EXHIBIT 4.1
RIGHTS AGREEMENT
DATED AS OF MAY 30, 2003
BY AND BETWEEN
CLAIRE'S STORES, INC.
AND
WACHOVIA BANK, N.A.,
AS RIGHTS AGENT
TABLE OF CONTENTS
PAGE
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Section 1. Definitions......................................................................................1
Section 2. Appointment of Rights Agent......................................................................7
Section 3. Issue of Right Certificates......................................................................8
Section 4. Form of Right Certificates......................................................................11
Section 5. Countersignature and Registration...............................................................12
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates...............................................................12
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................14
Section 8. Cancellation and Destruction of Right Certificates..............................................16
Section 9. Availability of Preferred Shares................................................................16
Section 10. Preferred Shares Record Date....................................................................18
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..............................19
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................................33
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................33
Section 14. Fractional Rights and Fractional Shares.........................................................39
Section 15. Rights of Action................................................................................41
Section 16. Agreement of Right Holders......................................................................42
Section 17. Right Certificate Holder Not Deemed a Shareholder...............................................43
Section 18. Concerning the Rights Agent.....................................................................43
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................................44
Section 20. Duties of Rights Agent..........................................................................45
Section 21. Change of Rights Agent..........................................................................49
Section 22. Issuance of New Right Certificates..............................................................50
Section 23. Redemption......................................................................................51
Section 24. Exchange........................................................................................52
Section 25. Notice of Certain Events........................................................................54
Section 26. Notices.........................................................................................55
Section 27. Supplements and Amendments......................................................................56
Section 28. Successors......................................................................................58
Section 29. Benefits of this Agreement......................................................................58
Section 30. Determinations and Actions by the Board of Directors............................................58
Section 31. Severability....................................................................................59
Section 32. Governing Law...................................................................................59
Section 33. Counterparts....................................................................................59
Section 34. Descriptive Headings............................................................................59
Exhibit A - Form of Articles of Amendment
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 30, 2003, between Claire's Stores,
Inc., a Florida corporation (the "COMPANY"), and Wachovia Bank, N.A. as rights
agent, a North Carolina corporation (the "RIGHTS AGENT").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "RIGHT" and, collectively, the
"RIGHTS") for each Common Share and Class A Common Share (each as hereinafter
defined) of the Company outstanding as of the Close of Business (as defined
below) on June 17, 2003 (the "RECORD DATE"), each Right representing the right
to purchase one one-thousandth of a Preferred Share (as hereinafter defined),
upon the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each Common Share and Class A Common Share that
shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined).
Accordingly, for and in consideration of the premises and the mutual
agreements set forth herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
Section 1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings indicated (other terms may be defined elsewhere in
this Agreement):
(a) "ACQUIRING PERSON" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding, but shall not include an Exempt Person (as such term is hereinafter
defined); PROVIDED, HOWEVER, that (i) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person" (as defined in this Section 1(a)) became or has become such
inadvertently (including, without limitation, because (A) such Person was
unaware that it beneficially owned an amount or percentage of Common Shares that
would otherwise cause such Person to be an "Acquiring Person" or (B) such Person
was aware of the extent of its Beneficial Ownership of Common Shares but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement unless and until such
Person shall have failed to divest itself, as soon as practicable (as
determined, in good faith, by the Board of Directors of the Company), of
Beneficial Ownership of a sufficient number of Common Shares so that such Person
would no longer otherwise qualify as an "Acquiring Person" under this Agreement;
and (ii) no Person shall become an "Acquiring Person" solely as the result of
the purchase or acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of Common
Shares beneficially owned by such Person to 15% (or such other percentage as
would otherwise result in such person becoming an "Acquiring Person" under this
Section 1(a)) or more of the Common Shares then outstanding; PROVIDED, HOWEVER,
that if a Person shall become the Beneficial Owner of 15% (or such other
percentage) or more of the Common Shares then outstanding by reason of such
share purchase or acquisition by the Company (as addressed in clause (ii) of
this Section 1(a)) and such Person shall thereafter become the Beneficial Owner
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of any additional Common Shares (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Shares or
pursuant to a split or subdivision of the outstanding Common Shares), then such
Person shall be deemed to be an "Acquiring Person" unless upon becoming the
Beneficial Owner of such additional Common Shares such Person does not
beneficially own 15% (or such other percentage as would otherwise result in such
person becoming an "Acquiring Person" under this Section 1(a)) or more of the
Common Shares then outstanding.
(b) "AFFILIATE" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(c) "ASSOCIATE" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of and
shall be deemed to "BENEFICIALLY own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
(ii) which 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 (other than
customary agreements with and between underwriters and selling group
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members with respect to a bona fide underwritten public offering of
securities), or upon the exercise of conversion rights, exchange rights
(including, but not limited to, the right to convert a Class A Common
Share into a Common Share), rights, warrants or options, or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (x) 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, (y) securities which such Person
has a right to acquire upon the exercise of Rights at any time prior to
the time that any Person becomes an Acquiring Person, or (z) securities
issuable upon the exercise of Rights from and after the time that any
Person becomes an Acquiring Person if such Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof
("Original Rights") or pursuant to Section 11(i) or Section 11(n) with
respect to an adjustment to Original Rights; 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
(iii) which are beneficially owned, directly or
indirectly, by any other Person and with respect to which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to
Section 1(d)(ii)(B) hereof) or disposing of any securities of the
Company.
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Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then outstanding,"
when used with reference to a Person's Beneficial Ownership of
securities of the Company, 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.
(e) "BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "CLASS A COMMON SHARES" shall mean the shares of the
Company's Class A common stock.
(g) "CLOSE OF BUSINESS" on any given date shall mean 5:00
P.M., New York City time, on such date; PROVIDED, HOWEVER, that, if such date is
not a Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(h) "COMMON SHARES" when used with reference to the Company
shall mean the shares of the Company's common stock. "Common Shares" when used
with reference to any Person other than the Company shall mean the capital stock
(or, in the case of a non-corporation entity, equivalent or similar 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.
(i) "DISTRIBUTION DATE" shall have the meaning set forth in
Section 3(a) hereof.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
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(k) "EXCHANGE RATIO" shall have the meaning set forth in
Section 24(a) hereof.
(l) "EXEMPT PERSON" shall mean (i) the Company or any
Subsidiary (as such term is hereinafter defined) of the Company, in each case
including, without limitation, in its fiduciary capacity, or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
or trustee holding Common Shares for or pursuant to the terms of any such plan
or for the purpose of funding any such plan or funding other employee benefits
for employees of the Company or of any Subsidiary of the Company, or (ii) any
Xxxxxxxx Family Member, any trust created for the benefit of a Xxxxxxxx Family
Member, or any Affiliate or Associate of a Xxxxxxxx Family Member, including any
Permitted Transferees (as such term is defined in the Company's Amended and
Restated Articles of Incorporation in effect as of the date hereof).
(m) "FINAL EXPIRATION DATE" shall have the meaning set forth
in Section 7(a) hereof.
(n) "NYSE" shall mean the New York Stock Exchange.
(o) "PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company, trust or other entity, and shall include
any successor (by merger or otherwise) of such entity.
(p) "PREFERRED SHARES" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company, having
the rights and preferences set forth in the Form of Articles of Amendment
attached to this Agreement as EXHIBIT A.
(q) "PURCHASE PRICE" shall have the meaning set forth in
Section 4 hereof.
(r) "RECORD DATE" shall have the meaning set forth in the
second paragraph hereof.
(s) "REDEMPTION DATE" shall have the meaning set forth in
Section 7(a) hereof.
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(t) "REDEMPTION PRICE" shall have the meaning set forth in
Section 23(a) hereof.
(u) "RIGHT" and "RIGHTS" shall have the meanings set forth in
the second paragraph hereof.
(v) "RIGHT CERTIFICATE" shall have the meaning set forth in
Section 3(a) hereof.
(w) "XXXXXXXX FAMILY MEMBER" shall mean Xxxxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx, E. Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxxx or any sibling or heir of
such persons.
(x) "SHARES ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such, or such earlier date that the Board of Directors has become aware that an
Acquiring Person has become such.
(y) "SUBSIDIARY" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(z) "SUMMARY OF RIGHTS" shall have the meaning set forth in
Section 3(b) hereof.
(aa) "TRADING DAY" shall have the meaning set forth in Section
11(d) hereof.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall, prior to the Distribution Date, also
be the holders of the Common Shares of the Company) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and
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shall in no event be liable for, the acts or omissions of any such co-Rights
Agent. In the event the Company appoints one or more co-Rights Agents, the
respective duties of the Rights Agents and any co-Rights Agents will be as the
Company may determine.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Close of Business
on the earlier of (i) the tenth day after the Shares Acquisition Date or (ii)
the tenth Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempt Person) of, or of the first public announcement of the intention of
such Person (other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person (other than an Exempt
Person) becoming the Beneficial Owner of Common Shares of the Company
aggregating 15% or more of the then outstanding Common Shares of the Company
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being herein referred to
as the "DISTRIBUTION DATE"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares or
Class A Common Shares of the Company 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) Rights (and any right to receive
Right Certificates) will be transferable only in connection with the transfer of
Common Shares or Class A Common Shares of the Company. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares or Class A Common Shares of the
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Company as of the Close of Business on the Distribution Date (other than any
Acquiring Person or any Affiliate or Associate of any Acquiring Person), at the
address of such holder shown on the records of the Company, a Right Certificate,
in substantially the form of EXHIBIT B hereto (a "RIGHT CERTIFICATE"),
evidencing one Right (subject to adjustment as provided herein) for each Common
Share or Class A Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of EXHIBIT C hereto (the "SUMMARY OF RIGHTS"),
by first-class, postage-prepaid mail, to each record holder of Common Shares and
Class A Common Shares as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares and Class A Common Shares of the Company
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. Until the Distribution Date (or,
if earlier, the Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares and Class A Common Shares of the
Company outstanding on the Record Date, with or without a copy of the Summary of
Rights, shall also constitute the transfer of the Rights associated with the
Common Shares and Class A Common Shares of the Company represented thereby.
(c) Rights shall be issued in respect of all Common Shares and
Class A Common Shares issued or disposed of (including, without limitation, upon
disposition of Common Shares or Class A Common Shares out of treasury stock or
issuance or reissuance of Common Shares and Class A Common Shares out of
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authorized but unissued shares) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date, or in certain circumstances
provided in Section 22 hereof, after the Distribution Date. Certificates issued
for Common Shares and Class A Common Shares (including, without limitation, upon
transfer of outstanding Common Shares, disposition of Common Shares or Class A
Common Shares out of treasury stock or issuance or reissuance of Common Shares
out of authorized but unissued shares) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A
RIGHTS AGREEMENT BETWEEN CLAIRE'S STORES, INC. AND
WACHOVIA BANK, N.A., DATED AS OF MAY 30, 2003, AS
IT MAY BE AMENDED FROM TIME TO TIME (THE
"AGREEMENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF CLAIRE'S STORES, INC.. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE AGREEMENT, SUCH
RIGHTS (AS DEFINED IN THE AGREEMENT) WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. CLAIRE'S
STORES, INC. WILL MAIL TO THE HOLDER OF THIS
CERTIFICATE A COPY OF THE AGREEMENT WITHOUT CHARGE
AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY
PERSON (AS DEFINED IN THE AGREEMENT) WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF BECOME
NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares and Class A
Common Shares of the Company represented by such certificates shall be evidenced
by such certificates alone, and the surrender for transfer of any such
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certificate (except as otherwise provided herein) shall also constitute the
transfer of the Rights associated with the Common Shares and Class A Common
Shares of the Company represented thereby. In the event that the Company
purchases or otherwise acquires any Common Shares or Class A Common Shares of
the Company after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares or Class A Common Shares of the Company shall
be deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares or Class A Common Shares
of the Company which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase Preferred Shares 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 Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any applicable
rule or regulation made pursuant thereto or with any applicable rule or
regulation of the NYSE or any stock exchange or interdealer quotation system on
which Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of this Agreement, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-thousandths of a Preferred
Share as shall be set forth therein at the price per one one-thousandth of a
Preferred Share set forth therein (the "PURCHASE PRICE"), but the number of such
one one-thousandths of a Preferred Share and the Purchase Price shall be subject
to adjustment as provided herein.
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Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman, Vice-Chairman, Chief
Executive Officer, President or Chief Financial Officer, either manually or by
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the individual who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the
Company by any individual who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
individual was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or agency designated for such purpose,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of this Agreement, at any time after the Distribution Date and
prior to the Expiration Date, any Right Certificate or Right Certificates (other
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than Right Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24
hereof) 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 of a Preferred Share as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, 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 or
agency of the Rights Agent designated for such purpose. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment 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.
Subject to the provisions of this Agreement, at any time after the
Distribution Date and prior to the Expiration Date, upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company will
make and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
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Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may (subject to Section 11(a)(ii) and except as otherwise
provided herein) exercise the Rights evidenced thereby, in whole or in part,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office or
agency of the Rights Agent designated for such purpose, together with payment of
the aggregate Purchase Price with respect to the total number of one
one-thousandths of Preferred Shares (or other securities, cash or other assets,
as the case may be) as to which the Rights are exercised, at any time which is
both after the Distribution Date and prior to the time (the "EXPIRATION DATE")
that is the earliest of (i) the Close of Business on May 30, 2013 (the "FINAL
EXPIRATION DATE"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "REDEMPTION DATE"), or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a
Preferred Share purchasable pursuant to the exercise of a Right shall initially
be $130.00. The Purchase Price and the number of one one-thousandths of a
Preferred Share (or other securities or property) to be acquired upon exercise
of a Right shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof, and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the Preferred Shares to be purchased and an amount equal to any applicable
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transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof, in cash or by certified check, cashier's check
or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares, or make available if the Rights Agent is such transfer agent,
certificates for the number of Preferred Shares to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from a depositary agent appointed by the Company
depositary receipts representing (interests in) such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with such depositary agent), and the Company
hereby directs such depositary agent to comply with such request; (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with Section 14 hereof; (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may properly be designated by
such holder; and (iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all of the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the exercisable Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Right Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
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occurrence of any purported transfer or purported exercise of Rights pursuant to
Section 6 hereof or this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of assignment or form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such transfer or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof as the Company may reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in 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
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and, in such case, shall
deliver a certificate of destruction thereof to the Company.
Section 9. AVAILABILITY OF PREFERRED SHARES. The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued shares of preferred stock or any Preferred Shares held
in its treasury the number of Preferred Shares that will be sufficient to permit
the exercise in full of all outstanding Rights in accordance with Section 7
hereof.
16
So long as the Preferred Shares issuable upon the exercise of
Rights may be listed or admitted to trading on any national securities exchange,
or quoted on NASDAQ, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed or admitted to trading on such exchange, or quoted on
NASDAQ, upon official notice of issuance upon such exercise.
From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
Preferred Shares upon the exercise of Rights, to register and qualify such
Preferred Shares under the Securities Act and any applicable state securities or
"Blue Sky" laws (to the extent exemptions therefrom are not available), cause
such registration statement and qualifications to become effective as soon as
practicable after such filing and keep such registration and qualifications
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of the date as of which the Rights are no
longer exercisable for such securities and the Expiration Date. The Company may
temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act shall have been declared effective, unless an exemption
therefrom is available.
17
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares 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 Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
PROVIDED, HOWEVER, that, if the date of such surrender and payment is a date
upon which the Preferred Shares transfer books of the Company 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
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
18
shall be exercisable, including, without limitation, the right to vote or to
receive dividends or other distributions, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES AND
NUMBER OF RIGHTS. The Purchase Price, the number of Preferred Shares or other
securities or property purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare and pay a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a
smaller number of Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the number and kind
of shares of capital stock issuable upon exercise of a Right as of the
record date for such dividend or the effective date of such
subdivision, combination or reclassification, shall be proportionately
adjusted so that the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior
to such date and at a time when the Preferred Shares transfer books of
the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.
(ii) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person (the first occurrence of
such event being referred to hereinafter as the "FLIP-IN EVENT"), then
19
(A) the Purchase Price shall be adjusted to be the Purchase Price in
effect immediately prior to the Flip-In Event multiplied by the number
of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such Flip-In Event, whether or not
such Right was then exercisable, and (B) each holder of a Right, except
as otherwise provided in this Section 11(a)(ii) and Section 11(a)(iii)
hereof, shall thereafter have the right to receive, upon exercise
thereof at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Agreement and in lieu of Preferred
Shares, such number of Common Shares of the Company as shall equal the
result obtained by dividing the Purchase Price (as so adjusted) by 50%
of the current per share market price of the Common Shares of the
Company (determined pursuant to Section 11(d) hereof) on the date of
such Flip-In Event; PROVIDED, HOWEVER, that the Purchase Price (as so
adjusted) and the number of Common Shares so receivable upon exercise
of a Right shall, following the Flip-In Event, be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof.
Notwithstanding anything in this Agreement to the contrary, however,
from and after the Flip-In Event, any and all Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate thereof) who becomes a
transferee after the Flip-In Event or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee
prior to or concurrently with the Flip-In Event pursuant to either (I)
a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part of a plan,
20
arrangement or understanding which has the purpose or effect of
avoiding the provisions of this paragraph, and subsequent transferees
of such Persons, shall be void without any further action, and any
holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Agreement. The
Company shall use all reasonable efforts to ensure that the provisions
of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the Flip-In Event, no Right Certificate shall
be issued pursuant to Section 3 or Section 6 hereof that represents
Rights that are or have become void pursuant to the provisions of this
paragraph, and any Right Certificate delivered to the Rights Agent that
represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be cancelled. From and after the
occurrence of an event specified in Section 13(a) hereof, any Rights
that theretofore have not been exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only in accordance with
Section 13 and not pursuant to this Section 11(a)(ii).
(iii) The Company may at its option substitute for a
Common Share issuable upon the exercise of Rights in accordance with
the foregoing subparagraph (ii) a number of Preferred Shares or
fraction thereof such that the current per share market price of one
Preferred Share multiplied by such number or fraction is equal to the
current per share market price of one Common Share. In the event that
there shall not be sufficient Common Shares authorized but unissued (or
issued but not outstanding) to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Board of
21
Directors shall, with respect to such deficiency, to the extent
permitted by applicable law and any material agreements then in effect
to which the Company is a party, (A) determine the excess (such excess,
the "SPREAD") of (1) the value of the Common Shares issuable upon the
exercise of a Right in accordance with the foregoing subparagraph (ii)
(the "CURRENT VALUE") over (2) the Purchase Price (as adjusted in
accordance with the foregoing subparagraph (ii)), and (B) with respect
to each Right (other than Rights which have become void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for
the Common Shares issuable in accordance with the foregoing
subparagraph (ii) upon exercise of the Right and payment of the
Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a
reduction in such Purchase Price, (3) Preferred Shares or other equity
securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having
dividend, voting, liquidation and other rights substantially comparable
to those of the Common Shares, are deemed in good faith by the Board of
Directors to have substantially the same value as the Common Shares
(such Preferred Shares and shares or fractions of shares of preferred
stock are hereinafter referred to as "COMMON STOCK EQUIVALENTS")), (4)
debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having a value which, when added to the
value of the Common Shares issued upon exercise of such Right, shall
have an aggregate value equal to the Current Value (less the amount of
any reduction in such Purchase Price), where such aggregate value has
been determined by the Board of Directors upon the advice of a
nationally recognized investment banking firm selected in good faith by
the Board of Directors; PROVIDED, HOWEVER, that if the Company shall
not make adequate provision to deliver value pursuant to clause (B)
above within thirty (30) days following the Flip-In Event (the date of
the Flip-In Event being the "SECTION 11(A)(II) TRIGGER DATE"), then the
Company shall be obligated to deliver, to the extent permitted by
22
applicable law and any material agreements then in effect to which the
Company is a party, upon the surrender for exercise of a Right and
without requiring payment of such Purchase Price, Common Shares (to the
extent available), and then, if necessary, such number or fractions of
Preferred Shares (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the
Spread. If, upon the occurrence of the Flip-In Event, the Board of
Directors shall determine in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance
upon exercise in full of the Rights, then, if the Board of Directors so
elects, the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is herein called
the "SUBSTITUTION PERIOD"). To the extent that the Company determines
that some action need be taken pursuant to the second and/or third
sentence of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such second sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
23
a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the
Common Shares shall be the current per share market price (as
determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii)
Trigger Date and the per share or fractional value of any "Common Stock
Equivalent" shall be deemed to equal the current per share market price
of the Common Shares. The Board of Directors of the Company may, but
shall not be required to, establish procedures to allocate the right to
receive Common Shares upon the exercise of the Rights among holders of
Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("EQUIVALENT
PREFERRED SHARES")) or securities convertible into Preferred Shares or
Equivalent Preferred Shares at a price per Preferred Share or Equivalent
Preferred Shares (or having a conversion price per share, if a security
convertible into Preferred Shares or Equivalent Preferred Shares) less than the
then current per share market price of the Preferred Shares (determined pursuant
to Section 11(d) 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 Preferred Shares and Equivalent Preferred Shares
outstanding on such record date plus the number of Preferred Shares and
Equivalent Preferred Shares which the aggregate offering price of the total
24
number of Preferred Shares and/or Equivalent Preferred Shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price, and the denominator
of which shall be the number of Preferred Shares and Equivalent Preferred Shares
outstanding on such record date plus the number of additional Preferred Shares
and/or Equivalent Preferred Shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); PROVIDED, HOWEVER, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Preferred Shares and Equivalent Preferred Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) 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 of the Preferred Shares
(determined pursuant to Section 11(d) hereof) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
25
Preferred Share, and the denominator of which shall be such current per share
market price (determined pursuant to Section 11(d) hereof) of the Preferred
Shares; PROVIDED, HOWEVER, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) Except as otherwise provided herein, 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(d)(i)) on
any date shall be deemed to be the average of the daily closing prices
per share of such Security for the 30 consecutive Trading Days
immediately prior to such date; PROVIDED, HOWEVER, that, in the event
that the current per share market price of the 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 Security
and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such
26
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
NYSE or, if the Security is not listed or admitted to trading on the
NYSE, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. The term
"TRADING DAY" shall mean a day on which the principal national
securities exchange or quotation system 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 or quotation system, a Business Day.
(ii) For the purpose of any computation hereunder, if
the Preferred Shares are publicly traded, the "current per share market
price" of the Preferred Shares shall be determined in accordance with
the method set forth in Section 11(d)(i) hereof. If the Preferred
Shares are not publicly traded but the Common Shares are publicly
27
traded, the "current per share market price" of the Preferred Shares
shall be conclusively deemed to be the current per share market price
of the Common Shares as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by one
thousand (as adjusted in accordance with the Articles of Amendment for
the Preferred Shares). If neither the Common Shares nor the Preferred
Shares are publicly traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this Section 11(e) 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-hundred-thousandth of a Preferred Share or one one-hundredth of a Common
Share or of any other share or security, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
28
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11 (m) hereof, as applicable, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
one-hundred-thousandth of a Preferred Share) obtained by (i) multiplying (x) the
number of one one-thousandths of a share purchasable upon the exercise of a
Right immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price, and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price pursuant to Sections 11(b) or 11(c) hereof to
adjust the number of Rights in substitution for any adjustment in the number of
one one-thousandths of a Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a Preferred
29
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one one-hundredth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. Such 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 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(i), the Company may, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein, and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or in the number of one one-thousandths of a Preferred Share issuable upon
the exercise of a Right, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
30
one-thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then applicable par value, if any, of the
fraction of Preferred Shares issuable upon exercise of a Right, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares, or other capital stock or securities, at such
adjusted Purchase Price.
(l) 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 Company may elect to defer until the occurrence of such
event issuing to the holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company 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.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such adjustments in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred Shares at less than
the current market price, issuance wholly for cash of Preferred Shares or
31
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to above in Section 11(b),
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such shareholders.
(n) 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 Company shall (i) declare and pay any
dividend on the Common Shares or Class A Common Shares payable in Common Shares
or Class A Common Shares, or (ii) effect a subdivision, combination or
consolidation of the Common Shares or Class A Common Shares (by reclassification
or otherwise than by payment of a dividend payable in Common Shares or Class A
Common Shares) into a greater or lesser number of Common Shares or Class A
Common Shares, then, in each such case, (A) the number Rights associated with
each Common Share or Class A Common Shares then outstanding, or issued or
delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share or Class A Common Shares
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each Common Share or Class A Common Shares
outstanding immediately prior to such event by a fraction the numerator of which
shall be the total number of Common Shares or Class A Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares or Class A Common Shares outstanding
immediately following the occurrence of such event.
(o) The Company agrees that, after the earlier of the
Distribution Date or the Shares Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
32
foreseeable that such action will diminish substantially or eliminate the
benefits intended to be afforded by the Rights as provided under this Agreement.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares, Class A
Common Shares or the Preferred Shares a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained and shall not be deemed
to have knowledge of any such adjustment unless and until it shall have received
such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event, directly or indirectly, at any time after
the Flip-in Event, (i) the Company shall consolidate with, or merge with and
into, any other Person, (ii) any Person shall merge with and into the Company
and the Company shall be the continuing or surviving corporation of such merger
and, in connection with such merger, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other Person (or
the Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or one or more of
its wholly-owned Subsidiaries, then, upon the first occurrence of any such
event, proper provision shall be made so that: (A) each holder of a Right (other
than Rights which have become void pursuant to Section 11(a)(ii) hereof) shall
thereafter have the right to receive, upon the exercise thereof at the Purchase
Price (as theretofore adjusted in accordance with Section 11(a)(ii) hereof), in
33
accordance with the terms of this Agreement and in lieu of Preferred Shares or
Common Shares of the Company, such number of validly authorized and issued,
fully paid, non-assessable and freely tradeable (if applicable or available)
Common Shares of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of the
current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; PROVIDED, HOWEVER, that the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) and the number of Common Shares of such Principal Party so receivable
upon exercise of a Right shall be subject to further adjustment as appropriate
in accordance with Section 11(f) hereof to reflect any events occurring in
respect of the Common Shares of such Principal Party after the occurrence of
such consolidation, merger, sale or transfer; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Agreement; (C) the term "Company", as used hereunder, shall thereafter
be deemed to refer to such Principal Party; and (D) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation of any such transaction as may be necessary to assure
34
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter deliverable upon
the exercise of the Rights; PROVIDED, HOWEVER, that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Shares of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.
(b) For purposes of this Agreement, "PRINCIPAL PARTY" shall
mean:
(i) in the case of any transaction described in
clause (i) or clause (ii) of the first sentence of Section 13(a)
hereof: (A) the Person that is the issuer of the securities into which
the Common Shares are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer the Common Shares of
which have the greatest aggregate market value of shares outstanding,
or (B) if no securities are so issued, (x) the Person that is the other
party to the merger, if such Person survives said merger, or, if there
is more than one such Person, the Person the Common Shares of which
have the greatest aggregate market value of shares outstanding, or (y)
if the Person that is the other party to the merger does not survive
the merger, the Person that does survive the merger (including the
Company, if it survives), or (z) the Person resulting from the
consolidation; and
35
(ii) in the case of any transaction described in
clause (iii) of the first sentence of Section 13(a) hereof, the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions,
or, if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred
or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons is the
issuer of Common Shares having the greatest aggregate market value of
shares outstanding;
PROVIDED, HOWEVER, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Shares of such Person are not at such time or
have not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of all of which are and have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
36
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) hereof unless prior
thereto the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a breach or default by the Principal Party of or under this
Agreement as the same shall have been assumed by the Principal Party pursuant to
Sections 13(a) and (b) hereof and providing that, as soon as practicable after
executing such agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under
the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date and similarly comply with all
applicable state securities laws;
(ii) use its best efforts, if the Common Shares of
the Principal Party shall be listed or admitted to trading on the NYSE
or on another national securities exchange, to list or admit to trading
(or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on the NYSE or such securities exchange,
or, if the Common Shares of the Principal Party shall not be listed or
admitted to trading on the NYSE or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the
37
Rights to be authorized for quotation on NASDAQ or on such other system
then in use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Shares of the Principal
Party subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has a provision in any of its
authorized securities or in its certificate or articles of incorporation or
by-laws or other instrument(s) governing its capitalization or affairs, which
provision would have the effect of (i) causing such Principal Party to issue
(other than to holders of Rights pursuant to this Section 13), in connection
with, or as a consequence of, the consummation of a transaction referred to in
this Section 13, Common Shares or Common Stock Equivalents of such Principal
Party at less than the then current market price per share thereof (determined
pursuant to Section 11(d) hereof) or securities exercisable for, or convertible
into, Common Shares or Common Stock Equivalents of such Principal Party at less
than the then current market price, or (ii) providing for any special payment,
tax or similar provision in connection with the issuance of the Common Shares of
such Principal Party pursuant to the provisions of Section 13, then, in such
event, the Company hereby agrees with each holder of Rights that it shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
38
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any
time after the Flip-In Event, enter into any transaction of the type described
in clauses (i) through (iii) of Section 13(a) hereof if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the shareholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(b) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates, or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights (except, prior to the
Distribution Date, in accordance with Section 11(n) hereof) or to distribute
Right Certificates which 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(a), 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
39
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the NYSE or, if the Rights are not
listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share) upon the exercise or exchange of Rights. Interests in fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; PROVIDED, HOWEVER, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
40
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at
the time such Rights are exercised or exchanged as herein provided an amount in
cash equal to the same fraction of the current market value of a whole Preferred
Share (as determined in accordance with Section 14(a) hereof) for the Trading
Day immediately prior to the date of such exercise or exchange.
(c) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares upon the exercise or exchange of Rights. In lieu of such fractional
shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Common Share (as determined in accordance with Section 14(a)
hereof) for the Trading Day immediately prior to the date of such exercise or
exchange.
(d) 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 shares upon exercise or exchange of a Right (except as expressly
provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares and Class A Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares and Class
A Common Shares), without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of the Common
41
Shares and Class A Common Shares), on his own behalf and for his own benefit,
may enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate (or, prior to the
Distribution Date, of the Common Shares and Class A Common Shares) in the manner
provided therein 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.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares and Class
A Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the Common Shares or Class A Common Shares certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the Common Shares
42
or Class A Common Shares certificates made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent (subject to Section 7(e) hereof) shall be affected by any notice to
the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or distributions or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise or exchange 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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as expressly provided in this
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised or exchanged in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder, and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, and its directors, officers,
employees and agents, for, and to hold each of them harmless against, any loss,
43
liability, or expense incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by any
such indemnified party in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against any claim
of liability arising therefrom.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
(c) The indemnity provided in this Section 18 shall survive
the expiration of the Rights, the resignation or removal of the Rights Agent and
the termination of this Agreement.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust powers of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; PROVIDED that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
44
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and, in all such cases, such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and, in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and, in all such cases, such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
45
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
Vice Chairman of the Board, Chief Executive Officer, the President or the Chief
Financial Officer of the Company, and the Secretary of the Company, and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights provided for in Sections 3, 11, 13, 23 and
24 hereof, or the ascertaining of the existence of facts that would require any
46
such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate furnished
pursuant to Section 12, describing such change or adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or other securities will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any of the Chairman of the Board, Vice Chairman, Chief Executive Officer,
President, Chief Financial Officer or Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
47
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five Business Days after
the date any officer of the Company 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 instructions in response
to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity (other than
an Acquiring Person).
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided that reasonable care was exercised
in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed in a manner sufficient to
certify that the holder is not an Acquiring Person (or an Affiliate or Associate
thereof) or a transferee thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company.
48
(k) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
(l) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind whatsoever (including, but
not limited to, lost profits).
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares, Class A Common Shares or Preferred Shares by registered or
certified mail, and, following the Distribution Date, to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares, Class A Common Shares or Preferred Shares by
registered or certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (which holder shall, with such notice, submit his Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (A) a corporation organized and doing
49
business under the laws of the United States or of any State of the United
States or the District of Columbia, in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million, or (B) an affiliate of a corporation described in clause (A)
of this sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares, Class A Common Shares or Preferred Shares, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such
form(s) as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
50
with the issuance or sale of Common Shares or Class A Common Shares following
the Distribution Date and prior to the Expiration Date, the Company may with
respect to Common Shares or Class A Common Shares so issued or sold pursuant to
(i) the exercise of stock options, (ii) under any employee plan or arrangement,
(iii) upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company or (iv) a contractual obligation of the
Company, in each case existing prior to the Distribution Date, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale.
Section 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option
and in its sole discretion, at any time prior to the Flip-In Event, redeem all
but not less than all the then outstanding Rights at a redemption price of $0.01
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring in respect of the Common Shares or Class A Common
Shares after the date hereof (such redemption price being hereinafter referred
to as the "REDEMPTION PRICE"). The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors, in its sole discretion, may establish. The
Redemption Price shall be payable, at the option of the Company, in cash, Common
Shares, or such other form of consideration as the Board of Directors shall
determine.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors may establish for the
effectiveness of such redemption), and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
of the holders of Rights thereafter shall be to receive the Redemption Price.
51
The Company 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 10 days after such action of the
Board of Directors ordering the redemption of the Rights (or such later time as
the Board of Directors may establish for the effectiveness of such redemption),
the Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares or Class A Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
shall state the method by which the payment of the Redemption Price will be
made. Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time or in any manner other than
as specifically set forth in this Section 23 or Section 24 hereof, and other
than in connection with the purchase of Common Shares or Class A Common Shares
of the Company prior to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option
and in its sole discretion, at any time after the Flip-In Event, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring in respect of the Common Shares after the date hereof
(such amount per Right being hereinafter referred to as the "EXCHANGE RATIO").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after an Acquiring Person shall have become the
52
Beneficial Owner of Common Shares of the Company aggregating 50% or more of the
Common Shares then outstanding. From and after the occurrence of an event
specified in Section 13(a) hereof, any Rights that theretofore have not been
exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in
accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors, in
its sole discretion, may establish..
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to paragraph (a) of this Section 24 and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of Common
Shares equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; PROVIDED, HOWEVER, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of the Rights
so exchanged 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 will state the method by which the exchange of the Common Shares for
Rights will be effected, and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected PRO
RATA based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
53
(c) The Company may at its option substitute and, in the event
that there shall not be sufficient Common Shares authorized but unissued (or
issued but not outstanding) to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of
such insufficiency, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or fraction thereof (or
Equivalent Preferred Shares, as such term is defined in Section 11(b)) such that
the current per share market price (determined pursuant to Section 11(d) hereof)
of one Preferred Share (or Equivalent Preferred Share) multiplied by such number
or fraction is equal to the current per share market price of one Common Share
(determined pursuant to Section 11(d) hereof) as of the date of such exchange.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall, at any time after the earlier
of the Distribution Date or the Shares Acquisition Date, propose (i) to pay any
dividend payable in shares of any class to the holders of the Preferred Shares
or to make any other distribution to the holders of the Preferred Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of the
Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the subdivision
or combination of outstanding Preferred Shares), (iv) to effect the liquidation,
dissolution or winding up of the Company, or (v) to pay any dividend on the
Common Shares or Class A Common Shares payable in Common Shares or Class A
Common Shares or to effect a subdivision, combination or consolidation of the
54
Common Shares or Class A Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares or Class A Common Shares), then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such dividend or distribution or
offering of rights or warrants, or the date on which such liquidation,
dissolution, winding up, reclassification, subdivision, combination or
consolidation is to take place and the date of participation therein by the
holders of the Common Shares/Class A Common Shares and/or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Common Shares and/or Preferred Shares, whichever shall be
the earlier.
(b) In case any event set forth in Section 11(a)(ii) or
Section 13 hereof shall occur, then the Company shall, as soon as practicable
thereafter, give to each holder of a Right Certificate (or, if occurring prior
to the Distribution Date, to each holder of Common Shares and Class A Common
Shares), in accordance with Section 26 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(a)(ii) and/or Section 13 hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
55
Claire's Stores, Inc.
0 X.X. 000 Xxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attn: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Wachovia Bank, N.A.
Corporate Trust Operation
0000 Xxxx X.X. Xxxxxx Xxxxxxxxx
0X0 (Xxxxxxx 28262)
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Except as otherwise provided in
this Section 27, for so long as the Rights are outstanding and then redeemable,
the Company may, in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend this Agreement, and/or any term,
provision or condition of this Agreement, in any respect without the consent or
approval of any holder or holders of the Rights. Without limiting the foregoing,
the Company may, at any time prior to such time as any Person becomes an
Acquiring Person, amend this Agreement to lower the percentage thresholds set
forth in Sections 1(a) and 3(a) hereof to not less than 10% (the "REDUCED
THRESHOLD"); PROVIDED, HOWEVER, that no Person who beneficially owns a number of
Common Shares equal to or greater than the Reduced Threshold shall become an
56
Acquiring Person unless such Person shall, after the public announcement of the
Reduced Threshold, increase its beneficial ownership of the then outstanding
Common Shares (other than as a result of the purchase or acquisition of Common
Shares by the Company) to an amount equal to or greater than the greater of (x)
the Reduced Threshold and (y) the sum of (i) the lowest beneficial ownership of
such Person as a percentage of the outstanding Common Shares as of any date on
or after the date of the public announcement of the Reduced Threshold, plus (ii)
0.001%. At any time when the Rights are no longer redeemable, except as
otherwise provided in this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
consent or approval of any holder or holders of Rights, provided that no such
supplement or amendment may (a) adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), (b) cause this Agreement again to become amendable other
than in accordance with this sentence, or (c) cause the Rights again to become
redeemable. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made to this Agreement which
decreases the Redemption Price and no supplement or amendment that changes the
rights, duties or liabilities of the Rights Agent under this Agreement shall be
effective without the consent of the Rights Agent. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment, provided that any
supplement or amendment that does not amend the Agreement in a manner adverse to
the Rights Agent shall become effective immediately upon execution by the
Company, whether or not also executed by the Rights Agent.
57
Section 28. SUCCESSORS. All the terms, conditions, covenants and
provisions of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares and Class A Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Shares and Class A Common Shares).
Section 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights, to exchange or not to exchange the Rights or
to amend or supplement or not amend or supplement this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are effected, done or made by the Board of Directors of the Company in good
58
faith shall be (x) final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights, as such, and on all other parties, and (y) not
subject the Board of Directors to any liability to the holders of the Rights.
Section 31. SEVERABILITY. The parties intend that this Agreement be
enforced and interpreted as written. If, however, any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Florida and for all purposes shall be governed by and construed and
enforced in accordance with the laws of such State applicable to contracts to be
made and performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections, subsections and provisions of this Agreement are inserted for
convenience of reference only and shall not control or affect the meaning,
interpretation or construction of any of the terms or provisions hereof.
59
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: CLAIRE'S STORES, INC.
By: By: /s/ Xxx Xxxxxx
--------------------------------- ------------------------------
Name: Name: Xxx Xxxxxx
------------------------------- ----------------------------
Title: Title: Chief Financial Officer
------------------------------ ----------------------------
Attest: WACHOVIA BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxxx
------------------------------- ----------------------------
Title: Corporate Trust Officer Title: Vice President
------------------------------ ----------------------------
61
EXHIBIT A
FORM
OF
ARTICLES OF AMENDMENT
DESIGNATING
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
CLAIRE'S STORES, INC.
PURSUANT TO SECTION 607.0602 OF THE
FLORIDA BUSINESS CORPORATION LAW
Claire's Stores, Inc., a corporation organized and existing under
Florida Business Corporation Act (hereinafter called the "Corporation"), in
accordance with the provisions of Section 607.0602 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Articles of Incorporation, as amended and
restated, of the Corporation (the "Articles of Incorporation"), the said Board
of Directors on May 30, 2003 adopted the following resolution creating a series
of 100,000 shares of Preferred Stock of the Corporation designated as "Series A
Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of the Articles
of Incorporation, a series of Preferred Stock, having a par value of $1.00 per
share, of the Corporation be and hereby is created, and that the designation and
number of shares thereof, and the voting and other powers, preferences and
relative, participating, optional or other rights of the shares of such series,
and the qualifications, limitations and restrictions thereof, are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
that shall be designated as "Series A Junior Participating Preferred Stock," and
the number of shares constituting such series shall be 100,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series
A-1
A Junior Participating Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
2. DIVIDENDS and DISTRIBUTION.
(A) Subject to the prior and superior rights of the holders of
any shares of any class or series of stock of the Corporation ranking prior and
superior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, and subject to the Corporation's Amended and Restated
Articles of Incorporation, the holders of shares of Series A Junior
Participating Preferred Stock, in preference to the holders of shares of any
class or series of stock of the Corporation ranking junior to the Series A
Junior Participating Preferred Stock in respect thereof, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of May, August, November and February, in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) the Adjustment Number (as defined below) times the aggregate per share
amount of all cash dividends, and the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other distributions
other than a dividend payable in shares of the Corporation's common stock, par
value $0.05 per share (the "Common Stock"), Class A common stock, par value
$0.05 per share (the "Class A Stock"), or a subdivision of the outstanding
shares of Common Stock or Class A Stock (by reclassification or otherwise),
declared on the Common Stock or Class A Stock of the Corporation since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 1000. In the event the Corporation shall
at any time after June 17, 2003 (i) declare and pay any dividend on the
Corporation's Common Stock or Class A Stock payable in shares of Common Stock or
Class A Stock, (ii) subdivide the outstanding Common Stock or Class A Stock or
(iii) combine the outstanding Common Stock or Class A 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 or Class A Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock or Class A Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
to the holders of the Series A Junior Participating Preferred Stock as provided
in paragraph (A) above immediately after it declares a dividend or distribution
on the Common Stock or Class A Stock (other than a dividend payable in shares of
Common Stock or Class A Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock entitled to receive a
A-2
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 A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 70 days prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the shareholders of the
Corporation. Except as otherwise provided herein, in any other Articles of
Amendment creating a series of Preferred Stock or any similar stock of the
Corporation, or by law, the holders of Series A Junior Participating Preferred
Stock and the holders of Common Stock and Class A Stock and any other capital
stock of the Corporation having general voting rights shall vote together, as
one class, on all matters submitted to a vote of shareholders of the
Corporation.
(B) Except as required by law, by Section 3(C) and by Section
10 hereof, holders of Series A Junior Participating Preferred Stock shall have
no special voting rights and their vote or consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock and Class A
Stock as set forth herein) for taking any corporate action.
(C) If, at the time of any annual meeting of shareholders for
the election of directors, the equivalent of six quarterly dividends (whether or
not consecutive) payable on any share or shares of Series A Junior Participating
Preferred Stock are in default, the number of directors constituting the Board
of Directors of the Corporation shall be increased by two. In addition to voting
together with the holders of Common Stock and Class A Stock for the election of
other directors of the Corporation, the holders of record of the Series A Junior
Participating Preferred Stock, voting separately as a class to the exclusion of
the holders of Common Stock and Class A Stock, shall be entitled at said meeting
of shareholders (and at each subsequent annual meeting of shareholders), unless
all dividends in arrears on the Series A Junior Participating Preferred Stock
have been paid or declared and set apart for payment prior thereto, to vote for
the election of two directors of the Corporation, the holders of any Series A
Junior Participating Preferred Stock being entitled to cast a number of votes
per share of Series A Junior Participating Preferred Stock as is specified in
paragraph (A) of this Section 3. Until the default in payments of all dividends
which permitted the election of said directors shall cease to exist, any
director who shall have been so elected pursuant to the provisions of this
A-3
Section 3(C) may be removed at any time, with or without cause, only by the
affirmative vote of the holders of the shares of Series A Junior Participating
Preferred Stock at the time entitled to cast a plurality of the votes entitled
to be cast for the election of any such director at a special meeting of such
holders called for that purpose, and any vacancy thereby created may be filled
by the vote of such holders. If and when such default shall cease to exist, the
holders of the Series A Junior Participating Preferred Stock shall be divested
of the foregoing special voting rights, subject to revesting in the event of
each and every subsequent like default in payment of dividends. Upon the
termination of the foregoing special voting rights, the term of office of all
persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(C) shall be in addition to any other voting rights granted to the
holders of the Series A Junior Participating Preferred Stock in this Section 3.
4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series A
Junior Participating 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; or
(iii) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating 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 Series A
Junior Participating Preferred Stock, or to such holders and holders of any such
shares ranking on a parity therewith, 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.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. REACQUIRED SHARES. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired promptly after the acquisition thereof. All such
A-4
shares shall upon their retirement become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
any conditions and restrictions on issuance set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation, dissolution or winding up of the
Corporation, 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 A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received an amount per share (the
"Series A Liquidation Preference") equal to the greater of (i) $1.00 plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (ii) the Adjustment Number
times the per share amount of all cash and other property to be distributed in
respect of the Common Stock and Class A Stock upon such liquidation, dissolution
or winding up of the Corporation.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other classes and series of
stock of the Corporation, if any, that rank on a parity with the Series A Junior
Participating Preferred Stock in respect thereof, then the assets available for
such distribution shall be distributed ratably to the holders of the Series A
Junior Participating Preferred Stock and the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) Neither the merger or consolidation of the Corporation
with or into another entity nor the merger or consolidation of any other entity
with or into the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 6.
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
outstanding 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 each share
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number 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.
8. NO REDEMPTION. Shares of Series A Junior Participating Preferred
Stock shall not be subject to redemption by the Corporation.
9. RANKING. The Series A Junior Participating Preferred Stock shall
rank junior to all other series of the Preferred Stock as to the payment of
A-5
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, unless the terms of any such series shall provide otherwise, and
shall rank senior to the Common Stock and Class A Stock as to such matters.
10. AMENDMENT. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Certificate of Incorporation
of the Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
11. FRACTIONAL SHARES. Series A Junior Participating Preferred Stock
may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
* * *
IN WITNESS WHEREOF, these Articles of Amendment have been executed on
behalf of the Corporation by its Chief Financial Officer, and attested by its
Secretary, this ___th day of _______, 2003.
-------------------------------------
Xxx X. Xxxxxx
Chief Financial Officer
Attest:
------------------------------------
Xxxxx X. Xxxxxxxx
Secretary
A-6
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- ___ Rights
NOT EXERCISABLE AFTER MAY 30, 2013 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
CLAIRE'S STORES, 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 May 30, 2003, as the same may be
amended from time to time (the "Rights Agreement"), between Claire's Stores,
Inc., a Florida corporation (the "Company"), and Wachovia Bank, N.A., as rights
agent (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., New York City time, on May 30, 2013 at the office or agency of the
Rights Agent designated for such purpose, or of its successor as rights agent,
one one-thousandth of a fully paid and non-assessable share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), of the Company, at a purchase price of $130.00 per one one-thousandth
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 of a share of Preferred Stock which may be
purchased upon exercise hereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of May 30, 2003, based on the
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Preferred Stock (or other securities or property) which may be purchased upon
the exercise of the Rights and the number of Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
B-1
This Right Certificate (and the Rights evidenced hereby) is subject to
all of the terms, provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Right Certificate a
copy of the Rights Agreement without charge after receipt of a written request
therefor.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, 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 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 (i) may be redeemed by the Company at a redemption price of
$.01 per Right, (ii) may be exchanged in whole or in part for shares of the
Company's common stock, par value $0.05 per share (the "Common Stock"), or for
share of preferred stock and/or (iii) may be amended or supplemented (but any
such amendment or supplement which follows the time that the Rights are no
longer redeemable may not adversely affect the interests of holders of Rights
(other than those of any Acquiring Person, whose Rights will have become void)).
No fractional shares of Preferred Stock, Common Stock or Class A Stock
will be issued upon the exercise or exchange of any Right or Rights evidenced
hereby (other than fractions of Preferred Stock which are integral multiples of
one one-thousandth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or distributions or be deemed for any purpose the holder of
the Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise or exchange 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement) or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised or exchanged as
provided and subject to the conditions 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.
B-2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________________.
Attest: CLAIRE'S STORES, INC.
By: By:
-------------------------------- ------------------------------------
Name: Name:
------------------------------ -----------------------------------
Title: Title:
----------------------------- ----------------------------------
Countersigned:
Wachovia Bank, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
B-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)
_______ Rights represented by this Right Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
______________________________ Attorney, to transfer said Rights on the books of
the within-named Company, with full power of substitution.
Dated: ____________________________
------------------------------------
Signature
SIGNATURE GUARANTEE:
-----------------------------------------
(To be completed)
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program. Guarantees by a notary public are not acceptable.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being transferred or assigned to an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------------------
Signature
B-4
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED IF HOLDER DESIRES TO EXERCISE
RIGHTS REPRESENTED BY THE RIGHT CERTIFICATE)
To Claire's Stores, Inc.:
The undersigned hereby irrevocably elects to exercise _____ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
(or other securities or property) issuable upon the exercise of such Rights and
requests that certificates for such shares of Preferred Stock (or such other
securities) be issued in the name of:
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Please insert social security or
other identifying number: ______________________________________________________
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 print name and address)
________________________________________________________________________________
Please insert social security or
other identifying number: ______________________________________________________
Dated: ________________
------------------------------------
Signature
(Signature must conform to holder specified on Right Certificate)
SIGNATURE GUARANTEE:
-----------------------------------------------
(To be completed)
B-5
Form of Reverse Side of Right Certificate - continued
Signature must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program. Guarantees by a notary public are not acceptable.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and have not been transferred or assigned to an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------------------
Signature
------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, 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 Company and the Rights Agent may deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person (or an
Affiliate, Associate or transferee thereof) and such Assignment or Election to
Purchase will not be honored.
B-6
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER
BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
CLAIRE'S STORES, INC.
INTRODUCTION
On May 30, 2003, the Board of Directors of our company, Claire's
Stores, Inc., a Florida corporation, declared a dividend of one preferred share
purchase right, or a "Right," for each outstanding share of common stock of
Claire's Stores, Inc., par value $0.05 per share, and for each outstanding share
of Class A common stock of Claire's Stores, Inc., par value $0.05 per share. The
dividend is payable on June 17, 2003 to shareholders of record on that date.
Once exercisable, each Right entitles the registered holder to purchase from us
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $1.00 per share, at a price of $130.00 per one one-thousandth of a
share of preferred stock, subject to adjustment, on the terms and conditions set
forth in the Rights Agreement.
Our board of directors has adopted this Rights Agreement, and declared
the Rights dividend, to protect shareholders from abusive, coercive or otherwise
unfair takeover tactics. In general terms, it works by imposing a significant
penalty upon any person or group that acquires 15% or more of outstanding shares
of our common stock without the approval of our board. The Rights Agreement
should not interfere with any merger or other business combination approved by
our board.
RIGHTS AGREEMENT
For those interested in the specific terms and provisions of the Rights
Agreement as entered into between Claire's Stores, Inc. and Wachovia Bank, N.A.,
as the Rights Agent, effective as of May 30, 2003, we provide the following
summary description. Please note, however, that this description is only a
summary, and is not complete, and should be read together with the entire Rights
Agreement, which has been filed with the Securities and Exchange Commission as
an exhibit to a Registration Statement on Form 8-A dated June 23, 2003. A copy
of the Rights Agreement is available free of charge from us.
C-1
THE RIGHTS; DISTRIBUTION DATE; RIGHT CERTIFICATES
Our board authorized the Rights with respect to each share of our
common stock and Class A common stock outstanding on June 17, 2003. The Rights
will initially trade with, and will be inseparable from, shares of our common
stock and Class A common stock. Until the earlier to occur of
(i) Ten days following a public announcement that a person or
group of affiliated or associated persons has acquired
beneficial ownership of 15% or more of the outstanding shares
of our common stock (any such person or group, with certain
exceptions provided in the Rights Agreement, being referred to
as an "Acquiring Person") or
(ii) Ten business days, or such later date determined by our board
of directors before any person or group of affiliated persons
becomes an Acquiring Person, following the commencement of, or
announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by that person or group of 15% or more of
the outstanding shares of our common stock (the earlier of
such dates being referred to as the "Distribution Date"),
the Rights will be evidenced, with respect to any of the shares of our
common stock or Class A common stock certificates outstanding as of the record
date, by a common stock certificate, or Class A common stock certificate,
together with this Summary of Rights. This Distribution Date is important, as it
causes the Rights to become exercisable for shares of preferred stock and
results in the distribution of separate right certificates. Our board of
directors may, in its discretion, reduce the ownership threshold at which a
person or group becomes an Acquiring Person, from 15% to not less than 10% of
the outstanding shares of our common stock.
The Rights Agreement provides that, until the Distribution Date, or
earlier expiration of the Rights, the Rights will be transferred with and only
with shares of our common stock and Class A common stock, and will be evidenced
solely by the certificates representing shares of our common stock or Class A
common stock. Until the Distribution Date, or earlier expiration of the Rights,
new common stock or Class A common stock certificates issued after the record
date upon transfer or new issuances of shares of our common stock or Class A
common stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date, or earlier expiration of the Rights, the
surrender for transfer of any certificates for shares of our common stock or
Class A common stock outstanding as of the record date, even without such
notation or a copy of this Summary of Rights, will also constitute the transfer
of the Rights associated with the shares of our common stock or Class A common
stock represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights will be mailed to
holders of record of shares of our common stock or Class A common stock as of
the close of business on the Distribution Date and such separate right
certificates alone will evidence the Rights.
C-2
EXERCISABILITY; EXERCISE PRICE; ADJUSTMENTS
The Rights are not exercisable until the Distribution Date. Until a
Right is exercised or exchanged, the holder thereof, as such, will have no
rights as a shareholder, including, without limitation, the right to vote or to
receive dividends or distributions on liquidation.
Once exercisable, each Right entitles the registered holder to purchase
from us one one-thousandth of a share of preferred stock, at the purchase price
of $130.00 per one one-thousandth of a share of preferred stock, subject to
adjustment.
The purchase price payable, and the number of shares of preferred stock
or other securities or property issuable, upon exercise of the Rights is subject
to adjustment from time to time to prevent dilution in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the preferred
stock, upon the grant to holders of shares of the preferred stock of certain
rights or warrants to subscribe for or purchase shares of preferred stock at a
price, or securities convertible into shares of preferred stock with a
conversion price, less than the then-current market price of the preferred stock
or upon the distribution to holders of the preferred stock of evidences of
indebtedness or assets, excluding regular periodic cash dividends or dividends
payable in preferred stock, or of subscription rights or warrants, other than
those referred to above. The number of outstanding Rights is subject to
adjustment in the event of a stock dividend on shares of our common stock or
Class A common stock payable in shares of our common stock or Class A common
stock, or subdivisions, consolidations or combinations of shares of our common
stock or Class A common stock occurring, in any such case, prior to the
Distribution Date.
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments require an adjustment of at least 1% in
such purchase price. No fractional shares of preferred stock will be issued
other than fractions of preferred stock which are integral multiples of one
one-thousandth of a share of preferred stock, which may, at our election, be
evidenced by depositary receipts, and in lieu thereof an adjustment in cash will
be made based on the current market price of the preferred stock.
Any Rights held by an Acquiring Person are void and may not be
exercised or transferred.
CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON; "FLIP-IN" AND
"FLIP-OVER" PROVISIONS
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person, which will thereupon become void,
will thereafter have the right to receive upon exercise of a Right that number
of shares of our common stock having a market value of two times the exercise
price of the Right. This is the so-called "flip-in" provision.
In the event that, after a person or group has become an Acquiring
Person, we are acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, proper
provisions are required to be made so that each holder of a Right, other than
Rights beneficially owned by an Acquiring Person which will have become void,
C-3
will thereafter have the right to receive upon the exercise of a Right that
number of shares of our common stock of the person with whom we have engaged in
the foregoing transaction (or its parent) that at the time of such transaction
have a market value of two times the exercise price of the Right. This is the
so-called "flip-over" provision.
PREFERRED STOCK PROVISIONS
Each Right, once exercisable, entitles the registered holder to
purchase from us one one-thousandth of a share of preferred stock. Shares of
preferred stock purchasable upon exercise of the Rights will not be redeemable.
Each share of preferred stock will be entitled, when, as and if declared, to a
minimum preferential quarterly dividend payment of the greater of $1.00 per
whole share, and an amount equal to 1,000 times the dividend declared per share
of our common stock or Class A common stock. In the event of our liquidation,
dissolution or winding up, the holders of the preferred stock will be entitled
to a minimum preferential payment of the greater of $1.00 per whole share (plus
any accrued but unpaid dividends), and an amount equal to 1,000 times the
payment made per share of our common stock or Class A common stock. Each share
of preferred stock will have 1,000 votes, voting together with holders of our
common stock or Class A common stock or Class A common stock. Finally, in the
event of any merger, consolidation or other transaction in which outstanding
shares of our common stock or Class A common stock are converted or exchanged,
each share of preferred stock will be entitled to receive 1,000 times the amount
received per share of our common stock or Class A common stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the preferred stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
preferred stock purchasable upon exercise of each Right should approximate the
value of one share of our common stock.
EXCHANGE PROVISION
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such Acquiring Person of 50% or more of the
outstanding shares of our common stock (or other trigger of the flip-over
provision), our board of directors may exchange the Rights, other than Rights
owned by such Acquiring Person which will have become void, in whole or in part,
for shares of our common or preferred stock, or a series of our preferred stock
having equivalent rights, preferences and privileges, at an exchange ratio of
one share of common stock, or a fractional share of preferred stock (or other
preferred stock) equivalent in value thereto, per Right.
REDEMPTION
Our board of directors may redeem the Rights, in whole, but not in
part, at a price of $0.01 per Right at any time before any person or group
becomes an Acquiring Person. The redemption price is payable, at our option, in
cash, shares of our common stock or such other form of consideration as the
board determines. The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as our board of directors in its
sole discretion may establish. Immediately upon any redemption of the Rights,
C-4
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price. The redemption price
is subject to adjustment in certain events.
AMENDMENT
For so long as the Rights are outstanding and then redeemable, we may,
except with respect to the redemption price, amend the Rights Agreement in any
manner. This includes the ability to lower the ownership threshold for an
Acquiring Person, which triggers the "flip-in" provision, to as low as 10%.
After the Rights are no longer redeemable, we may, except with respect to the
redemption price, amend the Rights Agreement in any manner that does not
adversely affect the interests of holders of the Rights, other than those of any
Acquiring Person, whose Rights will have become void.
INTERPRETATION; BOARD APPROVALS
Our board of directors has the sole authority to administer the Rights
Agreement and to exercise all rights and powers granted to the board or to us,
or as are advisable in the administration of the Rights Agreement, including the
power to interpret the provisions of the Rights Agreement and to make all
determinations appropriate for the administration of the Rights Agreement,
including a determination to redeem or not to redeem the Rights, to exchange the
Rights or to amend or supplement the Rights Agreement. All such interpretations
and determinations in good faith are final and binding on the parties, including
the Rights holders, and do not subject the Board, or the individual directors,
to any liability to the holders of Rights.
EXPIRATION
The Rights will expire on May 30, 2013, unless this date is extended or
unless the Rights are earlier redeemed or exchanged by us, in each case as
provided in the Rights Agreement.
OBTAINING A COPY OF THE RIGHTS AGREEMENT
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 dated
June 23, 2003. A copy of the Rights Agreement is available free of charge from
us. This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the complete text of the Rights
Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by this reference.
C-5