Exhibit 1
Liz Claiborne, Inc.
and
First Chicago
Trust Company of
New York
RIGHTS AGREEMENT
Dated as of December 4, 1998
TABLE OF CONTENTS
Page
Section 1. Certain Definitions.......................................................................-1-
Section 2. Appointment of Rights Agent...............................................................-8-
Section 3. Issuance of Rights Certificates.......................................................... -8-
Section 4. Form of Rights Certificates..............................................................-10-
Section 5. Execution, Countersignature and Registration.............................................-11-
Section 6. Transfer, Division, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates...............................-11-
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights............................-12-
Section 8. Cancellation and Destruction of Rights Certificates......................................-14-
Section 9. Reservation and Availability of Preferred Stock..........................................-15-
Section 10. Preferred Stock Record Date..............................................................-16-
Section 11. Adjustments to Purchase Price, Number of Shares or Number of Rights......................-16-
Section 12. Certification of Adjustments.............................................................-24-
Section 13. Consolidation, Merger or Sale or Transfer of Property, Assets or
Earning Power.........................................................................-24-
Section 14. Fractional Rights and Fractional Shares..................................................-27-
Section 15. Rights of Action.........................................................................-29-
Section 16. Agreement of Rights Holders Concerning Transfer and Ownership of
Rights................................................................................-29-
Section 17. Rights Holder Not Deemed a Stockholder...................................................-30-
Section 18. Concerning the Rights Agent..............................................................-30-
Section 19. Merger or Consolidation or Change of Name of Rights Agent................................-31-
Section 20. Duties of Rights Agent...................................................................-31-
Section 21. Change of Rights Agent...................................................................-33-
Section 22. Issuance of New Rights Certificates......................................................-34-
Section 23. Redemption...............................................................................-34-
Section 24. Notice of Certain Events.................................................................-35-
Section 25. Notices..................................................................................-36-
Section 26. Amendments and Supplements...............................................................-37-
Section 27. Successors...............................................................................-38-
Section 28. Benefits of this Agreement; Determinations and Actions by the Board of
Directors..............................................................................-38-
Section 29. Severability.............................................................................-38-
Section 30. Governing Law............................................................................-38-
Section 31. Counterparts.............................................................................-39-
Section 32. Descriptive Headings.....................................................................-39-
Section 33. Grammatical Construction.................................................................-39-
RIGHTS AGREEMENT
Rights Agreement dated as of December 4, 1998, between Liz
Claiborne, Inc., a Delaware corporation (the "Company"), and First Chicago Trust
Company of New York, a New York corporation (the "Rights Agent").
R E C I T A L S
The Board of Directors of the Company has authorized and
declared the payment of a dividend of one preferred share purchase right (the
"Right") for each share of Common Stock (as defined in Section 1) outstanding on
the Record Date (as defined in Section 1) and has authorized the issuance of one
Right for each share of Common Stock issued between the Record Date and the
Distribution Date (as defined in Section 1), and, in certain cases following the
Distribution Date. Each Right represents, as of the Record Date, the right to
purchase one one-hundredth of a share of Preferred Stock (as defined in Section
1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth in this Agreement, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) (i) "Acquiring Person" means any Person who or which,
together with all Affiliates and Associates of such Person, is (or has
previously been, at any time after the date of this Agreement, whether or not
such Person(s) continues to be) the Beneficial Owner of 15% or more of the
Outstanding Common Stock (as defined in this Section 1).
However, "Acquiring Person" shall not include any Exempt Person.
(ii) A Person does not become an "Acquiring Person"
solely as the result of (A) an acquisition of Common Stock by the Company or any
of its Subsidiaries which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Outstanding Common Stock, or (B) such Person becoming the
Beneficial Owner of 15% or more of the Outstanding Common Stock solely as a
result of an Exempt Event; provided, however, that if a Person becomes the
Beneficial Owner of 15% or more of the Outstanding Common Stock solely by reason
of such a share acquisition by the Company or the occurrence of such an Exempt
Event and such Person shall, after becoming the Beneficial Owner of such Common
Stock, become the Beneficial Owner of additional shares of Common Stock
constituting 1% or more of the then Outstanding Common Stock by any means
whatsoever (other than as a result of the subsequent occurrence of an Exempt
Event, a stock dividend or a subdivision of the Common Stock into a larger
number of shares or a similar transaction), then such Person shall be deemed to
be an "Acquiring Person; or (C) the inadvertent acquisition of beneficial
ownership of 15% or more of the Common Stock of the Company if the Board of
Directors determines in good faith that such acquisition was inadvertent and
such Person immediately divests itself of a sufficient number of shares of
Common Stock so that such Person could no
longer be an "Acquiring Person"; or (D) if such Person is an Institutional
Investor, such Institutional Investor becoming the Beneficial Owner of 15% or
more of the Outstanding Common Stock solely by reason of such Institutional
Investor's Regular Trading Activities; provided, however, that if an
Institutional Investor becomes the Beneficial Owner of 20% or more of the then
Outstanding Common Stock other than solely as the result of the events described
in clause (B) or (C) of this Section 1(a)(ii) (and in the case of clause (C),
such Institutional Investor immediately divests itself of a sufficient number of
shares of Common Stock as that it is no longer the Beneficial Owner of 20% or
more of the then Outstanding Common Stock), then such Institutional Investor
shall be deemed an "Acquiring Person."
(b) "Affiliate" of a Person has the meaning given to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement.
(c) "Associate" of a Person has the meaning given to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement.
(d) Except as provided below, a Person is the "Beneficial
Owner" of, and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate
of such Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate
of such Person has, directly or indirectly, the right or obligation (whether or
not then exercisable or effective) to acquire pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person will not be
deemed the Beneficial Owner of, or to beneficially own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any Affiliate or Associate of such Person until such tendered securities are
accepted for purchase or exchange; and provided further, that prior to the
occurrence of a Triggering Event, a Person will not be deemed the Beneficial
Owner of, or to beneficially own, securities obtainable upon exercise of the
Rights;
(iii) which such Person or any Affiliate or Associate
of such Person has, directly or indirectly, the right (whether or not then
exercisable or effective) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security pursuant to this clause (iii) if the agreement,
arrangement or understanding to vote, or to direct the voting of, such security
(A) arises solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the Exchange Act and applicable rules and regulations thereunder and (B) is not
also then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor schedule or report);
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(iv) which such Person or any Affiliate or Associate
of such Person has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or any
comparable or successor provision); or
(v) which are beneficially owned, directly or
indirectly, by any other Person or any Affiliate or Associate of such other
Person with whom such Person or any Affiliate or Associate of such Person has
any agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in subparagraph (iii) of this Section 1(d)) or disposing of any
securities of the Company.
Nothing in this Section 1(d) causes a Person engaged in
business as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary,
for purposes of this Agreement, no Person is to be treated as the "Beneficial
Owner" of, or to "beneficially own," any securities owned by any other Person
that is an Exempt Person.
(e) "Board of Directors" means the Board of Directors of the
Company, as the same is constituted from time to time, or if the Company ceases
to exist as a result of a Business Combination or otherwise, the board of
directors of the Company's successor, if any.
(f) "Business Combination" has the meaning set forth in
Section 13(a).
(g) "Business Day" means any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(h) "Close of Business" on any given date means 5:00 p.m., New
York, New York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., New York, New York time, on the next
succeeding Business Day.
(i) "Common Stock" when used in any context applicable prior
to a Business Combination means the Common Stock, par value $1.00 per share, of
the Company (as the same may be changed by reason of any combination,
subdivision or reclassification of the Common Stock). "Common Stock" when used
with reference to any Person (other than the Company prior to a Business
Combination) means shares of capital stock of such Person (if such Person is a
corporation) of any class or series, or units of equity interests in such Person
(if such Person is not a corporation) of any class or series, the terms of which
shares or units do not limit (as a fixed amount and not merely in proportional
terms) the amount of dividends or income payable or distributable on such shares
or units or the amount of property or assets distributable on such shares or
units upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person and do not provide that such shares or
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units are subject to redemption at the option of such Person, or any shares of
capital stock or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that if at any time there are more
than one such class or series of capital stock of or equity interests in such
Person, "Common Stock" of such Person will include all such classes and series
substantially in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.
(j) "Current Market Price" per share of Common Stock,
Preferred Stock or Equivalent Shares on any date is the average of the daily
closing prices per share of such Common Stock, Preferred Stock or Equivalent
Shares for the 30 consecutive Trading Days (as defined below in this Section
1(j)) ending on the last Trading Day immediately prior to such date for the
purpose of any computation under this Agreement except computations made
pursuant to Section 11(a)(iii), and for the 10 consecutive Trading Days
immediately following such date for the purpose of any computation under Section
11(a)(iii); provided, however, that in the event that the Current Market Price
per share of Common Stock, Preferred Stock or Equivalent Shares is determined
during a period following the announcement by the issuer of such Common Stock,
Preferred Stock or Equivalent Shares of (i) a dividend or distribution on such
Common Stock, Preferred Stock or Equivalent Shares other than a regular
quarterly cash dividend, or (ii) any subdivision, combination or
reclassification of such Common Stock, Preferred Stock or Equivalent Shares, and
prior to the expiration of 30 Trading Days after the "ex-dividend" date for such
dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market Price" shall
be appropriately adjusted to take into account such dividend, distribution,
subdivision, combination or reclassification. The closing price for each Trading
Day shall be the last sale price, regular way, on such day, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange ("NYSE") or, if the Common
Stock, Preferred Stock or Equivalent Shares are not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal United
States national securities exchange on which the Common Stock, Preferred Stock
or Equivalent Shares are listed or admitted to trading or, if the Common Stock,
Preferred Stock or Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, the last quoted sale price on
such day or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or
such other system then in use. If on any such day the Common Stock, Preferred
Stock or Equivalent Shares are not quoted by any such organization, the average
of the closing bid and asked prices on such day as furnished by a professional
market maker making a market in the Common Stock, Preferred Stock or Equivalent
Shares selected by a majority of the Board of Directors shall be used (which
selection shall be final, binding and conclusive for all purposes). If no such
market maker is making a market, the fair market value of such shares on such
day as determined in good faith by a majority of the Board of Directors or the
Board of Directors of the issuer of such Common Stock, Preferred Stock or
Equivalent Shares must be used, which determination must be described in a
statement filed
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with the Rights Agent and shall be final, binding and conclusive for all
purposes. The term "Trading Day" means a day on which the principal United
States national securities exchange on which the Common Stock, Preferred Stock
or Equivalent Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Stock, Preferred Stock of Equivalent
Shares are not listed or admitted to trading on any United States national
securities exchange, but are traded in the over-the-counter market and reported
by Nasdaq, then any day for which Nasdaq reports the high bid and low asked
prices in the over-the-counter market, or if the Common Stock, Preferred Stock
or Equivalent Shares are not traded in the over-the-counter market and reported
by Nasdaq, then a Business Day. If the Common Stock, Preferred Stock or
Equivalent Shares have not been so listed or admitted to trading for 30 or more
Trading Days or traded in the over-the-counter market and reported by Nasdaq for
30 or more Trading Days, "Current Market Price" per share means the fair market
value per share as determined in good faith by a majority of the Board of
Directors, whose determination must be described in a statement filed with the
Rights Agent and shall be final, binding and conclusive for all purposes.
(k) "Distribution Date" means the earlier of (i) the Stock
Acquisition Date, and (ii) the tenth Business Day after the Tender Offer Date.
The Board of Directors of the Company may, at its election, defer the date set
forth in clause (ii) of the preceding sentence to a specified later date or to
an unspecified later date to be determined by a subsequent action or event.
(l) "Equivalent Shares" means any class or series of capital
stock of the Company, other than the Preferred Stock, which is entitled to
participate on a proportional basis with the Preferred Stock in dividends and
other distributions, including distributions upon the liquidation, dissolution
or winding up of the Company. In calculating the number of any class or series
of Equivalent Shares for purposes of Section 11, the number of shares, or
fractions of a share, of such class or series of capital stock that is entitled
to the same dividend or distribution as a whole share of Preferred Stock shall
be deemed to be one share.
(m) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and any successor statute.
(n) "Exchange Date" means the time at which the Rights are
exchanged pursuant to Section 11(a)(iv).
(o) "Exempt Event" means with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock of the
Company solely as a result of the occurrence of a Triggering Event and the
effect of such Triggering Event on the last proviso of clause (ii) of the
definition of Beneficial Owner, other than a Triggering Event in which such
Person becomes an Acquiring Person.
(p) "Exempt Person" means (i) the Company, (ii) any Subsidiary
of the Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, and (iv) any Person holding Common Stock for any such
employee benefit plan or
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for employees of the Company or of any Subsidiary of the Company pursuant to the
terms of any such employee benefit plan.
(q) "Expiration Date" means the Close of Business on December
21, 2008.
(r) "Institutional Investor" means a Person who is principally
engaged in the business of managing investment funds for unaffiliated securities
investors and, as part of such Person's duties as agent for fully managed
accounts, holds or exercises voting or dispositive power over shares of Common
Stock.
(s) "Outstanding Common Stock" shall be determined in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act (or any successor or comparable
provision); provided, however, that any such calculation made for purposes of
determining the particular percentage of outstanding shares of Common Stock of
which any Person is the Beneficial Owner shall also include any such other
securities not then actually issued and outstanding which such Person would be
deemed to be the Beneficial Owner of, or to "beneficially own," pursuant to
Section 1(d).
(t) "Person" means any individual, firm, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity, and shall include any "group" as
that term is used in Rule 13d-5(b) under the Exchange Act (or any successor
provision).
(u) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, par value $0.01 per share, having the rights and preferences
set forth in the Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock attached hereto as Exhibit A.
(v) "Principal Party" means (i) in the case of any Business
Combination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from such Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value; and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the property, assets or earning power transferred pursuant to such Business
Combination or, if each Person that is a party to such Business Combination
receives the same portion of the property, assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot reasonably be determined, whichever of such Persons is the
issuer of the Common Stock which has the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act and such Person is a
direct or indirect Subsidiary of one or more other Persons, then (A)
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"Principal Party" refers to whichever of such other Persons has Common Stock
that is and has been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act; (B) if the Common Stocks of two or more of
such other Persons are and have been so registered, "Principal Party" refers to
whichever of such other Persons is the issuer of the Common Stock which has the
greatest aggregate market value; or (C) if the Common Stock of none of such
other Persons has been so registered, "Principal Party" refers to whichever of
such other Persons (other than an individual) is the Person which has the equity
securities with the greatest aggregate market value. In case such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth above apply to each of the chains of ownership having an interest in such
joint venture as if such Person were a Subsidiary of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(w) "Purchase Price" with respect to each Right is initially
$150.00 per one one-hundredth of a share of Preferred Stock, shall be subject to
adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America in cash or by certified
check or bank draft payable to the order of the Company.
(x) "Record Date" means the Close of Business on December 22,
1998.
(y) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(z) "Redemption Price" has the meaning given to such term in
Section 23.
(aa) "Regular Trading Activities" means trading activities
undertaken in the Institutional Investor's normal course of business and not for
the purpose of exercising, either alone or in concert with any other Person,
power to direct or cause the direction of the management and policies of the
Company.
(ab) "Rights Agent" means First Chicago Trust Company of New
York or any Co-Rights Agent or Successor Rights Agent appointed by the Company
pursuant to Section 2.
(bb) "Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
(cc) "Stock Acquisition Date" means the first date (including,
without limitation, any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) of public disclosure by the
Company, an Acquiring Person or otherwise that a Person has become an Acquiring
Person.
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(dd) "Subsidiary" has the meaning given to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in effect
on the date of this Agreement.
(ee) "Tender Offer Date" means the date of commencement or
public disclosure of an intention to commence (including any such commencement
or public disclosure which occurs on or after the date of this Agreement and
prior to the issuance of the Rights) a tender offer or exchange offer by a
Person if, after acquiring the maximum number of securities sought pursuant to
such offer, such Person, or any Affiliate or Associate of such Person, would be
an Acquiring Person.
(ff) Triggering Event occurs when a Person becomes an
Acquiring Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be
issued in respect of and shall be evidenced by the certificates representing the
shares of Common Stock issued and outstanding on the Record Date and shares of
Common Stock issued or which become outstanding after the Record Date and prior
to the earliest of the Distribution Date, the Redemption Date, the Exchange Date
and the Expiration Date (which certificates for Common Stock shall be deemed to
also be certificates evidencing the Rights), and not by separate certificates;
(ii) the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock and the surrender for transfer of any certificate for such shares
of Common Stock shall also constitute the surrender for transfer of the Rights
associated with the shares of Common Stock represented thereby. As soon as
practicable after the Company has notified the Rights Agent of the occurrence of
the Distribution Date, the Company will prepare and execute, and the Company
will deliver to the Rights Agent to be countersigned, which the Rights Agent
shall do, and the Rights Agent shall mail, by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, as shown by the records of the Company, at
the address of such holder shown on such records, one or more certificates
evidencing the Rights ("Rights Certificates"), in substantially the form of
Exhibit B hereto, evidencing one Right (as adjusted from time to time pursuant
to this Agreement) for each share of Common Stock so held. From and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(o), at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate adjustments (in accordance with Section 14(a)) so
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that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Stock as of
the close of business on the Record Date (other than any Acquiring Person or any
Associate or Affiliate of any Acquiring Person), at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names of the holders
thereof together with the Summary of Rights. Until the Distribution Date (or the
earlier of the Redemption Date and the Expiration Date), the surrender for
transfer of any certificate for Common Stock outstanding on the Record Date,
with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued or sold by the Company after the Record Date but prior to
the earliest of the Distribution Date, the Redemption Date, the Exchange Date or
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date or the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold pursuant to (i)
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificates
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificates
would be issued; and (y) no such Rights and Rights Certificates shall be issued,
if, and to the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date or shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, written on or otherwise affixed to them a
legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Liz
Claiborne, Inc. and First Chicago Trust Company of New York, as Rights
Agent, dated as of December 4, 1998 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of Liz
Claiborne, Inc. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no
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longer be evidenced by this certificate. Liz Claiborne, Inc. will mail
to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under
certain circumstances, as set forth in the Rights Agreement, Rights
that were, are or become beneficially owned by Acquiring Persons or
their Associates or Affiliates (as such terms are defined in the Rights
Agreement) may become null and void and the holder of any of such
Rights (including any subsequent holder) shall not have any right to
exercise such Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to
purchase shares and the form of assignment to be printed on the reverse thereof)
shall be in substantially the form of Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed or any securities association on whose interdealer quotation system the
Rights may be from time to time authorized for quotation, or to conform to
usage. Subject to the provisions of this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Distribution Date, and on their face
shall entitle the holders thereof to purchase such number of shares of Preferred
Stock as shall be set forth therein at the Purchase Price set forth therein, but
the number and kind of such securities and the Purchase Price shall be subject
to adjustment as provided in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i)
any Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the Distribution
Date, by a Person known by the Company to be: (A) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person; (B) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes or becomes entitled to be a transferee after the
Acquiring Person becomes such; or (C) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (x) a
direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in an Associate or Affiliate of such Acquiring Person) or to any
Person with whom such Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (y) a direct or indirect transfer which a
majority of the Board of Directors has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of
Section 7(e); or (ii) any Rights Certificate issued pursuant to this Agreement
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate
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beneficially owned by a Person referred to in this Section 4(b), shall contain
(to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by the Company's Chairman of the Board, Chief Executive Officer,
President or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a Rights
Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall
keep or cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14, at any time after
the Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the Redemption Date, the Exchange Date or the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or, following a Triggering Event or a Business
Combination, other securities, cash or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase immediately prior to such surrender.
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Any registered holder desiring to transfer, divide, combine or exchange any
Rights Certificate shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights Certificates to be
transferred, divided, combined or exchanged at the principal corporate office of
the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. As a condition to such transfer, division,
combination or exchange, the Company may require payment by the surrendering
holder of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection therewith. Neither the Rights Agent nor the Company shall
be obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have duly
completed and executed the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or such former or proposed Beneficial Owner) thereof or
such Beneficial Owner's Affiliates or Associates as the Company shall reasonably
request.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature by the Rights
Agent and delivery to the registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Each Right shall entitle (except as otherwise provided in
this Agreement) the registered holder thereof, upon the exercise thereof as
provided in this Agreement, to purchase, for the Purchase Price, at any time
after the Distribution Date and prior to the earliest of the Expiration Date,
the Exchange Date or the Redemption Date, one one-hundredth (1/100) of a share
of Preferred Stock (or other securities, cash or other property or assets, as
the case may be, as provided herein), subject to adjustment from time to time as
provided in Sections 11 and 13.
(b) The registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided in this
Agreement) in whole or in part (except that no fraction of a Right may be
exercised) at any time after the Distribution Date and prior to the earliest of
the Expiration Date, the Exchange Date or the Redemption Date, by surrendering
the Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal corporate trust
office of the Rights Agent, together with payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock (or other securities, cash or
other property or assets, as the case may be, as provided herein) as to which
the Rights are exercised.
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(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for each one one-hundredth of a
share of Preferred Stock (or other securities, cash or other property or assets,
as the case may be, as provided herein) to be purchased and an amount in cash,
certified bank check or bank draft payable to the order of the Company equal to
any applicable transfer tax required to be paid by the surrendering holder
pursuant to Section 9(d), the Rights Agent shall, subject to the provisions of
this Agreement, thereupon promptly (i)(A) requisition from any transfer agent
for the Preferred Stock (or make available, if the Rights Agent is the transfer
agent for the Preferred Stock) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests), or (B) if the Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share of Preferred Stock as
are to be purchased (in which case certificates for the Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary agent to comply
with such request; (ii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder; and (iii) if appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional shares
in accordance with Section 14 and, promptly after receipt thereof, cause the
same to be delivered to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated to issue other
securities (including shares of Common Stock) of the Company, pay cash and/or
distribute other property pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Sections 6 and 14.
(e) Notwithstanding anything in this Agreement to the
contrary, any Rights that are or were formerly beneficially owned on or after
the Distribution Date by (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person; (ii) a direct or indirect transferee of an Acquiring
Person (or of an Associate or Affiliate of such Acquiring Person) who becomes or
becomes entitled to be a transferee after the Acquiring Person becomes such; or
(iii) a direct or indirect transferee of an Acquiring Person (or of an Associate
or Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of
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equity interests in any Associate or Affiliate of such Acquiring Person) or to
any Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
regarding the transferred Rights, and (B) a direct or indirect transfer which a
majority of the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall, from and after the first occurrence of a
Triggering Event and without any further action, be null and void and no holder
of such Rights shall have any rights whatsoever with respect to such Rights
whether under this Agreement or otherwise; provided, however, that, in the case
of transferees described in clause (ii) or clause (iii) of this Section 7(e),
any Rights beneficially owned by such transferee shall be null and void only if
and to the extent such Rights were formerly beneficially owned by a Person who
was, at the time such Person beneficially owned such Rights, or who later
became, an Acquiring Person or an Affiliate or Associate of such Acquiring
Person. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of a Rights Certificate or to any other Person
as a result of the Company's failure to make, or any delay in making (including
any such failure or delay by the Board of Directors of the Company), any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees under this Section 7(e) or any other provision of this Agreement.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to the registered holder of a Rights
Certificate upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former or proposed Beneficial Owner) thereof or the Affiliates or Associates of
such Beneficial Owner (or former or proposed Beneficial Owner) as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, division, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu therefor except as expressly
permitted by the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available at all times out of its authorized and unissued
shares of Preferred Stock or its authorized and issued shares of Preferred Stock
held in its treasury (and, following the occurrence of a Triggering Event or a
Business Combination, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares of Common
Stock and/or other securities held in its treasury) free from preemptive rights
or any right of first refusal, a sufficient number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) to permit the exercise in full
of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the
Preferred Stock (and, following the occurrence of a Triggering Event or a
Business Combination, shares of Common Stock and/or other securities) issuable
upon the exercise of Rights may be listed on any United States national
securities exchange or quoted on any automated quotation system, to use its best
efforts to cause, from and after the time that the Rights become exercisable,
all such shares and/or other securities reserved for such issuance to be listed
on such exchange or quoted on such automated quotation system upon official
notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any certificates for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to (i) pay any transfer tax
which may be payable in respect of any transfer involved in the issuance or
delivery of any Rights Certificates or the issuance or delivery of any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) to a Person other than, or in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise; or (ii) transfer or deliver any Rights Certificate or
issue or deliver any certificates for shares of Preferred Stock (or Common Stock
and/or other securities as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the
-15-
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) as soon as
practicable following the Stock Acquisition Date (provided the consideration to
be delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii)), or as soon as is otherwise required by law
following the Distribution Date, as the case may be, to prepare and file a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights; (ii) to cause
such registration statement to become effective as soon as practicable after
such filing; and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which Rights are no longer exercisable
for such securities or (B) the Expiration Date. The Company shall also use its
best efforts to take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of this Section 9 (e), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall make a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective under the Securities Act.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (or Common Stock and/or such other
securities, as the case may be) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
open.
Section 11. Adjustments to Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and kind of securities, cash
and other property obtainable upon exercise of each Right and the number of
Rights outstanding shall be subject to adjustment from time to time as provided
in this Section 11.
-16-
(a) (i) In the event the Company shall at any time on or after
the date of this Agreement (A) pay a dividend or make a distribution on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by a stock
split or otherwise) the outstanding Preferred Stock into a larger number of
shares, (C) combine (by a reverse stock split or otherwise) the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any securities in
a reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
surviving corporation), except as otherwise provided in this Section 11 (a),
then in each such event the Purchase Price and the Redemption Price set forth in
Section 23, as each is in effect at the time of the record date for such
dividend or distribution, or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock or interests therein issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock or
interests therein which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Stock transfer books of the company
were open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering
Event, proper provision shall be made so that each holder of a Right, except as
otherwise provided in this Agreement, shall thereafter have the right to
receive, and the Company shall issue, upon exercise thereof at a price equal to
the then-current Purchase Price multiplied by the number of one one-hundredths
of a share of Preferred Stock for which a Right is then exercisable in
accordance with the terms of this Agreement, in lieu of the number of one
one-hundredths of a share of Preferred Stock or other securities receivable upon
exercise of a Right prior to the occurrence of the Triggering Event, such number
of shares of Common Stock of the Company as shall equal the result obtained by
(x) multiplying the then-current Purchase Price by the number of one-hundredths
of a share of Preferred Stock or other securities for which a Right was then
exercisable (without giving effect to such Triggering Event) and (y) dividing
that product by 50% of the Current Market Price per share of Common Stock on the
date of the occurrence of the Triggering Event (such number of shares being
referred to as the "Adjustment Shares"); provided, however, that if the
transaction or event that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13, then only the provisions of
Section 13 shall apply and no adjustment shall be made pursuant to this Section
11(a)(ii). Upon the occurrence of such Triggering Event, the Purchase Price
required to be paid in order to exercise a Right shall be unchanged, and the
Purchase Price shall be appropriately adjusted to reflect, and shall thereafter
mean, the amount required to be paid per share of Common Stock upon exercise of
a Right.
(iii) In lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii), the Company may, if a majority of the Board
of Directors of the Company determines that such action is necessary or
appropriate and not contrary to the interests of
-17-
holders of Rights, elect to, and, if that the number of shares of Common Stock
which are authorized by the Company's certificate of incorporation, but which
are not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights, are not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the Company shall take all such
action as may be necessary to authorize, issue or pay, upon the exercise of
Rights, cash (including by way of a reduction of the Purchase Price), debt
securities, property, assets or other equity securities of the Company
(including, without limitation, shares or units of shares of preferred stock)
which the Board of Directors of the Company has determined (which determination
shall be final, binding and conclusive for all purposes) to have essentially the
same value or economic rights as shares of Common Stock (such equity securities
referred to herein as "Common Stock Equivalents), or any combination of the
foregoing, having an aggregate value equal to the value of the Adjustment Shares
which otherwise would have been issuable pursuant to Section 11(a) (ii), which
aggregate value shall be determined by a majority of the Board of Directors
(which determination shall be final, binding and conclusive for all purposes).
If a majority of the Board of Directors determines to issue or deliver any
equity securities (other than Common Stock or Common Stock Equivalents), debt
securities and/or other property or assets pursuant to this Section 11(a)(iii),
the value of such securities and/or property or assets shall be determined by a
majority of the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by a majority of the
Board of Directors of the Company (which determination shall be final, binding
and conclusive for all purposes). If the Company is required to make adequate
provision to deliver value pursuant to the first sentence of this Section
11(a)(iii) and the Company shall not have made such adequate provision to
deliver value within ninety (90) days following the first occurrence of a
Triggering Event (the "Substitution Period"), then notwithstanding any provision
of Section 11(a)(ii) or this Section 11(a)(iii) to the contrary, the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the excess of the value of the Adjustment Shares over
the Purchase Price. If both Common Stock and cash are to be delivered pursuant
to the preceding sentence, amounts of both Common Stock and cash shall be
delivered upon surrender of each Right in a ratio of Common Stock to cash that
bears the same ratio as the total value of all Common Stock to be delivered (as
determined pursuant to this Section 11(a)(iii)) bears to the total value of all
cash to be delivered; provided, however, that the Company may adjust such ratio
to avoid issuing any fractional shares of Common Stock so long as the method of
adjustment is applied consistently to each holder of Rights entitled to receive
value with respect thereto pursuant to this Section 11(a)(iii). To the extent
that the Company determines that some action is to be taken pursuant to the
first and/or third sentences of this Section 11(a)(iii), the Company may suspend
the exercisability of the Rights but in no event to a time later than the
expiration of the Substitution Period. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a) (iii), the value of each Adjustment Share shall be the Current Market
Price per share of the Common Stock on the Stock Acquisition Date and the per
share or per unit
-18-
value of any Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date.
(iv) A majority of the Board of Directors of the
Company may, at its option, at any time and from time to time after the first
occurrence of a Triggering Event, cause the Company to exchange, for all or part
of the then-outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e)), shares of
Common Stock or Common Stock Equivalents at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement (such
exchange ratio being hereinafter referred to as the "Exchange Ratio"). Any
partial exchange shall be effected on a pro rata basis based on the number of
Rights (other than Rights which have become void pursuant to the provisions of
Section 7(e)) held by each holder of Rights. Notwithstanding the foregoing, the
Board of Directors shall not be empowered to effect such exchange at any time
after any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Outstanding Common Stock.
Immediately upon the action of a majority of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to this
Section 11(a)(iv) and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Common Stock
and/or Common Stock Equivalents equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange and, in addition, the Company shall promptly mail a
notice of any such exchange to all of the holders of such Rights in accordance
with Section 25; provided, however, that the failure to give, any delay in
giving or any defect in, such notice shall not affect the validity of such
exchange. Each such notice of exchange will state the method by which the
exchange of the Common Stock or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. In the event that the number of shares of Common Stock which
is authorized but not outstanding or reserved for issuance for a purpose other
than exercise of the Rights is not sufficient to permit any exchange of Rights
as contemplated in accordance with this Section 11(a)(iv), the Board of
Directors of the Company shall take all such action within its power as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights. The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) the last sale price of
the Company's Common Stock on the fifth Trading Day following the public
announcement of the exchange by the Company, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices on such day,
in either case on a when issued basis (taking into account the exchange), as
reported in the principal consolidated
-19-
transaction reporting system with respect to securities listed or admitted to
trading on the NYSE (or, if the Company's Common Stock is not so listed or
traded, then as determined in the manner provided under the definition of
"Current Market Price," adjusted to take into account the exchange). For the
purposes of this Section 11(a)(iv), the value of any Common Stock Equivalent on
any date shall be the same as the value of the Common Stock, as determined
pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of
this Agreement fix a record date for the issuance of rights, options or warrants
to holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Stock or Equivalent Shares (or securities convertible into or exchangeable for
Preferred Stock or Equivalent Shares) at a price per share of Preferred Stock or
Equivalent Shares (or, in the case of a convertible or exchangeable security,
having a conversion or exchange price per share of Preferred Stock or Equivalent
Shares) less than the Current Market Price per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Preferred Stock and Equivalent Shares (if any) outstanding on such record
date, plus the number of shares of Preferred Stock or Equivalent Shares, as the
case may be, which the aggregate exercise, conversion and/or exchange price for
the total number of shares of Preferred Stock or Equivalent Shares, as the case
may be, which are obtainable upon exercise, conversion and/or exchange of such
rights, options, warrants or convertible or exchangeable securities would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Preferred Stock and Equivalent Shares (if any) outstanding
on such record date, plus the number of additional shares of Preferred Stock or
Equivalent Shares, as the case may be, which may be obtained upon exercise,
conversion and/or exchange of such rights, options, warrants or convertible or
exchangeable securities. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by a majority of the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be final, binding and conclusive
for all purposes. Preferred Stock and Equivalent Shares owned by or held for the
account of the Company or any Subsidiary of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not issued following such adjustment, the
Purchase Price shall be readjusted to be the Purchase Price that would have been
in effect if such record date had not been fixed.
(c) In case the Company shall at any time after the date of
this Agreement fix a record date for the making of a distribution to holders of
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options, warrants or convertible or exchangeable securities
referred to in Section 11(b)), cash (other than a regular periodic cash dividend
at an annual rate not in excess of: (x) 125% of the annual rate of the regular
cash dividend
-20-
paid on the Preferred Stock during the immediately preceding fiscal year (or, if
the Preferred Stock was not outstanding during such preceding fiscal year, then
125% of the annual rate of the regular cash dividend paid on the Common Stock
during such year), or (y) in the event that a regular cash dividend was not paid
on the Preferred Stock (or Common Stock) during such preceding fiscal year, 5%
of the Current Market Value of the Preferred Stock on the date such regular cash
dividend was first declared), property, evidences of indebtedness, or assets,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by a majority of the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be final, binding and conclusive for all purposes) of the
portion of such securities, cash, property, evidences of indebtedness or assets
to be so distributed in respect of one share of Preferred Stock, and the
denominator of which shall be such Current Market Price per share of Preferred
Stock on such record date. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not made
following such adjustment, the Purchase Price shall be readjusted to be the
Purchase Price that would have been in effect if such record date had not been
fixed.
(d) Except as provided below, no adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(d) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent, to the
nearest one hundred-thousandth of a share of Common Stock, or to the nearest one
hundred-thousandths of a share of Preferred Stock. Notwithstanding the first
sentence of this Section 11(d), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment and (ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to Section
11(a) or Section 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any securities of the Company other than shares of
Preferred Stock, thereafter the Purchase Price and the number of such other
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares of Preferred Stock
contained in this Section 11 and the provisions of Sections 7, 9, 10, 12, 13, 14
and 24 with respect to the shares of Preferred Stock shall apply on like terms
to any such other securities.
(f) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
-21-
(g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Purchase Price as a
result of any calculation made pursuant to Sections 11(a)(i), 11(b) and 11(c),
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a share of Preferred Stock (calculated to the
nearest one hundred-thousandths of a share of Preferred Stock) obtained by (i)
multiplying the number of one one-hundredths of a share of Preferred Stock
covered by a Right immediately prior to adjustment pursuant to this Section
11(g) by the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(h) The Company may elect, on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of shares of
Preferred Stock for which a Right may be exercised, to adjust the number of
Rights, in lieu of an adjustment in the number of one one-hundredths of a share
of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
outstanding prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one hundred-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to such adjustment by
the Purchase Price in effect immediately after such adjustment. The Company
shall make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days after the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(h) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date a new Rights Certificate evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record, in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment and upon surrender thereof (if required by the Company), new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for in this
Agreement (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase
Price or the number or kind of shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one one-hundredth of a share of Preferred Stock
and the number of shares of Preferred Stock which were expressed in the initial
Rights Certificates issued hereunder.
-22-
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of one
one-hundredth of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-hundredth shares of such Preferred
Stock at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company in
its sole discretion shall determine to be advisable in order that any
combination or subdivision of the Preferred Stock, issuance wholly for cash of
any Preferred Stock at less than the Current Market Price per share of Preferred
Stock, issuance wholly for cash of Preferred Stock or securities which by their
terms are convertible into or exchangeable or exercisable for Preferred Stock,
stock dividends or issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock,
shall not be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with, (ii) merge with or into,
or (iii) directly or indirectly sell, lease or otherwise transfer or dispose of
(in one transaction or a series of related transactions) property, assets or
earning power aggregating more than 50% of the property, assets or earning power
of the Company and its Subsidiaries taken as a whole, to any other Person if (A)
at the time of or immediately after such consolidation, merger, sale, lease,
transfer or disposition there are any rights, warrants, securities or other
instruments outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights; (B) prior to, simultaneously with or immediately after such
consolidation, merger, sale, lease, transfer or disposition the stockholders (or
equity holders) of the Person who constitutes, or would constitute, the
Principal Party for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates; or (C) the form or nature of organization of the Principal Party
would preclude or limit the exercisability of the Rights. The Company shall not
consummate any such consolidation, merger, sale, lease, transfer or disposition
unless prior thereto the Company and such other
-23-
Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 11(a)(iv), 26 or
29(b), take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will, directly or
indirectly, diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.
(o) Anything in this Agreement to the contrary
notwithstanding, if the Company shall at any time prior to the Distribution Date
(i) pay a dividend or distribution on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, and the Purchase Price under, and the number of one one-hundredths of a
share of Preferred Stock issuable in respect of, the Rights, shall be
proportionately adjusted, so that following such event one Right (with the
Purchase Price and the number of one one-hundredths of a share of Preferred
Stock proportionately adjusted thereunder) shall thereafter be associated with
each share of Common Stock then outstanding, or issued or delivered thereafter
but prior to the Distribution Date. For example, if the Company effects a
two-for-one stock split at a time when each Right (if it becomes exercisable)
would entitle the holder to purchase one one-hundredth of a share of Preferred
Stock for a Purchase Price of $"Z", then following such stock split each
previous Right would be split into two current Rights and thereafter each such
current Right, upon becoming exercisable, would (subject to further adjustment)
entitle the holder to purchase one one-hundredth of a share of Preferred Stock
at a Purchase Price of 1/2 x $"Z".
Section 12. Certification of Adjustments. Whenever an
adjustment is made as provided in Section 11 or 13, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) promptly file with
the Rights Agent and with each transfer agent for the Preferred Stock a copy of
such certificate, and (c) mail or cause the Rights Agent to mail a brief summary
thereof to each holder of a Rights Certificate (or, if no Rights Certificates
have been issued, to each holder of a certificate representing shares of Common
Stock) in accordance with Section 25. Notwithstanding the foregoing sentence,
the failure of the Company to give such notice shall not affect the validity of
or the force or effect of or the requirement for such adjustment. Any adjustment
to be made pursuant to Section 11 or 13 shall be effective as of the date of the
event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of
Property, Assets or Earning Power.
(a) A "Business Combination" shall be deemed to occur in the
event that, on or following a Triggering Event, (i) the Company shall, directly
or indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a
-24-
transaction that complies with Section 11(m) and Section 11(n)) in a transaction
in which the Company is not the continuing, resulting or surviving corporation
of such merger or consolidation; (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m) and Section 11(n))
shall, directly or indirectly, consolidate with the Company, or shall merge with
and into the Company, in a transaction in which the Company is the continuing,
resulting or surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of the Common Stock
shall be changed (including, without limitation, any conversion into or exchange
for securities of the Company or of any other Person, cash or any other
property); (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of any other
Person, cash or any other property); or (iv) the Company shall, directly or
indirectly, sell, lease, exchange, mortgage, pledge (other than pledges in the
ordinary course of the Company's financing activities) or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall directly or indirectly
sell, lease, exchange, mortgage, pledge (other than pledges in the ordinary
course of the Company's financing activities) or otherwise transfer or dispose
of), in one transaction or a series of related transactions, property, assets or
earning power aggregating more than 50% of the property, assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person
(other than the Company or any of its Subsidiaries in one or more transactions
each and all of which comply with Section 11(m) and Section 11(n)).
In the event of a Business Combination, proper provision shall
be made so that each holder of a Right (except as otherwise provided in this
Agreement) shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the Purchase Price immediately prior to the first occurrence
of a Triggering Event multiplied by the number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event (without giving effect to the Triggering
Event) in accordance with the terms of this Agreement, such number of shares of
Common Stock of the Principal Party as shall be equal to the result obtained by
(x) multiplying the Purchase Price immediately prior to the first occurrence of
a Triggering Event by the number of one one-hundredths of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event (without giving effect to the Triggering
Event), and (y) dividing that product by 50% of the Current Market Price per
share of the Common Stock of such Principal Party immediately prior to the
consummation of such Business Combination. All shares of Common Stock of any
Person for which any Right may be exercised after consummation of a Business
Combination as provided in this Section 13(a) shall, when issued upon exercise
thereof in accordance with this Agreement, be duly and validly authorized and
issued, fully paid, nonassessable, freely tradeable, not subject to liens or
encumbrances, and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof of any
kind or nature whatsoever.
(b) After consummation of any Business Combination, (i) the
Principal Party shall be liable for, and shall assume, by virtue of such
Business Combination and without the necessity of any further act, all the
obligations and duties of the Company
-25-
pursuant to this Agreement, (ii) the term "Company" as used in this Agreement
shall thereafter be deemed to refer to such Principal Party, and (iii) such
Principal Party shall take all steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance
with Section 9) in connection with such Business Combination as is necessary to
ensure that the provisions of this Agreement shall thereafter be applicable, as
nearly equivalent as practicable, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination
unless prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13; (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights; (B) use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date; (C) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; (D) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the state securities or "blue sky" laws of such jurisdictions as may be
necessary or appropriate; (E) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a United States national
securities exchange; and (F) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights; (iii) the Company and the
Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms; and (iv) the Company and the Principal Party
shall have filed with the Rights Agent a certificate of a nationally recognized
firm of independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). Following a
Business Combination, the provisions of Section 11(a)(ii) shall be of no effect.
-26-
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, cash or other property for which a Right is exercisable or
the number of Rights outstanding or associated with each share of Common Stock
or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 13, unless the terms of this
Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect
any Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the
event the nature of the organization of any Principal Party shall preclude or
limit the acquisition of Common Stock of such Principal Party upon exercise of
the Rights as required by Section 13(a) as a result of a Business Combination,
it shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
(h) In addition to, and without limiting, any other provision
of this Section 13, in case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its certificate 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 (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, Common Stock
of such Principal Party at less than the then Current Market Price per share or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Current Market Price, or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been cancelled, waived or amended, or that
the 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 fractional
Rights or to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, the Company may at its option pay to the
registered holders of the Rights Certificates
-27-
with respect to which such fractional Rights would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of a Right for the Trading Day
immediately prior to the date on which such fractional Rights otherwise would
have been issuable. The closing price for any Trading Day shall be the last sale
price on such day, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, on such day,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if the Rights are not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal United States national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any United States national securities exchange,
the last quoted sale price on such day or, if not so quoted, the average of the
high bid and low asked prices on such day in the over-the-counter market, as
reported by Nasdaq or such other system then in use or, if on such day the
Rights are not quoted by any such system, the average of the closing bid and
asked prices on such day as furnished by a professional market maker making a
market in the Rights selected by a majority of the Board of Directors of the
Company (which selection shall be final, binding and conclusive for all
purposes). If on such day no such market maker is making a market in the Rights,
the current market value of the Rights on such day shall be determined in good
faith by a majority of the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be final, binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). Fractions of shares of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-hundredth
of a share of Preferred Stock, the Company may at its option (i) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full one one-hundredth of a share of Preferred
Stock upon the surrender of such scrip or warrants aggregating a full one
one-hundredth of a share of Preferred Stock, or (ii) pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the current market value of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred Stock (as determined pursuant
to the second sentence of the definition of "Current Market Price" in Section 1)
for the Trading Day immediately prior to the date of such exercise.
-28-
(c) The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) Current Market Price of
the Company's Common Stock.
(d) The holder of a Right by his acceptance thereof expressly
waives any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided,
all rights of action in respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, any registered holders of associated Common Stock); and any registered
holder of any Rights Certificate (or, prior to the Distribution Date, any share
of associated Common Stock), without the consent of the Rights Agent or of the
holder of any other Right, may, on his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company or any Principal Party to enforce, or otherwise act in respect of,
his rights pursuant to this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled, without posting any bond, to
specific performance of the obligations under, and injunctive relief against any
actual or threatened violation of the obligations of any Person subject to, this
Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer
and Ownership of Rights. Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with every other holder of
a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates will
be transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the associated Common Stock
certificate made by anyone other than the Company, the transfer agent for the
Common Stock or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary;
and
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(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Holder Not Deemed a Stockholder. No holder,
as such, of any Rights Certificate shall be entitled to vote or to receive
dividends or distributions or shall be deemed for any purpose the holder of
Preferred Stock or any other securities, cash or other property which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained in this Agreement or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights
of a stockholder of the Company, including, without limitation, any right (i) to
vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, (ii) to give or withhold consent to any corporate
action, (iii) to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), (iv) to receive dividends,
distributions or subscription rights, (v) to institute, as a holder of Preferred
Stock or other securities issuable on exercise of the Rights represented by any
Rights Certificate, any derivative action on behalf of the Company, or
otherwise, until and only to the extent that the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense incurred without gross
negligence, bad faith, willful misconduct or breach of this Agreement on the
part of the Rights Agent for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. This indemnification shall survive the termination of this Agreement.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document reasonably believed by it to
be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 20.
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Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under Section 21. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificate so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes and agrees to perform the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person or
any Affiliate or Associate of an Acquiring Person or the determination of
Current Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the President, the Chief Executive Officer, any Vice President,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be
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full authorization to the Rights Agent for any action taken or omitted by it in
good faith under this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
gross negligence, bad faith, willful misconduct or breach of this Agreement by
it or its attorneys or agents.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change in the
transferability or exercisability of the Rights or any change or adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13 or 23 or any other provision of this Agreement
or the ascertaining of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any change or adjustment is required); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Preferred Stock, Common
Stock or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performance
by the Rights Agent of its duties and obligations under this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for such instructions. When applying to any such officer for
instructions, the Rights Agent may set forth in writing (i) any proposed action
or omission of the Rights Agent with respect to its duties or obligations under
this Agreement and (ii) the date on or after which the Rights Agent proposes
such action will be taken or omitted. Such date shall not be less than three
Business Days after any such officer receives such
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application for instructions from the Rights Agent. Unless the Rights Agent has
received written instructions from the Company (including any such officer) with
respect to such proposed action or omission prior to such date (or, if longer,
in the case of a proposed action to be taken, prior to the Rights Agent actually
taking such action), the Rights Agent shall not be liable for the actions or
omissions set forth in such application, provided that such action or omission
does not violate any express provision of this Agreement.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of such
attorney or agent, provided that the Rights Agent exercised reasonable care in
the selection and continued employment of such attorney or agent.
(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 hereunder if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to the Rights Agent.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock or Preferred Stock
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. Notwithstanding any other provision of this Agreement, in no
event shall the resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall
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have been appointed and have accepted such appointment. If the Company shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by any holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the incumbent Rights Agent or the registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (i) a corporation organized and
doing business under the laws of the United States or any state of the United
States so long as such corporation is authorized to conduct a corporate trust or
banking business under the laws of such state and is in good standing, which is
authorized under such laws to exercise corporate trust powers or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000 or (ii) an affiliate of a
corporation described in clause (i). After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder and execute and
deliver any further assurance, conveyance, act or deed necessary for such
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock or Preferred Stock and mail a notice thereof
in writing to the registered holders of the Rights Certificates. Neither the
failure to give any notice provided for in this Section 21, however, nor any
defect therein, shall affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
Certificates to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing new Rights in such form as may be approved by a majority
of the Board of Directors of the Company to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of securities, cash
or other property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with the
issuance or sale of Common Stock following the Distribution Date and prior to
the Redemption Date, the Company may with respect to Common Stock so issued or
sold pursuant to (i) the exercise of stock options, (ii) under any employee plan
or arrangement, (iii) upon the exercise, conversion or exchange of securities
notes or debentures issued by the Company or (iv) a contractual obligation of
the Company, in each case existing prior to the Distribution Date, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale.
Section 23. Redemption
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) the Stock Acquisition Date and (ii) the
Expiration Date, redeem all but not less than all of the then-outstanding Rights
at a redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or
-34-
similar transaction occurring after the date of this Agreement. The Company may,
at its option, pay the Redemption Price in cash, shares (including fractional
shares) of Common Stock (based on the Current Market Price of the Common Stock
at the time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors.
(b) At the time and date of effectiveness set forth in any
resolution of the Board of Directors of the Company ordering the redemption of
the Rights (the "Redemption Date"), without any further action and without any
further notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price; provided, however, that such resolution of the Board of Directors of the
Company may be revoked, rescinded or otherwise modified at any time prior to the
time and date of effectiveness set forth in such resolution, in which event the
right to exercise will not terminate at the time and date originally set for
such termination by the Board of Directors of the Company. As soon as
practicable after the action of the Board of Directors of the Company ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and to the holders of the then-outstanding Rights by mailing
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the issuance of Rights
Certificates, on the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner provided in this Agreement shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. In any case, failure to give such notice by mail, or any defect in
the notice, to any particular holder of Rights shall not affect the sufficiency
of the notice to other holders of Rights. In the case of a redemption permitted
under this Section 23, the Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing
the manner of redemption of the Rights and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last addresses
as they appear on the registry books of the Rights Agent or, prior to the
issuance of the Rights Certificates, on the registry books of the transfer agent
for the Common Stock, and upon such action, all outstanding Rights Certificates
shall be null and void without any further action by the Company. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than as specifically set
forth in this Section 23 and other than in connection with the purchase of
shares of Common Stock prior to the earlier of the Distribution Date and the
Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on
or after the Distribution Date, shall propose to (a) pay any dividend payable in
stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash dividend at an annual rate not in excess of: (x) 125% of the
annual rate of the cash dividend paid on the Preferred Stock during the
immediately preceding fiscal year, or if the Preferred Stock was not outstanding
during such preceding fiscal year, then 125% of the annual rate of the cash
dividend paid on the Common Stock during such year , or (y) in the event that a
regular cash dividend was not paid on the Preferred Stock (or Common Stock)
during such preceding fiscal year, 5% of the Current Market Value of the
Preferred Stock on the date such regular cash dividend was first
-35-
declared); or (b) offer to the holders of its Preferred Stock rights, options or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options; or (c) effect any reclassification of the Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock, a change in the par value of such Preferred Stock or a change
from par value to no par value); or (d) directly or indirectly effect any
consolidation or merger into or with, or effect any sale, lease, exchange or
other transfer or disposition (or to permit one or more of its Subsidiaries to
effect any sale, lease, exchange or other transfer or disposition), in one
transaction or a series of related transactions, of more than 50% of the
property, assets or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person; or (e) effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 25, a notice of such proposed
action, which shall specify any record date for the purposes of such stock
dividend, distribution or rights, or the date on which such reclassification,
consolidation, merger, sale, lease, exchange, transfer, disposition,
liquidation, dissolution, or winding up is to take place and if such holders
will or may participate therein, the date of participation therein by the
holders of Common Stock and/or Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(a) or (b) above at least 20 days prior to the record date for determining
holders of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein, if any, by the holders of
Preferred Stock, whichever shall be the earlier.
In case any Triggering Event or Business Combination shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance with
Section 25, notice of the occurrence of such Triggering Event or Business
Combination, which shall specify the Triggering Event or Business Combination
and include a description of the consequences of such event to holders of Rights
under Section 11(a)(ii) or 13.
The failure to give notice as required by this Section 24 or
any defect therein shall not affect the legality or validity of the action taken
by the Company or the vote upon any such action.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address (or another
person's attention) is filed in writing with the Rights Agent) as follows:
Liz Claiborne, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
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Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address (or
another person's attention) is filed in writing with the Company) as follows:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
000 Xxxxxxxxxx Xxxx.
Xxxxx 0000
Xxxxxx Xxxx Xxx Xxxxxx 00000
Attn: Corporate Actions
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to the holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Amendments and Supplements. This Agreement may
not be amended or supplemented except as permitted in Section 26(a) or 26(b) or
as contemplated by Section 11(a)(iii).
(a) At any time prior to the Stock Acquisition Date, a
majority of the Board of Directors of the Company may, and the Rights Agent
shall, if so directed, amend or supplement any provision of this Agreement
without the approval of any holders of Rights.
(b) From and after the Stock Acquisition Date, a majority of
the Board of Directors of the Company may, and the Rights Agent shall, if so
directed, amend or supplement this Agreement without the approval of any holders
of Rights Certificates (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained in this Agreement which may be defective or inconsistent
with any other provision of this Agreement, or (iii) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person).
(c) Immediately upon the action of a majority of the Board of
Directors providing for any amendment or supplement pursuant to this Section 26,
and without any further action and without notice, such amendment or supplement
shall be deemed effective. Promptly following the adoption of any amendment or
supplement pursuant to this Section 26, the Company shall deliver to the Rights
Agent a copy, certified by the Secretary or any Assistant Secretary of the
Company, of resolutions of a majority of the Board of Directors of the Company
adopting such amendment or supplement. Upon such delivery, the amendment or
supplement shall be administered by the Rights Agent as part of this Agreement
in accordance with the terms of this Agreement, as so amended or supplemented.
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Section 27. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. Benefits of this Agreement; Determinations and
Actions by the Board of Directors. Nothing in this Agreement shall be construed
to give to any Person other than the Company, the Rights Agent and the
registered holders of Rights any legal or equitable right, remedy or claim under
this Agreement; and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Rights.
The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights, to exchange or not exchange
the Rights for Common Stock or other securities of the Company, or to amend or
supplement this Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors of
the Company in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other Persons, and
(y) not subject the Board of Directors of the Company to any liability to the
holders of the Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of this
Agreement or the application thereof to any Person or to any circumstance is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) If legal counsel to the Company delivers to the Company a
written opinion to the effect that, as a result of changes in federal law or New
York law, any term, provision, covenant or restriction of this Agreement may be
invalid, void or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the internal laws of such state applicable to
contracts to be made and performed entirely within
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such State, except for Sections 18, 19, 20 and 21 hereof which for all purposes
shall be governed by and construed under the laws of the State of New York.
Section 31. Counterparts. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
of this Agreement.
Section 33. Grammatical Construction. Throughout this
Agreement, where such meanings would be appropriate, (a) any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms
(e.g., references to "he" shall also include "she" and "it" and references to
"who" and "whom" shall also include "which"), (b) the plural form of nouns and
pronouns shall include the singular and vice-versa, (c) reference to a Section
means a Section of this Agreement, and (d) the word "including" means
"including, without limitation," whether expressly stated or not.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
LIZ CLAIBORNE, INC.
Attest:
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Secretary Name: Xxxxxxx X. Xxxxxxx
Title: Secretary
[Corporate Seal]
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Attest:
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Assistant Vice President
[Corporate Seal]
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Exhibit A
---------
FORM OF
CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER RIGHTS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
LIZ CLAIBORNE, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Xxxxxxxxx Xxxxxxxxx Xxxxxxxxx, President, Chairman of the
Board, and Chief Executive Officer, and Xxxxxx Xxxxxxxxx, Secretary, of Liz
Claiborne, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance with
the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the said Board
of Directors on December 7, 1988, adopted the following resolution creating a
series of 1,500,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board
of Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the preferences and relative, participating,
optional or other rights and the qualifications, limitations or restrictions
thereof are as follows:
SECTION 1. Designation and Amount. The designation of the
series of Preferred Stock created by this resolution shall be "Series A Junior
Participating Preferred Stock" and the number of shares constituting such series
shall be 1,500,000.
SECTION 2. Dividends and Distributions.
(A) Out of the surplus or net profits of the Corporation
legally available for the payment of dividends, the holders of shares of Series
A Junior Participating Preferred Stock shall be entitled to receive, when and as
such dividends may be declared by the Board of Directors, quarterly dividends
payable in cash on the tenth days of March, June, September and December in each
year (each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $1.00 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Participating Preferred
Stock. In the event the Corporation shall at any time after December 7, 1988
(the "Rights Declaration Date") (i) pay any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares or (iv)
issue any shares by reclassification of its shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Junior Participating
Preferred Stock shall have been entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that shall have been
outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares shall be prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date on which shares of Series A Junior Participating Preferred Stock are
first issued, or unless the date of issue shall be a Quarterly Dividend Payment
Date or shall be a date after the record date for the next Quarterly Dividend
Payment Date and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments which
may be in arrears.
(C) Dividends payable upon the share of Series A Junior
Participating Preferred Stock shall be cumulative (whether or not in any
dividend period or periods there shall be surplus or net profits of the
Corporation legally available for the payment of such dividends) so that, if on
any Quarterly Dividend Payment Date dividends upon the outstanding shares of
Series A Junior Participating Preferred Stock shall not have been paid, or
declared and a sum sufficient for the payment thereof set apart for such
payment, the amount of the deficiency shall be fully
-2-
paid, but without interest, or dividends in such amount declared on the shares
of Series A Junior Participating Preferred Stock and a sum sufficient for the
payment thereof set apart for such payment, before any dividend shall be
declared or paid upon or set apart for, or any other distribution shall be made
in respect of, or any payment shall be made in respect of, or any payment shall
be made on account of the purchase of, the Common Stock or any series of
Preferred Stock subordinate to the Series A Junior Participating Preferred
Stock.
SECTION 3. Distributions to Holders of Series A Junior
Participating Preferred Stock and Common Stock. Out of any surplus or net
profits of the Corporation legally available for dividends remaining after full
cumulative dividends upon any series of Preferred Stock ranking senior to Series
A Junior Participating Preferred Stock shall have been paid for all past
dividend periods, and after or concurrently with making payment of, or declaring
and setting apart for payment, full dividends on any series of Preferred Stock
ranking senior to the Series A Junior Participating Preferred Stock then
outstanding to the most recent Quarterly Dividend Payment Date and after the
Corporation shall have complied with the provisions in respect of any and all
amounts then or theretofore required to be set aside in respect of any sinking
fund or purchase fund with respect to any series of Preferred Stock ranking
senior to Series A Junior Participating Preferred Stock then outstanding and
entitled to the benefit of a sinking fund or purchase fund, and after the
Corporation shall have made provision for compliance in respect of the current
sinking fund or purchase period for any series of Preferred Stock ranking senior
to Series A Junior Participating Preferred Stock, then and not otherwise the
holders of Series A Junior Participating Preferred Stock shall be entitled to or
may receive dividends and redemption payments as provided herein. Out of any
surplus or net profits of the Corporation legally available for dividends
remaining after full cumulative dividends upon the shares of Series A Junior
Participating Preferred Stock then outstanding shall have been paid through the
preceding Quarterly Dividend Payment Date, and after the Corporation shall have
complied with the provisions in respect of any and all amounts then or
theretofore required (if any) to be set aside or applied in respect of any
redemption payments in respect of shares of Series A Junior Participating
Preferred Stock, then and not otherwise, the holders of Common Stock and of any
series of Preferred Stock ranking subordinate to Series A Junior Participating
Preferred Stock shall, subject to the rights of any other series of Preferred
Stock then outstanding, to paragraph (A) of Section 2 hereof and to the
provisions of the Certificate of Incorporation, be entitled to receive such
dividends as may from time to time be declared by the Board of Directors.
SECTION 4. Voting. (A) Holders of shares of Series A Junior
Participating Preferred Stock shall be entitled to 100 votes for each share of
stock held. In the event the Corporation shall at any time after the Rights
Declaration Date (i) pay any
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dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares or (iv) issue any shares by reclassification of its
shares of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number of votes by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event. Except as provided in this Section
4 and except as may be required by applicable law, holders of shares of Series A
Junior Participating Preferred Stock shall vote with the Common Stock on all
matters required to be submitted to holders of Common Stock and shall not be
entitled to vote as a separate class with respect to any matter.
(B) So long as any shares of Series A Junior Participating
Preferred Stock shall be outstanding, the Corporation shall not, without the
affirmative vote or written consent of the holders of a majority of the
aggregate number of shares of Series A Junior Participating Preferred Stock at
the time outstanding (or such greater percentage as may be required under
applicable law), acting as a single class, alter or change the powers,
preferences or rights given to the Series A Junior Participating Preferred Stock
by the Certificate of Incorporation so as to affect such powers, preferences or
rights adversely.
(C) If at the time of any annual meeting of stockholders of
the Corporation for the election of directors a default in preference dividends,
as the term "default in preference dividends" is hereinafter defined with
respect to the Series A Junior Participating Preferred Stock, shall exist, the
holders of the Series A Junior Participating Preferred Stock, voting separately
as a class with the holders of any other series of Preferred Stock so entitled
to vote, shall have the right to elect two members of the Board of Directors;
and the holders of the Common Stock shall not be entitled to vote in the
election of the directors of the Corporation to be elected as provided in the
foregoing clause. Whenever a default in preference dividends shall commence to
exist, the Corporation, upon the written request of the holders of 5% or more of
the outstanding shares of Preferred Stock so entitled to vote, shall call a
special meeting of the holders of the Preferred Stock so entitled to vote, such
special meeting to be held within 120 days after the date on which such request
shall be received by the Corporation, for the purpose of enabling such holders
to elect members of the Board of Directors as provided in the immediately
preceding sentence; provided, however, that such special meeting need not be
called if an annual meeting of stockholders of the Corporation for the election
of directors shall be scheduled to be held within such 120 days; and provided
further that in lieu of any such special
-4-
meeting, the election of the directors to be elected thereat may be effected by
the written consent of the holders of a majority of the outstanding shares that
would be entitled to be voted upon at such special meeting. Prior to any such
special meeting or meetings, the number of directors of the Corporation shall be
increased to the extent necessary to provide as additional places on the Board
of Directors the directorships to be filled by the Directors to be elected
thereat. Any director elected as aforesaid by the holders of shares of Preferred
Stock or of any series thereof shall cease to serve as such director whenever a
default in preference dividends shall cease to exist. If, prior to the end of
the term of any director elected as aforesaid by the holders of shares of the
Preferred Stock or of any series thereof, or elected by the holders of Common
Stock, a vacancy in the office of such director shall occur by reason of death,
resignation, removal or disability, or for any other cause, such vacancy shall
be filled for the unexpired term in the manner provided in the By-laws;
provided, however, that if such vacancy shall be filled by election by the
stockholders at a meeting thereof, the right to fill such vacancy shall be
vested in the holders of that class of stock or series thereof which elected the
director the vacancy in the office of whom is so to be filled, unless, in any
such case, no default in preference dividends shall exist at the time of such
election. For the purposes of this paragraph (C), a "default in preference
dividends" with respect to the Series A Junior Participating Preferred Stock
shall be deemed to have occurred whenever the amount of dividends in arrears
upon the Series A Junior Participating Preferred Stock shall be equivalent to
six full quarterly dividends or more, and, having so occurred, such default in
preference dividends shall be deemed to exist thereafter until, but only until,
all dividends in arrears on all shares of the Series A Junior Participating
Preferred Stock then outstanding shall have been paid. The term "dividends in
arrears" whenever used in this paragraph (C) with reference to the Series A
Junior Participating Preferred Stock shall be deemed to mean (whether or not in
any dividend period in respect of which such term is used there shall have been
surplus or net profits of the Corporation legally available for the payment of
dividends) that amount which shall be equal to cumulative dividends at the rate
for the Series A Junior Participating Preferred Stock for all past quarterly
dividend periods less the amount of all dividends paid, or deemed paid, for all
such periods upon such Series A Junior Participating Preferred Stock. Nothing
herein contained shall be deemed to prevent an increase in the number of
directors of the Corporation pursuant to its Bylaws as from time to time in
effect so as to provide as additional places on the Board of Directors
directorships to be filled by the directors so to be elected by the holders of
the Series A Junior Participating Preferred Stock, or to prevent any other
change in the number of the directors of the Corporation.
(D) Except as set forth herein or as otherwise required by
law, holders of Series A Junior Participating
-5-
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
SECTION 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors.
SECTION 6. Liquidation Rights. (A) Upon any liquidation
(voluntary of otherwise), dissolution or winding up of the Corporation
("Liquidation"), the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, before any payment
or distribution shall be made on the shares of any series of Preferred Stock
subordinate to Series A Junior Participating Preferred Stock as to assets in the
event of any Liquidation ("Junior Shares") or on the Common Stock, the amount of
$100.00 per share, plus a sum equal to all dividends (whether or not earned or
declared) on such shares accrued and unpaid thereon through the date of final
distribution (the "Series A Liquidation Preference").
(B) The shares of Series A Junior Participating Preferred
Stock shall be subordinate to any other series of Preferred Stock unless the
provisions of such other series provide otherwise, and shall be preferred over
the Common Stock, as to assets in the event of any Liquidation. In the event of
any Liquidation, the holders of the shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation available for distribution to its stockholders (after payment in
full of all amounts payable in respect of any series of Preferred Stock ranking
senior to Series A Junior Participating Preferred Stock), an amount determined
as provided in paragraph (A) of this Section 6 for every share of Series A
Junior Participating Preferred Stock before any distribution of assets shall be
made to the holders of any Junior Series or to the holders of the Common Stock.
If, in the event of any Liquidation, the holders of the Series A Junior
Participating Preferred Stock shall have received all the amounts to which they
shall be entitled in accordance with the terms of paragraph (A) of this Section
6, no additional distributions shall be made to the holders of shares of Series
A Junior Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
paragraph (C) of this
-6-
Section 6 to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii)
being referred to herein as the "Adjustment Number"). Following the payment of
the full amount of the Common Adjustment in respect of all outstanding shares of
Common Stock, holders of Series A Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed to the holders of Series A
Junior Participating Preferred Stock and Common Stock in the ratio of the
Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on
a per share basis, respectively. If, upon any Liquidation, the amounts payable
on or with respect to Series A Junior Participating Preferred Stock and any
series of Preferred Stock ranking on a parity with Series A Junior Participating
Preferred Stock are not paid in full, the holders of shares of such Preferred
Stock shall share ratably in any distribution of assets according to the
respective amounts which would be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to such
Preferred Stock were paid in full.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) pay any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares or (iv) issue any
shares by reclassification of its shares of Common Stock, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event.
(D) Neither the sale, lease or exchange (for cash, shares of
stock, securities or other consideration) of all or substantially all the
property and assets of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or consolidation of
any other corporation into or with the Corporation shall be deemed to be a
Liquidation for the purposes of this Section 6.
SECTION 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock shall be exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case the
shares of Series A Junior Participating Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation
-7-
shall at any time after the Rights Declaration Date (i) pay any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a smaller number
of shares or (iv) issue any shares by reclassification of its shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common Stock
outstanding immediately after such event and the denominator of which shall be
the number of shares of Common Stock that were outstanding immediately prior to
such event.
SECTION 8. Optional Redemption. (A) The Corporation shall have
the option to redeem the whole or any part of the Series A Junior Participating
Preferred Stock at any time at a redemption price equal to, subject to the
provision for adjustment hereinafter set forth, 100 times the "current per share
market price" of the Common Stock on the date of the mailing of the notice of
redemption, together with unpaid accumulated dividends to the date of such
redemption. In the event the Corporation shall at any time after the Rights
Declaration Date (i) pay any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares or (iv) issue any
shares by reclassification of its shares of Common Stock, then in each such case
the amount to which holders of shares of Series A Junior Participating Preferred
Stock shall be otherwise entitled immediately prior to such event under the
immediately preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common Stock
outstanding immediately after such event and the denominator of which shall be
the number of shares of Common Stock that were outstanding immediately prior to
such event. The "current per share market price" on any date shall be deemed to
be the average of the closing prices per share of such Common Stock for the 10
consecutive Trading Days (as such term in hereinafter defined) immediately prior
to such date. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale shall take place on such day, the average
of the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the principal national securities
exchange on which the Common Stock shall be listed or admitted to trading or, if
the Common Stock shall not be listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use or, if on any such date the Common
Stock shall not be quoted by any such organization, the average of the
-8-
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board of Directors of the
Corporation or, if on such date no such market maker shall be making a market in
the Common Stock, the fair value of the Common Stock on such date as determined
in good faith by the Board of Directors of the Corporation. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which the Common Stock shall be listed or admitted to trading shall be open for
the transaction of business or, if the Common Stock shall not be listed or
admitted to trading on any national securities exchange, any day on which
trading takes place in the over-the-counter market and prices reflecting such
trading are reported by NASDAQ or such other system then in use or, if the
shares of Common Stock are not quoted by any such organization, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in the
State of New York shall not be authorized or obligated by law or executive order
to close.
(B) Notice of any such redemption shall be given by mailing to
the holders of the Series A Junior Participating Preferred Stock a notice of
such redemption, first class postage prepaid, not later than the thirtieth day
and not earlier than the sixtieth day before the date fixed for redemption, at
their last address as the same shall appear upon the books of Corporation. Any
notice which shall be mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the stockholder shall have
received such notice, and failure duly to give such notice by mail, or any
defect in such notice, to any holder of Series A Junior Participating Preferred
Stock shall not affect the validity of the proceedings for the redemption of
such Series A Junior Participating Preferred Stock.
(C) If less than all the outstanding shares of the Series A
Junior Participating Preferred Stock are to be redeemed by the Corporation, the
number of shares to be redeemed shall be determined by the Board of Directors
and the shares to be redeemed shall be determined by lot or pro rata or in such
fair and equitable other manner as may be prescribed by resolution of the Board
of Directors.
(D) The notice of redemption to each holder of Series A Junior
Participating Preferred Stock shall specify (a) the number of shares of Series A
Junior Participating Preferred Stock of such holder to be redeemed, (b) the date
fixed for redemption, (c) the redemption price and (d) the place of payment of
the redemption price.
(E) If any such notice of redemption shall have been duly
given or if the Corporation shall have given to the bank or trust company
hereinafter referred to irrevocable written authorization promptly to give or
complete such notice, and if on or before the redemption date specified therein
the funds
-9-
necessary for such redemption shall have been deposited by the Corporation with
the bank or trust company designated in such notice, doing business in the
United States of America and having a capital, surplus and undivided profits
aggregating at least $100,000,000 according to its last published statement of
condition, in trust for the benefit of the holders of Series A Junior
Participating Preferred Stock called for redemption, then, notwithstanding that
any certificate for such shares so called for redemption shall not have been
surrendered for cancellation, from and after the time of such deposit all such
shares called for redemption shall no longer be deemed outstanding, all rights
with respect to such shares shall no longer be deemed outstanding and all rights
with respect to such shares shall forthwith cease and terminate, except the
right of the holders thereof to receive from such bank or trust company at any
time after the time of such deposit the funds so deposited, without interest. In
case less than all the shares represented by any surrendered certificate shall
be redeemed, a new certificate shall be issued representing the unredeemed
shares. Any interest accrued on such funds so deposited shall be paid to the
Corporation from time to time. Any funds so deposited and unclaimed at the end
of six years from such redemption date shall be repaid to the Corporation, after
which the holders of shares of Series A Junior Participating Preferred Stock
called for redemption shall look only to the Corporation for payment thereof;
provided, however, that any funds so deposited which shall not be required for
redemption because of the exercise of any privilege of conversion or exchange
subsequent to the date of deposit shall be repaid to the Corporation forthwith.
SECTION 9. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
SECTION 10. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Junior Participating Preferred Stock.
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IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this 16th day of December, 1988
---------------------------------
President, Chairman and Chief
Executive Officer
Attest:
----------------------
Secretary
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Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER DECEMBER 21, 2008 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY ARE OR MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
LIZ CLAIBORNE, 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 December 4, 1998,
between Liz Claiborne, Inc., a Delaware corporation (the "Company"), and First
Chicago Trust Company of New York, a New York corporation (the "Rights Agent"),
as the same has been or may hereafter be amended or supplemented in accordance
with the terms thereof (the "Rights Agreement"), to purchase from the Company at
any time prior to 5:00 P.M. (New York City time) on December 21, 2008 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, non-assessable
share of Series A Junior Participating Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of the Company, at a purchase price of $[150] per one
one-hundredth of a share (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. Neither the Rights Agent nor the Company shall be
obligated to undertake any action upon the surrender of this Rights Certificate
for exercise unless the registered holder
------------------------------
* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
hereof shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of this Rights Certificate
and (ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) (or former Beneficial Owner) of the Rights
represented by this Certificate, or Affiliates or Associates of such Beneficial
Owner (as such terms are defined in the Rights Agreement), as the Company shall
reasonably request. The number of Rights evidenced by this Rights Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of December 21, 1998, based on the Preferred Stock as
constituted at such date. The Company reserves the right to require prior to the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person, (ii) a transferee of an Acquiring Person
or an Associate or Affiliate of any such Acquiring Person who becomes a
transferee after the Acquiring Person becomes such or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person, such Rights shall become null and void without any
further action, and no holder hereof shall have any right with respect to such
Rights, whether under any provision of the Rights Agreement or otherwise, from
and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities, which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part thereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Company.
B-2
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one-hundredths of a
share of Preferred Stock as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of this Rights Certificate until the registered holder
hereof shall have (i) completed and signed the certificate contained in the form
of assignment on the reverse side of this Rights Certificate and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by this Certificate, or Affiliates
or Associates of such Beneficial Owner (or former Beneficial Owner), as the
Company shall reasonably request.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right at any time prior to the earlier of the close
of business on (i) the date of public disclosure that an Acquiring Person has
exceeded the triggering threshold, as such time period may be extended pursuant
to the Rights Agreement, and (ii) the Final Expiration Date.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
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 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 the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
B-3
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal.
Dated as of December 22, 1998
ATTEST: LIZ CLAIBORNE, INC.
By:
------------------------------ ---------------------------
Secretary Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
as Rights Agent
By: Date:
-------------------------- -----------------------
Authorized Signature
B-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
-------------------------------------------------------------
hereby sells, assigns and transfers unto
----------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ____________________, 19.
--------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person.
Dated: __________________, 19__
----------------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be exercised if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: LIZ CLAIBORNE, INC.:
The undersigned hereby irrevocably elects to exercise
____________Rights represented by this Rights Certificate to purchase the shares
of Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
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 Rights Certificate, a new Rights Certificate for the balance 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)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated:_____________, 19__
--------------------------------
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person.
Dated: _____________, 19__
----------------------------
Signature
Signature Guaranteed:
Notice
------
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
Exhibit C
---------
SUMMARY OF STOCK PURCHASE RIGHTS
On December 4, 1998, the Board of Directors of Liz Claiborne, Inc.
("LIZ") declared a dividend to its stockholders consisting of one Right for each
outstanding share of LIZ Common Stock. The Rights will be distributed to
stockholders of record at the close of business on December 22, 1998. The Rights
will replace existing stock purchase rights with similar terms that expire on
December 21, 1998. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between LIZ and First Chicago Trust
Company of New York, as Rights Agent. Capitalized terms used in this summary
without definition have the meanings assigned in the Rights Agreement.
Each right is nominally exercisable, subject to adjustment, for
one-hundredth of a share of Liz's Series A Junior Participating Preferred Stock
(the "Preferred Stock"). Aside from a preference on liquidation, each
one-hundredth of a share of Preferred Stock has rights substantially similar to
one share of Common Stock.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
"Distribution Date" will occur upon the earlier of (i) the day of public
disclosure that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock (20% or more
of the outstanding shares of Common Stock in the case of institutional
investors) or (ii) 10 business days (or such later date as may be determined by
the LIZ Board of Directors) following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 15% or
more of the outstanding shares of Common Stock.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 21, 2008 (the "Final Expiration
Date"), unless earlier redeemed by LIZ as described below.
If a Person becomes an Acquiring Person, each holder of a Right, other
than an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
will have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of LIZ) having a value equal
to two times the exercise price of the Right. For example, at an exercise price
of $150.00 per Right, each Right not owned by an Acquiring Person (or by certain
related parties) following an event set forth in the preceding paragraph would
entitle its holder to purchase $300.00 worth of Common Stock (or other
consideration, as noted above) for $150.00. Assuming that Common Stock had a per
share value of $50.00 at such time, the holder of each valid Right would be
entitled to purchase six (6) shares of Common Stock for $150.00. Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person or an Associate or Affiliate of an
Acquiring Person will be null and void.
If a tender offer to purchase 15% or more of the outstanding Common
Stock is announced, then 10 business days later (unless the Board of Directors
takes action to delay exercisability of the Rights or unless an Acquiring Person
becomes such), each Right will become exercisable for one one-hundredth of a
share of Preferred Stock.
In addition, if at any time following the first date of public
disclosure by the Company or otherwise that a person has become an Acquiring
Person LIZ is acquired in a merger or other business combination transaction or
50% or more of LIZ's assets or earning power is sold or transferred, each holder
of a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right. The events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after December 22,
1998 will contain a notation incorporating the Rights Agreement by reference,
and (iii) the transfer of any certificates for Common Stock outstanding will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, following the Distribution Date, the
separate Rights Certificates alone will represent the Rights. Except in certain
circumstances specified in the Rights Agreement or as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
The Purchase Price payable, and the number of shares of Common Stock or
Preferred Stock issuable upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution. Adjustments will be made to reflect
dividends (other than regular periodic cash dividends), distributions,
subdivisions, combinations, reclassification or the granting of certain rights
or warrants with respect to the Common Stock or the Preferred Stock, as
appropriate.
LIZ may redeem the Rights in whole, but not in part, at a price of $.01
per Right prior to the first date of public disclosure by the Company that a
person has become an Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a LIZ stockholder, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not be taxable
to stockholders or to LIZ, stockholders may, depending upon the circumstances,
recognize taxable income in the event that the Rights become exercisable for
Common Stock (or other consideration) of LIZ or for common stock of an acquiring
company as set forth above.
Any of the provisions of the Rights Agreement may be amended by a
majority of the LIZ Board of Directors prior to the first date of public
disclosure by the Company that a Person has become an Acquiring Person. From and
after such date, the provisions of the Rights Agreement may be amended by the
Board to cure any ambiguity, to correct or supplement any provision contained in
the Rights Agreement which may be defective or inconsistent with any other
provision in the Rights Agreement or to change or supplement the provisions of
the Rights Agreement in any manner which the Company may deem necessary or
desirable and which does not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person).
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-K. A
copy of the Rights Agreement is available to stockholders free of charge from
LIZ upon receipt of a written request to Investor Relations, Liz Claiborne,
Inc., 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. This summary description of the
Rights is not complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
