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UNIVERSAL INTERNATIONAL, INC.
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
AS RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF APRIL 19, 1996
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RIGHTS AGREEMENT
This Agreement is entered into as of April 19, 1996, by and between
Universal International, Inc., a Minnesota corporation (the "Company") and
Norwest Bank Minnesota, National Association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one common stock purchase right (a "Right") for each share of Common
Stock (as hereinafter defined) of the Company outstanding on May 15, 1996 (the
"Record Date"), each Right initially representing the right to purchase one
share of Common Stock upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
a. "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 20% or more
of the shares of Common Stock of the Company then
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outstanding, but not including any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, any entity holding shares of Common Stock for or
pursuant to the terms of any such plan, shares owned by management of the
Company on the Record Date, or shares owned by a person who inadvertently
becomes an Acquiring Person and who promptly divests sufficient shares such
that 20% or greater beneficial ownership ceases.
i. Notwithstanding the foregoing, no Person shall be an
"Acquiring Person" who becomes the Beneficial Owner of 20% or more of
the shares of Common Stock of the Company then outstanding as the
result of an acquisition of shares issued directly from the Company,
where such acquisition is approved by a majority of the Continuing
Directors, provided that such person was not an "Acquiring Person"
prior to such acquisition of shares from the Company; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 20% or
more of the shares of Common Stock of the Company then outstanding as
the result of an acquisition of shares directly from the Company,
where such acquisition is approved by a majority of the Continuing
Directors, and shall, after such acquisition, become the Beneficial
Owner of any additional shares of Common Stock of the Company, whether
such additional shares are acquired directly from the Company or
otherwise, where such acquisition is not approved by a majority of the
Continuing Directors, then such Person shall be deemed to be an
"Acquiring Person."
ii. Notwithstanding the foregoing, no Person shall become an
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"Acquiring Person" as the result of an acquisition of shares of Common
Stock by the Company which, by inducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to 20% or more of the shares of Common Stock of
the Company then outstanding; PROVIDED, HOWEVER, that if a Person
shall become the Beneficial Owner of 20% or more of the shares of
Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional shares of
Common Stock of the Company, then such Person shall be deemed to be an
"Acquiring Person."
b. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
c. A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
i. which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
ii. which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with
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respect to a bona fide public offering of securities), or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall
not he deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; PROVIDED,
HOWEVER, that a Person shall not he deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
iii. which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the provision to Section
l(c)(ii)(B)) or disposing of any securities of the Company.
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Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
d. "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Minnesota
are authorized or obligated by law or executive order to close.
e. "Close of business" on any given date shall mean 5:00 P.M.,
Minneapolis, Minnesota time, on such date; PROVIDED, HOWEVER, that if such
date is not a Business Day it shall mean 5:00 P.M., Minneapolis, Minnesota
time, on the next succeeding Business Day.
f. "Common Stock" when used with reference to the Company shall mean
the shares of Common Stock, par value $.05 per share, of the Company.
"Common Stock" when used with reference to any Person other than the
Company shall mean the capital stock (or security interest) with the
greatest voting power of such other Person or, if such other Person is a
Subsidiary of another Person, of the Person or Persons which ultimately
control such first-mentioned Person.
g. "Continuing Director" shall mean (i) any Person who is a member
of the Board of Directors of the Company, while such Person is a member of
the Board of Directors, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or
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Associate, and who was a member of the Board of Directors prior to the time
that any Person became an Acquiring Person; and (ii) any successor of a
Continuing Director, while such successor is a member of the Board of
Directors, who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative or nominee of an Acquiring Person
or of any such Affiliate or Associate, and who is recommended or elected to
succeed the Continuing Director by a majority of the Continuing Directors.
h. "Distribution Date" shall have the meaning set forth in Section 3
hereof.
i. "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
j. "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
k. "Purchase Price" shall have the meaning set forth in Section 7
hereof, as adjusted, provided in Section 11.
l. "Redemption Date" shall have the meaning set forth in Section 7
hereof.
m. "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such.
n. "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
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SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the shares of Common Stock) 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. ISSUE OF RIGHTS CERTIFICATES.
a. Until the earlier of (i) the tenth calendar day after the Shares
Acquisition Date or (ii) the thirtieth business day (or such later date as
may be determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the commencement
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding shares of Common Stock for or pursuant to the terms of
any such plan) of, or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding shares of Common Stock for or pursuant to the terms of
any such plan) to commence, a tender or exchange offer the consummation of
which would result in any Person becoming the Beneficial Owner of shares of
Common Stock aggregating 20% or more of the then outstanding shares of
Common Stock (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights; the earlier of such
dates being herein referred to as the "Distribution
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Date"), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for the Common Stock registered in
the names of the holders thereof (which certificates shall also be deemed
to be Rights Certificates) and not by separate Rights Certificates, and (y)
the Rights (and the right to receive Rights Certificates) will be
transferable only in connection with the transfer of shares of Common
Stock. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, send) by first class, insured, postage-prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of
the Company, a Rights Certificate, in substantially the form of Exhibit A
hereto (a "Rights Certificate"), evidencing one Right for each share of
Common Stock so held. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.
b. As soon as practicable after the Record Date, the Company will
send a copy of a Summary of Rights to purchase shares of Common Stock, in
substantially the form of Exhibit B hereto (the "Summary of Rights"), by
first class, postage-prepaid mail, to each record holder of the Common
Stock as of the close of business on the Record Date, at the address of
such holder shown on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached hereto. Until the Distribution Date
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(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for the Common Stock outstanding
on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby.
c. Certificates for shares of Common Stock which become outstanding
(including, without limitation, reacquired shares of Common Stock referred
to in the last sentence of this paragraph (c)) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entities the holder
hereof to certain rights as set forth in a Rights Agreement
between Universal International, Inc. and Norwest Bank
Minnesota, National Association, as Rights Agent, dated as
of April 19, 1996 (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
Universal International, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. Universal International,
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 ISSUED TO ANY
PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Stock represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby. In
the event that
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the Company purchases or acquires any shares of Common Stock after the Record
Date but prior to the Distribution Date, any Rights associated with such shares
of Common Stock shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any rights associated with the shares of Common
Stock which are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES. The Rights Certificates (and the
forms of election to purchase shares of Common Stock and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Rights Certificates
shall entitle the holders thereof to purchase such number of shares of Common
Stock as shall be set forth therein at the price per share set forth therein
(the "Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
a. The Rights Certificates shall (i) be executed on behalf of the
Company by its Chairman, its Chief Executive Officer, its President, any of
its Vice Presidents, its Chief Financial Officer or its Controller either
manually or by facsimile signature, (ii) have affixed hereto the Company's
seal or a facsimile thereof, and (iii) be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights
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Certificates shall be countersigned, manually or by facsimile signature, by
the Rights Agent for purposes of authorization only and shall not be valid
for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates has 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
Rights Agreement any such person was not such an officer.
b. Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office or offices, 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 on its face by each of the
Rights Certificates and the date of each of the Rights Certificates.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
a. Subject to the provisions of Section 14 hereof, at any time after
the close of business on the Distribution Date, and at or prior to the
close of business on the earlier of the Redemption Date or the Final
Expiration Date, any Rights Certificate or Rights Certificates (other than
Rights Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder
to purchase a like number of shares of Common Stock as the Rights
Certificate or Rights Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up,
combined or exchanged at the office or offices 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. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
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,
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in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will make and deliver a new Rights
Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS: PURCHASE PRICE: EXPIRATION DATE OF RIGHTS.
a. The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the
Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at its office or offices,
together with payment of the Purchase Price for each share of Common Stock
as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on May 15, 1999 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
b. The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall initially be Twenty-Five Dollars ($25.00), shall
be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.
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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 the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Rights Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Common Stock certificates for the number of shares of Common
Stock to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates, 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
(iv) when appropriate, after receipt, deliver such cash to or upon the
order of the registered holder of such Rights Certificate.
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 to the registered holder of
such Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall,
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if surrendered to the Company or to any of its agents, be delivered to the
Rights Agent for cancellation or in cancellation form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall 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 cancelled Rights
Certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON STOCK.
a. The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Common Stock or any shares of Common Stock held in its treasury, the number
of shares of Common Stock that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with Section 7 hereof.
b. If the Company's Common Stock is listed on any national
securities exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become
c. exercisable, all shares reserved for issuance upon the exercise
of the Rights to be listed on such exchange upon official notice of
issuance upon such exercise.
d. The Company shall use its best efforts to (i) file, as soon as
practicable following the Distribution Date, a registration statement under
the Securities Act of 1933 (the "Securities Act"), with respect to the
Rights and the securities purchasable upon exercise of
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the Rights on an appropriate form of registration statement, (ii) cause
such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date. The Company shall also
take such action as may be appropriate under the blue sky laws of the
various states. The Company may temporarily suspend, for a period of time
not to exceed ninety (90) calendar days, the exercisability of the Rights
in order to prepare and file any required registration statement. Upon any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect.
e. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable
shares. The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights
Certificates or of any shares of Common Stock upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of
certificates for the shares of Common Stock in a name other than that of,
the registered holder of the Rights Certificate evidencing Rights
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surrendered for exercise or to issue or to deliver any certificates for
shares of Common Stock 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 time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is
due.
SECTION 10. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Common Stock 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 Common Stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Common Stock transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a holder of shares of Common Stock for
which the Rights shall be exercisable, including, without limitation, the right
to vote, or receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares of Common
Stock covered by each
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Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
a. i. In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Stock payable in shares
of Common Stock, (B) subdivide the outstanding shares of Common Stock, (C)
combine the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the
Common 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; PROVIDED,
HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
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ii. Subject to Section 24 of this Agreement, in the event that
any Person shall become an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of shares of
Common Stock for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of shares of Common Stock, 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 shares
of Common Stock for which a Right is then exercisable and (y) dividing that
product by 50% of the then current per share market price of the Company's
Common Stock (determined pursuant to Section 11(d) hereof) on the date such
Person became an Acquiring Person. In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.
From and after the time any Person becomes an Acquiring Person,
any Rights that are or were acquired or beneficially owned by any Acquiring
Person (or any Associate or Affiliate of such Acquiring Person) shall be
void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. No Rights
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof;
no Rights Certificate shall be issued at any time upon the surrender of any
Rights to an Acquiring Person whose Rights would be void
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pursuant to the preceding sentence or any Associate or Affiliate thereof or
to any nominee of such Acquiring Person, Associate or Affiliate; and any
Rights Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be canceled.
iii. In the event the Company is required to issue shares of
Common Stock pursuant to the foregoing subparagraph (ii) or pursuant to
clause (i) of Section 13 hereof (if the Company is the successor or
surviving corporation as described in clause (i) of Section 13), the
Company may, if a majority of the Continuing Directors then in office
determine that such action is necessary or appropriate and not contrary to
the interests of the holders of Rights, elect to issue or pay, upon the
exercise of the Rights, cash (including an offset against the Purchase
Price), property, shares of Common Stock, shares of preferred stock, other
securities or any combination thereof having an aggregate value equal to
the value of the shares of Common Stock which otherwise would have been
issuable pursuant to the foregoing subparagraph (ii) or pursuant to clause
(i) of Section 13 hereof, which value shall be determined by a nationally
recognized investment banking firm selected by a majority of the Continuing
Directors then in office. For purposes of the preceding sentence, the
value of any preferred stock which a majority of the Continuing Directors
determines to be a "common stock equivalent" shall be deemed to have the
same value as the Common Stock.
iv. In the event that there shall not be sufficient shares of
Common Stock of the Company issued but not outstanding or authorized but
unissued to permit the exercise
21
in full of the Rights in accordance with the foregoing subparagraph (ii),
the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock for issuance upon exercise of the Rights.
b. In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of the Common Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Common Stock or securities convertible into
Common Stock at a price per share (or having a conversion price per share,
if a security convertible into Common Stock) less than the then current per
share market price of the Common Stock (as defined in Section 11(d)) 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 Common Stock outstanding on such record date plus
the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In case such
22
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 Continuing Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent. Common Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not
been fixed.
c. In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in shares of Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current
per share market price of the shares of Common Stock on such record date,
less the fair market value (as determined in good faith by a majority of
the Continuing Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness to be distributed or of such
subscription
23
rights or warrants applicable to one share of Common Stock, and the
denominator of which shall be such current per share market price of the
Common Stock; PROVIDED, HOWEVER, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had
not been fixed.
d. For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to
such date; PROVIDED, HOWEVER, that in the event that the current per share
market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security, and prior to the
expiration of thirty (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
per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing
price for each day shall be the last sale price, or,
24
in case no such sale takes place on such day, the average of the closing
bid and asked prices, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or such other system then in use, or, if on any such date
the Security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market trader
making a market in the Security selected by a majority of the Continuing
Directors of the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
e. No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
25
calculations under this Section 11 shall be made to the nearest cent or to
the nearest one ten-thousandth of a share of Common Stock or of any other
share or security as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) two years from the date of the
transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
f. If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right therefor exercised shall become entitled to
receive any shares of capital stock of the Company other than shares of
Common Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the shares of Common Stock contained in Section 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10 and 13 with
respect to the shares of Common Stock shall apply on like terms to any such
other shares.
g. All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common
Stock purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
h. Unless the Company shall have exercised its election as provided
in Section 11(i), subject to the provisions of Sections 11(a) and 13
hereof, upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
26
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of shares of Common Stock (calculated to the nearest one
ten-thousandth of a share of Common Stock) obtained by (i) multiplying (x)
the number of shares covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
i. The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Common 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 shares of
Common Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become the number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The 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 ten (10) calendar days later than the date of the public
announcement. If Rights
27
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the 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 so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public
announcement.
j. Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Common Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of shares of Common
Stock which were expressed in the initial Rights Certificates issued
hereunder.
k. Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the
28
opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at
such adjusted Purchase Price.
l. In any case in which this Section 11 shall require that any
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such
record date of the shares of Common Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; PROVIDED, HOWEVER, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiting such adjustment.
m. Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions to the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the shares of
Common Stock, issuance wholly for cash or shares of Common Stock at less
than the current market price, issuance wholly for cash or shares of Common
Stock or securities which by their terms are convertible into or
exchangeable for shares of Common Stock, dividends on Common Stock payable
in shares of Common Stock, or issuance of
29
rights, options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its shares of Common Stock
shall not be taxable to such stockholders.
n. In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay
any dividend on the outstanding Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the
shares of Common Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in any such case (i) the number of shares of
Common Stock purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of shares of Common
Stock so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (ii)
each share of Common Stock outstanding immediately after such event shall
have issued with respect to it that number of Rights which each share of
Common Stock outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, continuation or consolidation is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for
30
such adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Stock a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25
hereof.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. In the event that, following the Shares Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person, (b) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) following the Distribution Date, each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of shares of Common Stock for which a Right is then exercisable,
in accordance with the terms of this Agreement and in lieu of shares of Common
Stock, such number of shares of Common Stock of such other Person (including the
Company as successor thereto or as the surviving corporation) as shall equal the
result obtained by (A) multiplying the then current Purchase Price by the number
of shares of Common Stock for which
31
a Right is then exercisable and (B) dividing that product by 50% of the then
current per share market price of the shares of Common Stock of such other
Person (determined pursuant to Section 11(d) hereof) on the date of consummation
of such consolidation, merger, sale or transfer; (ii) the issuer of such shares
of Common Stock shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all of the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall hereafter be applicable, as nearly as reasonably may be,
in relation to the shares of Common Stock thereafter deliverable upon the
exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a supplemental
agreement so providing. The Company shall not enter into any transaction of the
kind referred to in this Section 13 if at the time of such transaction there are
any rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
a. The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there
32
shall be paid to the registered owners of the Rights Certificates with
regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place of
such day, the average of the closing bid and asked prices, in either case
as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any
national securities exchange the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the
Continuing Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by a majority of the Continuing
Directors of the Company shall be used.
33
b. The Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of common Stock. In lieu of fractional
shares of Common Stock, the Company shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of Common Stock. For the purposes of this Section
14(b), the current market value of a share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
c. The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or the holder of any other Rights Certificate, may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement without limiting the
foregoing or any
34
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against, actual or threatened
violations of the obligations of any Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
a. prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the shares of Common Stock;
b. after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or offices of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer; and
c. the Company and the Rights Agent may deem and treat the person in
whose name the 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 Certificates or the associated Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose
35
the holder of the shares of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein 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 or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
a. The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the 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 hold it
harmless against, any loss, liability or expense, incurred without
negligence, bad faith or willful misconduct 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 on the premises.
b. The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration
36
of this Agreement in reliance upon any Rights Certificate or certificate
for shares of the 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 believed by it to be genuine or to be signed,
executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
a. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that
such corporation would he eligible for appointment as a successor Rights
Agent under the provision of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificate 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
Certificates 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 Certificates either in the name of the
predecessor Rights Agent or
37
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.
b. 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 any 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 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 selected by it
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.
b. Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman,
the
38
Chief Executive Officer, the President, any of the Vice Presidents, the
Chef Financial Officer, the Secretary or the Controller of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
c. The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
d. The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
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 hereof
(except the due execution hereof 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
exercisability of the Rights (including the Rights becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount hereof) provided for in Section 3,
11, 13, 23 or 24, 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
39
Rights Certificates after receipt of actual notice from the Company stating
that a change or adjustment is required and specifying the manner and
amount thereof); 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 Common Stock to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock will, when
issued, he validly authorized and issued, fully paid and nonassessable.
f. The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
g. The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman, the Chief Executive Officer, the President, any of
the Vice Presidents, the Chief Financial Officer, the Secretary or the
Controller of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting
for those instructions.
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
40
it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company
or for any other legal entity.
i. The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
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 thirty (30) calendar days' notice in writing mailed to the Company and to
each transfer agent of the Common 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 thirty (30) calendar
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 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.
If the Company shall fail to make such appointment within a period of thirty
(30) calendar days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the registered
41
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 a
corporation organized and doing business under the laws of the United States or
of the States of Minnesota or New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of Minnesota or New York), in good standing, having an
office in the States of Minnesota or New York, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent shall be
vested with the same power, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW 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
42
new Rights Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price and
the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION.
a. A majority of the Continuing Directors, may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person,
redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). Such redemption of the Rights may be made effective
at such time, on such basis and with such conditions as a majority of the
Continuing Directors in its sole discretion may establish.
b. Immediately upon the action of the Continuing Directors of the
Company ordering the redemption of the Rights pursuant to Paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such redemption; PROVIDED,
HOWEVER, that the failure to give, or any defect in, any such notice shall
not affect the validity of such redemption. Within ten (10) calendar days
after such action of the Continuing Directors ordering the redemption of
the Rights, the Company shall mail a notice of redemption to all the
holders of the then outstanding Rights at their last addresses as they
43
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any matter other than that specifically set forth in
this Section 23 or in Section 24 hereof and other than in connection with
the purchase of shares of Common Stock prior to the Distribution Date.
SECTION 24. EXCHANGE.
a. A majority of the Continuing Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for shares of Common Stock 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 alter the date
hereof (such exchange ratio being hereinafter referred to as to "Exchange
Ratio"). Notwithstanding the foregoing, the Continuing Directors shall not
be empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or any such Subsidiary, or any entity holding shares of
Common Stock for or pursuant to the terms of any such plan), together with
all Affiliates
44
and Associates of such Person, becomes the Beneficial Owner of 50% or more
of the shares of Common Stock then outstanding.
b. Immediately upon the action of the Continuing Directors of the
Company ordering the exchange of any Rights pursuant to Paragraph (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; PROVIDED, HOWEVER, that the failure to give,
or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder
of Rights.
c. In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as
45
may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
d. The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares
of Cormnon Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this Paragraph
(d), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
a. In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Common Stock or to make any
other distribution to the holders of its Common Stock (other than a regular
quarterly cash dividend); (ii) to offer to the holders of its Common Stock
rights or warrants to subscribe for or to purchase any additional shares of
Common Stock or shares of stock of any class or any other securities,
rights or options; (iii) to effect any reclassification of its Common Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Common Stock); (iv) to effect any consolidation or
merger into or with, or to effect any sale or other transfer (or
46
to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to,
any other Person; or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the Common Stock, if any
such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least ten (10) calendar
days prior to the record date for determining holders of shares of Common
Stock for purposes of such action, and in the case of any such other
action, at least ten (10) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Stock, whichever shall be the earlier.
b. In case any of the events set forth in Section 11 (a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to holders of Rights
under Section 11 (a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be
47
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Universal International, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
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
is filed in writing with the Company) as follows:
Norwest Bank Minnesota, National Association
Shareowner Services
000 Xxxxx Xxxxxxx Xxxxxxxx, X.X. Xxx 000
Xxxxx Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Attention: Manager of Administration
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.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order to cure an ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; PROVIDED,
48
HOWEVER, that from and after such time as any Person becomes an Acquiring
Person, this Agreement shall not be amended in any manner which would adversely
affect the interests of the holders of Rights. Without limiting the foregoing,
the Company may at any time prior to such time as any Person becomes an
Acquiring Person amend this Agreement to lower the thresholds set forth in
Sections l(a) and 3(a) to not less than the greater of (i) any percentage
greater than the largest percentage of the outstanding shares of Common Stock
then known by the Company to be beneficially owned by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company, or any entity holding shares of Common Stock
for or pursuant to the terms of any such plan) and (ii) 10%.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by and for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable,
49
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 31. 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 Minnesota and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
SECTION 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
UNIVERSAL INTERNATIONAL, INC.
Attest:
By /s/ By /s/
------------------------------ ----------------------------------
Its Secretary Its Chief Executive Officer
----------------------------- ---------------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Attest:
By /s/ By /s/
------------------------------ ----------------------------------
Its Assistant Secretary Its Assistant Vice President
----------------------------- ---------------------------------
50
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No. R- ______Rights
NOT EXERCISABLE AFTER MAY 15, 1999, OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
RIGHTS CERTIFICATE
UNIVERSAL INTERNATIONAL, 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 April 19, 1996 (the "Rights Agreement"), between
Universal International, Inc., a Minnesota corporation (the "Company"), and
Norwest Bank Minnesota, National Association (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., Minneapolis, Minnesota
time, on May 15, 1999, at the office or offices of the Rights Agent, or at the
office of its successor as Rights Agent, one fully paid non-assessable share of
Common Stock, par value $.05 per share (the "Common Stock"), of the Company, at
a purchase price of $25.00 per share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of shares of Common Stock which may be purchased upon such exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of ___________, 19__, based on the Common Stock as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of shares of Common 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.
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 hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
A-1
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent, 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
shares of Common 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.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of Common
Stock, equivalent preferred shares of the Company or shares of the Company's
Common Stock, par value $.05 per share.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, 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 the shares of Common 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 mailer 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.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
* * * * * *
A-2
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of __________________ UNIVERSAL INTERNATIONAL, INC.
Attest:
By:
------------------------------- -------------------------------
Countersigned for purposes
of authentication only:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By
---------------------------------
Authorized Signature
A-3
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: ______________________
--------------------------
Enter taxpayer identification number of assignee Tax ID #
--------------------------
--------------------------
The ignature must correspond in every Sign here:
particular, without alteration, with the name(s)
as printed on your certificate(s). If acting in
a special capacity (eecutor, administrator,
cstodian, etc.) the capacity must be indicated.
--------------------------
Your signature must be medallion guaranteed by SIGNATURE GUARANTEED
an eligible guarantor institution as defined MEDALLION GUARANTEED
below (NAME OF FINANCIAL
INSTITUTION)
--------------------------
(Authorized Signature)
--------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
----------------------------
Signature
--------------------------------------------------------------------------------
A-4
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED
FORM OF ELECTION TO PURCHASE
----------------------------
(TO BE EXECUTED IF HOLDER DESIRES TO
EXERCISE THE RIGHTS CERTIFICATE.)
TO UNIVERSAL INTERNATIONAL, INC.:
The undersigned hereby irrevocably elects to exercise _____________________
_______________________________________________________________ Stock Rights
represented by this Rights Certificate to purchase the shares of Common Stock
issuable upon the exercise of such Rights and requests that certificates for
such shares of Common Stock be issued in the name of:
--------------------------
Enter taxpayer identification number Tax ID #
of person in whose name shares are to
be registered.
--------------------------
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 remaining of such Rights
shall be registered in the name of and delivered to:
--------------------------
Enter taxpayer identification number Tax ID #
of person in whose name shares are to
be registered.
--------------------------
Please print name and address
---------------------------------
---------------------------------
Dated:_____________________
---------------------------------
The signature must correspond in every Sign here:
particular, without alteration, with the
name(s) as printed on your
certificate(s). If acting in a special
capacity (executor, administrator,
custodian, etc.) the capacity must be
indicated.
---------------------------------
Your signature must be medallion SIGNATURE GUARANTEED
guaranteed by an eligible guarantor MEDALLION GUARANTEED
institution as defined below (NAME OF FINANCIAL INSTITUTION)
--------------------------------------------------------------------------------
A-5
-----------------------------------
(Authorized Signature)
FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED
--------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
--------------------------------------------------------------------------------
NOTICE
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
DEFINITION OF ELIGIBLE GUARANTOR INSTITUTION
Generally, an eligible guarantor institution as defined in Section
240.17Ad-15 of the Securities and Exchange Commission regulations means:
1) Banks as defined in Section 3(a) of the Federal Deposit Insurance Act.
2) Brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities brokers and government securities dealers,
as those terms are defined under the Securities Exchange Act of 1934.
3) Credit unions (as that term is defined in Section 19(b)(1)(A) of the
Federal Reserve Act.
4) National securities exchanges, registered securities associations, clearing
agencies, as those terms are used under the Securities Exchange Act of
1934.
5) Savings associations (as that term is defined in Section 3(b) of the
Federal Deposit Insurance Act).
NOTE: Other eligible guarantor institution requirements may apply.
TABLE OF CONTENTS
-----------------
PAGE
----
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . 7
Section 3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . 7
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . .10
Section 5. Countersignature and Registration . . . . . . . . . . . . . . .10
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 7. Exercise of Rights: Purchase Price: Expiration
Date Of Rights. . . . . . . . . . . . . . . . . . . . . . . . .13
Section 8. Cancellation and Destruction of Rights Certificates . . . . . .14
Section 9. Reservation and Availability of Common Stock. . . . . . . . . .15
Section 10. Common Stock Record Date. . . . . . . . . . . . . . . . . . . .16
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. . . . . . . . . . . . . . . . . . . . . . . .17
Section 12. Certificate of Adjusted Purchase price or Number of Shares. . .28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . .30
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . .31
Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . . . .32
Section 17. Rights Certificate Holder Not Deemed a Stockholder. . . . . . .33
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . .33
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . .34
i
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . .35
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . .38
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . .39
Section 23. Redemption and Termination. . . . . . . . . . . . . . . . . . .40
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . .43
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . .45
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . .46
Section 29. Benefits of this Agreement. . . . . . . . . . . . . . . . . . .46
Section 30. Severability. . . . . . . . . . . . . . . . . . . . . . . . . .46
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .46
Section 32. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .46
Section 33. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . .47
ii
RIGHTS AGREEMENT AMENDMENT
Rights Agreement Amendment, dated as of April 20, 1998 (this "Amendment"),
to the Rights Agreement dated as of April 19, 1996 (the "Rights Agreement"),
between Universal International, Inc., a Minnesota corporation (the "Company")
and Norwest Bank Minnesota, National Association (the "Rights Agent").
The Company and the Rights Agent have heretofore executed and delivered the
Rights Agreement. Pursuant to Section 27 of the Rights Agreement, the Company
and the Rights Agent may from time to time supplement or amend the Rights
Agreement in accordance with the provisions of Section 27 thereof.
In consideration of the foregoing premises and mutual agreements set forth
in the Rights Agreement and this Amendment, the parties hereto agree as follows:
1. The definition of "Acquiring Person" in Section 1(a) of the Rights
Agreement is hereby supplemented and amended by adding a new subsection (iii) to
read in its entirety as follows:
"(iii) Notwithstanding the foregoing, under no circumstances
shall "Acquiring Person" mean or include 99CENTS Only
Stores, a California corporation, and 99CENTS Only Stores
shall be and hereby is excluded and exempted from the
definition of "Acquiring Person."
2. Section 3(a) of the Rights Agreement is hereby supplemented, amended
and restated to read in its entirety as follows:
"SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the tenth calendar day after
the Shares Acquisition Date or (ii) the thirtieth business
day (or such later date as may be determined by action of
the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the
Company, any Subsidiary of the Company, any entity holding
shares of Common Stock for or pursuant to the terms of any
such plan or 99CENTS Only Stores, a California corporation)
of, or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company, any
Subsidiary of the Company, any entity holding shares of
Common Stock for or pursuant to the terms of any such plan
or 99CENTS Only Stores) to commence, a tender or exchange
offer the consummation of which would result in any Person
becoming the Beneficial Owner of shares of Common Stock
aggregating 20% or more of the then outstanding shares of
Common Stock (including any such date which is after the
date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for the Common Stock registered in the
names of the holders thereof (which certificates shall also
be deemed to be Rights Certificates) and not by separate
Rights Certificates, and (y) the Rights (and the right to
receive Rights Certificates) will be transferable only in connection
with the transfer of shares of Common Stock. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or cause to
be sent (and the Rights Agent will, if requested, send) by first
class, insured, postage-prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
Rights Certificate, in substantially the form of Exhibit A hereto (a
"Rights Certificate"), evidencing one Right for each share of Common
Stock so held. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates."
3. This Amendment shall be governed by and construed in accordance with
the laws of the State of Minnesota.
4. This Amendment may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed an original, and all such
counterparts shall together constitute but one and the same instrument.
5. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
UNIVERSAL INTERNATIONAL, INC.
Attest:
By: /s/* By: /s/
----------------------------- ---------------------------
Its: Secretary Xxxxxxx X. Xxxxx
Its: Chief Executive Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Attest:
By: /s/* By: /s/*
----------------------------- ---------------------------
Its: Assistant Secretary Its: Officer
---------------------------
*Signature illegible; signed by authorized representative
2
