RIGHTS AGREEMENT
Agreement, dated as of November 20, 1998, by and between Cutter & Buck
Inc., a Washington corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C., a New Jersey limited liability company (the "Rights Agent").
WITNESSETH:
WHEREAS, on November 20, 1998, the Board of Directors of the Company
authorized the issuance of, and declared a dividend payable in, one right (a
"Right"), for each share of the Company's Common Stock, no par value per
share (the "Common Stock"), outstanding as of the close of business on
December 7, 1998 (the "Record Date"). Each such Right represents the right
to purchase one one-hundredth of a share of Class A Junior Preferred Stock of
the Company (the " Preferred Stock"), having the rights and preferences set
forth in the form of the Certificate of Designations attached hereto as
Exhibit C authorized by the Board of Directors on November 20, 1998, upon the
terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized the
issuance of one Right (subject to adjustment) with respect to each share of
Common Stock which may be issued between the Record Date and the earlier to
occur of the Expiration Date or the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 20% or more of the Voting Stock (as such term is
hereinafter defined) of the Company then outstanding; provided that, an
Acquiring Person shall not include (i) an Exempt Person (as such term is
hereinafter defined), or (ii) any Person, together with all Affiliates
and Associates of such Person, who or which would be an Acquiring Person
solely by reason of (A) being the Beneficial Owner of shares of Voting
Stock of the Company, the Beneficial Ownership of which was acquired by
such Person pursuant to any action or transaction or series of related
actions or transactions approved by the Board of Directors before such
Person otherwise became an Acquiring Person, or (B) a reduction in the
number of issued and outstanding shares of Voting Stock of the Company
pursuant to a transaction or a series of related transactions approved by
the Board of Directors of the Company; provided, further, that in the
event such Person described in clause (i) above does not become an
Acquiring Person by reason of subclause (A) or (B) of this clause
(ii), such Person nonetheless becomes an Acquiring Person in the event
such Person thereafter acquires Beneficial Ownership of an additional 1%
of the Voting Stock of the Company, unless the acquisition of such
additional Voting
Stock would not result in such Person becoming an Acquiring Person by
reason of subclause (A) or (B) of this clause (ii). Notwithstanding
the foregoing, if the Board of Directors of the Company determines in
good faith (but only if at the time of such determination by the
Board of Directors there are then in office not less than a majority
of directors who are Continuing Directors (as such term is
hereinafter defined) and such action is approved by a majority of the
Continuing Directors then in office) that a Person who would
otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a) has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares of Voting Stock so that such Person would
no longer be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall
not be deemed an "Acquiring Person" for any purposes of this Rights
Agreement.
(b) "Affiliate" of a Person shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), as in
effect on the date of this Rights Agreement.
(c) "Associate" of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or of any Subsidiary (as
such term is hereinafter defined) thereof, or any Beneficial Owner of 10%
or more of any class of equity security thereof, (ii) with respect to a
partnership, any general partner thereof or any limited partner thereof
who is, directly or indirectly, the Beneficial Owner of a 10% ownership
interest therein, (iii) with respect to a business trust, any officer or
trustee thereof or of any Subsidiary thereof or any Beneficial Owner of
10% or more of any class of beneficial interest therein, (iv) with
respect to any association other than a corporation, partnership or
business trust, any officer or director or other person performing
similar functions thereof or of any Subsidiary thereof or any Beneficial
Owner of 10% or more of the Common Stock (as such term is hereinafter
defined) of the association, (v) with respect to a trust that is not a
business trust or an estate, any trustee, executor or similar fiduciary
or any Person who has a 10% or greater interest as a beneficiary in the
income from or principal of such trust or estate, (vi) with respect to a
natural person, any relative or spouse of such person, or any relative of
such spouse, who has the same home as such person, and (vii) any
Affiliate of such Person.
(d) A Person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings):
(i) which such Person or any of such Person's Affiliates
Associates beneficially owns, directly or indirectly, for purposes
of Section 13(d) of the Exchange Act and Regulations 13D and 13G
thereunder (or any comparable or successor law or regulation), in
each case as in effect on the date hereof; or
(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 or the
fulfillment of a condition or both) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
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rights, exchange rights, other rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) the right to vote, alone
or in concert with others, pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities if the agreement, arrangement
or understanding to vote such securities (1) arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act, and
(2) is not at the time reportable by such Person on a Schedule 13D
report under the Exchange Act (or any comparable or successor
report), other than by reference to a proxy or consent
solicitation being conducted by such Person; or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except as described in
clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company; provided, however,
that for purposes of determining Beneficial Ownership of
securities under this Rights Agreement, officers and directors of
the Company solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be Associates of
one another or may be deemed to constitute a group for purposes of
Section 13(d) of the Exchange Act) and shall not be deemed to own
shares owned by another officer or director of the Company.
Notwithstanding anything in this paragraph (d) to the contrary, a
Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any security beneficially owned by another
Person solely by reason of an agreement, arrangement or
understanding with such other Person for the purposes of:
(x) soliciting the Company's shareholders for the election of
director nominees or any other shareholder resolution, the
formation of and membership on any committee for the purpose of
promoting or opposing any shareholder resolution or for electing a
slate of nominees to the Company's Board of Directors, service on
such a slate of nominees, or agreement to a slate of director
nominees, provided, that such other Person retains the right at
any time to withdraw as a nominee or member of any such committee,
and to withhold or revoke any vote or proxy for or against any
such shareholder resolution or for such slate of nominees;
(y) entering into revocable voting agreements or the granting or
solicitation of revocable proxies with respect to any of the
matters described in the foregoing clause (x); or (z) the sharing
of expenses and the indemnification against expenses and
liabilities by any such other Person with respect to expenses
incurred or conduct occurring during the time such other Person is
a nominee or a member of any such committee described in the
foregoing clause (x). Further,
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notwithstanding anything in this paragraph (d) to the contrary, a
Person engaged in the business of underwriting securities shall
not be deemed the "Beneficial Owner" of, or to "Beneficially Own,"
any securities acquired in good faith in a firm commitment
underwriting until the expiration of forty days after the date of
such acquisition.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the state of Washington
are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
the state of Washington time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., the state of
Washington time, on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Company
shall mean the Company's common stock, no par value per share. "Common
Stock" when used with reference to any Person other than the Company
which shall be organized in corporate form shall mean the capital stock
or other equity security with the greatest per share voting power of such
Person. "Common Stock" when used with reference to any Person other than
the Company which shall not be organized in corporate form shall mean
units of beneficial interest which shall represent the right to
participate in profits, losses, deductions and credits of such Person and
which shall be entitled to exercise the greatest voting power per unit of
such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and who either (i) was a member of the Board
of Directors prior to the time that any Person became an Acquiring Person
(other than pursuant to a Qualifying Tender Offer), or (ii) subsequently
became a member of the Board of Directors, and whose nomination for
election or election to the Board of Directors was recommended or
approved by a majority of the Continuing Directors then on the Board of
Directors.
(i) "Distribution Date" shall have the meaning set forth in
Section 3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth in
Section l(b) hereof.
(k) "Exchange Number" shall mean one half of the number of
shares of Common Stock, one one-hundredth of a share of Preferred Stock,
or shares or other units of other property for which a Right is
exercisable immediately prior to the time of the action of the Board of
Directors to exchange the Rights.
(l) "Exempt Person" shall mean the Company, any Subsidiary of
the Company, or any employee benefit plan or employee stock plan of the
Company or any
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Subsidiary of the Company, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the
terms of any such plan.
(m) "Exercise Price" shall have the meaning set forth in
Section 7(b) hereof.
(n) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(o) "Fair Market Value" of any property shall mean the fair
market value of such property as determined in accordance with
Section 11(b) hereof.
(p) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(q) "Person" shall mean any partnership, limited liability
company, business trust, other association, government entity, estate,
trust, foundation, natural person or other entity.
(r) "Principal Party" shall have the meaning set forth in
Section l2(b) hereof.
(s) "Qualifying Tender Offer" shall mean a tender or exchange
offer for all outstanding shares of Common Stock of the Company approved
by a majority of the Board of Directors (provided, that at the time of
such approval of the Board of Directors there are then in office not less
than a majority of directors who are Continuing Directors and such offer
is approved by a majority of the Continuing Directors then in office),
after taking into account the potential long-term value of the Company
and all other factors that they consider relevant.
(t) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(u) "Right Certificate" shall have the meaning set forth in
Section 3(d) hereof.
(v) "Stock Acquisition Date" shall mean the first date on which
there shall be a public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such (which, for purposes of
this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) or such earlier date as a
majority of the Continuing Directors shall become aware of the existence
of an Acquiring Person.
(w) "Subsidiary" of a Person shall mean any corporation or
other entity of which securities or other ownership interests having
voting power sufficient to elect a majority of the board of directors or
other persons performing similar functions are beneficially owned,
directly or indirectly, by such Person or by any corporation or other
entity that is otherwise controlled by such Person.
(x) "Summary of Rights" shall have the meaning set forth in
Section 3(a) hereof.
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(y) "Trading Day" shall have the meaning set forth in
Section 11(b) hereof.
(z) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of the issuance and any transfer of any
security, instrument or right, including Rights, shares of Common Stock
and shares of Preferred Stock.
(aa) "Triggering Event" shall mean any event described in
Section 11(a)(ii) or clauses (x), (y) or (z) of Section 13(a).
(bb) "Voting Stock" shall mean (i) the Common Stock of the
Company, and (ii) any other shares of capital stock of the Company
entitled to vote generally in the election of directors or entitled to
vote together with the Common Stock in respect of any merger,
consolidation, sale of all or substantially all of the Company's assets,
liquidation, dissolution or winding up. For purposes of this Agreement,
a stated percentage of the Voting Stock shall mean a number of shares of
the Voting Stock as shall equal in voting power that stated percentage of
the total voting power of the then outstanding shares of Voting Stock in
the election of a majority of the Board of Directors or in respect of any
merger, consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
Any determination required to be made by the Board of Directors of the
Company for purposes of applying the definitions contained in this Section 1
shall be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights. The Rights Agent is entitled to always assume the Company's Board of
Directors acted in good faith and shall be fully protected and incur no
liability in reliance thereon.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents as it may
deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) On the Record Date (or as soon as practicable thereafter),
the Company or the Rights Agent (if requested by the Company and provided
with all necessary information) shall send a copy of a Summary of Rights,
in substantially the form attached hereto as Exhibit A (the "Summary of
Rights"), by first class mail, postage prepaid, to each record holder of
the Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.
(b) Until the Close of Business on the day which is the earlier
of (i) the tenth day after the Stock Acquisition Date, or (ii) the tenth
business day (or such later date as
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may be determined by action of the Board of Directors 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 the
first public announcement of the intent of any Person (other than an
Exempt Person) to commence, a tender or exchange offer upon the
successful consummation of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 20% or
more of the then outstanding shares of Voting Stock of the Company
(irrespective of whether any shares are actually purchased pursuant to
any such offer) (the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights shall be evidenced by the
certificates for Common Stock registered in the name of the holders of
Common Stock and not by separate Right certificates and the record
holders of such certificates for Common Stock shall be the record
holders of the Rights represented thereby, and (y) each Right shall be
transferable only simultaneously and together with the transfer of a
share of Common Stock (subject to adjustment as hereinafter provided).
Until the Distribution Date (or, if earlier, the Expiration Date or
Final Expiration Date), the surrender for transfer of any certificate
for Common Stock shall constitute the surrender for transfer of the
Right or Rights associated with the Common Stock evidenced thereby,
whether or not accompanied by a copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the
earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date and, in certain circumstances provided in Section 22
hereof, may be issued in respect of shares of Common Stock that become
outstanding after the Distribution Date. Certificates for Common Stock
(including, without limitation, certificates issued upon original
issuance, disposition from the Company's treasury or transfer or exchange
of Common Stock) after the Record Date but prior to the earliest of the
Distribution Date, the Expiration Date, or the Final Expiration Date (or,
in certain circumstances as provided in Section 22 hereof, after the
Distribution Date) shall have impressed, printed, written or stamped
thereon or otherwise affixed thereto the following legend:
This certificate also evidences and entitles the
holder hereof to the same number of Rights (subject to
adjustment) as the number of shares of Common Stock
represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Cutter &
Buck Inc. and ChaseMellon Shareholder Services, L.L.C.
dated as of November 20, 1998, as it may be amended from
time to time (the "Rights Agreement"), the terms of which
are incorporated herein by reference and a copy of which is
on file at the principal executive offices of Cutter & Buck
Inc.. Under certain circumstances, as set forth in the
Rights Agreement, such Rights shall be evidenced by
separate certificates and shall no longer be evidenced by
this certificate. Cutter & Buck Inc. shall mail to the
registered holder of this certificate a copy of the Rights
Agreement without charge within five days after receipt of
a written request therefor. UNDER CERTAIN CIRCUMSTANCES AS
PROVIDED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR
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AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
SHALL BE NULL AND VOID AND MAY NOT BE TRANSFERRED TO ANY
PERSON.
(d) 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 and provided with all necessary information, send), by first
class mail, postage prepaid, to each record holder of the Common Stock as
of the close of business on the Distribution Date, as shown by the
records of the Company, at the address of such holder shown on such
records, a certificate in the form provided by Section 4 hereof (a "Right
Certificate"), evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. As of and after the
Distribution Date, the Rights shall be evidenced solely by Right
Certificates and may be transferred by the transfer of the Right
Certificate as permitted hereby, separately and apart from any transfer
of one or more shares of Common Stock.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and
the forms of election to purchase shares, certificate and assignment to be
printed on the reverse thereof), when, as and if issued, 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 may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Common Stock or the Rights may
from time to time be listed or as the Company may deem appropriate to conform
to usage or otherwise and as are not inconsistent with the provisions of this
Rights Agreement and which do not affect the duties or responsibilities of
the Rights Agent. Subject to the provisions of Section 22 hereof, Right
Certificates evidencing Rights whenever issued, (i) shall be dated as of the
date of issuance of the Rights they represent, and (ii) subject to adjustment
from time to time as provided herein, on their face shall entitle the holders
thereof to purchase such number of shares (including fractional shares which
are integral multiples of one-hundredth of a share) of Preferred Stock as
shall be set forth therein at the price payable upon exercise of a Right
provided by Section 7(b) hereof as the same may from time to time be adjusted
as provided herein.
Section 5. COUNTERSIGNATURE REGISTRATION.
(a) Each Right Certificate shall be executed on behalf of the
Company by its Chairman, President or any Vice President, either manually
or by facsimile signature, and have affixed thereto the Company's seal or
a facsimile thereof which shall be attested by the Secretary or any
Assistant Secretary of the Company, either manually or by facsimile
signature. Each Right Certificate shall be countersigned by the Rights
Agent either manually or by facsimile signature and shall not be valid
for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any Right Certificate shall cease to be
such officer of the Company before countersignature by the Rights Agent
and issuance and delivery of the certificate by the Company, such Right
Certificate, nevertheless, may be countersigned by the Rights Agent and
issued and delivered with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of
the Company. Any Right Certificate may
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be signed on behalf of the Company by any person who, on the 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 Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates
upon exercise or transfer, and in such other locations as may be required
by law, 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.
(a) Subject to the provisions of Sections 7(e), 7(f) and 14
hereof, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the earlier of the Expiration
Date or the Final Expiration Date, any Right Certificate may be
(i) transferred, or (ii) split up, combined or exchanged for one or more
other Right Certificates, entitling the registered holder to purchase a
like number of shares of Preferred Stock as the Right Certificate or
Rights Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer any Right Certificate shall
surrender the Right Certificate at the office of the Rights Agent
designated for the surrender of Right Certificates with the form of
certificate and assignment on the reverse side thereof duly endorsed (or
enclosed with such Right Certificate a written instrument of transfer in
form satisfactory to the Company and the Rights Agent), duly executed by
the registered holder thereof or his attorney duly authorized in writing,
and with such signature duly guaranteed. Any registered holder desiring
to split up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate to be split up, combined or exchanged at the office of
the Rights Agent designated therefor. 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 Transfer
Tax that may be imposed in connection with any transfer, split up,
combination or exchange of any Right Certificates.
(b) Subject to the provisions of Sections 7(e), 7(f) and 14
hereof, upon receipt by the Company and the Rights Agent of evidence
satisfactory to them of the loss, theft, destruction or mutilation of a
Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security satisfactory to them and, if requested by the
Company or the Rights Agent, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, or upon surrender to
the Rights Agent and cancellation of the Right Certificate if mutilated,
the Company shall issue and deliver a new Right Certificate of like tenor
to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
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Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall not be exercisable until, and shall
become exercisable on, the Distribution Date (unless otherwise provided
herein, including, without limitation, the restrictions on exercisability
set forth in Sections 7(e) and 23(a) hereof). Except as otherwise
provided herein, the Rights may be exercised, in whole or in part, at any
time commencing with the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase and certificate on the
reverse side thereof duly executed (with signatures duly guaranteed), to
the Rights Agent at the principal office of the Rights Agent or the
office or offices designated for such purpose, together with payment of
the Exercise Price for each Right exercised, subject to adjustment as
hereinafter provided, at or prior to the Close of Business on the earlier
of (i) December 7, 2008 (the "Final Expiration Date), or (ii) the date
on which the Rights are redeemed as provided in Section 23 hereof (such
earlier date being herein referred to as the "Expiration Date").
(b) The Exercise Price for each one one-hundredth
(1/100) of a share of Preferred Stock issued pursuant to the exercise of
a Right shall initially be $125 (the "Exercise Price"). The Exercise
Price and the number of shares of Preferred Stock or other securities 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. The Exercise
Price shall be payable in lawful money of the United States of America,
in accordance with paragraph (c) below.
(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 by certified
check, cashiers bank draft or money order payable to the Company or the
Rights Agent of the Exercise Price for the shares to be purchased and an
amount equal to any applicable Transfer Tax required to be paid by the
holder of the Right Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall thereupon promptly (i) requisition from any
transfer agent of the Preferred Stock one or more certificates
representing the number of shares of Preferred Stock to be so purchased,
and the Company hereby authorizes and directs such transfer agent to
comply with all such requests, (ii) as provided in Section 14(b) hereof,
at the election of the Company, cause depositary receipts to be issued in
lieu of fractional shares of Preferred Stock, (iii) if the election
provided for in the immediately preceding clause (ii) has not been made,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14(b) hereof,
(iv) after receipt of such Preferred Stock certificates and, if
applicable, depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder, and
(v) when appropriate, after receipt, promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate;
provided, however, that in the case of a purchase of securities, other
than Preferred Stock, pursuant to Section 13 hereof, the Rights Agent
shall promptly take the appropriate actions corresponding in such case to
that referred to in the foregoing clauses (i) through (v) of this
Section 7(c). Notwithstanding the foregoing provisions of this
Section 7(c), the Company may suspend
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(with prompt notice thereof to the Rights Agent) the issuance of shares
of Preferred Stock upon exercise of a Right for a reasonable period,
not in excess of 90 days, during which the Company seeks to register
under the Securities Act of 1933, as amended (the "Securities Act"),
and any applicable securities law of any other jurisdiction, the shares
of Preferred Stock to be issued pursuant to the Rights; provided,
however, that nothing contained in this Section 7(c) shall relieve the
Company of its obligations under Section 9(c) hereof.
(d) In case the record holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such Right Certificate or his assign, subject to the provisions of
Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights
Agreement to the contrary, from and after the time (the "invalidation
time") when any Person first becomes an Acquiring Person, other than
pursuant to a Qualifying Tender Offer, any Rights that are beneficially
owned by (x) such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person), (y) a transferee of such Acquiring Person (or any such
Associate or Affiliate) who becomes a transferee after the invalidation
time, or (z) a transferee of such Acquiring Person (or any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the
invalidation time 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, arrangement or understanding which has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons referred to in clause (y) and (z)
above, shall be null and 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 Rights Agreement. The Company
shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) are complied with, but neither the Company nor the Rights
Agent shall have any liability to any holder of Right Certificates or any
other Person as a result of the Company's failure to make any
determination with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. No Right Certificate shall be
issued pursuant to Section 3 hereof that represents Rights Beneficially
Owned by an Acquiring Person whose Rights would be null and void pursuant
to the provisions of this Section 7(e) or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be null
and void pursuant to the provisions of this Section 7(e) or any Associate
or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be null and
void pursuant to the provisions of this Section 7(e) shall be canceled.
The Rights Agent shall have no duty or obligation under this Section
unless and until it has been notified of the identity of an Acquiring
Person and/or such Acquiring Person's Associates and Affiliates.
11
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a record holder upon the occurrence
of any purported exercise as set forth in this Section 7 unless such
record holder shall have (i) properly completed and signed the
certificate following the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Company or Rights Agent shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall cancel and retire, any Right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all canceled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) 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 out of authorized and issued shares of Preferred
Stock held in its treasury, such number of shares of Preferred Stock as
will from time to time be sufficient to permit the exercise in full of
all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares of Preferred
Stock issued or reserved for issuance in accordance with this Rights
Agreement to be listed, upon official notice of issuance, upon the
principal national securities exchange, if any, upon which the Common
Stock is listed or, if the principal market for the Common Stock is not
on any national securities exchange, to be eligible for quotation in The
Nasdaq Stock Market or any successor thereto or other comparable
quotation system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully
paid and non-assessable shares.
(d) The Company shall use its best efforts to (i) file, as soon
as practicable following the occurrence of the event described in
Section 11(a)(ii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration
12
statement under the Securities Act, with respect to the shares of
Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for Preferred Stock, and (B) the date of the expiration of
the Rights. The Company may temporarily suspend (with prompt notice
thereof to the Rights Agent), for a period of time not to exceed ninety
days, the issuance of shares of Preferred Stock upon exercise of a
Right in order to prepare and file a registration statement under the
Securities Act and permit it to become effective. The Company will
also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained
and until a registration statement under the Securities Act (if
required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due
and payable any and all federal and state Transfer Taxes which may be
payable in respect of the issuance or delivery of the Right Certificates
or of any shares of Preferred Stock issued or delivered 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 a Right Certificate to a Person other than, or the issuance or
delivery of certificates for Preferred Stock upon exercise of Rights in a
name other than that of, the registered holder of the Right Certificate,
and the Company shall not be required to issue or deliver a Right
Certificate or certificate for Preferred Stock to a Person other than
such registered holder until any such Transfer Tax shall have been paid
(any such Transfer Tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such Transfer Tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name
any certificate for shares of Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record
of such Preferred Stock represented thereby on, and such certificate shall be
dated as of, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Exercise Price (and any applicable
Transfer Taxes) was made; provided, however, that, if the date of such
surrender and payment is a date upon which the Preferred Stock 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 as of,
the next succeeding Business Day on which the relevant transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate, as such, shall not be entitled to any rights
of a stockholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
13
Section 11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES. The
Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right 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 Rights Agreement (A) declare or pay any
dividend on the Common Stock payable in shares of Common Stock,
(B) subdivide or split the outstanding shares of Common Stock into
a greater number of shares, or (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares
or effect a reverse split of the outstanding shares of Common
Stock, then and in each such event the number of shares of
Preferred Stock issuable upon the exercise of a Right after the
record date for such event (if one shall have been established or,
if not, after the date of such event) shall be the number of
shares of Preferred Stock issuable immediately prior to but not
including such event multiplied by a fraction the numerator of
which is the number of rights outstanding immediately prior to
such event and the denominator of which is the number of Rights
outstanding immediately after such event and the Exercise Price
after such event shall be the Exercise Price in effect immediately
prior to such event multiplied by such fraction. If an event
occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof
(ii) In the event that any Person (other than an
Exempt Person), alone or together with its Affiliates and
Associates, shall become an Acquiring Person, except pursuant to a
Qualifying Tender Offer, then, subject to the last sentence of
Section 23(a) hereof and except as otherwise provided in this
Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive
upon exercise of such Right in accordance with the terms of this
Rights Agreement and payment of the Exercise Price, the greater of
(1) the number of one one-hundredths of a share of Preferred Stock
for which such Right was exercisable immediately prior to the
first occurrence of the event described in this Section 11(a)(ii),
or (2) such number of one one-hundredths of a share of Preferred
Stock, based on the per share Fair Market Value of such Preferred
Stock (determined pursuant to Section 11(b) hereof) on the date of
such first occurrence, having a value equal to twice the Exercise
Price; provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In the event that the Company does not have
available sufficient authorized but unissued Preferred Stock to
permit the adjustments required pursuant to the foregoing
subparagraph (i) or the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize and reserve
for issuance such number of
14
additional shares of Preferred Stock as may from time to time
be required to be issued upon the exercise in full of all
Rights from time to time outstanding and, if necessary, shall
use its best efforts to obtain stockholder approval thereof.
In lieu of issuing shares of Preferred Stock in accordance with
the foregoing subparagraphs (i) and (ii), the Company may, if
the Board of Directors determines (but only if at the time of
such determination by the Board of Directors there are then in
office not less than a majority of directors who are Continuing
Directors and such action is approved by a majority of the
Continuing Directors then in office) that such action is
necessary or appropriate and not contrary to the interests of
holders of Rights, elect to issue or pay, upon the exercise of
such Rights, cash, property, shares of Preferred Stock or
Common Stock (including, without limitation, shares, or units
of shares, of Preferred Stock which the Board of Directors has
deemed to have essentially the same value or economic rights as
shares of Common Stock (such shares of Preferred Stock being
referred to as "Common Stock Equivalents")), or any combination
thereof, having an aggregate Fair Market Value equal to the
Fair Market Value of the shares of Preferred Stock which
otherwise would have been issuable pursuant to Section
11(a)(ii) hereof, which Fair Market Value shall be determined
by an investment banking firm selected by the Board of
Directors (but only if at the time of such selection there are
then in office not less than a majority of directors who are
Continuing Directors and such selection is approved by a
majority of the Continuing Directors then in office). For
purposes of the preceding sentence, the Fair Market Value of
the Preferred Stock shall be as determined pursuant to Section
11(b) hereof. Subject to Section 23 hereof, any such election
by the Board of Directors of the Company must be made and
publicly announced within thirty (30) days after the date on
which the event described in Section 11(a)(ii) hereof occurs.
(b) For the purpose of this Rights Agreement, the
"Fair Market Value" of any share of Preferred Stock (or fractional
share thereof), Common Stock or any other stock or any Right or other
security or any other property on any date shall be determined as
provided in this Section 11(b). In the case of a publicly-traded
stock or other security, the Fair Market Value on any date shall be
deemed to be the average of the daily closing prices per share of such
stock or per unit of such other security for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior
to but not including such date; provided, however, that in the event
that the Fair Market Value per share of any share of Common Stock is
determined during a period which includes any date that is within 30
Trading Days after but not including (i) the ex-dividend date for a
dividend or distribution on such stock payable in shares of Common
Stock or securities convertible into shares of Common Stock, or (ii)
the effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such stock,
then, and in each such case, the Fair Market Value shall be
appropriately adjusted by the Board of Directors of the Company to
take into account ex-dividend or post-effective date trading. The
closing price for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way (in either case, as reported
in the applicable transaction reporting system with respect to
securities
15
listed or admitted to trading on the New York Stock Exchange), or, if
the securities are not listed or admitted to trading on the New York
Stock Exchange, as reported in the applicable transaction reporting
system with respect to securities listed on the principal national
securities exchange on which such security is listed or admitted to
trading; or, if not listed or admitted to trading on any national
securities exchange, the last quoted price (or, if not so quoted, the
average of the high bid and low asked prices) in the over-the-counter
market, as reported by The Nasdaq Stock Market or such other system
then in use; or, if no bids for such security are 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 such
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 on which such security is listed or admitted to
trading is open for the transaction of business or, if such security is
not listed or admitted to trading on any national securities exchange,
a Business Day. If a security is not publicly held or not so listed or
traded, "Fair Market Value" shall mean the fair value per share of
stock or per other unit of such other security, as determined by an
independent investment banking firm experienced in the valuation of
securities selected in good faith by the Board of Directors of the
Company, or, if no such investment banking firm is, in the good faith
judgment of the Board of Directors, available to make such
determination, in good faith by the Board of Directors of the Company;
provided, however, that for purposes of making the adjustment provided
for by Section 11(a)(ii) hereof, the Fair Market Value of a share of
Preferred Stock shall not be less than 100% of the product of the Fair
Market Value of a share of Common Stock, as the case may be, multiplied
by the higher of the then Dividend Multiple or Vote Multiple applicable
to the Preferred Stock (as such terms are defined in the Certificate of
Designations relating to the Preferred Stock) and shall not exceed 105%
of the product of the then Fair Market Value of a share of Common
Stock, as the case may be, multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock.
In the case of property other than securities, the "Fair Market Value"
thereof shall be determined in good faith by the Board of Directors of
the Company based upon such appraisals or valuation reports of such
independent experts as the Board of Directors of the Company shall in
good faith determine to be appropriate in accordance with good business
practices and the interests of the holders of Rights. Any such
determination of Fair Market Value shall be described in a statement
filed with the Rights Agent and shall be binding upon the Rights Agent.
(c) All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one one-hundredth of a
share, as the case may be.
(d) Irrespective of any adjustment or change in the
Exercise Price or the number of shares of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Exercise Price and the
number of shares to be issued upon exercise of the Rights as in the
initial Right Certificates issued hereunder but, nevertheless, shall
represent the Rights as so adjusted.
(e) Before taking any action that would cause an
adjustment reducing the purchase price per whole share of Preferred Stock
upon exercise of the Rights below
16
the then par value, if any, of the shares of Preferred Stock, the
Company shall use its best efforts to 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 non-assessable
shares of such Preferred Stock at such adjusted purchase price per
share.
(f) Anything in this Section 11 to the contrary
notwithstanding, in the event of any reclassification of stock of the
Company or any recapitalization, reorganization or partial liquidation of
the Company or similar transaction, the Company shall be entitled to make
such further adjustments in the number of shares of Preferred Stock which
may be acquired upon exercise of the Rights, and such adjustments in the
Exercise Price therefor, in addition to those adjustments expressly
required by the other paragraphs of this Section 11, as the Board of
Directors of the Company shall determine to be necessary or appropriate
in order for the holders of such Rights in such event to be treated
equitably and in accordance with the purpose and intent of this Rights
Agreement or in order that any such event shall not, but for such
adjustment, in the opinion of counsel to the Company, result in the
stockholders of the Company being subject to any United States federal
income tax liability by reason thereof.
(g) In the event the Company shall at any time after the
Record Date make any distribution on the shares of Common Stock of the
Company, whether by way of a dividend or a reclassification of stock, a
recapitalization, reorganization or partial liquidation of the Company or
otherwise, in cash or any debt security, debt instrument, real or
personal property or any other property (other than any shares of Common
Stock or other capital stock of the Company and other than any right or
warrant to acquire any such shares, including any debt security
convertible into or exchangeable for any such share, at less than the
Fair Market Value of such shares) and the amount of such cash dividend or
the Fair Market Value of such debt security, debt instrument or property
exceeds 150% of the aggregate amount of the cash dividends declared or
paid on the Common Stock of the Company in the 15-month period
immediately preceding such distribution, then and in each such event,
unless such distribution is part of or is made in connection with a
transaction to which Section 11(a)(ii) or Section 13 hereof applies, the
Exercise Price shall be reduced by an amount equal to the cash or the
Fair Market Value of such distribution, as the case may be, per share of
Common Stock. For purposes hereof, the Fair Market Value of any property
distributed to the holders of shares of Common Stock of the Company shall
be the Fair Market Value of such property as determined by an independent
investment banking firm experienced in the valuation of securities or the
other property so distributed, as the case may be, selected in good faith
by the Board of Directors of the Company, or, if no such investment
banking firm is in the good faith judgment of the Board of Directors
available to make such determination, in good faith by the Board of
Directors of the Company, whose determination shall be final and binding
on the Company, the Rights Agent and the holders of Rights.
Section 12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11, 13 or
23(c) hereof, the Company shall (a) promptly prepare a certificate setting
forth such adjustment, and a brief statement of the facts and computations
giving rise to such adjustment, (b) promptly file with the Rights Agent and
with
17
each transfer agent for the Preferred Stock a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 26 hereof. Notwithstanding the foregoing sentence,
the failure of the Company to make such certification or give such notice
shall not affect the validity of or the force or effect of the requirement
for such adjustment. Any adjustment to be made pursuant to Section 11, 13 or
23(c) of this Rights Agreement shall be effective as of the date of the event
giving rise to such adjustment. 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 adjustment unless and until it
shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) Except for any transaction approved by the Board of
Directors (but only if at the time of such approval by the Board of
Directors there are then in office not less than a majority of directors
who are Continuing Directors and such action is approved by a majority of
the Continuing Directors then in office), in the event that, at any time
on or after the Distribution Date, (x) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person or
Persons (other than an Exempt Person) and the Company shall not be the
surviving or continuing corporation of such consolidation or merger or
the Company shall divide into two or more corporations and the Company
shall not survive the division, or (y) any Person or Persons (other than
an Exempt Person) shall, directly or indirectly, consolidate with, or
merge with and into, the Company, and the Company shall be the continuing
or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (other than an Exempt
Person) or of the Company or cash or any other property, or (z) the
Company or one or more of its Subsidiaries shall, directly or indirectly,
sell or otherwise transfer to any other Person or any Affiliate or
Associate of such Person, in one or more transactions, or the Company or
one or more of its Subsidiaries shall sell or otherwise transfer to any
Persons in one or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first
occurrence of any such event, proper provision shall be made so that
(i) each holder of record of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof and payment of the Exercise Price in accordance with the terms of
this Rights Agreement, such number of shares of validly issued, fully
paid, non-assessable and freely tradable Common Stock of the Principal
Party (as defined herein), not subject to any liens, encumbrances, rights
of first refusal or other adverse claims, as shall, based on the Fair
Market Value of the Common Stock of the Principal Party on the date of
the Consummation of such consolidation, merger, sale or transfer, equal
twice the Exercise Price; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the Company pursuant
to this Rights Agreement; (iii) the term "Company" for all purposes of
this Rights Agreement shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance
18
with the provisions of Section 9 hereof applicable to the reservation
of Preferred Stock) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares
of Common Stock thereafter deliverable upon the exercise of the Rights;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets,
recapitalization, reclassification of shares, reorganization 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 Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been
entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the
exercise of a Right, 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, and (v) the provisions of Section
11l(a)(ii) hereof shall be of no effect following the occurrence of any
event described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a) hereof: (A) the
Person that is the issuer of the securities into which shares of
Common Stock of the Company are changed or otherwise exchanged or
converted in such merger, consolidation or other fundamental
transaction, or, if there is more than one such issuer, the issuer
of the Common Stock of which has the greatest market value or
(B) if no securities are so issued, (x) the Person that is the
other party to the merger, consolidation or other fundamental
transaction and that survives such merger, consolidation or other
fundamental transaction, or, if there is more than one such
Person, the Person the Common Stock of which has the greatest
market value or (y) if the Person that is the other party to the
merger, consolidation or other fundamental transaction does not
survive the merger, consolidation or other fundamental
transaction, the Person that does survive the merger,
consolidation or other fundamental transaction (including the
Company if it survives); and
(ii) in the case of any transaction described in clause
(z) of the first sentence in Section 13(a), 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 as is the issuer of Common Stock having
the greatest market value of shares outstanding; provided,
however, that in any such case, if the Common Stock of such Person
is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so
registered, the term
19
"Principal Party" shall refer to such other Person, or if such
Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks 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 the Common Stock having the
greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger,
other fundamental transaction or sale or transfer of assets or earning
power referred to in Section 13(a) unless the Principal Party shall have
a sufficient number of authorized shares of its Common Stock that have
not been issued or reserved for issuance to permit exercise in full of
all Rights in accordance with this Section 13 and 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
Principal Party shall, upon consummation of such consolidation, merger,
other fundamental transaction or sale or transfer of assets or earning
power, assume this Rights Agreement in accordance with Section 13(a)
hereof and that all rights of first refusal or preemptive rights in
respect of the issuance of shares of Common Stock of the Principal Party
upon exercise of outstanding Rights have been waived and that such
transaction shall not result in a default by the Principal Party under
this Rights Agreement, and further providing that, as soon as practicable
after the date of any consolidation, merger, other fundamental
transaction or sale or transfer of assets or earning power referred to in
Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act 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 date of
expiration of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on
a national securities exchange or to meet the eligibility requirements
for quotation on The Nasdaq Stock Market; and
(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.
In the event that any of the transactions described in Section 13(a)
hereof shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not
theretofore been exercised shall, subject to the provisions of
Section 7(e) hereof, thereafter be exercisable in the manner described in
Section 13(a) hereof.
20
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Articles of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock of
such Principal Party at less than the then Fair Market Value per share
(determined pursuant to Section 11(b) hereof) or securities exercisable
for, or convertible into, Common Stock of such Principal Party at less
than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or
similar payment in connection with the issuance to any holder of a Right
of Common Stock of such Principal Party pursuant to the provisions of
this Section 13, then, in such event, the Company shall not consummate
any such transaction unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional
Rights (I.E., Rights to acquire less than one one-hundredth of a share of
Preferred Stock), unless such fractional Rights result from a transaction
referred to in Section 11(a)(i) hereof. If the Company shall determine
not to issue such fractional Rights, then, in lieu of such fractional
Rights, there shall be paid to the holders of record 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 Fair
Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral
multiples of one-hundredth of a share) upon exercise of the Rights or to
distribute certificates which evidence fractional shares (other than
fractions which are integral multiples of one-hundredth of a share). In
lieu of issuing fractions of shares of Preferred Stock, the Company may,
at its election, issue depositary receipts evidencing fractions of shares
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that the
holders of such depositary receipts shall have all of the rights,
privileges and preferences to which they would be entitled as owners of
the Preferred Stock. With respect to fractions that are not integral
multiples of one-hundredth of a share, if the Company does not issue such
fractional shares or depositary receipts in lieu thereof, there shall be
paid to the holders of record of Right Certificates at the time such
Right Certificates are exercised as herein provided an amount in cash
equal to the same fraction of the Fair Market Value of a share of
Preferred Stock.
21
(c) The holder of a Right by the acceptance of a Right
expressly waives his right to receive any fractional Right or any
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share) upon exercise of a
Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Rights Agreement, except the rights of action given to the Rights Agent
in Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the holders of
record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and
in this Rights 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 Rights 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 Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each 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 shall be
evidenced by the certificates for Common Stock registered in the name of
the holders of Common Stock (together, as applicable, with the Summary of
Rights), which certificates for Common Stock shall also constitute
certificates for Rights, and not by separate Right Certificates, and each
Right shall be transferable only simultaneously and together with the
transfer of shares of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer;
and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the
22
holder of Preferred Stock or any other securities which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in
Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(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 preparation, execution,
delivery and amendment of this Rights Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense, incurred without gross negligence, bad faith
or willful misconduct on the part of the Rights Agent, for any action
taken, suffered or omitted to be done by the Rights Agent in connection
with the acceptance and administration of this Rights Agreement,
including the cost and expenses of defending against any claim of
liability relating to the Rights or this Rights Agreement.
(b) The Rights Agent shall be protected against, and shall
incur no liability for or in respect of, any action taken, suffered or
omitted by it in connection with its acceptance and administration of
this Rights Agreement in reliance upon any Right Certificate or
certificate for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
(c) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Rights Agent be liable for special, punitive,
indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has
been advised of the likelihood of such loss or damage and regardless of
the form of the action.
Section 19. MERGER OR CONSOLIDATION OF OR CHANGE IN NAME OF THE RIGHTS
AGENT.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any Person
succeeding to the corporate trust or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent
23
under this Rights Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In
case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement any of the Rights Certificates
shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such 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 Rights 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; 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; in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only
the duties and obligations expressly imposed by this Rights 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 advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken, suffered or omitted by it in good faith and
in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of Fair Market Value) be proved
or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the
Board, the President or any Vice President and by the Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent. Any such certificate shall be full authorization to the
Rights Agent and the Rights Agent shall incur no liability for or in
respect of any action taken or suffered in good faith by it under the
provisions of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
24
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Rights
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 Rights 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 Rights
Agreement or in any Right Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or 13 hereof
or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock to be issued pursuant to this Rights Agreement
or any Right Certificate or as to whether any shares of Preferred Stock
will, when issued, be validly authorized and issued, fully paid and
non-assessable.
(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 the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President or any Vice
President or the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith in accordance with instructions
of any such officer.
(h) The Rights Agent and any shareholder, affiliate, 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 the Rights Agent under this Rights
Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other 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
25
Company resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Rights Agreement upon 30 days' notice in writing mailed to
the Company and to each transfer agent of the Common Stock and the
Preferred Stock by registered or certified mail. The Company may
remove the Rights Agent or any successor Rights Agent (with or without
cause) upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock and the Preferred Stock by registered or certified
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions
of this Section 21, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have
been appointed and have accepted such appointment. If the Company
shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company),
then the incumbent Rights Agent or the holder of record 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 Person
organized and doing business under the laws of the United States or of
any state thereof, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination in the conduct of its business by
federal or state authorities and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$5,000,000, or (b) an Affiliate controlled by a Person 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 Stock and Preferred Stock, and
mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Notwithstanding the foregoing provisions, in the event of resignation,
removal or incapacity of the Rights Agent, the Company shall have the
authority to act as the Rights Agent until a successor Rights Agent
shall have assumed the duties of the Rights Agent hereunder.
26
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Rights Agreement or of
the Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved by
its Board of Directors to reflect any adjustment or change in the
Exercise Price per share and the number or kind or class of shares of
stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights
Agreement.
Section 23. REDEMPTION.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors then in office, redeem all but not
less than all of the then outstanding Rights, at any time prior to the
Close of Business on the earlier of (i) the tenth day following the Stock
Acquisition Date (subject to extension by the Company as provided in
Section 26 hereof), or (ii) the Final Expiration Date, at a redemption
price of $0.01 per Right, subject to adjustments as provided in
subsection (c) below (the "Redemption Price"), provided, however, that
from and after the time that any Person shall become an Acquiring Person
(other than pursuant to a Qualifying Tender Offer), the Company may not
redeem the Rights for a period of 180 days following either (A) the date
a Person becomes an Acquiring Person or (B) a change (resulting from a
proxy or consent solicitation or from a vote or written consent(s)) in a
majority of the directors of the Company in office at the commencement of
such solicitation, or prior to such vote or consent(s), if any Person who
is a participant in such solicitation, vote or consent(s) has stated (or
if a majority of the directors in office at the commencement of such
solicitation or prior to such vote or consent(s) has determined in good
faith) that such Person (or any of its Affiliates or Associates) intends
to take, or may consider taking, any action which would result in such
Person becoming an Acquiring Person or which would cause the occurrence
of a Triggering Event, unless at the time of the action of the Board of
Directors there are then in office not less than a majority of directors
who are Continuing Directors and such redemption is approved by a
majority of the Continuing Directors then in office. Notwithstanding
anything contained in this Rights Agreement to the contrary, the Rights
shall not be exercisable pursuant to Section 11(a)(ii) hereof prior to
the expiration of the Company's right of redemption hereunder.
(b) Without any further action and without any notice, the
right to exercise the Rights will terminate effective at the effective
time of the action of the Board of Directors ordering the redemption of
the Rights and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price. Within 10 days after the effective
time of the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the
holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each notice of redemption will state
the method by which the payment of the Redemption Price will be made. At
the option of the Board of Directors, the Redemption Price may be paid in
cash to each Rights holder or by the issuance of shares (and, at the
Company's election,
27
cash or depositary receipts in lieu of fractions of shares other than
fractions which are integral multiples of one one-hundredth (1/100) of
a share of Preferred Stock) of Preferred Stock or Common Stock, in each
case having a Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date
of this Rights Agreement (A) pay any dividend on the Common Stock in
shares of Common Stock, (B) subdivide or split the of "standing shares of
Common Stock into a greater number of shares, or (C) combine or
consolidate the outstanding shares of Common Stock into a smaller number
of shares or effect a reverse split of the outstanding shares of Common
Stock, then, and in each such event, the Redemption Price shall be
adjusted so that the Redemption Price after such event shall equal the
Redemption Price immediately prior to such event multiplied by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock outstanding immediately prior to
such event; provided, however, that in each case such adjustment to the
Redemption Price shall be made only if the amount of the Redemption Price
shall be reduced or increased by at least $0.01 per Right.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option,
at any time after a Triggering Event, exchange all or part of the then
outstanding and exercisable Rights (which will not include Rights that
have become null and void pursuant to the provisions of Section 7(e)
hereof) for the Exchange Number of shares of Common Stock, shares or
units of Preferred Stock which the Board of Directors has determined to
be a Common Stock Equivalent, units of other property or any combination
thereof as determined by the Board of Directors. Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
any of its Subsidiaries or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
Plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to subsection
(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 of holders of such Rights shall be to receive the Exchange Number
of shares of Common Stock, Common Stock Equivalents or units of other
property equal to the number of Rights held by such holder multiplied by
the Exchange Number. The Company shall promptly give the Rights Agent
and the public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice that is mailed in the
28
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 Stock for Rights will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Common Stock Equivalents for Common Stock
exchangeable for Rights, at the initial rate of one share of Common Stock
Equivalent for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the Common Stock pursuant to
the Company's Articles of Incorporation, so that the share of Common
Stock Equivalent delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient Common
Stock issued but not outstanding, or authorized but unissued, to permit
any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to
authorized additional Common Stock for issuance upon exchange of the
Rights or shall take such other action specified in Section 11(a)(iii)
hereof.
(e) The Company shall not be required to issue fractions of
shares or to distribute certificates which evidence fractional shares.
In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to
the same fraction of the Fair Market Value (as defined in Section 11(b)
hereof) of a whole share of Common Stock. For the purposes of this
subsection (e), the Fair Market Value of a whole share of Common Stock
shall be determined as of the Trading Day (as defined in Section 11(b)
hereof) immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in
Section 11(a)(i) or 11(g) hereof, (ii) to offer to the holders of record
of any class of its Common Stock options, warrants, or other rights to
subscribe for or to purchase shares of its Common Stock (including any
security convertible into or exchangeable for Common Stock) or shares of
stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, (iii) to effect
any reclassification of its Preferred Stock or Common Stock or any
recapitalization or reorganization of the Company, (iv) to effect any
consolidation or merger with or into, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company shall give to the Rights
29
Agent and to each holder of record of a Right Certificate, in
accordance with Section 26 hereof, notice of such proposed action,
which shall specify the record date for the purposes of such
transaction referred to in Section 11(a)(i) hereof or such dividend or
distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or
transfer of assets, liquidation, dissolution, or winding up is to take
place and the record date for determining participation therein by the
holders of record of Common Stock or Preferred Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of record of the Preferred
Stock 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
record of Common Stock or Preferred Stock, whichever shall be the
earlier. The failure to give notice required by this Section 25 or any
defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) In case-any of the transactions referred to in
Section 11(a)(i), 11(g) or 13 of this Rights Agreement are proposed,
then, in any such case, the Company shall give to each holder of Rights,
in accordance with Section 26 hereof, notice of the proposal of such
transaction at least 10 days prior to consummating such transaction,
which notice shall specify the proposed event and the consequences of the
event to holders of Rights under Section 11(a)(i), 11(g) or 13 hereof, as
the case may be, and, upon consummating such transaction, shall similarly
give notice thereof to each holder of Rights.
Section 26. NOTICES. Notices or demands authorized by this
Rights Agreement to be given or made by the Rights Agent or by the
holder of record of any Right Certificate or Right 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:
Cutter & Buck Inc.
0000 Xxxxx Xxxxxx. Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
With a copy to:
Xxxx Xxxxxx Spears Lubersky LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by
the holder of record of any Right Certificate or Right 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:
30
ChaseMellon Shareholder Services, L.L.C.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right
Certificate or Right 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. For as long as the Rights
are then redeemable and except as provided in the last sentence of this
Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of the
Rights. At any time when the Rights are not then redeemable and except as
provided in the last sentence of this Section 27, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend this Rights
Agreement without the approval of any holders of Right Certificates (i) to
cure any ambiguity; (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein; or (iii) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable, provided that no
such supplement or amendment pursuant to this clause (iii) shall materially
adversely affect the interest of the holders of Right Certificates. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that any proposed supplement or amendment is in compliance with the
terms of this Section 27, and FURTHER PROVIDED that such supplement or
amendment does not change or increase the Rights Agent's duties, liabilities
or obligations, the Rights Agent shall execute such supplement or amendment.
This Agreement may be amended or supplemented at any time with the approval
of a majority of the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Stock). Notwithstanding anything
contained in this Rights Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price or the Final
Expiration Date and supplements or amendments may be made after the time that
any Person becomes an Acquiring Person (other than pursuant to a Qualifying
Tender Offer) only if at the time of the action of the Board of Directors
approving such supplement or amendment there are then in office not less than
a majority of directors who are Continuing Directors and such supplement or
amendment is approved by a majority of the Continuing Directors then in
office.
Section 28. SUCCESSORS. All of the covenants and provisions of this
Rights 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 RIGHTS AGREEMENT. Nothing in this
Rights Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the holders of
Common Stock in their capacity as holders of the Rights) any legal or
equitable right, remedy or claim under this Rights Agreement; but this Rights
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the holders of record of the Right Certificates (and,
31
prior to the Distribution Date, the holders of Common Stock in their capacity
as holders of the Rights).
Section 30. WASHINGTON CONTRACT. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Washington 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; provided, however, that all provisions regarding the rights, duties
and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely with such State.
Section 31. COUNTERPARTS. This Rights 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 32. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof
Section 33. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
CUTTER & BUCK INC.
Attest: By /s/ Xxxxxx X. Xxxxx
--------------------- ------------------------------
(SEAL) Name Xxxxxx X. Xxxxx
--------------------------
Title President
-------------------------
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
Attest: By /s/ Xxxxxx X. Xxxxxx
--------------------- ------------------------------
(SEAL) Name Xxxxxx X. Xxxxxx
--------------------------
Title Assistant Vice President
-------------------------
32
EXHIBIT A
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED
IN THE RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
CUTTER & BUCK INC.
SUMMARY OF RIGHTS TO PURCHASE
CLASS A JUNIOR PREFERRED STOCK
On November 20, 1998, the Board of Directors of Cutter & Buck Inc. (the
"Company"), declared a dividend distribution of one Preferred Stock Purchase
Right (individually, a "Right" and, collectively, the "Rights"), for each
outstanding share of the Company's Common Stock, no par value (the "Common
Stock"). The distribution is payable as of December 7, 1998 to shareholders
of record on that date. Each Right entitles the registered holder to
purchase from the Company one one-hundredth (1/100) of a share of preferred
stock of the Company, designated as Class A Junior Preferred Stock (the
"Class A Preferred Stock"), in each case at a price of $125 per one
one-hundredth (1/100) of a share (the "Exercise Price"). The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent").
AS DISCUSSED BELOW INITIALLY THE RIGHTS WILL NOT BE EXERCISABLE,
CERTIFICATES WILL NOT BE SENT TO SHAREHOLDERS AND THE RIGHTS WILL
AUTOMATICALLY TRADE WITH THE COMMON STOCK.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date"),
which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 20% or more
of the outstanding voting stock of the Company (an "Acquiring Person"), and
(ii) the tenth business day (or such later date as may be determined by the
Board of Directors prior to such time as any person or group of affiliated or
associated persons becomes an Acquiring Person) after the date of the
commencement or announcement of a person's or group's intention to commence a
tender or exchange offer the consummation of which would result in the
ownership of 20% or more of the Company's outstanding voting stock (even if
no shares are actually purchased pursuant to such offer); prior thereto, the
Rights would not be exercisable, would not be represented by a separate
certificate, and would not be transferable apart from the Company's Common
Stock, but will instead be evidenced, with respect to any of the Common Stock
certificates outstanding as of December 7, 1998, by such Common Stock
certificate. An Acquiring Person does not include (A) the Company, (B) any
subsidiary of the Company, (C) any employee benefit plan or employee
stock plan of the Company or of any subsidiary of the Company, or any trust
or other entity organized, appointed, established or holding Common Stock for
or pursuant to the terms of any such plan, or (D) any person or group whose
ownership of 20% or more of the shares of voting stock of the Company then
outstanding results solely from (i) any action or transaction or transactions
approved by the Board of Directors before such person or group became an
Acquiring Person, or (ii) a reduction in the number of issued and outstanding
shares of voting stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or
(ii) above shall become an Acquiring Person upon acquisition of an additional
1% or more of the Company's voting stock unless such acquisition of
additional voting stock will not result in such person or group becoming an
Acquiring Person by reason of such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after December 7, 1998 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as
of December 7, 1998, with or without a copy of this Summary of Rights
attached thereto, will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate certificates alone will evidence the Rights from and after the
Distribution Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on December 7, 2008, unless earlier
redeemed by the Company as described below.
The Class A Preferred Stock is nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. The
Class A Preferred Stock may not be issued except upon exercise of Rights.
Each share of Class A Preferred Stock will be entitled to receive when, as
and if declared, a quarterly dividend in an amount equal to the greater of
$1.00 per share or 100 times the cash dividends declared on the Company's
Common Stock. In addition, the Class A Preferred Stock is entitled to 100
times any non-cash dividends (other than dividends payable in equity
securities or certain rights or warrants) declared on the Common Stock, in
like kind. In the event of the liquidation of the Company, the holders of
Class A Preferred Stock will be entitled to receive, for each share of Class
A Preferred Stock, a payment in an amount equal to the greater of $125 per
one one-hundredth share of Class A Preferred Stock or 100 times the payment
made per share of Common Stock. Each share of Class A Preferred Stock will
have 100 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is
exchanged, each share of Class A Preferred Stock will be entitled to receive
100 times the amount received per share of Common Stock. The rights of Class
A Preferred Stock as to dividends, liquidation and voting are protected by
anti-dilution provisions.
2
The number of shares of Class A Preferred Stock issuable upon exercise
of the Rights is subject to certain adjustments from time to time in the
event of a stock dividend on, or a subdivision or combination of, the Common
Stock. The Exercise Price for the Rights is subject to adjustment in the
event of extraordinary distributions of cash or other property to holders of
Common Stock.
Unless the Rights are earlier redeemed or the transaction is approved by
the Board of Directors and the Continuing Directors (as defined in the Rights
Agreement), if the Company at any time after the Distribution Date were to be
acquired in a merger or other business combination (in which any shares of
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right will from and
after such date have the right to receive, upon payment of the Exercise
Price, that number of shares of common stock of the acquiring company having
a market value at the time of such transaction equal to two times the
Exercise Price. In addition, unless the Rights are earlier redeemed, in the
event that a person or group becomes the beneficial owner of 20% or more of
the Company's voting stock (other than pursuant to a tender or exchange offer
(a "Qualifying Tender Offer") for all outstanding shares of Common Stock that
is approved by the Board of Directors, after taking into account the
long-term value of the Company and all other factors they consider relevant
in the circumstances), the Rights Agreement provides that proper provisions
will be made so that each holder of record of a Right, other than the
Acquiring Person (whose Rights will thereupon become null and void), will
thereafter have the right to receive, upon payment of the Exercise Price,
that number of shares of the Class A Preferred Stock having a market value at
the time of the transaction equal to two times the Exercise Price (such
market value to be determined with reference to the market value of the
Company's Common Stock as provided in the Rights Agreement).
Fractions of shares of Class A Preferred Stock (other than fractions
which are integral multiples of one one-hundredth of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company
may also issue cash in lieu of fractional shares which are not integral
multiples of one one-hundredth of a share.
At any time on or prior to the close of business on the earlier of (i)
the tenth day after the time that a person has become an Acquiring Person (or
such later date as a majority of the Board of Directors and, if applicable, a
majority of the Continuing Directors may determine) or (ii) December 7, 2008,
the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right, subject to adjustment (the "Redemption Price"). The Rights
may be redeemed for the initial 180 day period after the time that any Person
has become an Acquiring Person only if approved by a majority of the
Continuing Directors. Immediately upon the effective time of the action of
the Board of Directors of the Company authorizing redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price or date of expiration of the Rights,
amend the Rights in any manner,
3
including an amendment to extend the time period in which the Rights may be
redeemed. At any time when the Rights are not then redeemable, the Company
may amend the Rights in any manner that does not materially adversely affect
the interests of holders of the Rights as such. Amendments to the Rights
Agreement from and after the time that any Person becomes an Acquiring Person
requires the approval of a majority of the Continuing Directors (as provided
in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Current Report on Form 8-K
dated November 25, 1998. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement which is incorporated in this summary description herein by
reference.
4
EXHIBIT B
[Form of Right Certificate]
Certificate No. R-________ Rights
NOT EXERCISABLE AFTER December 7, 2008 OR EARLIER IF REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY
AND UNDER CERTAIN OTHER CIRCUMSTANCES, AT $0.01 PER RIGHT (SUBJECT
TO ADJUSTMENT), ON THE TERMS SET FORTH OR REFERRED TO IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO OR
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND
MAY NOT BE TRANSFERRED TO ANY PERSON.
RIGHT CERTIFICATE
CUTTER & BUCK 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 November 20, 1998 (the "Rights
Agreement') between Cutter & Buck Inc., a Washington corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company (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. (Washington time) on December 7,
2008 at the office of the Rights Agent designated in the Rights Agreement for
such purpose, or its successor as Rights Agent, one one-hundredth (1/100) of
a fully paid nonassessable share of Class A Junior Preferred Stock (the
"Class A Preferred Stock") of the Company at a purchase price of $125, as the
same may from time to time be adjusted in accordance with the Rights
Agreement (the "Exercise Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase attached hereto duly
executed.
As provided in the Rights Agreement, the Exercise Price and the number
of shares of Class A Preferred Stock which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events and, upon the happening
of certain events, securities other than shares of Class A Preferred Stock,
or other property, may be acquired upon exercise of the Rights evidenced by
this Right Certificate, as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are 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 of the
Rights Agent, the Company and the holders of record of Right Certificates.
Copies of the Rights Agreement are on file at the principal executive office
of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights
Agreement for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the
holder of record to purchase a like aggregate number of shares of Class A
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 may be redeemed by the Company at its option or
under certain other circumstances at a redemption price of $0.01 per Right.
No fractional shares of Class A Preferred Stock (other than fractions
which are integral multiples of one one-hundredth (1/100) of a share) are
required to be issued upon the exercise of any Right or Rights evidenced
hereby, and in lieu thereof the Company may cause depository receipts to be
issued and/or a cash payment may 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 be deemed for any purpose the holder of Class A
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
a 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 as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
2
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
DATED as of _______________,1998.
CUTTER & BUCK INC.
Attest: By
---------------------------------- ------------------------------
[Secretary or Assitant Secretary] Name
--------------------------
Title
-------------------------
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By
------------------------------
Name
--------------------------
Title
-------------------------
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED _________________________________________ hereby
sells, assigns and transfers unto ____________________________________________
______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
Rights evidenced by this Right Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney to transfer the within Right Certificate on the
books of the within-named Company, with full power of substitution.
Dated:_______________________.
------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned or transferred by or on behalf of a Person who is or was an
Acquiring Person or an Associate or an Affiliate thereof (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement).
Dated:
---------------------
-----------------------------
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
2
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO CUTTER & BUCK INC.:
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Right Certificate to purchase the shares of Class
A Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such share(s) be issued in the following name:
Please insert social security
or other identifying number:_________________________________________________
_____________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS)
_____________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________________________________
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
3
Dated:
-----------------------
------------------------------------------------
Signature
(Signature must conform in all respects to name
of holder as specified on the fact of this Right
Certificate)
Signature Guaranteed:
4
EXHIBIT C
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
CLASS A JUNIOR PREFERRED STOCK
CUTTER & BUCK INC.
PURSUANT TO SECTIONS 23B.06.010 AND 23B.06.020 OF THE WASHINGTON
BUSINESS CORPORATION ACT
I, Xxxxxx X. Xxxxx, Chairman of Cutter & Buck Inc., a corporation
organized and existing under the Washington Business Corporation Act (the
"Company"), in accordance with the provisions of Sections 23B.06.010 and
23B.06.020 of such law, DO HEREBY CERTIFY that at a meeting of the Board of
Directors on November 20, 1998 at which meeting a quorum was present, that
the following resolutions were adopted:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the Company's Restated Articles
of Incorporation, as amended, a series of Preferred Stock of the Company be,
and hereby is, created, and the powers, designations, preferences and
relative, participating, optional or other special rights of the shares of
such series, and the qualifications, limitations or restrictions thereof, be,
and hereby are, as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Class A Junior Preferred Stock" (the "Class A Preferred
Stock'') and the number of shares constituting such series initially shall be
56,498. Notwithstanding the foregoing, however, if more than a total of
56,498 shares of Class A Preferred Stock shall be issuable upon the
exercise of Class A Rights (the "Class A Rights") issued pursuant to the
Rights Agreement, dated as of November 20, 1998, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (as such agreement
may be amended from time to time, the "Rights Agreement"), the Board of
Directors of the Company shall direct by resolution or resolutions that the
total number of shares of Class A Preferred Stock authorized to be issued be
increased (to the extent that the Articles of Incorporation, as amended, then
permits) to the largest number of whole shares (rounded up to the nearest
whole number) issuable upon exercise of such Class A Rights.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Class A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, (i) cash dividends in an amount per share
(rounded to the nearest cent) equal to 100 times the aggregate per share
amount of all cash dividends declared or paid on the Company's Common Stock,
no par value per share (the "Common Stock"), and (ii) a preferential cash
dividend (the "Preferential Dividends"), if any, in preference to the holders
of Common Stock, on the first day of March, June, September and
December of each year (each 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 Class A Preferred Stock, payable in an amount
(except in the case of the first Quarterly Dividend Payment if the date of
the first issuance of Class A Preferred Stock is a date other than a
Quarterly Dividend Payment Date, in which case such payment shall be a
prorated amount of such amount) equal to $1.00 per share of Class A Preferred
Stock less the per share amount of all cash dividends declared on the Class A
Preferred Stock pursuant to clause (i) of this sentence 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 Class A Preferred Stock. In the event the Company
shall, at any time after the issuance of any share or fraction of a share of
Class A Preferred Stock, make any distribution on the shares of Common Stock
of the Company, whether by way of a dividend or a reclassification of stock,
a recapitalization, reorganization or partial liquidation of the Company or
otherwise, which is payable in cash or any debt security, debt instrument,
real or personal property or any other property (other than cash dividends
subject to the immediately preceding sentence, a distribution of shares of
Common Stock or other capital stock of the Company or a distribution of
rights or warrants to acquire any such share, including any debt security
convertible into or exchangeable for any such share, at a price less than the
Fair Market Value (as hereinafter defined) of such share), then, and in each
such event, the Company shall simultaneously pay on each then outstanding
share of Class A Preferred Stock of the Company a distribution, in like kind,
of 100 times such distribution paid on a share of Common Stock (subject to
the provisions for adjustment hereinafter set forth). The dividends and
distributions on the Class A Preferred Stock to which holders thereof are
entitled pursuant to clause (i) of the first sentence of this paragraph and
pursuant to the second sentence of this paragraph are hereinafter referred to
as "Dividends" and the multiple of such cash and non-cash dividends on the
Common Stock applicable to the determination of the Dividends, which shall be
100 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple". In the
event the Company shall at any time after December 7, 1998 declare or pay any
dividend or make any distribution on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then in each such case the Dividend
Multiple thereafter applicable to the determination of the amount of
Dividends which holders of shares of Class A Preferred Stock shall be
entitled to receive shall be the Dividend Multiple applicable immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Common Stock in
respect of which a Dividend is required to be paid. No cash or non-cash
dividend or distribution on the Common Stock in respect of which a Dividend
is required to be paid shall be paid or set aside for payment on the Common
Stock unless a Dividend in respect of such dividend or distribution on the
Common Stock shall be simultaneously paid, or set aside for payment, on the
Class A Preferred Stock.
2
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Class A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Class A Preferred Stock.
Accrued but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Class A Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Class A Preferred
Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Class A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the holders of the Common
Stock. The number of votes which a holder of Class A Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple". In
the event the Company shall at any time after December 7, 1998 declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser number of shares
of Common Stock, then in each such case the Vote Multiple thereafter
applicable to the determination of the number of votes per share to which
holders of shares of Class A Preferred Stock shall be entitled after such
event shall be the Vote Multiple immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Company's
Restated Articles of Incorporation or Bylaws, in each case as the same may be
amended, the holders of shares of Class A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of shareholders of the Company.
(C) In the event that the Preferential Dividends accrued on
the Class A Preferred Stock for four or more quarterly dividend periods,
whether consecutive or not, shall not have been declared and paid or
irrevocably set aside for payment, the holders of record of Preferred Stock
of the Company of all series (including the Class A Preferred Stock), other
than any series in respect of which such right is expressly withheld by the
authorizing resolutions therefor, shall have the right, at the next meeting
of shareholders called for the election of directors, to elect two members to
the Board of Directors, which directors shall be in addition to the number
required by the Bylaws, as amended, prior to such event, to serve until the
next Annual Meeting and until their successors are elected and qualified or
their earlier resignation, removal or incapacity or until such earlier time
as all accrued and unpaid Preferential Dividends upon the outstanding shares
of Class A Preferred Stock shall have been paid (or irrevocably set aside for
payment) in full. The holders of shares of Class A Preferred Stock shall
continue to have the right to elect directors as provided by the immediately
preceding sentence until all accrued and unpaid Preferential Dividends upon
the outstanding shares of Class A Preferred Stock shall have been paid (or
set aside for payment) in full. Such directors may be removed and replaced by
such
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shareholders, and vacancies in such directorships may be filled only by such
shareholders (or by the remaining director elected by such shareholders, if
there be one) in the manner permitted by law; provided, however, that any
such action by shareholders shall be taken at a meeting of shareholders and
shall not be taken by written consent thereto.
(D) Except as otherwise required by the Company's Restated
Articles of Incorporation or Bylaws or set forth herein, in each case as the
same may be amended, holders of Class A Preferred Stock shall have no other
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for the taking of any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever Preferential Dividends or Dividends are in
arrears or the Company shall be in default of payment thereof, thereafter and
until all accrued and unpaid Preferential Dividends and Dividends, whether or
not declared, on shares of Class A Preferred Stock outstanding shall have
been paid or set irrevocably aside for payment in full, and in addition to
any and all other rights which any holder of shares of Class A Preferred
Stock may have in such circumstances, the Company 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 Class A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity as to dividends with the
Class A Preferred Stock, unless dividends are paid ratably on the Class A
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(A), redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Class A Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any
stock of the Company ranking junior (both as to dividends and upon
liquidation, dissolution or winding up) to the Class A Preferred Stock;
or
(iv) purchase or otherwise acquire for consideration any shares
of Class A Preferred Stock, or any shares of stock ranking on a parity
with the Class A Preferred Stock (either as to dividends or upon
liquidation, dissolution or winding up), except in accordance with a
purchase offer made to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and
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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 Company shall not permit any Subsidiary (as
hereinafter defined) of the Company to purchase or otherwise acquire for
consideration any shares of stock of the Company unless the Company could,
under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner. A "Subsidiary" of the Company shall
mean any corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority of the
board of directors of such corporation or other entity or other persons
performing similar functions are beneficially owned, directly or indirectly,
by the Company or by any corporation or other entity that is otherwise
controlled by the Company.
(C) The Company shall not issue any shares of Class A
Preferred Stock except upon exercise of Rights issued pursuant to the Rights
Agreement, a copy of which is on file with the Secretary of the Company at
its principal executive office and shall be made available to shareholders of
record without charge upon written request therefor addressed to said
Secretary. Notwithstanding the foregoing sentence, nothing contained in the
provisions hereof shall prohibit or restrict the Company from issuing for any
purpose any series of Preferred Stock with rights and privileges similar to,
different from, or greater than, those of the Class A Preferred Stock.
Section 5. REACQUIRED SHARES. Any shares of Class A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and canceled promptly after the acquisition thereof All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and
such shares may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors.
Section 6. LIQUIDATION DISSOLUTION OR WINDING UP. Upon any voluntary
or involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Class A Preferred Stock unless the holders of shares of Class A
Preferred Stock shall have received for each share of Class A Preferred
Stock, subject to adjustment as hereinafter provided, (A) $125 per one
one-hundredth of a share plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment or, (B) if greater than the amount specified in clause (i)(A) of this
sentence, an amount equal to 100 times the aggregate amount to be distributed
pa share to holders of Common Stock, as the same may be adjusted as
hereinafter provided, and (ii) to the holders of stock ranking on a parity
upon liquidation, dissolution or winding up with the Class A Preferred Stock,
unless simultaneously therewith distributions are made ratably on the Class A
Preferred Stock and all other shares of such parity stock in proportion to
the total amounts to which the holders of shares of Class A Preferred Stock
are entitled under clause (i)(A) of this sentence and to which the holders of
such parity shares are entitled, in each case upon such liquidation,
dissolution or winding up. The amount to which holders of Class A Preferred
Stock may be entitled upon liquidation, dissolution or winding up of the
Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of
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the amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable pursuant to
said clause to the delamination of the Participating Liquidation Amount, as
said multiple may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Liquidation Multiple". In the event the
Company shall at any time after December 7, 1998 declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares of Common
Stock, then, in each such case, the Liquidation Multiple thereafter
applicable to the determination of the Participating Liquidation Amount to
which holders of Class A Preferred Stock shall be entitled after such event
shall be the Liquidation Multiple applicable immediately prior to such event
multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that wale outstanding
immediately prior to such event.
Section 7. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(A) In the event that holders of shares of Common Stock of
the Company receive after December 7, 1998, in respect of their shares of
Common Stock, any share of capital stock of the Company (other than any share
of Common Stock of the Company), whether by way of reclassification,
recapitalization, reorganization, dividend or other distribution or otherwise
(a "Transaction"), then, and in each such event, the dividend rights, voting
rights and rights upon the liquidation, dissolution or winding up of the
Company of the shares of Class A Preferred Stock shall be adjusted so that
after such event the holders of Class A Preferred Stock shall be entitled, in
respect of each share of Class A Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior
to such adjustment, to (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such Transaction multiplied by the
additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such
capital stock, (ii) such additional voting rights as equal the Vote Multiple
in effect immediately prior to such Transaction multiplied by the additional
voting rights which the holder of a share of Common Stock shall be entitled
to receive by virtue of the receipt in the Transaction of such capital stock,
and (iii) such additional distributions upon liquidation, dissolution or
winding up of the Company as equal the Liquidation Multiple in effect
immediately prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the
receipt in the Transaction of such capital stock, as the case may be, all as
provided by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of
the Company receive after December 7, 1998, in respect of their shares of
Common Stock, any right or warrant to purchase Common Stock (including as
such a right, for all purposes of this paragraph, any security convertible
into or exchangeable for Common Stock) at a purchase price per share less
than the Fair Market Value of a share of Common Stock on the date of issuance
of such right or warrant, then and in each such event the dividend rights,
voting rights and rights upon the liquidation, dissolution or winding up of
the Company of the shares of Class A Preferred Stock shall each be adjusted
so that after such event the Dividend Multiple, the Vote Multiple and the
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Liquidation Multiple shall each be the product of the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple, as the case may be, in effect
immediately prior to such event multiplied by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants plus the maximum Rumba of shares
of Common Stock which could be acquired upon exercise in full of all such
rights or warrants and the denominator of which shall be the number of shares
of Common Stock outstanding immediately before such issuance of rights or
warrants plus the number of shares of Common Stock which could be purchased,
at the Fair Market Value of the Common Stock at the time of such issuance, by
the maximum aggregate consideration payable upon exercise in full of all such
rights or warrants.
(C) In the event that holders of shares of Common Stock of
the Company receive after December 7, 1998, in respect of their shares of
Common Stock, any right or warrant to purchase capital stock of the Company
(other than shares of Common Stock), including as such a right, for all
purposes of this paragraph, any security convertible into or exchangeable for
capital stock of the Company (other than Common Stock), at a purchase price
per share less than the Fair Market Value of such shares of capital stock on
the date of issuance of such right or warrant, then and in each such event
the dividend rights, voting rights and rights upon liquidation, dissolution
or winding up of the Company of the shares of Class A Preferred Stock shall
each be adjusted so that after such event each holder of a share of Class A
Preferred Stock shall be entitled, in respect of each share of Class A
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such event, to receive (i) such
additional dividends as equal the Dividend Multiple in effect immediately
prior to such event multiplied, first, by the additional dividends to which
the holder of a share of Common Stock shall be entitled upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction (as hereinafter
defined), and (ii) such additional voting rights as equal the Vote Multiple
in effect immediately prior to such event multiplied, first, by the
additional voting rights to which the holder of a share of Common Stock shall
be entitled upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise and multiplied again by the
Discount Fraction, and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Common Stock shall be entitled to
receive upon liquidation, dissolution or winding up of the Company upon
exercise of such right or warrant by virtue of the capital stock which could
be acquired upon such exercise and multiplied again by the Discount Fraction.
For purposes of this paragraph, the "Discount Fraction" shall be a fraction
the numerator of which shall be the difference between the Fair Market Value
of a share of the capital stock subject to a right or warrant distributed to
holders of shares of Common Stock of the Company as contemplated by this
paragraph immediately after the distribution thereof and the purchase price
pa share for such share of capital stock pursuant to such right or warrant
and the denominator of which shall be the Fair Market Value of a share of
such capital stock immediately after the distribution of such right or
warrant.
(D) For purposes of this Certificate of Designations, the
"Fair Market Value" of a share of capital stock of the Company (including a
share of Common Stock) on any date shall be deemed to be the average of the
daily closing price pa share thereof ova the 30 consecutive
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Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that, in the event that such Fair Market Value of
any such share of capital stock is determined during a period which includes
any date that is within 30 Trading Days after (i) the evidenced date for a
dividend or distribution on stock payable in shares of such stock or
securities convertible into shares of such stock, or (ii) the effective date
of any subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the Fair Market
Value shall be appropriately adjusted by the Board of Directors of the
Company to take into account exdividend or post-effective date trading. The
closing price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way (in either case, as reported in the applicable
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange), or, if the shares are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
applicable transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares are listed or
admitted to trading or, if the shares 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 The Nasdaq Stock Market or such other
system then in use, or if on any such date the shares 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 shares
selected by the Board of Directors of the Company. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares are listed or admitted to trading is open for the transaction of
business or, if the shares are not listed or admitted to trading on any
national securities exchange, on which the New York Stock Exchange or such
other national securities exchange as may be selected by the Board of
Directors of the Company is open. If the shares are not publicly held or not
so listed or traded on any day within the period of 30 Trading Days
applicable to the delamination of Fair Market Value thereof as aforesaid,
"Fair Market Value" shall mean the fair market value thereof pa share as
determined in good faith by the Board of Directors of the Company. In either
case referred to in the foregoing sentence, the determination of Fair Market
Value shall be described in a statement filed with the Secretary of the
Company.
Section 8. CONSOLIDATION. Merger etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
each outstanding share of Class A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case
may be, for which or into which each share of Common Stock is changed or
exchanged multiplied by the highest of the Vote Multiple, the Dividend
Multiple or the Liquidation Multiple in effect immediately prior to such
event.
Section 9. EFFECTIVE TIME OF ADJUSTMENTS.
(A) Adjustments to the Class A Preferred Stock required by
the provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
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(B) The Company shall give prompt written notice to each
holder of a share of Class A Preferred Stock of the effect of any adjustment
to the voting rights, dividend rights or rights upon liquidation, dissolution
or winding up of the Company of such shares required by the provisions
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
give such notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment.
Section 10. NO REDEMPTION. The shares of Class A Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may
acquire shares of Class A Preferred Stock in any other manner permitted by
law, and the provisions hereof and the Restated Articles of Incorporation of
the Company, in each case as the same may be amended.
Section 11. RANKING. Unless otherwise provided in a Certificate of
Designations relating to a subsequent series of prepared stock of the
Company, the Class A Preferred Stock shall rank junior to all other series of
the Company's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior
to the Common Stock.
Section 12. AMENDMENT. The provisions hereof and the Restated
Articles of Incorporation, as amended, of the Company shall not be amended in
any manna which would adversely affect the rights, privileges or powers of
the Class A Preferred Stock without, in addition to any other vote of
shareholders required by law, the affirmative vote of the holders of
two-thirds or more of the outstanding shares of Class A Preferred Stock,
voting together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designations and do affirm the foregoing as true under the penalties of
perjury this ______day of November, 1998.
By:
---------------------------------------
Xxxxxx X. Xxxxx, Chairman
ATTEST:
By:
-----------------------------
Name:
Title:
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