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LAMONTS APPAREL, INC.
and
NORWEST BANK MINNESOTA, N.A., AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF JANUARY 12, 1999
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TABLE OF CONTENTS
PAGE
1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. Appointment Of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . .7
3. Issuance Of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . .7
4. Form Of Right Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5. Countersignature And Registration. . . . . . . . . . . . . . . . . . . . . . . .9
6. Transfer, Split-Up, Combination And Exchange Of Right Certificates;
Mutilated, Destroyed, Lost Or Stolen Right Certificates. . . . . . . . . . . . 10
7. Exercise Of Rights; Purchase Price; Expiration Date Of Rights. . . . . . . . . 11
8. Cancellation And Destruction Of Right Certificates . . . . . . . . . . . . . . 13
9. Reservation And Availability Of Preferred Stock. . . . . . . . . . . . . . . . 14
10. Preferred Stock Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 15
11. Adjustment Of Purchase Price, Number And Kind Of Shares Or Number Of
Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. Certificate Of Adjusted Purchase Price Or Number Of Shares.. . . . . . . . . . 23
13. Consolidation, Merger Or Sale Or Transfer Of Assets Or Earning Power . . . . . 23
14. Fractional Rights And Fractional Shares. . . . . . . . . . . . . . . . . . . . 26
15. Rights Of Action.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16. Agreement Of Right Holders.. . . . . . . . . . . . . . . . . . . . . . . . . . 28
17. Right Certificate Holder Not Deemed A Stockholder. . . . . . . . . . . . . . . 28
18. Concerning The Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 29
19. Merger Or Consolidation Or Change Of Name Of Rights Agent. . . . . . . . . . . 30
20. Duties Of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21. Change Of Rights Agent.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22. Issuance Of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . 34
23. Redemption And Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . 34
24. Notice Of Certain Events.. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
25. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
27. Certain Beneficial Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Exhibit A - Form of Certificate of Designation, Preferences and Rights
of Series RP Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B - Form of Right Certificate. . . . . . . . . . . . . . . . . . . . . . .B-1
Exhibit C - Form of Summary of Rights. . . . . . . . . . . . . . . . . . . . . . .C-1
RIGHTS AGREEMENT
This RIGHTS AGREEMENT (the "AGREEMENT") is made as of this 12th day of
January, 1999 by and between Lamonts Apparel, Inc., a Delaware corporation (the
"CORPORATION"), and Norwest Bank Minnesota, N.A. (the "RIGHTS AGENT"), with
respect to the following facts and circumstances.
A. The Board of Directors of the Corporation has authorized and
declared a dividend of one preferred share purchase right (a "RIGHT") for each
share of Common Stock (as hereinafter defined) of the Corporation, and each
share of Class B Common Stock of the Corporation, outstanding at the Close of
Business (as hereinafter defined) on January 22, 1999 (the "RECORD DATE"), each
Right representing the right to purchase one one-thousandth (1/1000th) of a
share of Preferred Stock (as hereinafter defined), upon the terms and subject to
the conditions herein set forth.
B. The Board of Directors of the Corporation has further authorized and
directed the issuance of one Right with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date (as such
terms are hereinafter defined); PROVIDED, HOWEVER, that Rights may be issued
with respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date and the Final
Expiration Date in accordance with the provisions of Section 22 of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
1.1. "ACQUIRING PERSON" means, except as otherwise provided in
Section 27, any Person who or which, together with all Affiliates and
Associates of such Person, without the prior approval of the Corporation's
Board of Directors, shall be the Beneficial Owner of shares representing 15%
or more of the Voting Power (other than as a result of a Permitted Offer) or
was such a Beneficial Owner at any time after the date hereof, whether or not
such person continues to be the Beneficial Owner of shares representing 15%
or more of the Voting Power. Notwithstanding the foregoing: (A) the term
"Acquiring Person" shall not include (i) the Corporation, (ii) any Subsidiary
of the Corporation, (iii) any employee benefit plan of the Corporation or of
any Subsidiary of the Corporation, (iv) any Person or entity organized,
appointed or established by the Corporation or any Subsidiary of the
Corporation for or pursuant to the terms of any such plan, or (v) any Person
who or which, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares
representing 15% or more of the Voting Power as a result of the acquisition
of shares of Common Stock directly from the Corporation; and (B) no Person
shall be deemed to be an "Acquiring Person" either (i) as a result of the
acquisition of Common Stock by the Corporation which, by reducing the number
of shares of Common Stock outstanding, increases the proportional number of
shares beneficially owned by such Person together with all Affiliates and
Associates of such Person; PROVIDED, HOWEVER, that if (X) a Person would
become an Acquiring Person (but for the operation of this subclause (B)(i))
as a result of the acquisition of shares of Common Stock by the Corporation,
and (Y) after such share acquisition by the Corporation, such Person, or an
Affiliate or Associate of such Person, becomes the Beneficial Owner of any
additional shares of Common Stock, then such Person shall be deemed an
Acquiring Person, or (ii) if (X) within eight (8) days after such Person
would otherwise have become an Acquiring Person (but for the operation of
this subclause (B)(ii)), such Person notifies the Board of Directors of the
Corporation that such Person did so inadvertently and (Y) within two (2)
Business Days (as defined in Section 1.8 hereof) after such notification,
such Person is the Beneficial Owner of shares representing less than 15% of
the Voting Power.
1.2. "ACT" means the Securities Act of 1933, as amended.
1.3. "ADJUSTED NUMBER OF SHARES" and "ADJUSTED PURCHASE PRICE" have
the respective meanings set forth in Section 11.1.3 hereof.
1.4. "ADJUSTMENT SHARES" has the meaning set forth in
Section 11.1.2 hereof.
1.5. "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
1.6. The term "CURRENT PER SHARE MARKET PRICE" shall have the
meaning set forth in Section 11.4.1 hereof when used with respect to a
"Security" (as defined in said Section 11.4.1) and shall have the meaning set
forth in Section 11.4.2 when used with respect to the Preferred Stock.
1.7. A Person is the "BENEFICIAL OWNER" of and "BENEFICIALLY OWNS"
any securities which:
1.7.1. such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
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1.7.2. such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; PROVIDED, HOWEVER, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
1.7.3. are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to subclause (B) of
Section 1.7.2), or disposing of any securities of the Corporation.
Notwithstanding anything in this Section 1.7 to the
contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Corporation, shall mean
the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially hereunder.
Notwithstanding anything in this Section 1.7 to the
contrary, no Person shall be deemed to beneficially own any securities solely
by reason of such Person being a party to a customary agreement pursuant to
which such Person acts or agrees to act as an underwriter with respect to a
bona fide public offering of securities.
No decision reached, or action taken, by the Board of
Directors of the Corporation or any committee thereof shall cause any Person
(or any Affiliate or Associate of such Person) who is a member of the Board
of Directors of the Corporation or such committee to be deemed, for the
purposes of this Agreement, to be a Beneficial Owner of any securities
beneficially owned by any other Person (or any Affiliate or Associate of such
Person) who is a member of the Board of Directors of the Corporation or any
committee thereof solely by reason of such membership of the Board of
Directors or any committee thereof or participation in the decisions or
actions thereof on the part of either or both of such Persons.
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1.8. "BUSINESS DAY" means any day other than a Saturday, a Sunday,
a day on which banking institutions in the State of Minnesota or Washington are
obligated by law or executive order to close, or a United States federal
holiday.
1.9. "CAPITAL STOCK EQUIVALENTS" has the meaning set forth in
Section 11.1.3 hereof.
1.10. "CLOSE OF BUSINESS" on any given date means 5:00 P.M.,
Washington time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it means 5:00 P.M., Washington time, on the next succeeding
Business Day.
1.11. "COMMON STOCK" when used with reference to the Corporation
means the Class A Common Stock of the Corporation or, in the event of a
subdivision, combination or consolidation with respect to such shares of Common
Stock, the shares of Common Stock resulting from such subdivision, combination
or consolidation. "Common Stock" when used with reference to any Person other
than the Corporation means the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
1.12. "CORPORATION" means Lamonts Apparel, Inc., a Delaware
corporation, and also means a Principal Party to the extent provided in
Section 13.1 hereof.
1.13. "DISTRIBUTION DATE" has the meaning set forth in Section 3.1
hereof.
1.14. "EQUIVALENT PREFERRED STOCK" has the meaning set forth in
Section 11.2 hereof.
1.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
1.16. "EXCHANGE RATIO" has the meaning set forth in Section 26.1
hereof.
1.17. "FINAL EXPIRATION DATE" has the meaning set forth in
Section 7.1 hereof.
1.18. "INTERESTED STOCKHOLDER" means any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest, or any other
Person acting directly or indirectly on behalf of or in concert with any such
Acquiring Person, Affiliate or Associate.
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1.19. "NASDAQ" has the meaning set forth in Section 11.4.1 hereof.
1.20. "PERMITTED OFFER" means a tender or exchange offer which is
for all outstanding shares of Common Stock of the Corporation at a price and on
terms determined, prior to the purchase of shares under such tender or exchange
offer, by at least a majority of the members of the Board of Directors who are
not officers of the Corporation and who are not Acquiring Persons or Affiliates,
Associates, nominees or representatives of an Acquiring Person, to be adequate
(taking into account all factors that such directors deem pertinent including,
without limitation, prices that could reasonably be achieved if the Corporation
or its assets were sold on an orderly basis designed to realize maximum value)
and otherwise in the best interests of the Corporation, its stockholders (other
than the Person or any Affiliate or Associate thereof on whose basis the offer
is being made) and other relevant constituencies, taking into account all
factors that such directors may deem pertinent.
1.21. "PERSON" means any individual, firm, partnership,
corporation, limited liability company, limited liability partnership, trust,
association, joint venture or other entity, and includes any successor (by
merger or otherwise) of such entity.
1.22. "PREFERRED STOCK" means shares of the Corporation's Series RP
Preferred Stock, par value $.01 per share, having the relative rights,
preferences and limitations set forth in the Form of Certificate of Designation,
Preferences and Rights of Series RP Preferred Stock attached to this Agreement
as Exhibit A.
1.23. "PRINCIPAL PARTY" has the meaning set forth in Section 13.2
hereof.
1.24. "PRORATION FACTOR" has the meaning set forth in Section 11.1.3
hereof.
1.25. "PURCHASE PRICE" has the meaning set forth in Section 4.1
hereof.
1.26. "RECORD DATE" has the meaning set forth in Recital A hereof.
1.27. "REDEMPTION DATE" has the meaning set forth in Section 7.1
hereof.
1.28. "REDEMPTION PRICE" has the meaning set forth in Section 23.1.1
hereof.
1.29. "RIGHT CERTIFICATE" has the meaning set forth in Section 3.1
hereof.
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1.30. "RIGHTS" has the meaning set forth in Recital A hereof.
1.31. "RIGHTS AGENT" means Norwest Bank Minnesota, N.A., as Rights
Agent hereunder, and, from the time of its succession, any successor Rights
Agent under Section 19 or Section 21 hereof.
1.32. "SECTION 11.1.2 EVENT" has the meaning set forth in
Section 11.1.2 hereof.
1.33. "SECTION 13 EVENT" means any event described in clause (x),
(y) or (z) of Section 13.1 hereof.
1.34. "SHARES ACQUISITION DATE" means the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Corporation or
an Acquiring Person that an Acquiring Person has become such or that facts exist
as a result of which there exists an Acquiring Person; PROVIDED, that, if such
Person is determined by the Board of Directors of the Corporation not to have
become an Acquiring Person pursuant to subclause (B)(ii) of Section 1.1 hereof,
then no Shares Acquisition Date shall be deemed to have occurred.
1.35. "SUBSIDIARY" of any Person means any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
1.36. "SUMMARY OF RIGHTS" has the meaning set forth in Section 3.2
hereof.
1.37. "TRADING DAY" has the meaning set forth in Section 11.4.1
hereof.
1.38. "TRIGGERING EVENT" means any Section 11.1.2 Event or any
Section 13 Event.
1.39. "VOTING POWER" means the combined voting power of the voting
securities of the Corporation, outstanding on any relevant determination date,
to vote generally in the election of directors of the Corporation.
1.40. The term "VOTING SECURITIES" has the meaning set forth in
Section 13.1 hereof.
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2. APPOINTMENT OF RIGHTS AGENT.
2.1. The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment. The Corporation may from
time to time appoint such co-Rights Agents as it may deem necessary or
desirable. The Rights Agent shall have no duty to supervise, and in no event
shall be liable for, the acts or omissions of any such co-Rights Agent.
3. ISSUANCE OF RIGHT CERTIFICATES.
3.1. Until the earlier of (i) the Shares Acquisition Date or (ii)
the Close of Business on the tenth (10th) day (or such later date as may be
determined by action of the Corporation's Board of Directors) after the date of
the commencement by any Person (other than the Corporation, any Subsidiary of
the Corporation, any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation or any Person or entity organized, appointed or
established by the Corporation or any Subsidiary of the Corporation for or
pursuant to the terms of any such plan) of, or after the date of the first
public announcement of the intention of any Person (other than the Corporation,
any Subsidiary of the Corporation, any employee benefit plan of the Corporation
or of any Subsidiary of the Corporation or any Person or entity organized,
appointed or established by the Corporation or any Subsidiary of the Corporation
for or pursuant to the terms of any such plan) to commence (which intention to
commence remains in effect for five (5) Business Days after such announcement),
a tender or exchange offer the consummation of which would result in any Person
becoming an Acquiring Person (including, in the case of both (i) and (ii), any
such date which is after the date of this Agreement and prior to the issuance of
the Rights) (the "DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject
to the provisions of Section 3.2 hereof) by the certificates for shares of
Common Stock registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Corporation); PROVIDED, HOWEVER, that
if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution Date,
the Corporation will prepare and execute, the Rights Agent will countersign, and
the Corporation will send or cause to be sent by first-class, postage-prepaid
mail, to each record holder of shares of Common Stock as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Corporation, a Right Certificate, substantially in the form of
Exhibit B hereto (a "RIGHT CERTIFICATE"), evidencing one Right for each share of
Common Stock so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
3.2. As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form
7
of Exhibit C hereto (the "SUMMARY OF RIGHTS"), by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock as of
the Close of Business on the Record Date, at the address of such holder shown
on the records of the Corporation. With respect to certificates for shares
of Common Stock outstanding as of the Record Date, until the Distribution
Date the Rights will be evidenced by such certificates registered in the
names of the holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for transfer of
any certificate for shares of Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with such shares of Common
Stock.
3.3. Certificates for shares of Common Stock that become
outstanding (including, without limitation, reacquired shares of Common Stock
referred to in the last sentence of this Section 3.3) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date, shall be deemed also to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between Lamonts Apparel, Inc. and Norwest Bank
Minnesota, N.A., as Rights Agent, dated as of January
12, 1999 (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 Lamonts Apparel, 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. Lamonts Apparel, 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
set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring
Person or an Affiliate or Associate thereof (as defined
in the Rights Agreement) and certain related persons,
whether currently held by or on behalf of such Person or
by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the shares of Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented
thereby. In the event that the Corporation purchases or acquires any shares of
Common Stock after the Record Date but prior to the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), any Rights
associated with such shares of Common Stock shall be deemed cancelled and
retired so that the Corporation shall not be entitled to exercise any Rights
associated with the Common Stock that are no longer outstanding.
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4. FORM OF RIGHT CERTIFICATE.
4.1. The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Corporation may deem appropriate (which
may not affect the duties and responsibilities of the Rights Agent) and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-thousandths (1/1000ths) of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth (1/1000th) of a share of
Preferred Stock set forth therein in accordance with Section 7.2 hereof (the
"PURCHASE PRICE"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
4.2. Any Right Certificate issued pursuant to Section 3.1 or
Section 22 hereof that represents Rights that are null and void pursuant to
Section 7.6 of this Agreement and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and upon notice by the Corporation to the Rights
Agent that this Section 4.2 has become applicable) the following legend:
The Rights represented by this Right 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 Right Certificate
and the Rights represented hereby are null and void.
The provisions of Section 7.6 of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Right Certificate.
5. COUNTERSIGNATURE AND REGISTRATION.
5.1. The Right Certificates shall be executed on behalf of the
Corporation by its President or any Vice President and the Secretary or an
Assistant Secretary, either manually or by facsimile signature, shall have
affixed thereto the Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Corporation, either
manually or by facsimile signature. The Right Certificates shall be
countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Corporation who shall have signed any of the
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Right Certificates shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Right Certificates may nevertheless be countersigned by the
Rights Agent and issued and delivered by the Corporation with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Corporation; and any Right Certificate may
be signed on behalf of the Corporation by any Person who, at the actual date
of the execution of such Right Certificate, shall be a proper officer of the
Corporation to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such Person was not such an officer.
5.2. Following the Distribution Date, and receipt by the Rights
Agent of a list of record holders of Rights, the Rights Agent will keep or
cause to be kept, at its office designated pursuant to Section 25 hereof as
the appropriate place for surrender or transfer of the Right Certificates,
books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on the face
of each of the Right Certificates and the certificate number and the date of
each of the Right Certificates.
6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
6.1. Subject to the provisions of Section 4.2, Section 7.6 and
Section 14 hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right Certificates
may be transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to purchase a
like number of one one-thousandths (1/1000ths) of a share of Preferred Stock
(or, following a Triggering Event, other securities, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Corporation shall
be obligated to take any action whatsoever with respect to the transfer of any
such surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Corporation or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Section 4.2,
Section 7.6 and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Corporation may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
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The Rights Agent may in its sole discretion require the Corporation or the
Person entitled to such Right Certificate to provide evidence that such
payment has been made prior to countersigning and delivering any Right
Certificate pursuant to this Section 6.1.
6.2. Upon receipt by the Corporation and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security satisfactory to them, and, at the
Corporation's request, reimbursement to the Corporation and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Corporation will make and deliver a new Right Certificate of like tenor to
the Rights Agent for countersignature and delivery to the registered holder
in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
7.1. Subject to Section 7.6 hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price for
the total number of one one-thousandths (1/1000ths) of a share of Preferred
Stock (or other securities, as the case may be) as to which such surrendered
Rights are exercised, at or prior to the earlier of (i) the Close of Business
on January 12, 2009 (the "FINAL EXPIRATION DATE"), or (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (the "REDEMPTION
DATE").
7.2. The Purchase Price for each one one-thousandth (1/1000th)
of a share of Preferred Stock pursuant to the exercise of a Right shall
initially be $6.00, shall be subject to adjustment from time to time as
provided in the next sentence and in Sections 11 and 13.1 hereof and shall be
payable in accordance with paragraph 7.3 below. Anything in this Agreement
to the contrary notwithstanding, in the event that at any time after the date
of this Agreement and prior to the Distribution Date, the Corporation shall
(i) declare or pay any dividend on the Common Stock payable in Common Stock
or (ii) effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in any such case, each share of Common Stock outstanding
following such subdivision, combination or consolidation shall continue to
have a Right associated therewith and the Purchase Price following any such
event shall be proportionately adjusted to equal the result obtained by
multiplying the Purchase Price immediately prior to such event by a fraction
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. The
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adjustment provided for in the preceding sentence shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
7.3. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, accompanied by payment of the
Purchase Price for the Preferred Stock (or other securities, as the case may
be) to be purchased and an amount equal to any applicable tax or governmental
charge required to be paid by the holder of such Right Certificate in
accordance with Section 6 hereof by certified check, cashier's check or money
order payable to the order of the Corporation, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Stock certificates for the number of shares of Preferred Stock to
be purchased, and the Corporation hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Corporation, in its
sole discretion, shall have elected to deposit the Preferred Stock issuable
upon exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths (1/1000ths) of a share of Preferred Stock as are to be
purchased (in which case certificates for the Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Corporation will direct the depositary agent to comply with
such requests, (ii) when appropriate, requisition from the Corporation the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in such name
or names as may be designated by such holder, and (iv) when appropriate,
after receipt thereof, deliver such cash to or upon the order of the
registered holder of such Right Certificate. In the event that the
Corporation is obligated to issue other securities (including shares of
Common Stock) of the Corporation pursuant to Section 11.1 hereof, the
Corporation will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if and when
necessary to comply with this Agreement.
7.4. In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11.1.2, the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the Rights represented by such Right
Certificate no longer include the rights provided by Section 11.1.2 of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby that continue to include
the rights provided by Section 11.1.2.
7.5. In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14 hereof, or the Rights Agent shall place an
appropriate notation on the Right Certificate with respect to those Rights
exercised.
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7.6. Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11.1.2 Event, any Rights
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or from any Affiliate or Associate thereof) to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has a continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of
Directors of the Corporation has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7.6, shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The
Corporation shall notify the Rights Agent when this Section 7.6 applies and
shall use all reasonable efforts to insure that the provisions of this
Section 7.6 and Section 4.2 hereof are complied with, but neither the
Corporation nor the Rights Agent shall have any liability to any holder of
Right Certificates or other Person as a result of the Corporation's failure
to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
7.7. Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Corporation or
the Rights Agent shall reasonably request.
8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Corporation or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by the provisions of this Rights
Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Corporation
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Corporation, or shall, at the written
request of the Corporation, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Corporation.
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9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK.
9.1. The Corporation covenants and agrees that, at all times
prior to the occurrence of a Section 11.1.2 Event, it will cause to be
reserved and kept available out of its authorized and unissued Preferred
Stock, or any authorized and issued Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the occurrence of a
Section 11.1.2 Event, shall, to the extent reasonably practicable, so reserve
and keep available a sufficient number of shares of Common Stock (and/or
other securities) that may be required to permit the exercise in full of the
Rights pursuant to this Agreement.
9.2. So long as the shares of Preferred Stock (and, after the
occurrence of a Section 11.1.2 Event, shares of Common Stock or any other
securities) issuable upon the exercise of the Rights may be listed on any
stock exchange, the Corporation shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares or other
securities reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
9.3. The Corporation covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(or shares of Common Stock and/or other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
non-assessable shares or securities.
9.4. The Corporation covenants and agrees that it will pay when
due and payable any and all taxes and governmental charges that may be
payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Corporation
shall not, however, be required to pay any tax or governmental charge that
may be payable in respect of any transfer or delivery of Right Certificates
to a person other than, or the issuance or delivery of certificates or
depositary receipts for the shares of Preferred Stock (or shares of Common
Stock and/or other securities, as the case may be) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any certificates or
depositary receipts for shares of Preferred Stock (or shares of Common Stock
and/or other securities, as the case may be) upon the exercise of any Rights,
until any such tax or governmental charge shall have been paid (any such tax
or governmental charge being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the
Corporation's reasonable satisfaction that no such tax or governmental charge
is due.
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9.5. The Corporation shall use its best efforts to (i) file, as
soon as practicable following the Shares Acquisition Date, a registration
statement under the Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act and the rules and
regulations thereunder) until the date of the expiration of the period for
exercise of the Rights provided by Section 11.1.2. The Corporation will also
take such action as may be appropriate under the blue sky laws of the various
states.
10. PREFERRED STOCK RECORD DATE.
Each Person in whose name any certificate for shares of Preferred Stock
(or shares of 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 shares of Preferred Stock (or shares of
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 Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable taxes and governmental charges) was made;
PROVIDED, HOWEVER, that, if the date of such surrender and payment is a date
upon which the shares of Preferred Stock (or shares of Common Stock and/or
other securities, as the case may be) transfer books of the Corporation are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business
Day on which the shares of Preferred Stock (or shares of Common Stock and/or
other securities, as the case may be) transfer books of the Corporation are
open.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER
OF RIGHTS.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.
11.1. ADJUSTMENT EVENTS.
11.1.1. In the event the Corporation shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred
Stock payable in Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller number of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), except as otherwise provided in this
Section 11.1 and Section 7.6 hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock
that, if such Right had been
15
exercised immediately prior to such date and at a time when the Preferred
Stock transfer books of the Corporation were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value, if any, of the shares of capital
stock of the Corporation issuable upon exercise of one Right. If an event
occurs that would require an adjustment under both Section 11.1.1 and Section
11.1.2, the adjustment provided for in this Section 11.1.1 shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11.1.2.
11.1.2. In the event (a "SECTION 11.1.2 EVENT") that any
Person, alone or together with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so that each holder of
a Right (except as provided below and in Section 7.6 hereof) shall, for a
period of sixty (60) days (or such longer period as the Corporation's Board
of Directors may determine at any time prior to or during such period of
sixty (60) days) after the later of the occurrence of any such event or the
effective date of an appropriate registration statement under the Act
pursuant to Section 9.5 hereof, have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price, in accordance
with the terms of this Agreement, such number of shares of Common Stock (or,
in the discretion of the Corporation's Board of Directors, one
one-thousandths (1/1000ths) of a share of Preferred Stock) as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the
then number of one one-thousandths (1/1000ths) of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence
of a Section 11.1.2 Event, and (y) dividing that product by 50% of the then
current per share market price of the Common Stock (determined pursuant to
Section 11.4 hereof) on the date of such first occurrence (such number of
shares being referred to as the "ADJUSTMENT SHARES"); PROVIDED, HOWEVER, that
if the transaction that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11.1.2.
11.1.3. In the event that there shall not be sufficient
treasury or authorized but unissued (and unreserved) Common Stock to permit
the exercise in full of the Rights in accordance with Section 11.1.2 and the
Rights become so exercisable (and the Board of Directors of the Corporation
has not determined to make the Rights exercisable solely into fractions of a
share of Preferred Stock), notwithstanding any other provision of this
Agreement, to the extent necessary and permitted by applicable law, each
Right (except as provided below and in Section 7.6 hereof) shall thereafter
represent the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, (x) a number
of (or fractions of) shares of Common Stock calculated by dividing the
maximum number of shares of Common Stock that may permissibly be issued by
the number of outstanding Rights and (y) a number of one one-thousandths
(1/1000ths) of shares of Preferred Stock or a number of, or fractions of,
other equity securities of the Corporation (or, in the discretion of the
Board of Directors of the Corporation, debt) that the Board of Directors of
the Corporation has determined to have an aggregate current market value
(determined pursuant to Section 11.1.1 and Section 11.1.2 hereof,
16
to the extent applicable) equal to the difference between (1) the aggregate
current market value of the Adjustment Shares (assuming such shares of Common
Stock could be issued pursuant to Section 11.1.2 hereof) and (2) the
aggregate current market value of the shares of Common Stock issued in
respect of such Right pursuant to the preceding clause (x) (such number of,
or fractions of, shares of Preferred Stock, debt or other equity securities
or debt of the Corporation being referred to as a "CAPITAL STOCK
EQUIVALENT"); PROVIDED, HOWEVER, if sufficient shares of Common Stock and/or
Capital Stock Equivalents are unavailable, then the Corporation shall, to the
extent permitted by applicable law, take all such action as may be necessary
to authorize additional shares of Common Stock or Capital Stock Equivalents
for issuance upon exercise of the Rights, including the calling of a meeting
of stockholders; and PROVIDED, FURTHER, that if the Corporation is unable to
cause sufficient shares of Common Stock and/or Capital Stock Equivalents to
be available for issuance upon exercise in full of the Rights, then each
Right shall thereafter represent the right to receive the Adjusted Number of
Shares upon exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined). As used herein, the term "ADJUSTED NUMBER OF SHARES"
shall be equal to that number of (or fractions of) shares of Common Stock
(and/or Capital Stock Equivalents) equal to the product of (x) the number of
Adjustment Shares and (y) a fraction, the numerator of which is the number of
shares of Common Stock (and/or Capital Stock Equivalents) available for
issuance upon exercise of the Rights and the denominator of which is the
aggregate number of Adjustment Shares otherwise issuable upon exercise in
full of all Rights (assuming there were a sufficient number of shares of
Common Stock available) (such fraction being referred to as the "PRORATION
FACTOR"). The "ADJUSTED PURCHASE PRICE" shall mean the product of the
Purchase Price and the Proration Factor. The Board of Directors of the
Corporation may, but shall not be required to, establish procedures to
allocate the right to receive shares of Common Stock and Capital Stock
Equivalents upon exercise of the Rights among holders of Rights.
11.2. In case the Corporation shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all
holders of Preferred Stock entitling them (for a period expiring within 60
calendar days after such record date) to subscribe for or purchase shares of
Preferred Stock (or shares having the same rights, privileges and preferences
as the Preferred Stock ("EQUIVALENT PREFERRED STOCK")) or securities
convertible into Preferred Stock or Equivalent Preferred Stock at a price per
share of Preferred Stock or Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into shares of
Preferred Stock or Equivalent Preferred Stock) less than the then current per
share market price of the Preferred Stock (as determined pursuant to Section
11.4 hereof) 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 outstanding on such
record date plus the number of shares of Preferred Stock that the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current per share market price, and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); PROVIDED, HOWEVER, that in no event shall the
17
consideration to be paid upon the exercise of one Right be less than the
aggregate par value, if any, of the shares of capital stock of the
Corporation issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be determined in good
faith by the Board of Directors of the Corporation, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights. Preferred Stock owned by
or held for the account of the Corporation 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 so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if such record
date had not been fixed.
11.3. In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which
the Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11.2 hereof), 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 then current per share market price (as
determined pursuant to Section 11.4 hereof) of the Preferred Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Corporation, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock, and the denominator
of which shall be such current per share market price of the Preferred Stock;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value, if any, of
the shares of capital stock of the Corporation to be issued upon exercise of
one Right. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed.
11.4. COMPUTATION OF "CURRENT PER SHARE MARKET PRICE."
11.4.1. For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11.4.1) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to and not including such date;
PROVIDED, HOWEVER, that in the event that the current per share market price
of the Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
18
Security and prior to the expiration of thirty (30) Trading Days after (but
not including) the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and
in each such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the Corporation.
If on any such date no such market maker is making a market in the Security,
the fair value of the Security on such date as determined in good faith by
the Board of Directors of the Corporation shall be used. The term "TRADING
DAY" shall mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
11.4.2. For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Stock shall be determined
in accordance with the method set forth in Section 11.4.1. If the shares of
Preferred Stock are not publicly traded, the "current per share market price"
of the Preferred Stock shall be conclusively deemed to be the current per
share market price of the Common Stock as determined pursuant to Section
11.4.1 (appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by 1,000.
If neither the Common Stock nor the Preferred Stock are publicly held or so
listed or traded, "current per share market price" shall mean, with respect
to the Preferred Stock, the fair value per share as determined in good faith
by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Rights.
11.5. Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments that by reason of this Section 11.5
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall
be made to the nearest cent or to the nearest one one-thousandth (1/1000th)
of a share of Preferred Stock or of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11.5, any
19
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction that mandates
such adjustment or (ii) the Final Expiration Date.
11.6. If as a result of an adjustment made pursuant to Section
11.1.2 or Section 13.1 hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Corporation other than Preferred Stock, thereafter the number of other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained in Section 11.1
through 11.3, inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
11.7. All Rights originally issued by the Corporation subsequent
to any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
11.8. The Corporation may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of
any adjustment in the number of one one-thousandths (1/1000ths) 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 (1/1000ths) of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Corporation 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, and shall deliver a copy of such public
announcement to the Rights Agent. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11.8,
the Corporation shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Corporation, shall cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Corporation, new Right Certificates evidencing
all the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in
20
the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
11.9. Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths (1/1000ths) of a share of
Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-thousandths (1/1000ths) of a share
of Preferred Stock that were expressed in the initial Right Certificates
issued hereunder.
11.10. Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number
of one one-thousandths (1/1000ths) of a share of Preferred Stock, share of
Common Stock or other securities issuable upon exercise of the Rights, the
Corporation shall take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue such number of fully paid and non-assessable one one-thousandths
(1/1000ths) of a share of Preferred Stock, share of Common Stock or other
securities at such adjusted Purchase Price.
11.11. In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of the Preferred Stock, shares of Common Stock or other
securities of the Corporation, if any, issuable upon such exercise over and
above the Preferred Stock, shares of Common Stock or other securities of the
Corporation, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the
Corporation shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment and shall deliver
to the Rights Agent a notice describing the terms of such due xxxx or other
appropriate instrument.
11.12. Anything in this Section 11 to the contrary
notwithstanding, the Corporation shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that the Corporation in its sole
discretion shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of Preferred Stock or securities that by their terms are
convertible into or exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Corporation to holders of its Preferred Stock shall not
be taxable to such holders.
11.13. The Corporation covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the
21
Corporation in a transaction that does not violate Section 11.14 hereof),
(ii) merge with or into any other Person (other than a Subsidiary of the
Corporation in a transaction that does not violate Section 11.14 hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), 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 Corporation
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Corporation and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11.14 hereof), if (x) at
the time of or immediately after such consolidation, merger, sale or
transfer, there are any charter or bylaw provisions or any rights, warrants
or other instruments or securities outstanding or agreements in effect or
other actions taken that would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale or
transfer, the stockholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13.1 hereof shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates. The Corporation shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto the
Corporation and such other Person shall have executed and delivered to the
Rights Agent a supplemental agreement evidencing compliance with this Section
11.13.
11.14. The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section
25.2 hereof, take (or permit any Subsidiary to take) any action the purpose
of which is to, or if at the time such action is taken it is reasonably
foreseeable that the effect of such action is to, materially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
11.15. The exercise of Rights under Section 11.1.2 shall only
result in the loss of rights under Section 11.1.2 to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under
this Agreement, including the rights represented by Section 13.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Corporation shall promptly (a) prepare a certificate setting forth
such adjustment and a brief, reasonably detailed statement of the facts,
computations and methodology accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Stock and the Preferred
Stock a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25.1 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall have no duty with respect to, and
shall not be deemed to have knowledge of, such adjustment unless and until it
shall have received such certificate.
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
22
13.1. In the event that, on or following the Shares Acquisition
Date, directly or indirectly, (x) the Corporation shall consolidate with, or
merge with and into, any Interested Stockholder or, if in such merger or
consolidation all holders of shares of Common Stock are not treated alike,
any other Person, (y) the Corporation shall consolidate with, or merge with,
any Interested Stockholder or, if in such merger or consolidation all holders
of shares of Common Stock are not treated alike, any other Person, and the
Corporation shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction described
in (x) or (y), a merger or consolation that would result in all of the
securities generally entitled to vote in the election of directors of the
Corporation ("voting securities") outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting
securities of the Corporation or such voting surviving entity outstanding
immediately after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or consolidation),
or (z) the Corporation shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), 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 Corporation and its Subsidiaries
(taken as a whole) to any Interested Stockholder or Stockholders or, if in
such transaction all holders of Common Stock are not treated alike, any other
Person (other than the Corporation or any Subsidiary of the Corporation in
one or more transactions each of which does not violate Section 11.14
hereof), then, and in each such case (except as provided in Section 13.4
hereof), proper provision shall be made so that (i) each holder of a Right,
except as provided in Section 7.6 hereof, shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement and in lieu of
Preferred Stock, such number of freely tradeable shares of Common Stock of
the Principal Party, not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock for which a Right
is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11.1.2) and dividing that product by (B) 50% of the
then current per share market price of the Common Stock of such Principal
Party (determined pursuant to Section 11.4 hereof) on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Corporation pursuant to this
Agreement; (iii) the term "Corporation" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions
of Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; and (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the shares of Common Stock thereafter deliverable upon the
exercise of the Rights.
23
13.2. "PRINCIPAL PARTY" shall mean:
13.2.1. in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13.1, the Person that is the
issuer of any securities into which shares of Common Stock of the Corporation
are converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation
(including, if applicable, the Corporation if it is the surviving
corporation); and
13.2.2. in the case of any transaction described in clause
(z) of the first sentence of Section 13.1, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that in any of the foregoing cases, (1) if the Common
Stock of such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the shares of Common Stock of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, the shares
of Common Stock of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate market value; and (3) in case
such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
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 this
Section 13 in the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.
13.3. The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have
a sufficient number of its authorized shares of Common Stock that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the
Corporation and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
Sections 13.1 and 13.2 and further providing that, as soon as practicable
after the date of any consolidation, merger, sale or transfer mentioned in
Section 13.1, the Principal Party at its own expense shall:
13.3.1. prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best efforts
to cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Act) until the Final Expiration
Date;
24
13.3.2. use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or appropriate; and
13.3.3. deliver to holders of the Rights historical
financial statements for the Principal Party that comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11.1.2 and shall survive any exercise thereof.
13.4. Notwithstanding anything in this Agreement to the contrary,
the foregoing provisions of this Section 13 shall not be applicable to a
transaction described in clauses (x) and (y) of Section 13.1 if: (i) such
transaction is consummated with a Person or Persons who acquired shares of
Common Stock pursuant to a Permitted Offer (or a wholly owned Subsidiary of
any such Person or Persons); (ii) the price per share of Common Stock offered
in such transaction is not less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose shares were purchased pursuant
to such Permitted Offer; and (iii) the form of consideration offered in such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by
this Section 13.4, all Rights hereunder shall expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
14.1. The Corporation shall not be required to issue fractions
of Rights or to distribute Right Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes
of this Section 14.1, the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted by
25
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Corporation. If on any such date
no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Corporation shall be used.
14.2. The Corporation shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are one one-thousandth
(1/1000th) or integral multiples of one one-thousandth (1/1000th) of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates that
evidence fractional shares of Preferred Stock (other than fractions that are one
one-thousandth (1/1000th) or integral multiples of one one-thousandth (1/1000th)
of a share of Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-thousandth (1/1000th) of a share of Preferred
Stock may, at the election of the Corporation, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Corporation and a
depositary selected by it; PROVIDED that such agreement shall provide that the
holders of such depositary receipts shall have the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Stock represented by such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not one one-thousandth (1/1000th) or integral multiples
of one one-thousandth (1/1000th) of a share of Preferred Stock, the Corporation
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred Stock. For the
purposes of this Section 14.2, 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 Section 11.4.2 hereof) for the Trading Day immediately prior to the
date of such exercise.
14.3. Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive shares of
Common Stock, Capital Stock Equivalents (other than Preferred Stock) or other
securities upon the exercise of a Right, the Corporation shall not be
required to issue fractions of shares or units of such shares of Common
Stock, Capital Stock Equivalents or other securities upon exercise of the
Rights or to distribute certificates that evidence fractions of such shares
of Common Stock, Capital Stock Equivalents or other securities. In lieu of
fractional shares or units of such shares of Common Stock, Capital Stock
Equivalents or other securities, the Corporation may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share or unit of such shares of Common Stock, Capital Stock
Equivalents or other securities. For purposes of this Section 14.3, the
current market value shall be determined in the manner set forth in Section
11.4 hereof for the Trading Day immediately prior to the date of such
exercise and, if such Capital Stock Equivalent is not traded, each such
Capital Stock Equivalent shall have the value of one one-thousandth
(1/1000th) of a share of Preferred Stock.
14.4. The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights or any
fractional share upon exercise of a
26
Right (except as provided above). The Rights Agent shall not be deemed to
have knowledge of, and shall have no duty in respect of, the issuance of
fractional Rights or fractional shares unless and until it shall have
received instructions from the Corporation concerning the issuance of such
fractional Rights or fractional shares.
15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of shares of the Common Stock);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of shares of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of shares of the Common Stock), may, in such
registered holder's own behalf and for such registered holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, such
registered holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
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. Nothing in this Section 15 is
intended to modify or limit the authority of the Board of Directors under
Section 25.3.
16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right, by accepting the same, consents and agrees
with the Corporation and the Rights Agent and with every other holder of a
Right that:
16.1. prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the associated shares of
Common Stock;
16.2. after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
16.3. subject to Section 6 and Section 7.7 hereof, the
Corporation and the Rights Agent may deem and treat the Person in whose name
the Right Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate or the associated Common Stock certificate
made by anyone
27
other than the Corporation or the Rights Agent) for all purposes whatsoever,
and neither the Corporation nor the Rights Agent, subject to the last
sentence of Section 7.6 hereof, shall be required to be affected by any
notice to the contrary; and
16.4. Notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other
order, decree, judgment or ruling (whether interlocutory or final) issued by
a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
PROVIDED, HOWEVER, that the Corporation must use its best efforts to have any
such order, decree, judgment or ruling lifted or otherwise overturned as soon
as practicable.
17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of shares of the
Preferred Stock or any other securities of the Corporation that may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 24 hereof), or to receive dividends or other
distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
18.1. The Corporation 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,
preparation, delivery, amendment and execution of this Agreement and the
exercise and performance of its duties hereunder. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including without limitation the costs and
expenses of defending against any claim of liability in respect of any such
action. The costs and expenses of enforcing this right of indemnification
28
shall also be paid by the Corporation. The indemnity provided for herein
shall survive the expiration of the Rights and the termination of this
Agreement.
18.2. The Rights Agent may conclusively rely upon and shall be
authorized and protected and shall incur no liability for, or in respect of,
any action taken, suffered or omitted by it in connection with the acceptance
and administration of this Agreement in reliance upon any Right Certificate
or certificate for shares of Common Stock or for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons. The Rights Agent shall not be deemed to have
knowledge of, and shall have no duty in respect of, any fact contained in
such Right Certificate or certificate for shares of Common Stock or for other
securities of the Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document unless and until it shall
have received the same.
18.3. Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, indirect, punitive,
incidental or consequential loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has been advised
of the likelihood of such loss or damage and regardless of the form of the
action.
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
19.1. Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to
the stock transfer or all or substantially all of the shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, PROVIDED that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof.
19.2. In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
29
20. DUTIES OF RIGHTS AGENT.
20.1. The Rights Agent undertakes those duties and obligations,
and only the duties and obligations, expressly imposed by this Agreement (and
no implied duties or obligations) upon the following terms and conditions,
and no implied duties or obligations shall be read into this Agreement
against the Rights Agent, by all of which the Corporation and the holders of
Right Certificates, by their acceptance thereof, shall be bound.
20.2. Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel for the
Corporation), and the advice or opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent, and the Rights
Agent shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
opinion.
20.3. 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 an Acquiring Person
and the determination of the current market price of any security) be proved
or established by the Corporation prior to taking, suffering or omitting any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman or
Vice Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Treasurer or the Secretary of the Corporation and
delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent and the Rights Agent shall
incur no liability for or in respect of any action taken, suffered or
omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
20.4. The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
20.5. The Rights Agent shall not be liable for, or by reason of,
any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature on such Right
Certificates) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Corporation only.
20.6. The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights
30
(including the Rights becoming null and void pursuant to Section 7.6 hereof)
or any adjustment required under the provisions of Section 11, Section 13 or
Section 26 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced
by Right Certificates after receipt of the certificate described in Section
12 hereof); 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 or shares of Common Stock to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Stock
or shares of Common Stock will, when issued, be validly authorized and
issued, fully paid and non-assessable.
20.7. The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
20.8. The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman or Vice Chairman of the Board, the Chief
Executive Officer, the President, any Vice President or the Secretary of the
Corporation, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full authorization
and protection of the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
good faith or lack of action in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. The
Rights Agent shall incur no liability for or in respect of its reliance upon
the most recent instructions received by any such officer. Any application
by the Rights Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Agreement and the date on or
after which such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any
such application on or after the date specified in such application (which
date shall not be less than five (5) Business Days after the date any officer
of the Corporation actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instruction in response to such
application specifying the action to be taken, suffered or omitted.
20.9. The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Corporation or become pecuniarily
interested in any transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the
31
Rights Agent from acting in any other capacity for the Corporation or for any
other Person or legal entity.
20.10. The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, negligence or misconduct of
any such attorneys or agents or for any loss to the Corporation or any other
Person resulting from any such act, default, negligence or misconduct, absent
gross negligence, bad faith or willful misconduct in the selection and
continued employment thereof.
20.11. No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
20.12. 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
not been completed, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with
the Corporation.
21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice
in writing mailed to the Corporation and to each transfer agent of the Common
Stock or Preferred Stock by registered or certified mail, and, at the expense
of the Corporation, to the holders of the Right Certificates by first-class
mail. The Corporation may remove the Rights Agent or any successor Rights
Agent upon sixty (60) 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
holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Corporation shall appoint a successor to the Rights Agent. If the
Corporation shall fail to make such appointment within a period of sixty (60)
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Corporation), then
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Corporation or by such a
court, shall be (i) a Person organized and doing business under the laws of
the United States or of any of the States of New York, New Jersey,
32
California or Minnesota (or of any other state of the United States so long
as such Person is authorized to do business in any of the States of New York,
New Jersey, California or Minnesota), in good standing, having an office in
any of such States, which is subject to supervision or examination by federal
or state authority and which (or the parent corporation of which) has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (ii) an affiliate of such Person. After appointment,
the successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delvered,
any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement. Not later than the effective date of any such appointment, the
Corporation 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 Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
22. ISSUANCE OF NEW RIGHT CERTIFICATES.
22.1. Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Corporation may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
22.2. In connection with the issuance or sale of Common Stock
following the Distribution Date and prior to the earlier of the Redemption
Date and the Final Expiration Date, the Corporation (a) shall with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued by the
Corporation, and (b) may in any other case, if deemed necessary or
appropriate by the Board of Directors of the Corporation, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; PROVIDED, HOWEVER, that no Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
33
23. REDEMPTION AND TERMINATION.
23.1. REDEMPTION
23.1.1. The Board of Directors of the Corporation may, at
its option, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "REDEMPTION PRICE"), at any time prior to the earlier of
the occurrence of a Section 11.1.2 Event or the Final Expiration Date. The
Corporation may, at its option, pay the Redemption Price either in shares of
Common Stock (based on the current per share market price of the Common Stock
at the time of redemption) or cash; PROVIDED that if the Corporation elects
to pay the Redemption Price in shares of Common Stock, the Corporation shall
not be required to issue any fractional shares of Common Stock and the number
of shares of Common Stock issuable to each holder of Rights shall be rounded
down to the next whole share.
23.1.2. In addition, the Board of Directors of the
Corporation may, at its option, at any time following the occurrence of a
Section 11.1.2 Event and the expiration of any period during which the holder
of Rights may exercise the Rights under Section 11.1.2 but prior to any
Section 13 Event redeem all but not less than all of the then outstanding
Rights at the Redemption Price (x) in connection with any merger,
consolidation or sale or other transfer (in one transaction or in a series of
related transactions) of assets or earning power aggregating 50% or more of
the earning power of the Corporation and its Subsidiaries (taken as a whole)
in which all holders of shares of Common Stock are treated alike and not
involving (other than as a holder of shares of Common Stock being treated
like all other such holders) an Interested Stockholder or (y) (i) if and for
so long as the Acquiring Person is not thereafter the Beneficial Owner of
securities representing 15% or more of the Voting Power, and (ii) at the time
of redemption no other Persons are Acquiring Persons.
23.2. In the case of a redemption permitted under Section 23.1.1,
immediately upon the date for redemption set forth in (or determined in the
manner specified in) a resolution of the Board of Directors of the
Corporation ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23.1.2, the right to exercise the
Rights will terminate and represent only the right to receive the Redemption
Price upon the later of ten (10) Business Days following the giving of such
notice or the expiration of any period during which the Rights may be
exercised under Section 11.1.2. The Corporation shall promptly give public
notice of any such redemption; PROVIDED, HOWEVER, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption set forth in
a resolution of the Board of Directors of the Corporation ordering the
redemption of the Rights, the Corporation shall mail a notice of
34
redemption to the Rights Agent and all the holders of the then outstanding
Rights at (in the case of notice to holders) their addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Corporation nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in any
manner other than as specifically set forth in this Section 23 and other than
in connection with the purchase of shares of Common Stock prior to the
Distribution Date.
23.3. The Corporation 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 in accordance with this
Agreement and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their addresses as they appear on the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books
of the Transfer Agent of the Common Stock, and upon such action, all
outstanding Rights and Right Certificates shall be null and void without any
further action by the Corporation.
24. NOTICE OF CERTAIN EVENTS.
24.1. In case the Corporation shall propose (i) to 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 quarterly cash dividend), (ii) to offer to the holders
of its Preferred Stock rights or warrants to subscribe for or to purchase any
additional Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision
of outstanding Preferred Stock), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Corporation in
a transaction which does not violate Section 11.14 hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer) in one or more transactions, of 50% or
more of the assets or earning power of the Corporation and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Corporation
and/or any of its Subsidiaries in one or more transactions each of which does
not violate Section 11.14 hereof), or (v) to effect the liquidation,
dissolution or winding up of the Corporation, then, in each such case, the
Corporation shall give the Rights Agent and to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action which shall specify the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of the Preferred 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 (i) or (ii) above at least twenty (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 twenty (20)
35
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Stock, whichever shall
be the earlier.
24.2. In case of a Section 11.1.2 Event, then (i) the Corporation
shall as soon as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 25.1.3 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11.1.2 hereof,
and (ii) all references in the preceding Section 24.1 to Preferred Stock
shall be deemed thereafter to refer also to shares of Common Stock and/or, if
appropriate, other securities of the Corporation.
25. Miscellaneous.
25.1. NOTICES.
25.1.1. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Corporation shall be sufficiently given or made if
sent by registered or certified mail and shall be deemed given upon receipt,
addressed (until another address is filed in writing with the Rights Agent)
as follows:
Lamonts Apparel, Inc.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
25.1.2. Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made by the
Corporation or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent registered or certified
mail and shall be deemed given upon receipt, addressed (until another address
is filed in writing with the Corporation) as follows:
Norwest Bank Minnesota, N.A.
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxx
25.1.3. Notices or demands authorized by this Agreement to
be given or made by the Corporation or the Rights Agent to the holder of any
Right Certificate or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock shall be
36
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 Corporation.
25.2. SUPPLEMENTS AND AMENDMENTS. The Corporation may from time
to time supplement or amend any provision of this Agreement without the
approval of any holders of Rights in order to cure any ambiguity, to correct,
supplement or amend any provision herein, or to make any other provision with
respect to the Rights which the Corporation may deem necessary or desirable,
any such supplement or amendment to be evidenced by a writing signed by the
Corporation and the Rights Agent; PROVIDED, HOWEVER, that the affirmative
vote of the holders of a majority of the then outstanding Rights shall be
required (i) to increase the Purchase Price, to reduce the Redemption Price
and/or to amend, in a manner adverse to the interests of the holders of
Rights, the Exchange Ratio and (ii) following a Distribution Date, to
supplement or amend any provision of this Agreement or the Rights in any
other respect; and FURTHER PROVIDED, that in the event that any Rights are
rendered void by Section 7.6 or Section 13.4, then as and from the time such
Rights are so rendered void, a majority of Rights outstanding shall be
determined without reference to such voided Rights. Upon the delivery of a
certificate from an appropriate officer of the Corporation which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 25.2, and, if requested by the Rights Agent, an opinion of counsel,
the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of shares of Common Stock. This
Agreement shall not be amended, without the prior written consent of the
Rights Agent, in any manner that changes or increases the duties or
obligations of the Rights Agent.
25.3. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
The Board of Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Corporation, or as may be necessary
or advisable in the administration of this Agreement, including without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement
and whether any proposed amendment adversely affects the interests of the
holders of Right Certificates). For all purposes of this Agreement, any
calculation of the number of shares of Common Stock or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock or any other
securities of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions
with respect to the foregoing) which are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the Corporation, the
Rights Agent, the holders of the Right Certificates and all other Persons,
and (y) not subject the Board to any liability to the holders of the Right
Certificates. The Rights Agent shall be fully protected and shall incur no
37
liability for or in respect of its reliance on the good faith of the
Corporation's Board of Directors with respect to actions done or made in
connection with such calculation. Nothing in Section 15 hereof is intended
to modify or limit this Section 25.3.
25.4. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
25.5. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person or corporation other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the shares of Common
Stock) any legal or equitable right, remedy or claim under this Agreement.
This Agreement shall be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the shares of Common
Stock).
25.6. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
25.7. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
25.8. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
25.9. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
26. EXCHANGE.
26.1. Notwithstanding any other provision hereof, the Board of
Directors of the Corporation may, at its option, at any time after any Person
becomes an Acquiring Person,
38
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become null and void pursuant to the
provisions of Section 7.6 hereof) for shares of Common Stock of the
Corporation at an exchange ratio determined by dividing the then-applicable
exercise price of the Rights determined under Section 7.2 by the "current per
share market price" as defined in Section 11.4.1 (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO"). Notwithstanding the
foregoing, the Corporation's Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the
Corporation, any Subsidiary of the Corporation, any employee benefit plan of
the Corporation or any such Subsidiary, or any Person organized, appointed or
established by the Corporation for or pursuant to the terms of any such plan
or any trustee, administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of
shares representing 50% or more of the Voting Power.
26.2. Immediately upon the action of the Board of Directors of
the Corporation ordering the exchange of any Rights pursuant to Section 26.1
and without any further action and without any notice, the right to exercise
such rights shall terminate and the only right thereafter of the holder of
such Rights (other than a holder of Rights that have become null and void
pursuant to the provisions of Section 7.6 hereof) shall be to receive that
number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Corporation shall promptly
give public notice, and shall promptly give notice to the Rights Agent, of
any such exchange; PROVIDED, HOWEVER, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The
Corporation promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7.6) held by each holder of Rights.
26.3. In the event that there shall not be sufficient shares of
Common Stock issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 26,
the Corporation shall take all such action as may be necessary to issue
additional shares of Common Stock, Preferred Stock and/or Capital Stock
Equivalents with an aggregate current market value (as determined by the
Board of Directors of the Corporation) equal to the aggregate current market
value of a number of shares of Common Stock equal to the Exchange Ratio.
27. CERTAIN BENEFICIAL OWNERS.
39
27.1. XXXXXXXX INVESTMENT COMPANY. On January 4, 1999, Xxxxxxxx
Investment Company (together with its Affiliates and Associates, "Xxxxxxxx")
reported to the Securities and Exchange Commission that it beneficially owned
2,925,140 shares of Common Stock, Class A Warrants to purchase 1,810,380
shares of Common Stock and Class B Warrants to purchase 581,181 shares of
Common Stock (collectively, the "Grandfathered Xxxxxxxx Securities"). In
addition, Xxxxxxxx has advised the Corporation that it has offered to
purchase the securities issued to BEA Associates for the account of Executive
Life Insurance Company of New York pursuant to the Corporation's Modified and
Restated Plan of Reorganization Under Chapter 11 of the Bankruptcy Code,
effective January 31, 1998 (the "BEA Securities"). In the event that
Xxxxxxxx acquires the BEA Securities on or before February 12, 1999, the BEA
Securities shall be deemed Grandfathered Xxxxxxxx Securities. Neither (i)
the beneficial ownership by Xxxxxxxx of the Grandfathered Xxxxxxxx Securities
nor (ii) the acquisition by Xxxxxxxx of beneficial ownership of any shares of
Common Stock resulting from the exercise of any Class A Warrant or Class B
Warrant included within the Grandfathered Xxxxxxxx Securities (the
"Underlying Xxxxxxxx Grandfathered Securities") shall constitute Xxxxxxxx an
Acquiring Person; PROVIDED, HOWEVER, that, irrespective of the disposition by
Xxxxxxxx of any of the Grandfathered Xxxxxxxx Securities or any of the
Underlying Xxxxxxxx Grandfathered Securities, Xxxxxxxx shall be deemed an
Acquiring Person in the event that Xxxxxxxx becomes, subsequent to the first
public announcement of the execution of this Agreement, the Beneficial Owner
of shares of Common Stock other than the Grandfathered Xxxxxxxx Securities
which, when aggregated with Xxxxxxxx'x then current beneficial ownership of
Common Stock (including the Grandfathered Xxxxxxxx Securities), represent 15%
or more of the Voting Power.
27.2. SPECIALTY INVESTMENT. The Company is aware that Specialty
Investment I LLC (together with its Affiliates and Associates, "Specialty
Investment") beneficially owns Class C Warrants to purchase 3,429,588 shares
of Class A Common Stock of the Corporation (the "Grandfathered Specialty
Investment Securities"). Neither (i) the beneficial ownership by Specialty
Investment of the Grandfathered Specialty Investment Securities nor (ii) the
acquisition by Specialty Investment of any shares of Common Stock resulting
from the exercise of any Class C Warrants included within the Specialty
Investment Grandfathered Securities (the "Underlying Specialty Investment
Grandfathered Securities") shall constitute Specialty Investment an Acquiring
Person; PROVIDED, HOWEVER, that, irrespective of the disposition by Specialty
Investment of any of the Grandfathered Specialty Investment Securities or the
Underlying Specialty Investment Grandfathered Securities, Specialty
Investment shall be deemed an Acquiring Person in the event that Specialty
Investment becomes, subsequent to the first public announcement of the
execution of this Agreement, the Beneficial Owner of shares of Common Stock
other than the Grandfathered Specialty Investment Securities which, when
aggregated with Specialty Investment's then current beneficial ownership of
Common Stock (including the Grandfathered Specialty Investment Securities),
represent 15% or more of the Voting Power.
27.3. EVIDENCE OF PREEXISTING ADDITIONAL BENEFICIAL OWNERSHIP. If
any Person provides evidence satisfactory to the Board of Directors of the
Corporation that such Person was, as of immediately prior to the public
announcement of the execution of this Agreement, the
40
Beneficial Owner of shares representing 15% or more of the Voting Power
(including, in the case of Xxxxxxxx, shares in addition to the Grandfathered
Xxxxxxxx Securities and, in the case of Specialty Investment, shares in
addition to the Grandfathered Specialty Investment Securities), neither such
Person nor any of such Person's Affiliates or Associates shall be deemed an
Acquiring Person solely by reason of such Person's beneficial ownership of
such shares. Such Person shall be deemed an Acquiring Person in the event
that such Person acquires beneficial ownership of any other shares of Common
Stock than those referred to in the immediately preceding sentence, which
other shares, when aggregated with any shares referred to in the immediately
preceding sentence, represent more than 15% of the Voting Power.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the date and year first above written.
LAMONTS APPAREL, INC.
Attest:
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxxx
Vice Chairman of the Board
and Chief Administrative Officer
NORWEST BANK MINNESOTA, N.A.,
as Rights Agent
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
----------------------------
Title: Account Manager
---------------------------
EXHIBIT A
Form of
Certificate of Designation, Preferences and
Rights of Series RP Preferred Stock
of
Lamonts Apparel, Inc.
(Pursuant to Section 151 of the Delaware General Corporation Law)
I, Xxxxxx X. Xxxxxxxxxx, Secretary of Lamonts Apparel, Inc. (the
"CORPORATION"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of
the Corporation by the Restated Certificate of Incorporation of the Corporation,
the said Board of Directors has adopted the following resolutions creating a
series of 40,000 shares of Preferred Stock designated as Series RP Preferred
Stock.
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation in accordance with the provisions of the
Restated Certificate of Incorporation of the Corporation, the Board of Directors
hereby creates a series of Series RP Preferred Stock, with a par value of $.01
per share, of the Corporation and hereby states the designation and number of
shares, and fixes the relative rights, preferences and limitations thereof as
follows (the following provisions being intended to operate in addition to any
other provisions of said Restated Certificate of Incorporation applicable to any
series of Preferred Stock):
Series RP Preferred Stock
Section 1. DESIGNATION, PAR VALUE AND AMOUNT. The shares of such series
shall be designated as "Series RP Preferred Stock" (hereinafter referred to as
"SERIES RP PREFERRED STOCK"), the shares of such series shall be with par value
of $.01 per share, and the number of shares constituting such series shall be
40,000; PROVIDED, HOWEVER, that, if more than a total of 40,000 shares of Series
RP Preferred Stock shall be issuable upon the exercise of Rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of January 12, 1999, between
the Corporation and Norwest Bank Minnesota, N.A., as Rights Agent (as amended
from time to time, the "RIGHTS AGREEMENT"), the Board of Directors of the
Corporation shall direct by resolution or resolutions that a certificate be
properly executed, acknowledged and filed providing for the total number of
shares of Series RP Preferred Stock authorized to be issued to be increased (to
the extent that the Restated Certificate of Incorporation then permits) to the
largest number of whole shares (rounded up to the nearest whole number) issuable
upon exercise of the Rights.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
2.1 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 RP Preferred Stock with respect to dividends, the holders of
shares of Series RP Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of assets legally available for
the purpose, quarterly dividends payable in cash on the first business 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 RP Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment set forth in Section 6.1, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 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,
par value $.01 per share, of the Corporation (the "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 RP Preferred Stock.
2.2 The Corporation shall declare a dividend or distribution on
the Series RP Preferred Stock as provided in Section 2.1 above 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 $1.00 per share on
the Series RP Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
2.3 Dividends shall begin to accrue and be cumulative on
outstanding shares of Series RP Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series RP
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 RP Preferred Stock entitled to receive a quarterly dividend and before
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 RP 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 RP Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 30 days prior to the date fixed for
the payment thereof.
2
Section 3. VOTING RIGHTS. The holders of shares of Series RP
Preferred Stock shall have the following voting rights:
3.1 Except as provided in Section 3.3 and subject to the
provision for adjustment hereinafter set forth, each share of Series RP
Preferred Stock shall entitle the holder thereof to 1,000 votes on all
matters submitted to a vote of the stockholders of the Corporation.
3.2 Except as otherwise provided herein or by law, the holders
of shares of Series RP 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.
3.3 The following additional provisions shall apply with
respect to the voting of shares of Series RP Preferred Stock:
3.3.1 If, on the date used to determine stockholders of
record for any meeting of stockholders for the election of directors, a
default in preference dividends (as defined in Section 3.3.5 below) on the
Series RP Preferred Stock shall exist, the holders of the Series RP Preferred
Stock shall have the right, voting as a class as described in Section 3.3.2
below, to elect two directors (in addition to the directors elected by
holders of Common Stock of the Corporation). Such right may be exercised (a)
at any meeting of stockholders for the election of directors or (b) at a
meeting of the holders of shares of Voting Preferred Stock (as hereinafter
defined), called for the purpose in accordance with the Bylaws of the
Corporation, until all such cumulative dividends (referred to above) shall
have been paid in full or until non-cumulative dividends have been paid
regularly for at least one year.
3.3.2 The right of the holders of Series RP Preferred
Stock to elect two directors, as described above, shall be exercised as a
class concurrently with the rights of holders of any other series of
Preferred Stock upon which voting rights to elect such directors have been
conferred and are then exercisable. The Series RP Preferred Stock and any
additional series of Preferred Stock that the Corporation may issue and that
may provide for the right to vote with the foregoing series of Preferred
Stock are collectively referred to herein as "VOTING PREFERRED STOCK."
3.3.3 Each director elected by the holders of shares of
Voting Preferred Stock shall be referred to herein as a "PREFERRED DIRECTOR."
A Preferred Director shall continue to serve as such for a term of one year,
except that upon any termination of the right of all holders of Voting
Preferred Stock to vote as a class for Preferred Directors, the term of
office of Preferred Directors then serving shall terminate. Any Preferred
Director may be removed by, and shall not be removed except by, the vote of
the holders of record of a majority of the outstanding shares of Voting
Preferred Stock then entitled to vote for the election of directors, present
(in person or by proxy) and voting together as a single class (a) at a
meeting of the stockholders, or (b) at a meeting of the holders of shares of
such Voting Preferred Stock, called for the purpose in accordance with the
Bylaws of the Corporation.
3.3.4 So long as a default in any preference dividends of
the Series RP Preferred Stock shall exist or the holders of any other series
of Voting Preferred Stock shall be
3
entitled to elect Preferred Directors, (a) any vacancy in the office of a
Preferred Director may be filled (except as provided in the following clause
(b)) by an instrument in writing signed by the remaining Preferred Director
and filed with the Corporation and (b) in the case of the removal of any
Preferred Director, the vacancy may be filled by the vote or written consent
of the holders of a majority of the outstanding shares of Voting Preferred
Stock then entitled to vote for the election of directors, present (in person
or by proxy) and voting together as a single class, at such time as the
removal shall be effected. Each director appointed as aforesaid by the
remaining Preferred Director shall be deemed, for all purposes hereof, to be
a Preferred Director. Whenever (x) no default in preference dividends on the
Series RP Preferred Stock shall exist and (y) the holders of other series of
Voting Preferred Stock shall no longer be entitled to elect such Preferred
Directors, then the number of directors constituting the Board of Directors
of the Corporation shall be reduced by two.
3.3.5 For purposes hereof, a "DEFAULT IN PREFERENCE
DIVIDENDS" on the Series RP Preferred Stock shall be deemed to have occurred
whenever the amount of cumulative and unpaid dividends on the Series RP
Preferred Stock shall be equivalent to six full quarterly dividends or more
(whether or not consecutive), and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all cumulative dividends on
all shares of the Series RP Preferred Stock then outstanding shall have been
paid through the last Quarterly Dividend Payment Date or until, but only
until, non-cumulative dividends have been paid regularly for at least one
year.
3.4 Except as set forth herein (or as otherwise required by
applicable law), holders of Series RP Preferred Stock shall have no general
or special voting rights and their consent shall not be required for taking
any corporate action.
Section 4. CERTAIN RESTRICTIONS.
4.1 Whenever quarterly dividends or other dividends or
distributions payable on the Series RP 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 RP Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
4.1.1 declare or pay dividends, 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 RP Preferred
Stock;
4.1.2 declare or pay dividends, 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 RP
Preferred Stock, except dividends paid ratably on the Series RP 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;
4.1.3 redeem or purchase or otherwise acquire for
consideration (except as provided in Section 4.1.4 below) shares of any stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series RP Preferred Stock, provided that the
4
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 RP Preferred Stock;
4.1.4 redeem or purchase or otherwise acquire for
consideration any shares of Series RP Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series RP 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.
4.2 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 Section 4.1,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series RP 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 subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, in any other Certificate
of Amendment creating a series of Preferred Stock or as otherwise required by
law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
6.1 Subject to the prior and superior rights of holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series RP Preferred Stock with respect to rights upon liquidation,
dissolution or winding up (voluntary or otherwise), no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series RP Preferred
Stock unless, prior thereto, the holders of shares of Series RP Preferred
Stock shall have received per share an amount equal to the greater of 1,000
times $6.00 or 1,000 times the payment made per share of Common Stock, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "SERIES RP
LIQUIDATION PREFERENCE"). Following the payment of the full amount of the
Series RP Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series RP Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share
(the "CAPITAL ADJUSTMENT") equal to the quotient obtained by dividing (i) the
Series RP Liquidation Preference by (ii) 1,000 (as appropriately adjusted as
set forth in Section 6.3 to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such
number in clause (ii) being hereafter referred to as the "ADJUSTMENT
NUMBER"). Following the payment of the full amount of the Series RP
Liquidation Preference and the Capital
5
Adjustment in respect of all outstanding shares of Series RP Preferred Stock
and Common Stock, respectively, holders of Series RP Preferred Stock and
holders of Common Stock shall receive their ratable and proportionate share
of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
6.2 In the event, however, that there are not sufficient assets
available to permit payment in full of the Series RP Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if
any, which rank on a parity with the Series RP Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of Series RP
Preferred Stock and the holders of such parity shares in proportion to their
respective liquidation preferences. In the event, however, that there are
not sufficient assets available to permit payment in full of the Capital
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
6.3 In the event the Corporation shall (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, 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.
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 RP Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to the Adjustment Number
(as appropriately adjusted as set forth in Section 6.3 to reflect such events
as stock splits, stock dividends and recapitalizations with respect to the
Common Stock) 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 RP Preferred Stock
shall not be redeemable.
Section 9. RANKING. The Series RP Preferred Stock shall rank junior
to all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such other
series shall provide otherwise.
Section 10. AMENDMENT. The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner that would
materially alter or change the powers, preferences or special rights of the
Series RP Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding
shares of Series RP Preferred Stock, voting separately as a class.
6
Section 11. FRACTIONAL SHARES. Series RP Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and have the benefit of all other
rights of holders of Series RP Preferred Stock.
RESOLVED, that the proper officers of the Corporation be, and each of
them hereby is, authorized to execute a Certificate of Designation with
respect to the Series RP Preferred Stock pursuant to Section 151 of the
General Corporation Law of the State of Delaware and to take all appropriate
action to cause such Certificate to become effective, including, but not
limited to, the filing and recording of such Certificate with and/or by the
Secretary of State of the State of Delaware.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, I have executed and subscribed to this Certificate and
do affirm the foregoing as true under penalty of perjury this 12th day of
January, 1999.
----------------------------------
Xxxxxx X. Xxxxxxxxxx
Secretary
8
EXHIBIT B
Form of Right Certificate
Certificate No. RP- _____ Rights
NOT EXERCISABLE AFTER JANUARY 12, 2009 OR EARLIER IF
REDEEMED BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.001 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT.
Right Certificate
LAMONTS APPAREL, 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 January 12, 1999 (the "Rights
Agreement"), between Lamonts Apparel, Inc., a Delaware corporation (the
"Corporation"), and Norwest Bank Minnesota, N.A. (the "Rights Agent") to
purchase from the Corporation at any time after the Distribution Date (as
such term is defined in the Rights Agreement) and prior to 5:00 P.M.,
Washington time, on January 12, 2009, unless the Rights evidenced hereby
shall have been previously redeemed by the Corporation, at the principal
office or offices of the Rights Agent designated for such purpose, or at the
office of its successor as Rights Agent, one one-thousandth (1/1000th) of a
fully paid non-assessable share of Series RP Preferred Stock (the "Preferred
Stock") of the Corporation, at a purchase price of $6.00 per one
one-thousandth (1/1000th) of a share of Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights evidenced
by this Right Certificate (and the number of one one-thousandths (1/1000ths)
of a share of Preferred Stock that may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of January 12, 1999, based on the Preferred Stock as
constituted at such date.
Upon the occurrence of a Section 11.1.2 Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate
are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of an Affiliate or Associate thereof) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or from any Affiliate or Associate thereof) to
holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has a continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Corporation has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7.6 of the Rights Agreement, shall become null and void
without any further action and no holder hereof shall have any rights
whatsoever with respect to such Rights, whether under any provision of the
Rights Agreement or otherwise.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-thousandths (1/1000ths) of a share of Preferred Stock or other
securities that may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events (as such term is
defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
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 Corporation and the holders of the Right
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights under the specific circumstances set forth
in the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Corporation and the office of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the designated office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Preferred Stock or other securities as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Corporation at a redemption price
of $.001 per Right (subject to adjustment as provided in the Rights
Agreement) payable in cash.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions that
are one one-thousandth (1/1000th) or integral multiples of one one-thousandth
(1/1000th) of a share of Preferred Stock, which may, at the election of the
Corporation, be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of the
Preferred Stock or of any other securities of the Corporation that may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Corporation or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or
2
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 other distributions or to exercise any
preemptive or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in
the Rights Agreement.
This Right 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
Corporation and its corporate seal. Dated as of __________, _____.
[SEAL]
ATTEST: LAMONTS APPAREL, INC.
By By
------------------------------ ------------------------------
Name Name
---------------------------- ----------------------------
Title Title
--------------------------- ---------------------------
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By
-----------------------------
Name
---------------------------
Title
--------------------------
3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________
Attorney-in-Fact, to transfer the within Right Certificate on the books of
the within-named Corporation, with full power of substitution.
Dated:__________, _____ _____________________________
Signature
Signature Guaranteed:
______________________________
Signatures must be guaranteed by an "Eligible Guarantor Institution" as
defined in Rule 17Ad-15 (or any successor rule or regulation) promulgated
pursuant to the Securities Exchange Act of 1934, as amended (this term means,
in general, banks, stock brokers, savings and loan associations, and credit
unions, in each case with membership in an approved signature guarantee
medallion program).
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), (2) this Right
Certificate is not being sold, assigned or transferred to or on behalf of any
such Acquiring Person, Affiliate or Associate, and (3) after due inquiry and
to the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement).
_____________________________
Signature
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise Rights represented by the Right
Certificate)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise ______________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock, shares of Common Stock or other securities issuable upon the exercise of
such Rights and requests that certificates for such shares of Preferred Stock,
shares of Common Stock or other securities be issued in the name of:
Please insert social security number
or other identifying number _______________________________________________
___________________________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security number
or other identifying number ________________________________________________
____________________________________________________________________________
(Please print name and address)
Dated: __________, _____
__________________________________
Signature
Signature Guaranteed:
_________________________________
Signatures must be guaranteed by an "Eligible Guarantor Institution" as
defined in Rule 17Ad-15 (or any successor rule or regulation) promulgated
pursuant to the Securities Exchange Act of 1934, as amended (this term means, in
general, banks, stock brokers, savings and loan associations, and credit unions,
in each case with membership in an approved signature guarantee medallion
program).
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), (2) this Right Certificate is not being sold,
assigned or transferred by or on behalf of any such Acquiring Person, Affiliate
or Associate, and (3) after due inquiry and to the best knowledge of the
undersigned, the undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
__________________________________
Signature
Notice
The signature on the foregoing Forms of Assignment and Election and
certificates must conform to the name as written upon the face of this Right
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 or the Form of Election to Purchase, as the case may be, is not
completed, the Corporation and the Rights Agent 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 such terms are defined in the Right
Agreement) and such Assignment or Election to Purchase will not be honored.
EXHIBIT C
LAMONTS APPAREL, INC.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxxx, Xxxxxxxxxx 00000
FORM OF
SUMMARY OF RIGHTS TO PURCHASE
SERIES RP PREFERRED SHARES
The Board of Directors (the "Board") of Lamonts Apparel, Inc. (the
"Corporation") has declared a dividend distribution of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock (the
"Common Stock") of the Corporation. The dividend is payable to the stockholders
of record on January 22, 1999 (the "Record Date"), and with respect to shares of
Common Stock issued thereafter until the Distribution Date (as defined below)
and, in certain circumstances, with respect to shares of Common Stock issued
after the Distribution Date. Except as set forth below, each Right, when it
becomes exercisable, entitles the registered holder to purchase from the
Corporation one one-thousandth (1/1000th) of a share of Series RP Preferred
Stock, $.01 par value per share (the "Preferred Stock"), of the Corporation at a
price of $6.00 per one one-thousandth (1/1000th) of a share of Preferred Stock
(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
Corporation and Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights
Agent"), dated as of January 12, 1999.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates representing the Rights ("Right Certificates") will be
distributed. The Rights will separate from the Common Stock upon the earliest
to occur of (i) a person or group of affiliated or associated persons having
acquired, without the prior approval of the Corporation's Board of Directors,
beneficial ownership of securities which represent 15% or more of the voting
power (the "Voting Power") of the then outstanding voting securities of the
Corporation (except pursuant to a Permitted Offer, as hereinafter defined) or
(ii) 10 days (or such later date as the Board may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group of
affiliated or associated persons becoming an Acquiring Person (as hereinafter
defined) (the "Distribution Date"). A person or group whose acquisitions of
shares of Common Stock cause a Distribution Date pursuant to clause (i) above
is an "Acquiring Person," with certain exceptions as set forth in the Rights
Agreement. The date that a person or group is first publicly announced to
have become such by the Corporation or such Acquiring Person is the "Shares
Acquisition Date."
The Rights Agreement contains "grandfathering" provisions which permit
Xxxxxxxx Investment Company ("Xxxxxxxx") to maintain its reported beneficial
ownership of 2,925,140 shares of Common Stock, Class A Warrants to purchase
1,810,380 shares of Common Stock and Class B Warrants to purchase 581,181 shares
of Common Stock (collectively, the "Xxxxxxxx
Grandfathered Securities") and Specialty Investment I LLC ("Specialty
Investment") to maintain its beneficial ownership of Class C Warrants to
purchase 3,429,588 shares of Common Stock (the "Specialty Investment
Grandfathered Securities") without becoming an Acquiring Persons. In
addition, in the event that Xxxxxxxx acquires certain securities held by BEA
Associates for the account of Executive Life Insurance Company of New York on
or before February 12, 1999, such securities shall also be deemed Xxxxxxxx
Grandfathered Securities. However, Xxxxxxxx or Specialty Investment will be
deemed an Acquiring Person in the event that either of them, subsequent to
the first public announcement of the execution of the Rights Agreement,
acquires beneficial ownership of any shares of Common Stock other than those
included in or underlying the Xxxxxxxx Grandfathered Securities or the
Specialty Investment Grandfathered Securities, as the case may be, which,
when aggregated with such securities, represent 15% or more of the Voting
Power. In addition, if any security holder provides evidence satisfactory to
the Board of beneficial ownership of shares of Common Stock representing 15%
or more of the Voting Power as of immediately prior to the first public
announcement of the execution of the Rights Agreement (including, in the case
of Xxxxxxxx, shares in addition to the Grandfathered Xxxxxxxx Securities and,
in the case of Specialty Investment, shares in addition to the Grandfathered
Specialty Investment Securities), then such security holder will not be
deemed an Acquiring Person with respect to such securities.
The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the associated shares of
Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuance of shares of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even 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 shares of Common Stock represented
by such certificate. As soon as practicable following the Distribution Date,
Right Certificates will be mailed to the holders of record of the shares of
Common Stock as of the Close of Business (as defined in the Rights Agreement)
on the Distribution Date (and to each initial record holder of certain shares
of Common Stock issued after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on January 12, 2009, unless earlier
redeemed by the Corporation as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding shares of
Common Stock at a price and on terms which a majority of certain members of
the Board determines to be adequate and in the best interests of the
Corporation, its stockholders and other relevant constituencies, other than
such Acquiring Person, its affiliates and associates (a "Permitted Offer")),
each holder of a Right will thereafter have the right (the "Flip-In Right")
to receive, upon exercise, the number of shares of Common Stock (or, in
certain circumstances, of one one-thousandths (1/1000ths) of a share of
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Preferred Stock or other securities of the Corporation) having a value
(immediately prior to such triggering event) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person or any affiliate or associate thereof will be null and
void. The Board has the option, at any time after any person becomes an
Acquiring Person, to exchange all or part of the then-exercisable Rights
(excluding those that have become void, as described in the immediately
preceding sentence) for shares of Common Stock, at an exchange ratio
determined by dividing the then-applicable Purchase Price by the then-current
market price per share of Common Stock as determined in accordance with the
Rights Agreement. However, this option generally terminates if any person
becomes the beneficial owner of shares representing 50% or more of the Voting
Power.
In the event that, at any time following the Shares Acquisition
Date, (i) the Corporation is acquired in a merger or other business
combination transaction in which the holders of all of the outstanding shares
of Common Stock immediately prior to the consummation of the transaction are
not the holders of all of the surviving corporation's voting power, or (ii)
more than 50% of the Corporation's assets or earning power is sold or
transferred, in either case with or to (x) an Acquiring Person or any
affiliate or associate thereof or (y) any other person in which such
Acquiring Person, affiliate or associate has an interest or any person acting
on behalf of or in concert with such Acquiring Person, affiliate or
associate, or (z) if, in such transaction, all holders of shares of Common
Stock are not treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon exercise,
common shares of the acquiring company (or, in certain circumstances, its
parent), having a value equal to two times the exercise price of the Right.
The holder of a Right will continue to have the Flip-Over Right whether or
not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of shares of Preferred
Stock, shares of Common Stock or other securities 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) upon the grant to holders of
shares of the Preferred Stock of certain rights or warrants to subscribe for
or purchase Preferred Stock at a price, or securities convertible into
Preferred Stock with a conversion price, less than the then current market
price of the Preferred Stock or (iii) upon the distribution to holders of
shares of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths (1/1000ths) of a share of Preferred Stock issuable upon
exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock payable in
Common Stock or subdivisions, consolidations or combinations of the Common
Stock occurring, in any such case, prior to the Distribution Date.
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Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but, if greater,
will be entitled to an aggregate dividend per share of 1,000 times the
dividend declared per share of Common Stock. In the event of liquidation,
the holders of shares of the Preferred Stock will be entitled to a minimum
preferential liquidation payment per share in an amount equal to the greater
of $6.00 or 1,000 times the payment made per share of Common Stock plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series RP
Liquidation Preference"); thereafter, and after the holders of shares of the
Common Stock receive a liquidation payment of an amount equal to the quotient
obtained by dividing the Series RP Liquidation Preference by 1,000 (subject
to certain adjustments for stock splits, stock dividends and
recapitalizations with respect to the Common Stock), the holders of shares of
the Preferred Stock and the holders of the Common Stock will share the
remaining assets in the ratio of 1,000 to 1 (as adjusted) for each share of
Preferred Stock and Common Stock so held, respectively. Finally, in the
event of any merger, consolidation or other transaction in which shares of
Common Stock are exchanged, each share of Preferred Stock will be entitled to
receive 1,000 times the amount received per share of Common Stock. These
rights are protected by customary antidilution provisions. In the event that
the amount of accrued and unpaid dividends on the Preferred Stock is
equivalent to six full quarterly dividends or more, the holders of shares of
the Preferred Stock shall have the right, voting as a class, to elect two
directors in addition to the directors elected by the holders of shares of
the Common Stock until all cumulative dividends on the Preferred Stock have
been paid or set apart for payment through the last quarterly dividend
payment date. No fractional shares of Preferred Stock will be issued (other
than fractions which are one one-thousandth (1/1000th) or integral multiples
of one one-thousandth (1/1000th) of a share of Preferred Stock, which may, at
the election of the Corporation, be evidenced by depositary receipts) and in
lieu thereof, an adjustment in cash will be made based on the market price of
the Preferred Stock on the last trading day prior to the date of exercise.
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.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, and under
certain other circumstances, the Corporation may redeem the Rights in whole,
but not in part, at a price (payable in cash or, at the Corporation's
election, in Common Stock) of $.001 per Right (the "Redemption Price"), which
redemption shall be effective upon the action of the Board. Additionally,
following the Shares Acquisition Date, the Corporation may redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price,
provided that such redemption is in connection with a merger or other
business combination transaction or series of transactions involving the
Corporation in which all holders of shares of Common Stock are treated alike
but not involving an Acquiring Person or its affiliates or associates.
Other than those provisions relating to the rights, duties and
obligations of the Rights Agent, all of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Corporation prior
to the Distribution Date, except that the affirmative vote of the
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holders of a majority of the then outstanding Rights (excluding Rights which
have become void in accordance with the Rights Agreement) will be required
(i) to increase the Purchase Price, to reduce the price at which the Rights
may be redeemed and/or to amend, in a manner adverse to the interests of the
holders of Rights, the exchange ratio of rights for shares of Common Stock
and (ii) following a Distribution Date, to supplement or amend any provision
of the Rights Agreement or the Rights in any other respect.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Corporation, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders of the
Corporation, stockholders may, depending upon the circumstances, recognize
taxable income should the Rights become exercisable or upon the occurrence of
certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A. A copy of the Rights Agreement is available free of charge from the
Corporation. 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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