectiveness set forth in
any resolution of the Board of Directors of the Company ordering the redemption
of the Rights, without any further action and without any further 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; provided,
however, that such resolution of the Board of Directors of the Company may be
revoked, rescinded or otherwise modified at any time prior to the time and date
of effectiveness set forth in such resolution, in which event the right to
exercise will not terminate at the time and date originally set for such
termination by the Board of Directors of the Company. As soon as practicable
after the action of the Board of Directors of the Company ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and 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 issuance of Rights
Certificates, on the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner provided in this Agreement shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. In any case, failure to give such notice by mail, or any
defect in the notice, to any particular holder of Rights shall not affect the
sufficiency of the notice to other holders of Rights. In the case of a
redemption permitted under this Section 23, the Company may, at its option,
discharge all of its obligations with respect to the Rights by (i) issuing a
press release announcing the manner of redemption of the Rights and (ii)
mailing payment of the Redemption Price to the registered holders
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of the Rights at their last addresses as they appear on the registry books of
the Rights Agent or, prior to the issuance of the Rights Certificates, on the
registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. 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, and
other than in connection with the purchase of shares of Common Stock prior to
the earlier of the Distribution Date and the Expiration Date.
Section 24. Notice of Certain Events. In case the
Company, on or after the Distribution Date, shall propose to (a) pay any
dividend payable in stock of any class to the holders of its Preferred Stock or
to make any other distribution to the holders of its Preferred Stock (other
than a regular periodic cash dividend at an annual rate not in excess of 125%
of the annualized rate of the cash dividend paid on the Preferred Stock during
the immediately preceding fiscal year), or (b) offer to the holders of its
Preferred Stock rights, options, or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice
of such proposed action, which shall specify any record date for the purposes
of such stock dividend or distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution, or winding up is to take place and if
such holders will or may participate therein, the date of participation therein
by the holders of Common Stock and/or Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein, if any, by
the holders of Preferred Stock, whichever shall be the earlier. The failure to
give notice as required by this Section 24 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote
upon any such action.
In case any Triggering Event or Business Combination shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 25, notice of the occurrence of such Triggering Event or Business
Combination, which shall specify the Triggering Event or Business Combination
and include a description of the consequences of such event to holders of
Rights under Section 11(a)(ii) or 13.
- 36 -
38
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
Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Office Depot, Inc.
2200 Old Germantown Road
Delray Beach, Florida 33445
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
4 Station Square, Third Floor
Pittsburgh, Pennsylvania 15219
Attention: Administration Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent
by first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Supplements and Amendments.
(a) At any time prior to the Stock Acquisition Date, a
majority of the Continuing Directors (or, if no Continuing Directors are then
in office, the Board of Directors of the Company) may, except as provided in
Section 26(c), and the Rights Agent shall, if so directed, supplement or amend
any provision of this Agreement without the approval of any holders of Rights.
(b) From and after the Stock Acquisition Date, a majority
of the Continuing Directors (or, if no Continuing Directors are then in office,
the Board of Directors of the Company) may, except as provided in Section
26(c), and the Rights Agent shall, if so directed, amend this Agreement without
the approval of any holders of Rights Certificates (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained in this Agreement which
may be defective or inconsistent with any other provision of this Agreement, or
(iii) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person).
- 37 -
39
(c) No supplement or amendment to this Agreement shall be
made which changes the Purchase Price, the number of shares of Preferred Stock,
other securities, cash or other property for which a Right is then exercisable
or the Redemption Price or provides for an earlier Expiration Date.
(d) Immediately upon the action of a majority of the
Continuing Directors (or, if no Continuing Directors are then in office, the
Board of Directors) providing for any amendment or supplement pursuant to this
Section 26, and without any further action and without notice, such amendment
or supplement shall be deemed effective. Promptly following the adoption of
any amendment or supplement pursuant to this Section 26, the Company shall
deliver to the Rights Agent a copy, certified by the Secretary or any Assistant
Secretary of the Company, of resolutions of a majority of the Continuing
Directors (or, if no Continuing Directors are then in office, the Board of
Directors of the Company) adopting such amendment or supplement. Upon such
delivery, the amendment or supplement shall be administered by the Rights Agent
as part of this Agreement in accordance with the terms of this Agreement, as so
amended or supplemented.
Section 27. 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.
Section 28. Benefits of this Agreement; Determinations
and Actions by the Board of Directors. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the registered holders of Rights any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights.
For purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act (or any successor provision); provided,
however, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(d) of this
Agreement. The Board of Directors of the Company (or, where specifically
provided for herein, a majority of the Continuing Directors) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Continuing Directors, the Board
of Directors of the Company or 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 a determination to redeem or not redeem the Rights,
to exchange or not exchange the Rights for Common Stock or other securities of
the Company, or to amend or supplement this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all
- 38 -
40
omissions with respect to the foregoing) which are done or made by the Board of
Directors of the Company (or, where specifically provided for herein, a
majority of the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other Persons, and (y) not subject the Board of Directors of the
Company or the Continuing Directors to any liability to the holders of the
Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of
this Agreement or the application thereof to any Person or to any circumstance
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.
(b) If legal counsel to the Company delivers to the
Company a written opinion to the effect that, as a result of changes in federal
law or Delaware law, any term, provision, covenant or restriction of this
Agreement may be invalid, void, or unenforceable, then, notwithstanding any
other provision of this Agreement, the Company and the Rights Agent may amend
this Agreement to modify, revise or delete such term, provision, covenant or
restriction to the extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each
Rights 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 internal laws of such state applicable to
contracts to be made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed
in counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and both such counterparts shall together constitute but one
and the same instrument.
Section 32. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions of this Agreement.
Section 33. Grammatical Construction. Throughout this
Agreement, where such meanings would be appropriate, (a) any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms
(e.g., references to "he" shall also include "she" and "it" and references to
"who" and "whom" shall also include "which"), and (b) the plural form of nouns
and pronouns shall include the singular and vice-versa (e.g., references to
"Continuing Directors" shall also mean "Continuing Director" if there be only
one Continuing Director at the relevant time).
* * * * *
- 39 -
41
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
OFFICE DEPOT, INC.
By: /s/ Barry J. Goldstein
------------------------------------
Its: Executive Vice President
------------------------------------
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Marilyn Spisak
------------------------------------
Its: Vice President
------------------------------------
- 40 -
42
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
OFFICE DEPOT, INC.
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Barry J. Goldstein, Exxecutive Vice President--Finance, Chief Financial
Officer and Secretary of Office Depot, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 151 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Certificate of Incorporation of the Corporation, the Board of
Directors on September 3, 1996, adopted the following resolution creating a
series of 500,000 shares of Preferred Stock designated as Junior Participating
Preferred Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board by ARTICLE
FOUR of the Restated Certificate of Incorporation and out of the Preferred
Stock authorized therein, the Board hereby authorizes that a series of
Preferred Stock of the Corporation be, and it hereby is, created, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Junior Participating Preferred Stock, Series A" (the "Series A
Preferred Stock") and the number of shares constituting such series shall be
500,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders
of shares of Series A Preferred Stock, in preference to the holders of
Common Stock and of any other junior stock,
43
shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth day of March,
June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $25.00 or (b) the Adjustment
Number (as defined below) times the aggregate per share amount of
all cash dividends, and the Adjustment Number times the aggregate
per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of
Series A Preferred Stock. The "Adjustment Number" shall initially
be 1000. In the event the Corporation shall at any time after
September 16, 1996 (i) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock into a greater number of shares or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment Number
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of
this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25.00
per share on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend
and before
- 2 -
44
such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to a number of votes equal to the Adjustment Number
(as adjusted from time to time pursuant to Section 2(A) hereof) on
all matters submitted to a vote of the stockholders of the
Corporation.
(B) Except as otherwise provided herein, in the Certificate
of Incorporation or by-laws, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, the occurrence of such contingency shall mark
the beginning of a period (herein called a "default period") that
shall extend until such time when all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current
quarterly period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for
payment. During each default period, (1) the number of Directors
shall be increased by two, effective as of the time of election of
such Directors as herein provided, and (2) the holders of Series A
Preferred Stock and the holders of other Preferred Stock upon which
these or like voting rights have been conferred and are exercisable
(the "Voting Preferred Stock") with dividends in arrears equal to
six quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect such two Directors.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that such
voting right shall not be exercised unless the holders of at least
one-third in number of the shares of
- 3 -
45
Voting Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of the holders of Common Stock
shall not affect the exercise by the holders of Voting Preferred
Stock of such voting right.
(iii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than
10% of the total number of shares of Voting Preferred Stock
outstanding, irrespective of series, may request, the calling of a
special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the
President, an Executive Vice President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Voting Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be given
to each holder of record of Voting Preferred Stock by mailing a
copy of such notice to him at his last address as the same appears
on the books of the Corporation. Such meeting shall be called for
a time not earlier than 10 days and not later than 60 days after
such order or request or, in default of the calling of such meeting
within 60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning
in the aggregate not less than 10% of the total number of shares of
Voting Preferred Stock outstanding. Notwithstanding the provisions
of this paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors
voting as a class, (x) the Directors so elected by the holders of
Voting Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in the Board
of Directors may be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class or
classes of stock which elected the Director whose office shall have
become vacant. References in this paragraph (C) to Directors
elected by the holders of a particular class or classes of stock
shall include Directors elected by such Directors to fill vacancies
as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Voting Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected
by the holders of Voting Preferred Stock as a class shall terminate
and (z) the number of Directors shall be such number as may be
provided for in the Certificate of Incorporation or By-Laws
irrespective of any increase made pursuant to the provisions of
paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in
the Certificate of Incorporation or By-Laws). Any vacancies in the
Board of Directors
- 4 -
46
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except dividends paid ratably on the
Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the
respective series or classes.
- 5 -
47
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares
at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued shares
of preferred stock and may be reissued as part of a new series of preferred
stock to be created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (A)
to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock shall
have received the greater of (i) $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, and (ii) an aggregate amount per share,
equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(A) hereof) times the aggregate amount to be distributed per share to
holders of Common Stock, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock then outstanding shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number (as
adjusted from time to time pursuant to Section 2(A) hereof) times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged.
Section 8. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 9. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
of the outstanding shares of Series A Preferred Stock, voting together as a
single class.
- 6 -
48
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 6th day of
September, 1996.
---------------------------------------
Barry J. Goldstein
Executive Vice President--Finance,
Chief Financial Officer and Secretary
- 7 -
49
Exhibit B
[Form of Rights Certificate]
Certificate No. R- Rights
----------
NOT EXERCISABLE AFTER SEPTEMBER 16, 2006 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION OR EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]
Rights Certificate
OFFICE DEPOT, INC.
This certifies that _________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of September 3, 1996 (the "Rights Agreement")
between Office Depot, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability
company (the "Agent"), unless notice of redemption shall have been previously
given by the Company, to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M. (New York, New York time) on September 16, 2006, at the principal
corporate trust office of the Rights Agent, or at the office of its successor
as Rights Agent, one one-thousandth of a fully paid nonassessable share of the
Junior Participating Preferred Stock, Series A, par value $.01 per share, of
the Company (the "Preferred Stock"), at a purchase price (the "Purchase Price")
of $95.00 per one one-thousandth share, upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
Purchase Price may be paid in cash or by certified bank check or bank draft
payable to the order of the Company.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock or other securities, cash or other property which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
50
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Distribution Date and the
Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, or (ii) a direct or indirect transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person),
such Rights may become null and void, in which event the holder of any such
Right (including any subsequent holder) shall not have any right with respect
to such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them
in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of
the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced
by the Rights Certificate or Rights Certificates surrendered entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (a) may be redeemed by the Board of Directors of the Company
at its option at a redemption price of $.01 per Right subject to adjustment,
payable, at the election of the Company, in cash or shares (including
fractional shares) of Common Stock or such other consideration as the Board of
Directors may determine, at any time prior to the earlier of (i) 12:00 a.m.
(midnight, New York, New York time) on the Stock Acquisition Date, and (ii) the
Expiration Date, or, (b) may be exchanged after the Stock Acquisition Date by
the Board of Directors of the Company at its option in whole or in part for
shares of the Company's Common Stock or other Company securities.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof the Company may elect to (i) evidence fractional
shares by depositary receipts, (ii) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or in bearer form
(represented by a certificate) which shall entitle the holder to receive a full
share upon the surrender of such scrip or warrants aggregating a full share, or
(iii) make a cash payment, as provided in the Rights Agreement.
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51
No holder of this Rights Certificate, as such, shall be entitled to vote
or to receive dividends on, or shall be deemed for any purpose the holder of,
Preferred Stock or of any other securities, cash or property which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company, including,
without limitation, any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
* * * * *
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _______ __, ____.
OFFICE DEPOT, INC.
By:
--------------------------------
Title:
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
----------------------------
Authorized Officer
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52
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ___________________________________
hereby sells, assigns and transfers unto __________________________________
___________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of Attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of Office Depot,
Inc., with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
53
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate or any Rights evidenced hereby are are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did did not acquire any of the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated:
---------------------------- ------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment
is not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and, in the case of
an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
54
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: OFFICE DEPOT, INC.
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid
to:
Please insert social security
or other identifying number:
--------------------------
- ------------------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------------------
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby exercised shall be mailed to and registered in the name of
the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number:
-----------------------
- ------------------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------------------
55
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate are are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned did did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated:
-------------------------- --------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election to
Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any
Rights evidenced hereby, will affix a legend to that effect on any Rights
Certificate issued in whole or partial exchange for this Rights Certificate.
56
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On September 3, 1996, the Board of Directors of Office Depot, Inc. (the
"Company") authorized the issuance of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.01 per share
(the "Common Shares"), of the Company. The distribution is payable to the
stockholders of record at the close of business on September 16, 1996 (the
"Record Date"), and with respect to all Common Shares that become outstanding
after the Record Date and prior to the earliest of the Distribution Date (as
defined below), the redemption of the Rights, the exchange of the Rights, and
the expiration of the Rights (and, in certain cases, following the Distribution
Date). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of a Junior Participating Preferred Stock, Series
A, par value $.01 per share, of the Company (the "Preferred Shares") at a price
of $95.00 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) the expiration of the Company's
redemption rights following the date of public disclosure that a person or
group other than certain exempt persons (an "Acquiring Person"), together with
persons affiliated or associated with such Acquiring Person (other than those
that are exempt persons), has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding Common Shares (the
"Stock Acquisition Date") or (ii) the tenth business day after the date of
commencement or public disclosure of an intention to commence a tender offer or
exchange offer by a person other than an exempt person if, upon consummation of
the offer, such person could acquire beneficial ownership of 20% or more of the
outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Share certificates
and not by separate certificates. The Rights Agreement provides that, until
the Distribution Date (or earlier redemption, exchange or expiration of the
Rights), the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date, upon
transfer or new issuance of the Common Shares, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights) the surrender for
transfer of any certificate for Common Shares, with or without such notation or
a copy of this Summary of Rights being attached thereto, will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date, and such separate Right Certificates alone will evidence
the Rights.
57
The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on September 16, 2006 (the "Expiration Date"), unless earlier redeemed
or exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities, cash or other property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of
the Preferred Shares of certain rights, options or warrants to subscribe for
Preferred Shares or securities convertible into Preferred Shares at less than
the current market price of the Preferred Shares or (iii) upon the distribution
to holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained
earnings) or of subscription rights or warrants (other than those referred to
above). In addition, the Purchase Price payable and the number of Preferred
Shares purchasable, on exercise of a Right is subject to adjustment in the
event that the Company should (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision or combination of
the Common Shares into a different number of Common Shares.
In the event that a person becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights that are or
were beneficially owned by the Acquiring Person and certain related persons and
transferees (which will thereafter be void), shall thereafter have the right to
receive upon exercise of such Right that number of Common Shares (or other
securities) having at the time of such transaction a market value of two times
the exercise price of the Right. In the event that a person becomes an
Acquiring Person and the Company is involved in a merger or other business
combination transaction where the Company is not the surviving corporation or
where Common Stock is changed or exchanged or in a transaction or transactions
in which 50% or more of its consolidated assets or earning power are sold,
proper provision shall be made so that each holder of a Right (other than such
Acquiring Person and certain related persons or transferees) shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a market
value of two times the exercise price of the Right. In addition, the Company's
Board of Directors has the option of exchanging all or part of the Rights
(excluding void Rights) for an equal number of Common Shares in the manner
described in the Rights Agreement.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
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58
At any time prior to public disclosure that an Acquiring Person has become
such, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"), payable in
cash, shares (including fractional shares) of Common Stock or any other form of
consideration deemed appropriate by the Board of Directors. Immediately upon
action of the Board of Directors ordering redemption of the Rights, the ability
of holders to exercise the Rights will terminate and the only rights of such
holders will be to receive the Redemption Price.
At any time prior to public disclosure that an Acquiring Person has become
such, the Board of Directors of the Company may amend or supplement the Rights
Agreement without the approval of the Rights Agent or any holder of the Rights,
except for an amendment or supplement which would change the Redemption Price,
provide for an earlier expiration date of the Rights or change the Purchase
Price. Thereafter, the Board of Directors of the Company may amend or
supplement the Rights Agreement without such approval only to cure ambiguity,
correct or supplement any defective or inconsistent provision or change or
supplement the Rights Agreement in any manner which shall not adversely affect
the interests of the holders of the Rights (other than an Acquiring Person or
an affiliate or associate thereof). Immediately upon the action of the Board
of Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000
times the dividend declared per Common Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment equal to the greater of $100 per share and 1,000 times the
payment made per Common Share. Each Preferred Share will have 1,000 votes per
share, voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received per
Common Share.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group other than an exempt person that
attempts to acquire the Company on terms not approved by the Board, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors prior to the time a person or
group other than an exempt person has acquired beneficial ownership of 20% or
more of the Common Shares, because until such time the Rights may generally be
redeemed by the Company at $.01 per Right.
On September 4, 1996, the Company entered into an Agreement and Plan of
Merger with Staples, Inc. ("Staples") and Marlin Acquisition Corp., a
wholly-owned subsidiary of Staples, pursuant to which Marlin Acquisition Corp.
would merge with and into the Company and the Company would become a
wholly-owned subsidiary of Staples (collectively, the "Merger"). Staples
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59
and its affiliates are exempt persons for purposes of the rights plan, and
therefore will not become Acquiring Persons by virtue of the Merger.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to an Application for Registration on Form
8-A and as an Exhibit to the Company's Current Report on Form 8-K. A copy of
the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
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