AMENDMENT NO. 1
to the
AMENDED AND RESTATED RIGHTS AGREEMENT
THIS AMENDMENT NO. 1, dated as of June 4, 1997 (the "Amendment") to the
Amended and Restated Rights Agreement dated as of March 17, 1997 (the "Amended
and Restated Rights Agreement"), between MOTHERS WORK, INC., a Delaware
corporation (the "Company") and STOCKTRANS, INC. (the "Rights Agent").
WHEREAS, effective October 5, 1995 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
distribution of one right for each share of common stock, par value $.01 per
share, of the Company (the "Company Common Stock") outstanding at the Close of
Business on October 16, 1995 (the "Record Date"), and authorized the issuance of
one right (subject to adjustment) for each share of Company Common Stock issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and, except as otherwise provided in Section 22 of the
Rights Agreement, the Distribution Date, each right issued in respect of a share
of Company Common Stock ("Right") initially representing the right to purchase,
upon the terms and subject to the conditions hereinafter set forth, one Unit of
Series B Junior Participating Preferred Stock;
WHEREAS, on March 17, 1997, the Company entered into the Amended and
Restated Rights Agreement to amend the Rights Agreement dated as of October 9,
1995 (the "Rights Agreement") to, among other things, insert provisions relating
to an inadvertent triggering of the impact of the Rights, and to restate the
Rights Agreement, as thereby amended, in its entirety;
WHEREAS, the Company desires to amend the Amended and Restated Rights
Agreement to designate Xxxxxx Xxxxxxx Inc. ("Xxxxxxx") as an Exempt Person
provided that Xxxxxxx shall immediately and thereafter cease to be an Exempt
Person if it, individually or together with its affiliates or associates,
acquires additional shares resulting in an increase in its aggregate beneficial
ownership of Company Common Stock from time to time outstanding by more than
46,833 shares of Company Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. Section 1, paragraph (j) of the Amended and Restated Rights
Agreement is amended to read in its entirety as follows:
(j) "Exempt Person" means:
(i) the Company, any Subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or of any Subsidiary of the
Company, or any person or entity organized, appointed, established or
holding Company Common Stock for or pursuant to the terms of any such plan;
(ii) any member of the Matthias Group, any member of the Meridian
Group, any member of the Mass Financial Group, or any member of the Crown
Group; provided, however, that all the members of the Meridian Group, the
Mass Financial Group or the Crown Group, as applicable, shall immediately
and thereafter cease to be an Exempt Person if the members of such group
shall acquire, at any time after Rights Dividend Declaration Date,
additional shares resulting in an increase in such group's aggregate
beneficial ownership of Company Common Stock from time to time outstanding
by more than 46,833 shares of Company Common Stock; and provided, further,
that all members of the Matthias Group shall immediately and thereafter
cease to be an Exempt Person if such group at any time shall acquire
additional shares resulting in an increase in its aggregate beneficial
ownership of Company Common Stock from time to time outstanding, except for
increases resulting from the future issuance to such members of options
hereafter issued by the Company, or by inheritance or laws of descent;
(iii) Xxxxxx Xxxxxxx Inc. ("Xxxxxxx"); provided, however, that Xxxxxxx
shall immediately and thereafter cease to be an Exempt Person if it,
individually or together with its affiliates or associates, shall acquire,
at any time after May 22, 1997, additional shares resulting in an increase
in its aggregate beneficial ownership of Company Common Stock from time to
time outstanding by more than 46,833; and
(iv) any Person who would otherwise become an Acquiring Person solely
by virtue of a reduction in the number of outstanding shares of Company
Common Stock; provided, however, that such Person shall not be an Exempt
Person if, subsequent to such reduction, such Person shall become the
Beneficial Owner of any additional shares of Company Common Stock.
SECTION 2. The form of Summary of Rights set forth in Exhibit C attached to
the Amended and Restated Rights Agreement is hereby amended to read in its
entirety as set forth in Exhibit C attached hereto.
SECTION 3. The terms "Agreement" and "Rights Agreement" as used in the
Amended and Restated Rights Agreement shall be deemed to refer to the Amended
and Restated Rights Agreement as amended hereby. This Amendment shall be
effective as of the date hereof and, except as set forth herein, the Amended and
Restated Rights Agreement shall remain in full force and effect and be otherwise
unaffected hereby.
SECTION 4. This Amendment may be executed (including by facsimile) in one
or more counterparts and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, all as of the date first above written.
ATTEST: MOTHERS WORK, INC.
By: /s/ Xxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------- ------------------------------
Xxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxxx
Secretary President
ATTEST: STOCKTRANS, INC.
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxxx Xxxxxx
---------------------------- ------------------------------
Xxxxxxx Xxxxxxxx Xxxxxxxx Xxxxxx
Vice-President and President
Secretary
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On October 5, 1995, the Board of Directors of Mothers Work, Inc., a
Delaware corporation (the "Company"), declared a distribution of one Right (as
defined below) for each outstanding share of Common Stock, par value $.01 per
share (the "Company Common Stock"), to stockholders of record at the close of
business on October 16, 1995 (the "Record Date") and for each share of Company
Common Stock issued (including shares distributed from Treasury) by the Company
thereafter and prior to the Distribution Date. Each Right entitles the
registered holder, subject to the terms of the Rights Agreement, to purchase
from the Company one one-thousandth of a share (a "Unit") of Series B Preferred
Stock, par value $.01 per share (the "Preferred Stock"), at a Purchase Price of
$85.00 per Unit, subject to adjustment (the "Right"). The Purchase Price is
payable in cash or by certified or bank check or money order payable to the
order of the Company. On March 17, 1997, the Company entered into an amendment
(the "Amended and Restated Rights Agreement") to its Rights Agreement, dated as
of October 9, 1995, with StockTrans, Inc., as Rights Agent (the "Rights
Agreement"). The Amended and Restated Rights Agreement restates the Rights
Agreement, makes certain minor changes, corrects certain scrivener's errors, and
provides the independent directors of the Company with some discretion in
determining when the Distribution Date (as defined below) shall occur and the
date until which the Rights may be redeemed. In addition, the Amended and
Restated Rights Agreement exempts from its operation any person that acquires,
obtains the right to acquire, or otherwise obtains beneficial ownership of 10%
or more of the then outstanding shares of Company Common Stock without any
intention of changing or influencing control of the Company provided that such
person, as promptly as practicable, divests himself or itself of a sufficient
number of shares of Common Stock so that such person would no longer an
Acquiring Person (as defined below). On June 4, 1997, the Company entered into
an amendment ("Amendment No. 1") to its Amended and Restated Rights Agreement
that designates Xxxxxx Xxxxxxx Inc. ("Xxxxxxx") as an Exempt Person until such
time as Xxxxxxx, individually or together with its affiliates or associates,
increases its beneficial ownership of Company Common Stock by more than 46,833
shares of Company Common Stock. The description and terms of the Rights are set
forth more fully in the Amended and Restated Rights Agreement.
Copies of the Amended and Restated Rights Agreement and the Certificate of
Designation for the Preferred Stock have been filed with the Securities and
Exchange Commission as exhibits to a Current Report on Form 8-K dated March 18,
1997 (the "Form 8-K"). Copies of Amendment No. 1 to the Amended and Restated
Rights Agreement has been filed with the Securities and Exchange Commission as
an exhibit to the Quarterly Report on Form 10-Q dated August ___, 1997 (the
"Form 10-Q"). Copies of the Amended and Restated Rights Agreement, Amendment No.
1, and the Certificate of Designation are available free of charge from the
Company. This summary description of the Rights and the Preferred Stock does not
purport to be complete and is qualified in its entirety by reference to all the
provisions of the Amended and Restated Rights Agreement and the Certificate of
Designation, including the definitions therein of certain terms, which Amended
and Restated Rights Agreement and Certificate of Designation are incorporated
herein by reference.
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Company Common Stock and the
"Distribution Date" will occur (i) upon the earlier of (x) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company or any employee benefit
plan of the Company or such subsidiary) (an "Acquiring Person") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of 10%
or more of the then outstanding shares of Company Common Stock, and (y) 10
business days following the commencement of a tender offer or exchange offer
that would result in an Acquiring Person owning 10% or more of the then
outstanding shares of Company Common Stock, or (ii) such later date as may be
determined by action of a majority of the independent members of the Board of
Directors (such determination to be made prior to such time as any person
becomes an Acquiring Person pursuant to (x) or (y) above). Until the
Distribution Date, (i) the Rights will be evidenced by Company Common Stock
certificates and will be transferred with and only with such Company Common
Stock certificates, (ii) new Company Common Stock certificates issued after the
Record Date (also including shares distributed from Treasury) will contain a
notation incorporating the Amended and Restated Rights Agreement by reference
and (iii) the surrender for transfer of any certificates representing
outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the tenth anniversary of the Rights Agreement unless
earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 10% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Amended
and Restated Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., by means of a reverse stock
split or recapitalization), then, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. The exercise price is the Purchase Price multiplied by the number
of Units of Preferred Stock issuable upon exercise of a Right prior to the
events described in this paragraph. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, all
Rights that are, or (under certain circumstances specified in the Amended
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and Restated Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
and the Company is not the surviving corporation (other than a merger described
in the preceding paragraph), (ii) any Person consolidates or merges with the
Company and all or part of the Company Common Stock is converted or exchanged
for securities, cash or property of any other Person or (iii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise, common stock of the
Acquiring Person having a value equal to two times the exercise price of the
Right.
In light of the fact that certain stockholders of the Company currently
exceed the 10% threshold for distribution of the Rights, the Amended and
Restated Rights Agreement exempts those stockholders from triggering the
distribution of the Rights unless they, individually or together with their
affiliates or associates, increase their beneficial ownership of Company Common
Stock by more than 46,833 shares of Company Common Stock. These stockholders
consist of Meridian Venture Partners, Massachusetts Financial Services Company,
and Crown-Xxxxx Associates, and their respective affiliates and associates.
Additionally, Xxx and Xxxxxxx Xxxxxxxx, the current Chairman and Chief Executive
Officer, and President and Chief Operating Officer, respectively, also
collectively exceed the 10% threshold. Under the Amended and Restated Rights
Agreement, their current level of ownership does not result in the distribution
of the Rights. However, if they (or any of their affiliates or associates)
acquire any additional shares which results in an increase in their aggregate
percentage ownership of outstanding Company Common Stock, other than increases
resulting from the future issuance of employee stock options or from inheritance
or by the laws of descent, then the Rights are distributed.
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until (i) ten business days following the Stock Acquisition
Date or (ii) such later date as a majority of the independent members of the
Board of Directors shall determine (such determination to be made prior to the
date specified in (i) above), a majority of the Independent Directors may redeem
the Rights in whole, but not in part, at a price of $.01 per
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Right (subject to adjustment in certain events) (the "Redemption Price"),
payable, at the election of such majority of the Independent Directors, in cash
or shares of Company Common Stock. Immediately upon the action of a majority of
the Independent Directors ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will be entitled to dividends at the same rate
per share as dividends declared on the Company Common Stock and shall be
entitled to payment of dividends to the extent dividends are declared on the
Company Common Stock. In the event of liquidation, the holder of a Unit of
Preferred Stock will receive the per share amount paid in respect of a share of
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock. Each Unit of Preferred Stock will have one vote, voting
together with the Company Common Stock. The rights of holders of the Preferred
Stock to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of the Company Common Stock.
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