1
EXHIBIT 4
--------------------------------------------------------------------------------
RIGHTS AGREEMENT
THE NEIMAN MARCUS GROUP, INC.
and
BANKBOSTON, N.A.
as Rights Agent
Dated as of October 6, 1999
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
Section 1. Certain Definitions ......................................................... 2
Section 2. Appointment of Rights Agent ................................................. 12
Section 3. Issue of Right Certificates ................................................. 13
Section 4. Form of Right Certificates .................................................. 16
Section 5. Countersignature and Registration ........................................... 16
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates ................................ 17
Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights ............... 18
Section 8. Cancellation and Destruction of Right Certificates .......................... 21
Section 9. Availability of Shares of Preferred Stock ................................... 21
Section 10. Preferred Stock Record Date ................................................. 23
Section 11. Adjustment of Purchase Price, Number of Shares and Number of Rights ......... 24
Section 12. Certificate of Adjusted Purchase Price or Number of Shares .................. 42
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earnings Power ....... 42
Section 14. Fractional Rights and Fractional Shares ..................................... 48
Section 15. Rights of Action ............................................................ 50
Section 16. Agreement of Right Holders .................................................. 51
Section 17. Right Certificate Holder Not Deemed a Stockholder ........................... 51
Section 18. Concerning the Rights Agent ................................................. 52
Section 19. Merger or Consolidation or Change of Name of Rights Agent ................... 53
Section 20. Duties of Rights Agent ...................................................... 54
Section 21. Change of Rights Agent ...................................................... 57
Section 22. Issuance of New Right Certificates .......................................... 59
i
3
Page
Section 23. Redemption.......................................................................................... 59
Section 24. Exchange............................................................................................ 60
Section 25. Notice of Certain Events............................................................................ 64
Section 26. Notices............................................................................................. 65
Section 27. Supplements and Amendments.......................................................................... 66
Section 28. Successors.......................................................................................... 66
Section 29. Benefits of this Agreement.......................................................................... 66
Section 30. Severability........................................................................................ 67
Section 31. Governing Law....................................................................................... 67
Section 32. Counterparts........................................................................................ 67
Section 33. Descriptive Headings................................................................................ 67
Section 34. Administration...................................................................................... 67
ii
4
RIGHTS AGREEMENT
Agreement, dated as of October 6, 1999, between The Neiman
Marcus Group, Inc., a Delaware corporation (the "Company"), and BankBoston,
N.A., a national banking association (the "Rights Agent").
The Board of Directors of the Company on October 6, 1999
(i)(A) authorized the issuance and declared a dividend of one preferred share
purchase right (a "Class A Right") for each share of Class A Common Stock (as
hereinafter defined) outstanding as of the close of business (as defined below)
on October 18, 1999 (the "Record Date"), each Class A Right representing the
right to purchase one one-thousandth (subject to adjustment) of a share of
Series A Preferred Stock (as hereinafter defined), upon the terms and subject to
the conditions herein set forth, and (B) further authorized and directed the
issuance of one Class A Right (subject to adjustment as provided herein) with
respect to each share of Class A Common Stock that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Class A Rights may be issued with respect to
shares of Class A Common Stock that shall become outstanding after the
Distribution Date and prior to the Redemption Date and the Final Expiration Date
in accordance with Section 22, (ii)(A) authorized the issuance and declared a
dividend of one preferred share purchase right (a "Class B Right") for each
share of Class B Common Stock (as hereinafter defined) outstanding as of the
close of business (as defined below) on the Record Date, each Class B Right
representing the right to purchase one one-thousandth (subject to adjustment) of
a share of Series B Preferred Stock (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and (B) further authorized and
directed the issuance of one Class B Right (subject to adjustment as provided
herein) with
5
2
respect to each share of Class B Common Stock that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Class B Rights may be issued with respect to
shares of Class B Common Stock that shall become outstanding after the
Distribution Date and prior to the Redemption Date and the Final Expiration Date
in accordance with Section 22 and (iii)(A) authorized and directed the issuance
of one preferred share purchase right (a "Class C Right" and together with the
Class A Rights and the Class B rights, the "Rights") (subject to adjustment as
provided herein) with respect to each share of Class C Common Stock (as
hereinafter defined) that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined), each Class C Right
representing the right to purchase one one-thousandth (subject to adjustment) of
a share of Series C Preferred Stock (as hereinafter defined), upon the terms and
subject to the conditions herein set forth; provided, however, that Class C
Rights may be issued with respect to shares of Class C Common Stock that shall
become outstanding after the Distribution Date and prior to the Redemption Date
and the Final Expiration Date in accordance with Section 22.
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 meaning indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as
such term is hereinafter defined)
6
3
of (a) 15% or more of the shares of Class B Common Stock (as such term
is hereinafter defined) then outstanding or (b) shares of Common Stock
representing, in the aggregate, 15% or more of the total number of
votes entitled to be cast generally (other than in an election of
directors) by the holders of the Common Stock then outstanding, but
shall not include an Exempt Person (as such term is hereinafter
defined); provided, however, that if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be
an "Acquiring Person" has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially
owned a percentage of Common Stock that would otherwise cause such
Person to be a "Acquiring Person" or (ii) such Person was aware of the
extent of its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under this
Rights Agreement) and without any intention of changing or influencing
control of the Company, and such Person as promptly as practicable
divested or divests himself or itself of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would
no longer be an Acquiring Person, then such Person shall not be deemed
to be or to have become an "Acquiring Person" for any purposes of this
Agreement. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of shares of Common
Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned (or votes entitled to be cast) by such Person to (a) 15% or more
of the shares of Class B Common Stock then outstanding or (b) shares of
Common Stock representing, in the aggregate, 15% or more of the total
number of votes entitled to be cast generally (other than in an
election of directors) by the holders of the Common Stock then
outstanding; provided, however, that if a Person shall become the
Beneficial Owner of (a) 15% or more of the
7
4
shares of Class B Common Stock then outstanding or (b) shares of Common
Stock representing, in the aggregate, 15% or more of the total number
of votes entitled to be cast generally (other than in an election of
directors) by the holders of the Common Stock then outstanding by
reason of such share acquisitions by the Company and thereafter become
the Beneficial Owner of any additional shares of Class B Common Stock,
in the case of clause (a) above, or Common Stock, in the case of clause
(b) above, then such Person shall be deemed to be an "Acquiring Person"
unless upon the consummation of the acquisition of such additional
shares of Class B Common Stock or Common Stock, as the case may be,
such Person does not beneficially own (a) 15% or more of the shares of
Class B Common Stock then outstanding or (b) shares of Common Stock
representing, in the aggregate, 15% or more of the total number of
votes entitled to be cast generally (other than in an election of
directors) by the holders of the Common Stock then outstanding. 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.
(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, shall
be deemed to have "Beneficial Ownership" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates is deemed to beneficially own,
directly or indirectly within the meaning of
8
5
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement;
(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 respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (x) securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase, (y) securities which
such Person has a right to acquire on the exercise of Rights
at any time prior to the time a Person becomes an Acquiring
Person or (z) securities issuable upon exercise of Rights from
and after the time a Person becomes an Acquiring Person if
such Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution
Date or pursuant to Section 3(a) or Section 22 hereof
("original Rights") or pursuant to Section 11(i) or Section
11(n) with respect to an adjustment to original Rights; or (B)
the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security by reason of such agreement, arrangement or
understanding if the agreement, arrangement or understanding
to vote such
9
6
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 proviso to Section 1(c)(ii)(B)) or
disposing of any securities of the Company;
provided, however, that notwithstanding anything else contained in this Section
1(c):
(1) no Xxxxx Holder shall be deemed to be the Beneficial Owner of
securities beneficially owned by any other Person that is not a Xxxxx Holder
solely by reason of such other Person's status as an Affiliate or Associate of
any Xxxxx Holder or any other Person, other than Harcourt General, Inc. or its
subsidiaries unless (A) one or more Xxxxx Holders, collectively, beneficially
owns fifty percent or more of the voting power of such other Person or such
other Person beneficially owns fifty percent or more of the voting power of a
Xxxxx Holder that is not a natural person, (B) a majority of the board of
directors or other governing body of such other Person is comprised of Xxxxx
Holders or such other Person has the power to nominate a majority of the board
of directors or other governing body of a Xxxxx Holder, that is not a natural
person, (C) such other Person is a spouse or lineal descendant of a grandparent
of a Xxxxx Holder (or any spouse of a lineal descendent of a grandparent of a
Xxxxx Holder) or (D) a primary purpose of such other Person becoming an
Affiliate or Associate of a
10
7
Xxxxx Holder or any other Person after the date of this Agreement is to
circumvent the purposes of this Agreement;
(2) no Person, other than Harcourt General, Inc. and its
subsidiaries, shall be deemed to be the Beneficial Owner of securities
beneficially owned by a Xxxxx Holder solely by reason of such Person's status as
an officer, director or employee of a Xxxxx Holder or any Xxxxx Holder's or
other Person's status as an Affiliate or Associate of such Person, unless (A)
one or more Xxxxx Holders, collectively, beneficially owns fifty percent or more
of the voting power of such Person, or such Person beneficially owns fifty
percent or more of the voting power of a Xxxxx Holder that is not a natural
person, (B) a majority of the board of directors or other governing body of such
Person is comprised of Xxxxx Holders or such Person has the power to nominate a
majority of the board of directors or other governing body of a Xxxxx Holder or
that is not a natural person, (C) such Person is a spouse or lineal descendant
of a grandparent of a Xxxxx Holder (or any spouse of a lineal descendant of a
grandparent of a Xxxxx Holder) or (D) a primary purpose of such Xxxxx Holder
becoming an Affiliate or Associate of any other Person after the date of this
Agreement is to circumvent the purposes of this Agreement; and
(3) no bona fide financial institution that is a pledgee of a
Xxxxx Holder (a "Pledgee") shall be deemed the Beneficial Owner of securities
beneficially owned by a Xxxxx Holder solely by reason of such Pledgee's status
as a pledgee of a Xxxxx Holder and so long as such Pledgee may report the
ownership of those shares that are acquired pursuant to the pledge on a Schedule
13G (or any comparable or successor report) under the Exchange Act, provided
however, that if such Pledgee forecloses on any such pledge and a Xxxxx Holder
thus ceases to beneficially own such pledged shares, the Pledgee shall be
deemed
11
8
to beneficially own such shares; unless such pledged shares are sold within
one-hundred and eighty (180) days of such foreclosure;
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New
York, or the State in which the principal office of the Rights Agent is
located, are authorized or obligated by law or executive order to
close.
(e) "Class A Common Stock" shall mean the Class A Common
Stock, par value $.01 per share, of the Company.
(f) "Class B Common Stock" shall mean the Class B Common
Stock, par value $.01 per share, of the Company.
(g) "Class C Common Stock" shall mean the Class C Common
Stock, par value $.01 per share, of the Company.
(h) "Class A Right" shall have the meaning set forth in the
Recitals hereto.
(i) "Class B Right" shall have the meaning set forth in the
Recitals hereto.
(j) "Class C Right" shall have the meaning set forth in the
Recitals hereto.
(k) "Class A Right Certificate" shall have the meaning set
forth in Section
3(a) hereof.
(l) "Class B Right Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(m) "Class C Right Certificate" shall have the meaning set
forth in Section 3(a) hereof.
12
9
(n) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York City time,
on the next succeeding Business Day.
(o) "Common Stock" when used with reference to the Company
shall mean, collectively, the Class A Common Stock, the Class B Common
Stock and the Class C Common Stock. "Common Stock" when used with
reference to any Person other than the Company shall mean the capital
stock (or, in the case of an unincorporated entity, the equivalent
equity interest) with the greatest voting power of such other Person
or, if such other Person is a subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned Person.
(p) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(q) "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, (iii)
any employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any entity or trustee holding Common Stock for or
pursuant to the terms of any such plan or for the purpose of funding
any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company, (v) Harcourt General,
Inc., a Delaware corporation, but only for the period beginning on the
Record Date and ending at 12:01 a.m. on October 23, 1999 or (vi) the
Xxxxx Family Group, so long as the Xxxxx Family Group does not acquire
beneficial ownership of (A) additional shares of Class B Common Stock
after the date of this Agreement (other than shares of Common Stock,
employee stock options or other equity securities of the Company
granted by the Company after the date of this Agreement to a member of
the Xxxxx Family Group in his or her capacity as a director, officer or
employee of the Company, including shares issuable upon the exercise or
conversion of such employee stock options or other equity securities)
that would represent, together with all shares of Class B Common Stock
acquired by the Xxxxx Family Group after the date of this Agreement,
more than 6% of the outstanding shares of Class B Common Stock then
outstanding after giving
13
10
effect to such acquisition and (B) additional shares of Common Stock
after the date of this Agreement (other than shares of Common Stock,
employee stock options or other equity securities of the Company
granted by the Company after the date of this Agreement to a member of
the Xxxxx Family Group in his or her capacity as a director, officer or
employee of the Company, including shares issuable upon the exercise or
conversion of such employee stock options or other equity securities)
that would represent, together with all shares of Common Stock acquired
by the Xxxxx Family Group after the date of this Agreement, more than
6% of the total voting power of the Company represented by the
votes entitled to be cast generally (other than in an election of
directors) represented by the total number of shares of Common Stock
then outstanding.
Notwithstanding the foregoing, the Xxxxx Family Group shall
not cease to be an "Exempt Person" as a result of the acquisition of
shares of Class B Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of
shares beneficially owned by the Xxxxx Family Group and acquired after
the date of this Agreement to exceed shares representing, in the
aggregate, 6% of the shares of Class B Common Stock then outstanding,
unless the Xxxxx Family Group thereafter acquires beneficial ownership
of any additional shares of Class B Common Stock. In addition, the
Xxxxx Family Group shall not cease to be an "Exempt Person" as a result
of the acquisition of shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate
voting power of the Company represented by the shares beneficially
owned by the Xxxxx Family Group and acquired after the date of this
Agreement to exceed shares representing, in the aggregate, 6% of the
total voting power of the Company represented by the votes entitled to
be cast generally (other than in an election of directors) by the
holders of the Common Stock then outstanding, unless the Xxxxx Family
Group thereafter acquires beneficial ownership of any additional
shares of Common Stock.
(r) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(s) "New York Stock Exchange" shall mean the New York Stock
Exchange, Inc.
14
11
(t) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise)
of such entity.
(u) "Preferred Stock" shall mean, collectively, (i) the Series
A Junior Participating Preferred Stock, par value $.01 per share, of
the Company (the "Series A Preferred Stock"), (ii) the Series B Junior
Participating Preferred Stock, par value $.01 per share, of the Company
(the "Series B Preferred Stock") and (iii) the Series C Junior
Participating Preferred Stock, par value $.01 per share, of the Company
(the "Series C Preferred Stock"), in each case having the rights and
preferences set forth in the Form of Certificate of Designations
attached to this Agreement as Exhibit X-0, Xxxxxxx X-0 and Exhibit A-3,
respectively.
(v) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(w) "Right Certificate" shall mean collectively or severally,
as the context shall require, the Class A Right Certificate, the Class
B Right Certificate and/or the Class C Right Certificate.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended
(y) "Xxxxx Family Group" shall mean (i) the parties to the
Xxxxx-Xxxxx/Marks Family Stockholders' Agreement, dated as of September
1, 1999 (as amended, supplemented, or otherwise modified from time to
time, provided that a primary purpose of any such amendment, supplement
or modification is not to circumvent the purposes of this Agreement,
the "Stockholders' Agreement"), any Person who is described in any of
clause (i) through (v)(other than clause (i)(C)) of Section 4 of the
Stockholders' Agreement and Harcourt General, Inc., and its
subsidiaries, so long as Harcourt General, Inc. is an Affiliate of any
party to the Stockholders' Agreement (collectively, the "Xxxxx
Holders") or (ii) any
15
12
other Person, to the extent such Person would be deemed to be the
Beneficial Owner of Common Stock beneficially owned by a Xxxxx Holder,
solely by reason of such Person's status as an Affiliate or Associate
of another a Xxxxx Holder or any other Person on the date of this
Agreement.
(z) "Stock Acquisition Date" shall mean the first date of
public announcement (which for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d)
of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such or such earlier date as a majority of
the Board of Directors shall become aware of the existence of an
Acquiring Person.
(aa) "Subsidiary" or "subsidiary" of any Person shall mean any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient to elect a majority
of the board of directors or other persons performing similar functions
are beneficially owned, directly or indirectly, by such Person, and any
corporation or other entity that is otherwise controlled by such
Person.
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 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, upon ten (10) days' prior notice to the
Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any such co-Rights Agent.
16
13
Section 3. Issue of Right Certificates. (a) Until the earlier
of (i) the tenth day after the Stock Acquisition Date or (ii) the tenth 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 an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of (a) shares of Class B
Common Stock aggregating 15% or more of the Class B Common Stock then
outstanding or (b) shares of Common Stock representing, in the aggregate, 15% or
more of the total number of votes entitled to be cast generally (other than in
an election of directors) by the holders of Common Stock then outstanding
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights; the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right
Certificates and (y) the Rights will be transferable only in connection with the
transfer 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, (A) to each record holder
of Class A Common Stock as of the close of business on the Distribution Date
(other than any Acquiring Person or any Associate or Affiliate of an Acquiring
Person), at the address of such holder shown on the records of the Company, a
Class A Right Certificate, in substantially the form of Exhibit B-1 hereto (a
"Class A Right Certificate"), evidencing one Class A Right (subject to
adjustment as provided herein) for each share of Class A Common Stock so
17
14
held, (B) to each record holder of Class B Common Stock as of the close of
business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, a Class B Right Certificate, in
substantially the form of Exhibit B-2 hereto (a "Class B Right Certificate"),
evidencing one Class B Right (subject to adjustment as provided herein) for each
share of Class B Common Stock so held and (C) to each record holder of Class C
Common Stock as of the close of business on the Distribution Date (other than
any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at
the address of such holder shown on the records of the Company, a Class C Right
Certificate, in substantially the form of Exhibit B-3 hereto (a "Class C Right
Certificate"), evidencing one Class C Right (subject to adjustment as provided
herein) for each share of Class C Common Stock so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Shares of
Preferred Stock, in substantially the form of Exhibit C hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of Common
Stock as of the close of business on the Record Date (other than any Acquiring
Person or any Associate or Affiliate of any Acquiring Person), at the address of
such holder shown on the records of the Company. With respect to certificates
for Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights. Until the Distribution Date
(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Stock outstanding on the
Record
18
15
Date, with or without a copy of the Summary of Rights, shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.
(c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expira tion Date
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
The Neiman Marcus Group, Inc. and BankBoston, N.A., dated as
of October 6, 1999, as the same may be amended from time to
time (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 The Neiman Marcus
Group, 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. The Neiman Marcus Group, 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 owned by or transferred to any Person who
becomes an Acquiring Person (as defined in the Rights
Agreement) and certain transferees thereof will become null
and void and will no longer be transferable.
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, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated
19
16
with such Common Stock shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Stock
which are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.
Section 4. Form of Right Certificates. The Class A Right
Certificates, the Class B Right Certificates and the Class C Right Certificates
(and the forms of election to purchase shares and of assignment to be printed on
the reverse thereof) shall be substantially in the form set forth in Exhibit
B-1, Exhibit B-2 and Exhibit B-3, respectively, 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 the New York Stock Exchange or of any other stock exchange
or automated quotation system on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Sections 11, 13 and
22 hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-thousandths of a share of Preferred Stock as shall be set
forth therein at the price per one one-thousandth of a share of Preferred Stock
set forth therein (the "Purchase Price"), but the number of such one
one-thousandths of a share of Preferred Stock and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by the Chairman of the
Board of Directors, the President, any of the Vice Presidents, the Treasurer or
the Controller of the Company, either manually or by
20
17
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Right Certificates, had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the
Company, by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at an office or agency designated for such purpose,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 7(e), 11(a)(ii) and 14 hereof, at any time
after the close of business on the Distribution Date, and prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates may be transferred, split up, combined
or exchanged
21
18
for another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-thousandths of a share of Preferred
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated for such
purpose. Thereupon the Rights Agent shall countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at
any time after the Distribution Date and prior to the close of business on the
earlier of the Redemption Date or the Final Expiration Date, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date
of Rights. (a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution
22
19
Date, and thereafter the registered holder of any Right Certificate may, subject
to Section 11(a)(ii) hereof and except as otherwise provided herein, exercise
the Rights evidenced thereby in whole or in part upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office or agency of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-thousandth of a share of Preferred Stock as to which the Rights are
exercised, at any time which is both after the Distribution Date and prior to
the earliest of (i) the close of business on October 6, 2009 (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" shall be initially (i)$ 100.00 for
each one one-thousandth of a share of Series A Preferred Stock, (ii) $100.00 for
each one one-thousandth of a share of Series B Preferred Stock and (iii) $100.00
for each one one-thousandth of a share of Series C Preferred Stock, in each case
purchasable upon the exercise of a Right. The Purchase Price and the number of
one one-thousandths of a share of Preferred Stock or other securities or
property to be acquired upon exercise of a Right shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph (c)
of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the number of one one-thousandths of a share of Preferred Stock to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Right Certificate in accordance with Section 9 hereof, in
23
20
cash or by certified check, cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Stock certificates for the number of
one one-thousandths of a share of Preferred Stock to be purchased (and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests), or (B) requisition from the depositary agent depositary receipts
representing interests in such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case certificates for the
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) (and the Company hereby di rects the depositary
agent to comply with such request), (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) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the exercisable Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of Rights upon the
occurrence of any purported transfer or exercise of Rights
24
21
pursuant to Section 6 hereof or this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the form of
assignment or election to purchase set forth on the reverse side of the Right
Certificate surrendered for such transfer or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy, or cause to be destroyed, such cancelled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Shares of Preferred Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or any
shares of Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the time that a Person becomes an Acquiring Person, shares of Common Stock and
other securities) issuable
25
22
upon the exercise of Rights may be listed or admitted to trading on the New York
Stock Exchange or listed on any other national securities exchange or quotation
system, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed or admitted to trading on the New York Stock Exchange or listed on any
other exchange or quotation system upon official notice of issuance upon such
exercise.
(c) From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary to permit the issuance
of shares of Preferred Stock (and following the time that a Person first becomes
an Acquiring Person, shares of Common Stock and other securities) upon the
exercise of Rights, to register and qualify such shares of Preferred Stock (and
following the time that a Person first becomes an Acquiring Person, shares of
Common Stock and other securities) under the Securities Act and any applicable
state securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction
26
23
unless the requisite qualification in such jurisdiction shall have been obtained
and until a registration statement under the Securities Act (if required) shall
have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the time that a Person becomes an Acquiring Person, shares of
Common Stock and other securities) delivered upon exercise of Rights shall, at
the time of delivery of the certificates therefor (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any shares of Preferred Stock (or shares of Common Stock or
other securities) upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Stock (or shares of Common Stock or other securities) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or deliver any certificates or depositary receipts for
Preferred Stock (or shares of Common Stock or other securities) upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by that holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for Preferred Stock is issued upon the exercise of Rights
shall for all purposes be
27
24
deemed to have become the holder of record of the shares of Preferred Stock
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Stock for which the
Rights shall be exercisable, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares and
Number of Rights. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on any series of
Preferred Stock payable in shares of Preferred Stock, (B)
subdivide any series of outstanding Preferred Stock, (C)
combine the shares of any outstanding series of Preferred
Stock into a smaller number of shares of Preferred Stock or
(D) issue any shares of its capital stock in a
reclassification of any series of the Preferred 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 applicable 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
28
25
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, the 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. So long as Class
A Rights, Class B Rights and Class C Rights are outstanding,
the Corporation shall not effect any of the actions set forth
in Clauses (A), (B), (C) or (D) of this paragraph with respect
to either the Series A Preferred Stock, the Series B Preferred
Stock or the Series C Preferred Stock unless the Corporation
shall also contemporaneously effect a like transaction with
respect to the other such series; provided, however, that in
the event that such a transaction is effected with respect to
one such series but no such shares of the other series are
outstanding, 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 upon such date,
shall be proportionately adjusted with respect to the holders
of Rights exercisable for shares of such series that are not
outstanding as if such a dividend, subdivision, combination or
reclassification had been effected with respect to the shares
of such series.
29
26
(ii) Subject to Section 24 of this Agreement and
except as otherwise provided in this Section 11(a)(ii), in the
event any Person becomes an Acquiring Person, each holder of a
Right shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then current
applicable Purchase Price multiplied by the number of one
one-thousandths of a share of Preferred Stock for which such
Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of shares of Preferred Stock, such
number of shares of Class A Common Stock (in the case of a
Class A Right), Class B Common Stock (in the case of a Class B
Right) or Class C Common Stock (in the case of a Class C
Right) (or at the option of the Company, such number of one
one-thousandths of a share of Series A Preferred Stock (in the
case of a Class A Right), Series B Preferred Stock (in the
case of a Class B Right) or Series C Preferred Stock (in the
case of a Class C Right)) as shall equal the result obtained
by (x) multiplying the then current applicable Purchase Price
by the number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price
of the Company's Class A Common Stock (in the case of a Class
A Right), Class B Common Stock (in the case of a Class B
Right) or Class C Common Stock (in the case of a Class C
Right) (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event; provided, however, that
the applicable Purchase Price and the number of shares of
Common Stock so receivable upon exercise of a Right shall
thereafter be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. Notwithstanding anything
in this Agreement to the
30
27
contrary, however, from and after the time (the "invalidation
time") when any Person first becomes an Acquiring Person, any
Rights that are beneficially owned by (x) any Acquiring Person
(or any Affiliate or Associate of any Acquiring Person), (y) a
transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the invalidation
time or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or
concurrently with the invalidation time pursuant to either (I)
a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or (II) a transfer which the Board of
Directors has determined is part of a plan, arrangement or
understanding which has the purpose or effect of avoiding the
provisions of this paragraph, and subsequent transferees of
such Persons, shall be void without any further action and any
holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights under any provision of
this Agreement. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of
Right Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring Person
or its Affiliates, Associates or transferees hereunder. From
and after the invalidation time, no Right Certificate shall be
issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become void pursuant to the
provisions of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the
31
28
provisions of this paragraph shall be cancelled. From and
after the occurrence of an event specified in Section 13(a)
hereof, any Rights that theretofore have not been exercised
pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not
pursuant to this Section 11(a)(ii).
(iii) The Company may at its option substitute for a
share of Common Stock issuable upon the exercise of Rights in
accordance with the foregoing subparagraph (ii) such number or
fractions of shares of the applicable series of Preferred
Stock having an aggregate current market value equal to the
current per share market price of a share of the applicable
class of Common Stock. In the event that there shall not be
sufficient shares of Common Stock of any class issued but not
outstanding or authorized but unissued to permit the exercise
in full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then
in effect to which the Company is a party (A) determine the
excess of (1) the value of the shares of Common Stock issuable
upon the exercise of each Class A Right, each Class B Right
and each Class C Right in accordance with the foregoing
subparagraph (ii) (the "Current Values") over (2) the then
current applicable Purchase Price multiplied by the number of
one one- thousandths of shares of Preferred Stock for which
such Right was exercisable immediately prior to the time that
the Acquiring Person became such (such excess, the "Spread"),
and (B) with respect to each Right (other than Rights which
have become void pursuant to Section 11(a)(ii)), make adequate
provision to substitute for the shares of Class A Common
Stock, Class B Common Stock or
32
29
Class C Common Stock, as the case may be, issuable in
accordance with subparagraph (ii) upon exercise of the Right
and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the applicable Purchase Price, (3) shares of
Preferred Stock or other equity securities of the Company
(including, without limitation, shares or fractions of shares
of preferred stock which, by virtue of having dividend, voting
and liquidation rights substantially comparable to those of
the shares of Common Stock, are deemed in good faith by the
Board of Directors to have substantially the same value as the
shares of Class A Common Stock (in the case of a Class A
Right), Class B Common Stock (in the case of a Class B Right)
or Class C Common Stock (in the case of a Class C Right) (such
shares of Preferred Stock and shares or fractions of shares of
preferred stock are hereinafter referred to as "Common Stock
equivalents")), (4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing, having a value
which, when added to the value of the shares of Common Stock
actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value (less the amount of
any reduction in the applicable Purchase Price), where such
aggregate value has been determined by the Board of Directors
upon the advice of a nationally recognized investment banking
firm selected in good faith by the Board of Directors;
provided, however, if the Company shall not make adequate
provision to deliver value pursuant to clause (B) above within
thirty (30) days following the date that the Acquiring Person
became such (the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, to the extent permitted
by applicable law and any material agreements then in effect
to
33
30
which the Company is a party, upon the surrender for exercise
of a Right and without requiring payment of the Purchase
Price, shares of Class A Common Stock (in the case of a Class
A Right), Class B Common Stock (in the case of a Class B
Right) or Class C Common Stock (in the case of a Class C
Right) (to the extent available), and then, if necessary, such
number or fractions of shares of the applicable series of
Preferred Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If, upon the date any Person
becomes an Acquiring Person, the Board of Directors shall
determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, then, if the
Board of Directors so elects, the thirty (30) day period set
forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder approval
for the authorization of such additional shares (such thirty
(30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the
second and/or third sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 11(a)(ii) hereof
and the last sentence of this Section 11(a)(iii) hereof, that
such action shall apply uniformly to all outstanding Class A
Rights, Class B Rights and Class C Rights and (y) may suspend
the exercisability of the Class A Rights, the Class B Rights
and the Class C Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
34
31
distribution to be made pursuant to such second sentence and
to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Class A Rights, the
Class B Rights and the Class C Rights has been temporarily
suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the shares of Class A Common
Stock (in the case of a Class A Right), Class B Common Stock
(in the case of a Class B Right) or Class C Common Stock (in
the case of a Class C Right) shall be the current per share
market price (as determined pursuant to Section 11(d)(i)) on
the Section 11(a)(ii) Trigger Date and the per share or
fractional value of any "Common Stock equivalent" shall be
deemed to equal the current per share market price of the
Class A Common Stock (in the case of a Class A Right), Class B
Common Stock (in the case of a Class B Right) or Class C
Common Stock (in the case of a Class B Right). The Board of
Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive (a)
shares of Class A Common Stock upon the exercise of the Class
A Rights among holders of Class A Rights, (b) shares of Class
B Common Stock upon the exercise of the Class B Rights among
holders of Class B Rights and (c) shares of Class C Common
Stock upon the exercise of the Class C Rights among holders of
Class C Rights, in each case, pursuant to this Section
11(a)(iii). (b) In case the Company shall fix a record date
for the issuance of rights, options
or warrants to all holders of Preferred Stock entitling them (for a
period expiring within 45 calendar days after such record date) to
subscribe for or purchase shares of the
35
32
applicable series of Preferred Stock (or shares having the same rights,
privileges and preferences as the applicable series of Preferred Stock
("equivalent preferred shares")) or securities convertible into the
applicable series of Preferred Stock or equivalent preferred shares at
a price per share of Preferred Stock or equivalent preferred shares (or
having a conversion price per share, if a security convertible into
shares of Preferred Stock or equivalent preferred shares) less than the
then current per share market price of the applicable series of
Preferred Stock (determined pursuant to Section 11(d) hereof) on such
record date, the applicable Purchase Price to be in effect after such
record date shall be determined by multiplying the applicable Purchase
Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of such series of
Preferred Stock and equivalent preferred shares outstanding on such
record date plus the number of shares of such series of Preferred Stock
and equivalent preferred shares which the aggregate offering price of
the total number of shares of such series of Preferred Stock and/or
equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current market price, and the
denominator of which shall be the number of shares of such series of
Preferred Stock and equivalent preferred shares outstanding on such
record date plus the number of additional shares of such series of
Preferred Stock and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so
to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of
36
33
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Shares of Preferred Stock and
equivalent preferred shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of any series of Preferred 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
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the applicable Purchase Price to
be in effect after such record date shall be determined by multiplying
the applicable 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 applicable series of Preferred
Stock (determined pursuant to Section 11(d) hereof) on such record
date, less the fair market value (as determined in good faith by the
Board of Directors of the Company whose determination shall be
described in a statement filed with the Rights Agent) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of such series
of Preferred
37
34
Stock, and the denominator of which shall be such current per share
market price (determined pursuant to Section 11(d) hereof) of such
series of Preferred Stock; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less
than the aggregate par value 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 applicable Purchase
Price shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) (i) Except as otherwise provided herein, for the purpose
of any computation hereunder, the "current per share market price" of
any security (a "Security" for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily closing prices
per share of such Security for the 30 consecutive Trading Days (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 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, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and
asked prices,
38
35
regular way, in either case as reported by 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 NASDAQ or such other system then in use, or, if
on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by
the Board of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities exchange 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.
(ii) For the purpose of any computation hereunder, if any
series of Preferred Stock is publicly traded, the "current per share
market price" of such series of Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If any series
of Preferred Stock is not publicly traded but the corresponding series
of Common Stock is publicly traded, the "current per share market
price" of such series of Preferred Stock shall be conclusively deemed
to be the current per share market price of the corresponding series of
Common Stock as determined pursuant to Section 11(d)(i) multiplied by
one thousand (appropriately adjusted to reflect any stock split, stock
39
36
dividend or similar transaction occurring after the date hereof). If
neither the Common Stock nor the corresponding Preferred Stock of any
series is publicly traded, "current per share market price" shall mean
the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
state ment filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the applicable Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one ten-thousandth of a
share of Preferred Stock or share of Common Stock or other share or
security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the 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 thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other
than Preferred Stock, thereafter the Purchase Price and the number of
such other shares so receivable upon exercise of a Right shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), 11(b), 11(c), 11(e),
11(h), 11(i) and 11(m), and the provisions of Sections 7, 9, 10,
40
37
13 and 14 hereof with respect to the Preferred 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 one
one-thousandths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a share of
Preferred Stock (calculated to the nearest one ten-thousandth of a
share of Preferred Stock) of the applicable series obtained by (i)
multiplying (x) the number of one one-thousandths of a share covered by
a Right immediately prior to such adjustment by (y) the applicable
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the
applicable 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 one one-thousandths of
a share of the applicable series of Preferred Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number
of one
41
38
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the applicable Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the applicable
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 applicable
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company may, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record
date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result
of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the
public announcement.
42
39
(j) Irrespective of any adjustment or change in the applicable
Purchase Price or the number of one one-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express
the applicable Purchase Price and the number of one one-thousandths of
a share of Preferred Stock which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
Preferred Stock or other shares of capital stock issuable upon exercise
of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of
Preferred Stock or other such shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred 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
requiring such adjustment.
43
40
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price for any series of Preferred Stock, 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 any series of
Preferred Stock, issuance wholly for cash of any shares of any series
of Preferred Stock at less than the current market price, issuance
wholly for cash or any series of Preferred Stock or securities which by
their terms are convertible into or exchangeable for any series of
Preferred Stock, dividends on any series of Preferred Stock payable in
shares of Preferred Stock or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on any class of shares of Common Stock
payable in Common Stock or (ii) effect a subdivision, combination or
consolidation of any class of Common Stock (by reclassification or
otherwise other than by payment of a dividend payable in Common Stock)
into a greater or lesser number of Common Stock, then in any such case,
the number of Rights associated with each share of Common Stock of such
class then outstanding, or issued or delivered thereafter, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock of such class following any
such event shall equal the result obtained by (A) in the case of the
Class A Rights, multiplying the number of Class A Rights associated
with each share of Class A Common Stock immediately prior to such event
by a fraction the
44
41
numerator of which shall be the total number of shares of Class A
Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares
of Class A Common Stock outstanding immediately following the
occurrence of such event, (B) in the case of the Class B Rights,
multiplying the number of Class B Rights associated with each share of
Class B Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Class B
Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares
of Class B Common Stock outstanding immediately following the
occurrence of such event and (C) in the case of the Class C Rights,
multiplying the number of Class C Rights associated with each share of
Class C Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Class C
Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares
of Class C Common Stock outstanding immediately following the
occurrence of such event . The adjustments provided for in this Section
11(n) shall be made successively to any class of Common Stock whenever
such a dividend is declared or paid or such subdivision, combination or
consolidation is effected on such class of Common Stock.
(o) The Company agrees that, after the earlier of the
Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially
or eliminate the benefits intended to be afforded by the Rights.
45
42
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common Stock
or the Preferred Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof (if so required under Section 25 hereof). The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earnings Power. (a) In the event, directly or indirectly, at any time
after any Person has become an Acquiring Person, (i) the Company shall merge
with and into any other Person, (ii) any Person shall consolidate with the
Company, or any Person shall merge with and into the Company and the Company
shall be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 50%
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company or one or more of
its wholly-owned Subsidiaries), then in each such case, proper provision shall
be made so that: (A) each holder of record of a Right (other than Rights which
have become void pursuant to Section 11(a)(ii)) shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the then current
applicable
46
43
Purchase Price multiplied by the number of one one-thousandths of a share of
Preferred Stock for which the applicable Right is then exercisable (each as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c),
11(h), 11(i) and 11(m)), in accordance with the terms of this Agreement and in
lieu of Preferred Stock, such number of validly issued, fully paid and
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is then
exercisable (as subsequently adjusted thereafter pursuant to Sections 11(a)(i),
11(b), 11(c), 11(h), 11(i) and 11(m)) and (2) dividing that product by 50% of
the then current per share market price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d)(i) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided, that the
Purchase Price and the number of shares of Common Stock of such Principal Party
issuable upon exercise of each Right shall be further adjusted as provided in
Section 11(f) of this Agreement to reflect any events occurring in respect of
such Principal Party after the date of such consolidation, merger, sale or
transfer; (B) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and du ties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party; and (D)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock in accordance
with Section 9 hereof) in connection with such consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter
47
44
deliverable upon the exercise of the Rights; provided, that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the applicable Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which such holder would have
been entitled to receive had such holder, at the time of such transaction, owned
the Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clauses (i) or (ii) of the first sentence of Section 13(a) hereof: (A)
the Person that is the issuer of the securities into which the shares
of Common Stock are converted in such merger or consolidation, or, if
there is more than one such issuer, the issuer of the shares of Common
Stock of which have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (x) the Person that
is the other party to the merger, if such Person survives said merger,
or, if there is more than one such Person, the Person the shares of
Common Stock of which have the greatest aggregate market value of
shares outstanding or (y) if the Person that is the other party to the
merger does not survive the merger, the Person that does survive the
merger (including the Company if it survives) or (z) the Person
resulting from the consolidation; and
48
45
(ii) in the case of any transaction described in
clause (iii) of the first sentence in Section 13(a) hereof, the Person
that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions,
or, if each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power so transferred
or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest aggregate market value of
shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time or has
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of all of which is and has been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.
49
46
(c) The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) hereof unless prior
thereto the Company and the Principal Party involved therein shall have executed
and delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance with
their terms and that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under this Agreement as the
same shall have been assumed by the Principal Party pursuant to Sections 13(a)
and (b) hereof and providing that, as soon as practicable after executing such
agreement pursuant to this Section 13, the Principal Party will:
(i) prepare and file a registration statement under
the Securities Act, if necessary, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate
form, use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and use its
best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date, and similarly comply
with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange, to list or
admit to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on the New York
Stock Exchange or such securities exchange, or, if the Common Stock of
the Principal Party shall not be listed or admitted to trading on the
New York Stock Exchange or a national
50
47
securities exchange, to cause the Rights and the securities receivable
upon exercise of the Rights to be reported by such other system then in
use;
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all
respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13, then, in
such event, the Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be
51
48
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any
time after a Person first becomes an Acquiring Person, enter into any
transaction of the type contemplated by clauses (i), (ii) or (iii) of Section
13(a) hereof if (x) at the time of or immediately after such consolidation,
merger, sale, transfer or other transaction there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer of other transaction, the
stockholders of the Person who constitutes, or would constitute, the Principal
Party for purposes of Section 13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates or Associates or
(z) the form or nature of organization of the Principal Party would preclude or
limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction
52
49
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 the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a
53
50
share of Preferred Stock, the Company shall pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
share of Preferred Stock. For the purposes of this Section 14(b), the current
market value of a share of Preferred Stock shall be the closing price of a share
of the applicable series of Preferred Stock (as determined pursuant to Section
11(d)(i) 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
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), on his own behalf and for his own
benefit, may enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, such Common Stock) in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
54
51
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or agency of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution Date,
the Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the Common Stock
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred 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 Right Certificate be construed to confer upon the holder of any Right
55
52
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 this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith 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 arising therefrom, directly or
indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for any series of Preferred Stock or any class of
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 and to be signed, executed
56
53
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 powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name
57
54
or in its changed name and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman of the Board of Directors, the President, any Vice President,
the Treasurer, the Controller or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or wilful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates
58
55
(except its countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections
3, 11, 13, 23 and 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 Right Certificates after receipt of a
certificate furnished pursuant to Section 12, describing such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any shares of
Preferred Stock or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
59
56
(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 of the Board of Directors, the Chief Executive
Officer, the Chief Operating Officer, the President, the Chief Financial
Officer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of
the Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to
such application specifying the action to be taken or omitted.
(h) The Rights Agent and any 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
it were not Rights Agent under this Agreement. Nothing herein shall
60
57
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.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has not been completed to certify the
holder is not an Acquiring Person (or an Affiliate or Associate thereof),
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of each class of Common Stock or each series of Preferred Stock
by registered or certified mail, and, following the Distribution Date, to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of each class of Common Stock or each series of Preferred
Stock by registered or certified mail, and, following the Distribution Date, to
the holders of the Right Certificates by first-class mail. If the Rights
61
58
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the laws
of the United States or any State thereof, 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 powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
any class of Common Stock or any series of Preferred Stock, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
62
59
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such forms as may be approved by its Board of Directors to reflect any
adjustment or change in the applicable Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of any class of Common Stock
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Company may, with respect to shares of Common
Stock of any class so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) upon the exercise,
conversion or exchange of securities notes or debentures issued by the Company
or (iv) a contractual obligation of the Company in each case existing prior to
the Distribution Date, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale.
Section 23. Redemption. (a) The Board of Directors of the Company
may, at any time prior to such time as any Person first becomes an Acquiring
Person, redeem all but not less than all 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
(the redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such con ditions as the Board of Directors in its sole discretion may
establish. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the current market price of the Common Stock at
the time of redemption) or any other form of consideration deemed appropriate by
the Board of Directors.
63
60
(b) Immediately upon the action of the Board of Directors ordering
the redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right 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 10 days after such action of the Board of Directors
ordering the redemption of the Rights (or such later time as the Board of
Directors may establish for the effectiveness of such redemption), the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common 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 shall state the method by which the
payment of the Redemption Price will be made.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person first becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for shares of Common Stock (or, at the Company's option,
Preferred Stock in accordance with Section 11(a)(iii)) at an exchange ratio of
one share of Class A Common Stock per Class A Right (or one one-thousandth of a
share of Series A Preferred Stock), one share of Class B Common Stock per Class
B Right (or one one-thousandth of a share of Series B Preferred Stock) and one
share of Class C Common Stock per
64
61
Class C Right (or one one-thousandth of a share of Series C Preferred Stock)
(adjusted to reflect any stock split, stock dividend or similar transaction with
respect to the applicable class of Common Stock occurring after the date hereof;
such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of (1) shares of Class B Common Stock aggregating 50% or more
of the shares of Class B Common Stock then outstanding or (2) shares of Common
Stock representing, in the aggregate, 50% or more of the total number of votes
entitled to be cast generally (other than in an election of directors) by the
holders of the Common Stock then outstanding. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exchanged pursuant to this Section 24(a) shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged pursuant to this
Section 24(a). The exchange of the Rights by the Board of Directors may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of 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
shall promptly mail a notice of any such exchange to
65
62
all of the holders of the Rights so exchanged at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the 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 of (a) Class A Rights shall be effected pro rata based on
the number of available shares of Class A Common Stock and the number of Class A
Rights (other than Class A Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Class A Rights,
(b) Class B Rights shall be effected pro rata based on the number of available
shares of Class B Common Stock and the number of Class B Rights (other than
Class B Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Class B Rights and (c) Class C Rights
shall be effected pro rata based on the number of available shares of Class C
Common Stock and the number of Class C Rights (other than Class C Rights which
have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Class C Rights.
(c) The Company may at its option substitute, and, in the event that
there shall not be sufficient shares of Class A Common Stock, Class B Common
Stock or Class C Common Stock, as the case may be, issued but not outstanding or
authorized but unissued to permit an exchange of Class A Rights, Class B Rights
or Class C Rights, as the case may be, for Class A Common Stock, Class B Common
Stock or Class C Common Stock as contemplated in accordance with this Section
24, the Company may, in its discretion, take such action as may be necessary to
authorize additional shares of Class A Common Stock, Class B Common Stock or
Class C Common Stock for issuance upon exchange of the Class A Rights, the Class
B Rights or
66
63
the Class C Rights. In the event that the Company shall determine not to take
such action or shall, after good faith effort, be unable to take such action as
may be necessary to authorize such additional shares of Class A Common Stock,
Class B Common Stock or Class C Common Stock, the Company shall substitute, to
the extent of such insufficiency, for each share of Class A Common Stock, Class
B Common Stock or Class C Common Stock that would otherwise be issuable upon
exchange of a Class A Right, Class B Right or Class C Right, a number of shares
of Series A Preferred Stock, Series B Preferred Stock, or Series C Preferred
Stock or fractions thereof (or equivalent preferred shares as such term is
defined in Section 11(b)) having an aggregate current per share market price
(determined pursuant to Section 11(d) hereof) equal to the current per share
market price of one share of Class A Common Stock, Class B Common Stock or Class
C Common Stock (determined pursuant to Section 11(d) hereof), as the case may
be, as of the date of issuance of such shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, as the case may be, or
fractions thereof (or equivalent preferred shares).
(d) The Company shall not, in connection with any exchange pursuant
to this Section 24, be required to issue fractions of shares of Common Stock or
to distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the Right 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 the
applicable class of Common Stock. For the purposes of this paragraph (d), the
current market value of a whole share of Class A Common Stock, Class B Common
Stock or Class C Common Stock shall be the closing price of a share of Class A
Common Stock, Class B Common Stock and Class C
67
64
Common Stock (as determined pursuant to the second sentence of Section 11(d)(i)
hereof), as applicable, 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
at any time after the earlier of the Distribution Date or the Stock Acquisition
Date propose (i) to pay any dividend payable in stock of any class to the
holders of any series of its Preferred Stock or to make any other distribution
to the holders of any series of its Preferred Stock (other than a regular
quarterly cash dividend), (ii) to offer to the holders of any series of its
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of any series of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of any series of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding Preferred Stock),
(iv) to effect the liquidation, dissolution or winding up of the Company, or (v)
to declare or pay any dividend on any class of Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of any class of
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of such class or series of Common Stock
and/or Preferred Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the Preferred
Stock for purposes of such action, and in the case of any such other action, at
68
65
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Stock and/or
Preferred Stock, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or Section 13
shall occur then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
and Section 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Neiman Marcus Group, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
BankBoston, N.A.
c/o Equiserve Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Client Administration
69
66
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Except as otherwise provided
for so long as the Rights are then redeemable, the Company may in its sole and
absolute discretion, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of this Agreement in any respect without the
approval of any holders of the Rights. At any time when the Rights are no longer
redeemable, no such supplement or amendment shall be made if such supplement or
amendment shall adversely affect the interests of the holders of Rights as such
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person), and no such amendment may cause the Rights again to become redeemable
or cause the Agreement again to become amendable other than in accordance with
this sentence. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered
70
67
holders of the Right Certificates (and, prior to the Distribution Date, the
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 Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement or applicable to this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
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.
Section 34. Administration. The Board of Directors of the Company
shall have the exclusive power and authority to: (i) administer and interpret
the provisions of this Agreement, including, without limiting the generality of
the foregoing, to administer and interpret the provisions of this Agreement
relating to Exempt Persons to effectuate the purpose of
71
68
such provisions, and (ii) to exercise all rights and powers specifically granted
to the Board of Directors or the Company or as may be necessary or advisable in
the administration of this Agreement. All such actions, calculations,
determinations and interpretations which are done or made by the Board of
Directors in good faith shall be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other parties and shall not
subject the Board of Directors to any liability to the holders of the Rights.
[The remainder of this page intentionally left blank.]
72
69
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.
THE NEIMAN MARCUS GROUP, INC.
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title Senior Vice President, General
Counsel and Secretary
BANKBOSTON, N.A.
By /s/ Xxxxx Xxxxxx Eori
----------------------------------------
Name: Xxxxx Xxxxxx Eori
Title Director, Client Services
73
Exhibit A-1
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
THE NEIMAN MARCUS GROUP, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
-------------------
The Neiman Marcus Group, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Company"), hereby certifies that the following resolution was duly adopted
by the Board of Directors of the Company as required by Section 151 of the
General Corporation Law of the State of Delaware at a meeting duly called and
held on October 6, 1999:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended to date (hereinafter called
the "Certificate of Incorporation"), the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company and hereby adopts the resolution establishing the designation,
number of shares, preferences, voting powers and other rights, and the
restrictions and limitations thereof, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred Stock.
A-1-1
74
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Class A Common Stock,
par value $.01 per share, of the Company ("Class A Common Stock"), Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common Stock")
and Class C Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock" and, together with the Class A Common Stock and Class B Common
Stock, the "Common Stock") and of any other stock of the Company ranking junior
to the Series A Preferred Stock, and on a pari passu basis with the Series B
Preferred Stock and the Series C Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for such purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series A Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class A Common Stock, declared on the Class A Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the
first Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series A Preferred Stock. In the event the Company shall at any
time after October 18, 1999 declare or pay any dividend on the Class A Common
Stock payable in shares of Class A Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Class A Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Class A Common Stock) into a greater or lesser number of shares of Class A
Common Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Class A
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class A Common Stock that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Class A Common
Stock (other than a dividend payable in shares of Class A Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Class A Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per
share on the Series A Preferred Stock shall nevertheless be payable, when, as
and if declared, on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or
not earned or declared, on outstanding shares of Series A Preferred Stock from
the Dividend Payment Date
A-1-2
75
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and before such
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights;
(A) Subject to the provision for adjustment hereinafter set forth
and except as otherwise provided in the Certificate of Incorporation or required
by law, each share of Series A Preferred Stock shall entitle the holder thereof
to a number of votes equal to 1,000 times the number of votes which each share
of Class A Common Stock is entitled to vote, on all matters upon which the
holders of the Class A Common Stock of the Company are entitled to vote. In the
event the Company shall at any time after October 18, 1999 declare or pay any
dividend on the Class A Common Stock payable in shares of Class A Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Class A Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Class A Common Stock) into a greater or lesser number
of shares of Class A Common Stock, then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Class A Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class A Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series A Preferred Stock and the holders of shares of
Class A Common Stock and any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Class A Common Stock as set forth herein) for taking any
corporate action.
A-1-3
76
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not earned or declared, on shares of Series A Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Company ranking
junior (as to dividends and upon dissolution, liquidation or winding
up) to the Series A Preferred Stock or rights, warrants or options
to acquire such junior stock;
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof.
A-1-4
77
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Class A Common Stock, or (B) to the holders of shares of stock ranking
on a parity upon liquidation, dissolution or winding up with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Company shall at any time after October 18, 1999
declare or pay any dividend on the Class A Common Stock payable in shares of
Class A Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Class A Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Class A Common Stock) into a greater
or lesser number of shares of Class A Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Pref erred Stock were
entitled immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Class A Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class A Common Stock that were outstanding immediately prior
to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Class A Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same time be similarly
converted into, exchanged for or changed into an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Class A
Common Stock is converted, exchanged or converted. In the event the Company
shall at any time after October 18, 1999 declare or pay any dividend on the
Class A Common Stock payable in shares of Class A Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Class A Common Stock) into a greater or lesser number of shares of Class A
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
A Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Class A Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class A Common Stock that were outstanding immediately prior
to such event.
A-1-5
78
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable from any holder.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, pari passu with the
Series B and the Series C Preferred Stock, junior to all other series of
Preferred Stock and senior to all classes of Common Stock.
Section 10. Amendment. If any proposed amendment to the Certificate
of Incorporation (including this Certificate of Designations) would alter,
change or repeal any of the preferences, powers or special rights given to the
Series A Preferred Stock so as to affect the Series A Preferred Stock adversely,
then the holders of the Series A Preferred Stock shall be entitled to vote
separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. The Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Stock.
A-1-6
79
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its this day of , 1999.
--------------------- ---- -------
--------------------------------------------
Name:
Title:
X-0-0
00
Xxxxxxx X-0
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
THE NEIMAN MARCUS GROUP, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
-------------------
The Neiman Marcus Group, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Company"), hereby certifies that the following resolution was duly adopted
by the Board of Directors of the Company as required by Section 151 of the
General Corporation Law of the State of Delaware at a meeting duly called and
held on October 6, 1999:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended to date (hereinafter called
the "Certificate of Incorporation"), the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company and hereby adopts the resolution establishing the designation,
number of shares, preferences, voting powers and other rights, and the
restrictions and limitations thereof, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 100,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series B Preferred Stock.
A-2-1
81
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, the holders of shares of
Series B Preferred Stock, in preference to the holders of Class A Common Stock,
par value $.01 per share, of the Company ("Class A Common Stock"), Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common Stock")
and Class C Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock" and, together with the Class A Common Stock and Class B Common
Stock, the "Common Stock") and of any other stock of the Company ranking junior
to the Series B Preferred Stock, and on a pari passu basis with the Series C
Preferred Stock and the Series A Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for such purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series B Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class B Common Stock, declared on the Class B Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the
first Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series B Preferred Stock. In the event the Company shall at any
time after October 18, 1999 declare or pay any dividend on the Class B Common
Stock payable in shares of Class B Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Class B Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Class B Common Stock) into a greater or lesser number of shares of Class B
Common Stock, then in each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Class B
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class B Common Stock that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Class B Common
Stock (other than a dividend payable in shares of Class B Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Class B Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per
share on the Series B Preferred Stock shall nevertheless be payable, when, as
and if declared, on such subsequent Dividend Payment Date.
A-2-2
82
(C) Dividends shall begin to accrue and be cumulative, whether or
not earned or declared, on outstanding shares of Series B Preferred Stock from
the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of issue is
a Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series B Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights;
(A) Subject to the provision for adjustment hereinafter set forth
and except as otherwise provided in the Certificate of Incorporation or required
by law, each share of Series B Preferred Stock shall entitle the holder thereof
to a number of votes equal to 1,000 times the number of votes which each share
of Class B Common Stock is entitled to vote, on all matters upon which the
holders of the Class B Common Stock of the Company are entitled to vote. In the
event the Company shall at any time after October 18, 1999 declare or pay any
dividend on the Class B Common Stock payable in shares of Class B Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Class B Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Class B Common Stock) into a greater or lesser number
of shares of Class B Common Stock, then in each such case the number of votes
per share to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Class B Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class B Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series B Preferred Stock and the holders of shares of
Class B Common Stock and any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting rights and
their consent shall not be
A-2-3
83
required (except to the extent they are entitled to vote with holders of Class B
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not earned or declared, on shares of Series B Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the
Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series B Preferred Stock, except dividends paid
ratably on the Series B Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Company ranking
junior (as to dividends and upon dissolution, liquidation or winding
up) to the Series B Preferred Stock or rights, warrants or options
to acquire such junior stock;
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series B Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof.
A-2-4
84
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series B Preferred Stock unless, prior thereto, the holders of shares of Series
B Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series B Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Class B Common Stock, or (B) to the holders of shares of stock ranking
on a parity upon liquidation, dissolution or winding up with the Series B
Preferred Stock, except distributions made ratably on the Series B Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Company shall at any time after October 18, 1999
declare or pay any dividend on the Class B Common Stock payable in shares of
Class B Common Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of Class B Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Class B Common Stock) into a greater
or lesser number of shares of Class B Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Class B Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class B Common Stock that were outstanding immediately prior
to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Class B Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case each share of Series B Preferred Stock shall at the same time be similarly
converted into, exchanged for or changed into an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Class B
Common Stock is converted, exchanged or converted. In the event the Company
shall at any time after October 18, 1999 declare or pay any dividend on the
Class B Common Stock payable in shares of Class B Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Class B Common Stock) into a greater or lesser number of shares of Class B
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
B Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Class B Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class B Common Stock that were outstanding immediately prior
to such event.
A-2-5
85
Section 8. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable from any holder.
Section 9. Rank. The Series B Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, pari passu with the
Series C and the Series A Preferred Stock, junior to all other series of
Preferred Stock and senior to all classes of Common Stock.
Section 10. Amendment. If any proposed amendment to the Certificate
of Incorporation (including this Certificate of Designations) would alter,
change or repeal any of the preferences, powers or special rights given to the
Series B Preferred Stock so as to affect the Series B Preferred Stock adversely,
then the holders of the Series B Preferred Stock shall be entitled to vote
separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series B Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. The Series B Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Stock.
A-2-6
86
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its this day of , 1999.
----------------------------------------
Name:
Title:
X-0-0
00
Xxxxxxx X-0
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
OF
THE NEIMAN MARCUS GROUP, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
-------------------
The Neiman Marcus Group, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter called
the "Company"), hereby certifies that the following resolution was duly adopted
by the Board of Directors of the Company as required by Section 151 of the
General Corporation Law of the State of Delaware at a meeting duly called and
held on October 6, 1999:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Restated Certificate of Incorporation, as amended to date (hereinafter called
the "Certificate of Incorporation"), the Board of Directors hereby creates a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company and hereby adopts the resolution establishing the designation,
number of shares, preferences, voting powers and other rights, and the
restrictions and limitations thereof, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series C Junior Participating Preferred Stock" (the "Series C
Preferred Stock") and the number of shares constituting the Series C Preferred
Stock shall be 50,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series C Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series C Preferred Stock.
A-3-1
88
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series C Preferred Stock with respect to dividends, the holders of shares of
Series C Preferred Stock, in preference to the holders of Class A Common Stock,
par value $.01 per share, of the Company ("Class A Common Stock"), Class B
Common Stock, par value $.01 per share, of the Company ("Class B Common Stock")
and Class C Common Stock, par value $.01 per share, of the Company ("Class C
Common Stock" and, together with the Class A Common Stock and Class B Common
Stock, the "Common Stock") and of any other stock of the Company ranking junior
to the Series C Preferred Stock, and on a pari passu basis with the Series A
Preferred Stock and the Series B Preferred Stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for such purpose, quarterly dividends payable in cash on the last day
of March, June, September and December in each year (each such date being
referred to herein as a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction of a share
of Series C Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Class C Common Stock, declared on the Class C Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the
first Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series C Preferred Stock. In the event the Company shall at any
time after October 18, 1999 declare or pay any dividend on the Class C Common
Stock payable in shares of Class C Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Class C Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Class C Common Stock) into a greater or lesser number of shares of Class C
Common Stock, then in each such case the amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Class C
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Class C Common Stock that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series C Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Class C Common
Stock (other than a dividend payable in shares of Class C Common Stock);
provided, that, in the event no dividend or distribution shall have been
declared on the Class C Common Stock during the period between any Dividend
Payment Date and the next subsequent Dividend Payment Date, a dividend of $1 per
share on the Series C Preferred Stock shall nevertheless be payable, when, as
and if declared, on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or
not earned or declared, on outstanding shares of Series C Preferred Stock from
the Dividend Payment Date
A-3-2
89
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of issue
of such shares, or unless the date of issue is a Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
C Preferred Stock entitled to receive a quarterly dividend and before such
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series C
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series C Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights;
(A) Subject to the provision for adjustment hereinafter set forth
and except as otherwise provided in the Certificate of Incorporation or required
by law, each share of Series C Preferred Stock shall entitle the holder thereof
to a number of votes equal to 1,000 times the number of votes which each share
of Class C Common Stock is entitled to vote, on all matters upon which the
holders of the Class C Common Stock of the Company are entitled to vote. In the
event the Company shall at any time after October 18, 1999 declare or pay any
dividend on the Class C Common Stock payable in shares of Class C Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Class C Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Class C Common Stock) into a greater or lesser number
of shares of Class C Common Stock, then in each such case the number of votes
per share to which holders of shares of Series C Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Class C Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class C Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a series of
Preferred Stock or any similar stock, and except as otherwise required by law,
the holders of shares of Series C Preferred Stock and the holders of shares of
Class C Common Stock and any other capital stock of the Company having general
voting rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series C Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Class C Common Stock as set forth herein) for taking any
corporate action.
A-3-3
90
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not earned or declared, on shares of Series C Preferred Stock outstanding
shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the
Series C Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series C Preferred Stock, except dividends paid
ratably on the Series C Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series C Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Company ranking
junior (as to dividends and upon dissolution, liquidation or winding
up) to the Series C Preferred Stock or rights, warrants or options
to acquire such junior stock;
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series C Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the
A-3-4
91
Common Stock or of shares of any other stock of the Company ranking junior, upon
liquidation, dissolution or winding up, to the Series C Preferred Stock unless,
prior thereto, the holders of shares of Series C Preferred Stock shall have
received $1,000 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not earned or declared, to the date of
such payment, provided that the holders of shares of Series C Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of shares of Class C
Common Stock, or (B) to the holders of shares of stock ranking on a parity upon
liquidation, dissolution or winding up with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Company shall at any time after October 18, 1999 declare or pay any dividend on
the Class C Common Stock payable in shares of Class C Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Class C
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Class C Common Stock) into a greater or lesser number of shares of
Class C Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under the proviso in clause (A) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Class C Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Class C Common
Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Class C Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case each share of Series C Preferred Stock shall at the same time be similarly
converted into, exchanged for or changed into an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Class C
Common Stock is converted, exchanged or converted. In the event the Company
shall at any time after October 18, 1999 declare or pay any dividend on the
Class C Common Stock payable in shares of Class C Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Class C Common Stock) into a greater or lesser number of shares of Class C
Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the conversion, exchange or change of shares of Series
C Preferred Stock shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Class C Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Class C Common Stock that were outstanding immediately prior
to such event.
Section 8. No Redemption. The shares of Series C Preferred Stock
shall not be redeemable from any holder.
A-3-5
92
Section 9. Rank. The Series C Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the Company, pari passu with the
Series A and the Series B Preferred Stock, junior to all other series of
Preferred Stock and senior to all classes of Common Stock.
Section 10. Amendment. If any proposed amendment to the Certificate
of Incorporation (including this Certificate of Designations) would alter,
change or repeal any of the preferences, powers or special rights given to the
Series C Preferred Stock so as to affect the Series C Preferred Stock adversely,
then the holders of the Series C Preferred Stock shall be entitled to vote
separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series C Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. The Series C Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series C Stock.
A-3-6
93
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its this day of , 1999.
----------------------------------------
Name:
Title:
X-0-0
00
Xxxxxxx X-0
Form of Class A Right Certificate
Certificate No. R- ____
NOT EXERCISABLE AFTER OCTOBER 6, 2009 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE CLASS A RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER CLASS A RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, CLASS A RIGHTS OWNED BY OR TRANSFERRED TO ANY
PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
Class A Right Certificate
THE NEIMAN MARCUS GROUP, INC.
This certifies that ___________ or registered assigns, is the
registered owner of the number of Class A 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 October 6, 1999, as the same may be amended
from time to time (the "Rights Agreement"), between The Neiman Marcus Group,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking 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., New York City time, on October 6, 2009 at the
office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, par value $.01 per share
(the "Series A Preferred Stock"), of the Company, at a purchase price of $100.00
per one one-thousandth of a share of Series A Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Class A Right Certificate with
the Form of Election to Purchase duly executed. The number of Class A Rights
evidenced by this Class A Right Certificate (and the number of one
one-thousandths of a share of Series A Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of October 18, 1999, based on the Series A
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Series A Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Class A Rights and the number of Class A
Rights evidenced by this Class A Right Certificate are subject to modification
and adjustment upon the happening of certain events.
B-1-1
95
Notwithstanding anything in the Rights Agreement to the contrary,
from and after the time (the "invalidation time") when any person first becomes
an Acquiring Person (as defined in the Rights Agreement), the Class A Rights
evidenced hereby beneficially owned by (x) any Acquiring Person (or any
Affiliate (as defined in the Rights Agreement) or Associate (as defined in the
Rights Agreement) of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee after the
invalidation time or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Class A Rights or (II) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of Section 11(a)(ii) of the Rights
Agreement, and subsequent transferees of such persons, shall be void without any
further action and any holder hereof shall thereafter have no rights whatsoever
with respect to the Class A Rights evidenced hereby under any provision of the
Rights Agreement.
This Class A Right 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 Class A Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Class A Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Class A Right Certificate, with or without other Class A Right
Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Class A Right
Certificate or Class A Right Certificates of like tenor and date evidencing
Class A Rights entitling the holder to purchase a like aggregate number of
shares of Series A Preferred Stock as the Class A Rights evidenced by the Class
A Right Certificate or Class A Right Certificates surrendered shall have
entitled such holder to purchase. If this Class A Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class A Right Certificate or Class A Right Certificates for the number
of whole Class A Rights not exercised.
Subject to the provisions of the Rights Agreement, the Class A
Rights evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Class A Right or (ii) may be exchanged in whole or
in part for shares of Series A Preferred Stock or shares of the Company's Class
A Common Stock, par value $.01 per share.
No fractional shares of Series A Preferred Stock or Class A Common
Stock will be issued upon the exercise of any Class A Right or Class A Rights
evidenced hereby (other than
B-1-2
96
fractions which are integral multiples of one one-thousandth of a share of
Series A Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Class A Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Series A Preferred Stock or of any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Class A Right or Class A Rights evidenced by
this Class A Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Class A Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-1-3
97
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of .
------------
ATTEST: THE NEIMAN MARCUS GROUP, INC.
By ------------------- By -----------------------
Countersigned:
-----------------------,
as Rights Agent
By -----------------------
Authorized Signature
B-1-4
98
Form of Reverse Side of Class A Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Class A Right Certificate)
FOR VALUE RECEIVED hereby sells, assigns
-------------------------
and transfers unto
---------------------------
--------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------
Class A Rights represented by this Class A Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer said Class A Rights on the
-------------------
books of the within-named Company, with full power of substitution.
Dated: _________________
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
------------------------------------------------------------
(To be completed)
The undersigned hereby certifies that the Class A Rights evidenced
by this Class A Right Certificate are not beneficially owned by, were not
acquired by the undersigned from, and are not being assigned to, an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------
Signature
B-1-5
99
Form of Reverse Side of Class A Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Class A Rights
represented by the Class A Right Certificate)
To THE NEIMAN MARCUS GROUP, INC.
The undersigned hereby irrevocably elects to exercise
Class A Rights represented by this Class A Right Certificate
------------------
to purchase the shares of Series A Preferred Stock (or other securities or
property) issuable upon the exercise of such Class A Rights and requests that
certificates for such shares of Series A Preferred Stock (or such other
securities) be issued in the name of:
--------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------
If such number of Class A Rights shall not be all the Class A Rights evidenced
by this Class A Right Certificate, a new Class A Right Certificate for the
balance remaining of such Class A Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
--------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------
Dated:
--------------------
------------------------
Signature
(Signature must conform to holder specified on Class A Right Certificate)
B-1-6
100
Signature Guaranteed:
Signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States.
B-1-7
101
Form of Reverse Side of Class A Right Certificate -- continued
(To be completed)
--------------------------------------------------------------
The undersigned certifies that the Class A Rights evidenced by this
Class A Right Certificate are not beneficially owned by, and were not acquired
by the undersigned from, an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement)
----------------------
Signature
-----------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Class A Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
B-1-8
102
Exhibit B-2
Form of Class B Right Certificate
Certificate No. R- ____
NOT EXERCISABLE AFTER OCTOBER 6, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE CLASS B RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER CLASS B
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, CLASS B
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Class B Right Certificate
THE NEIMAN MARCUS GROUP, INC.
This certifies that ___________ or registered assigns, is the
registered owner of the number of Class B 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 October 6, 1999, as the same may be amended
from time to time (the "Rights Agreement"), between The Neiman Marcus Group,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking 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., New York City time, on October 6, 2009 at the
office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series B Junior Participating Preferred Stock, par value $.01 per share
(the "Series B Preferred Stock"), of the Company, at a purchase price of $100.00
per one one-thousandth of a share of Series B Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Class B Right Certificate with
the Form of Election to Purchase duly executed. The number of Class B Rights
evidenced by this Class B Right Certificate (and the number of one
one-thousandths of a share of Series B Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of October 18, 1999, based on the Series B
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Series B Preferred Stock (or other securities or property) which
B-2-1
103
may be purchased upon the exercise of the Class B Rights and the number of Class
B Rights evidenced by this Class B Right Certificate are subject to modification
and adjustment upon the happening of certain events.
Notwithstanding anything in the Rights Agreement to the contrary,
from and after the time (the "invalidation time") when any person first becomes
an Acquiring Person (as defined in the Rights Agreement), the Class B Rights
evidenced hereby beneficially owned by (x) any Acquiring Person (or any
Affiliate (as defined in the Rights Agreement) or Associate (as defined in the
Rights Agreement) of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee after the
invalidation time or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Class B Rights or (II) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of Section 11(a)(ii) of the Rights
Agreement, and subsequent transferees of such persons, shall be void without any
further action and any holder hereof shall thereafter have no rights whatsoever
with respect to the Class B Rights evidenced hereby under any provision of the
Rights Agreement.
This Class B Right 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 Class B Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Class B Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Class B Right Certificate, with or without other Class B Right
Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Class B Right
Certificate or Class B Right Certificates of like tenor and date evidencing
Class B Rights entitling the holder to purchase a like aggregate number of
shares of Series B Preferred Stock as the Class B Rights evidenced by the Class
B Right Certificate or Class B Right Certificates surrendered shall have
entitled such holder to purchase. If this Class B Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class B Right Certificate or Class B Right Certificates for the number
of whole Class B Rights not exercised.
Subject to the provisions of the Rights Agreement, the Class B
Rights evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Class B
B-2-2
104
Right or (ii) may be exchanged in whole or in part for shares of Series B
Preferred Stock or shares of the Company's Class B Common Stock, par value $.01
per share.
No fractional shares of Series B Preferred Stock or Class B Common
Stock will be issued upon the exercise of any Class B Right or Class B Rights
evidenced hereby (other than fractions which are integral multiples of one
one-thousandth of a share of Series B Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Class B Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Series B Preferred Stock or of any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Class B Right or Class B Rights evidenced by
this Class B Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Class B Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-2-3
105
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________.
ATTEST: THE NEIMAN MARCUS GROUP, INC.
By -------------------- By ---------------------
Countersigned:
-----------------------,
as Rights Agent
By -------------------------
Authorized Signature
B-2-4
106
Form of Reverse Side of Class B Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Class B Right Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns
and transfers unto ___________________________
--------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------
Class B Rights represented by this Class B Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ___________________ Attorney, to transfer said Class B Rights on the
books of the within-named Company, with full power of substitution.
Dated: ---------------------
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
------------------------------------------------------------
(To be completed)
The undersigned hereby certifies that the Class B Rights evidenced
by this Class B Right Certificate are not beneficially owned by, were not
acquired by the undersigned from, and are not being assigned to, an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------
Signature
B-2-5
107
Form of Reverse Side of Class B Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Class B Rights
represented by the Class B Right Certificate)
To THE NEIMAN MARCUS GROUP, INC.
The undersigned hereby irrevocably elects to exercise
__________________ Class B Rights represented by this Class B Right Certificate
to purchase the shares of Series B Preferred Stock (or other securities or
property) issuable upon the exercise of such Class B Rights and requests that
certificates for such shares of Series B Preferred Stock (or such other
securities) be issued in the name of:
--------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------
If such number of Class B Rights shall not be all the Class B Rights evidenced
by this Class B Right Certificate, a new Class B Right Certificate for the
balance remaining of such Class B Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
--------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------
Dated: --------------------------
------------------------
Signature
(Signature must conform to holder specified on Class B Right Certificate)
B-2-6
108
Signature Guaranteed:
Signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States.
B-2-7
109
Form of Reverse Side of Class B Right Certificate -- continued
(To be completed)
--------------------------------------------------------------
The undersigned certifies that the Class B Rights evidenced by this
Class B Right Certificate are not beneficially owned by, and were not acquired
by the undersigned from, an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement)
----------------------
Signature
-----------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Class B Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
B-2-8
110
Exhibit B-3
Form of Class C Right Certificate
Certificate No. R- ____
NOT EXERCISABLE AFTER OCTOBER 6, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE CLASS C RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER CLASS C
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, CLASS C
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Class C Right Certificate
THE NEIMAN MARCUS GROUP, INC.
This certifies that ___________ or registered assigns, is the
registered owner of the number of Class C 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 October 6, 1999, as the same may be amended
from time to time (the "Rights Agreement"), between The Neiman Marcus Group,
Inc., a Delaware corporation (the "Company"), and BankBoston, N.A., a national
banking 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., New York City time, on October 6, 2009 at the
office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series C Junior Participating Preferred Stock, par value $.01 per share
(the "Series C Preferred Stock"), of the Company, at a purchase price of $100.00
per one one-thousandth of a share of Series C Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Class C Right Certificate with
the Form of Election to Purchase duly executed. The number of Class C Rights
evidenced by this Class C Right Certificate (and the number of one
one-thousandths of a share of Series C Preferred Stock which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of October 18, 1999, based on the Series C
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price, the number of one one-thousandths of a share of
Series C Preferred Stock (or other securities or property) which
B-3-1
111
may be purchased upon the exercise of the Class C Rights and the number of Class
C Rights evidenced by this Class C Right Certificate are subject to modification
and adjustment upon the happening of certain events.
Notwithstanding anything in the Rights Agreement to the contrary,
from and after the time (the "invalidation time") when any person first becomes
an Acquiring Person (as defined in the Rights Agreement), the Class C Rights
evidenced hereby beneficially owned by (x) any Acquiring Person (or any
Affiliate (as defined in the Rights Agreement) or Associate (as defined in the
Rights Agreement) of any Acquiring Person), (y) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee after the
invalidation time or (z) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee prior to or concurrently with
the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Class C Rights or (II) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding the provisions of Section 11(a)(ii) of the Rights
Agreement, and subsequent transferees of such persons, shall be void without any
further action and any holder hereof shall thereafter have no rights whatsoever
with respect to the Class C Rights evidenced hereby under any provision of the
Rights Agreement.
This Class C Right 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 Class C Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of the
Rights Agent. The Company will mail to the holder of this Class C Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Class C Right Certificate, with or without other Class C Right
Certificates, upon surrender at the office or agency of the Rights Agent
designated for such purpose, may be exchanged for another Class C Right
Certificate or Class C Right Certificates of like tenor and date evidencing
Class C Rights entitling the holder to purchase a like aggregate number of
shares of Series C Preferred Stock as the Class C Rights evidenced by the Class
C Right Certificate or Class C Right Certificates surrendered shall have
entitled such holder to purchase. If this Class C Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class C Right Certificate or Class C Right Certificates for the number
of whole Class C Rights not exercised.
Subject to the provisions of the Rights Agreement, the Class C
Rights evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Class
B-3-2
112
C Right or (ii) may be exchanged in whole or in part for shares of Series C
Preferred Stock or shares of the Company's Class C Common Stock, par value $.01
per share.
No fractional shares of Series C Preferred Stock or Class C Common
Stock will be issued upon the exercise of any Class C Right or Class C Rights
evidenced hereby (other than fractions which are integral multiples of one
one-thousandth of a share of Series C Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Class C Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Series C Preferred Stock or of any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Class C Right or Class C Rights evidenced by
this Class C Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Class C Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-3-3
113
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________.
ATTEST: THE NEIMAN MARCUS GROUP, INC.
By ----------------- By --------------------
Countersigned:
-----------------------,
as Rights Agent
By -------------------------
Authorized Signature
B-3-4
114
Form of Reverse Side of Class C Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Class C Right Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns
and transfers unto ___________________________
--------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------
Class C Rights represented by this Class C Right Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ___________________ Attorney, to transfer said Class C Rights on the
books of the within-named Company, with full power of substitution.
Dated: _________________
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a com mercial bank or trust company having an office or
correspondent in the United States.
------------------------------------------------------------
(To be completed)
The undersigned hereby certifies that the Class C Rights evidenced
by this Class C Right Certificate are not beneficially owned by, were not
acquired by the undersigned from, and are not being assigned to, an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement).
------------------------
Signature
B-3-5
115
Form of Reverse Side of Class C Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Class C Rights
represented by the Class C Right Certificate)
To THE NEIMAN MARCUS GROUP, INC.
The undersigned hereby irrevocably elects to exercise
__________________ Class C Rights represented by this Class C Right Certificate
to purchase the shares of Series C Preferred Stock (or other securities or
property) issuable upon the exercise of such Class C Rights and requests that
certificates for such shares of Series C Preferred Stock (or such other
securities) be issued in the name of:
--------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------
If such number of Class C Rights shall not be all the Class C Rights evidenced
by this Class C Right Certificate, a new Class C Right Certificate for the
balance remaining of such Class C Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
--------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------
Dated: ------------------------
------------------------
Signature
(Signature must conform to holder specified on Class C Right Certificate)
B-3-6
116
Signature Guaranteed:
Signature must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States.
B-3-7
117
Form of Reverse Side of Class C Right Certificate -- continued
(To be completed)
--------------------------------------------------------------
The undersigned certifies that the Class C Rights evidenced by this
Class C Right Certificate are not beneficially owned by, and were not acquired
by the undersigned from, an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement)
----------------------
Signature
-----------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Class C Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
B-3-8
118
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
Shares of Preferred Stock
On October 6, 1999, the Board of Directors of The Neiman Marcus
Group, Inc. (the "Company") declared a dividend of (i) one preferred stock
purchase right (a "Class A Right") for each outstanding share of Class A Common
Stock, par value $.01 per share, of the Company (the "Class A Common Stock") to
stockholders of record as of the close of business on October 18, 1999 (the
"Record Date"), each Class A Right representing the right to purchase one
one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share, of the Company (the "Series A Preferred Stock") and (ii)
one preferred stock purchase right (a "Class B Right" and, collectively with the
Class A Rights, the "Rights") for each outstanding share of Class B Common
Stock, par value $.01 per share, of the Company (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock") to stockholders on
the Record Date, each Class B Right representing the right to purchase one
one-thousandth of a share of Series B Junior Participating Preferred Stock, par
value $.01 per share, of the Company (the "Series B Preferred Stock" and,
collectively with the Series A Preferred Stock, the "Preferred Stock"). In the
event that shares of Class C Common Stock, par value $.01 per share, of the
Company (the "Class C Common Stock") are issued, they will be issued together
with preferred stock purchase rights (the "Class C Rights") to acquire shares of
Series C Junior Participating Preferred Stock, par value $.01 per share, of the
Company ("Series C Preferred Stock"). The description and terms of the Rights
are set forth in a Rights Agreement, dated as of October 6, 1999, as the same
may be amended from time to time (the "Rights Agreement"), between the Company
and BankBoston, N.A., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person"), other than an Exempt Person (as defined below), has
acquired beneficial ownership of (a) 15% or more of the outstanding shares of
Class B Common Stock or (b) shares of Common Stock representing, in the
aggregate, 15% or more of the total number of votes entitled to be cast
generally (other than in an election of directors) by the holders of the Common
Stock then outstanding or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of (a) 15% or more of the outstanding shares of
Class B Common Stock or (b) shares of Common Stock representing, in the
aggregate, 15% or more of the total number of votes entitled to be cast
generally (other than in an election of directors) by the holders of the Common
Stock then outstanding (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock cer
tificate together with a copy of this Summary of Rights; provided, however, that
if the Board of Directors of the Company determines in good faith that a person
who would otherwise be an
C-1
119
"Acquiring Person" has become such inadvertently and without any intention of
changing or influencing control of the Company, and such person, as promptly as
practicable divested or divests itself of beneficial ownership of a sufficient
number of shares of Common Stock so that such person would no longer be an
Acquiring Person, then such person shall not be deemed to be or to have become
an "Acquiring Person". No person will become an "Acquiring Person" as the result
of an acquisition of shares of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such person; provided, however, that if a person shall
become an "Acquiring Person" by reason of such share acquisitions by the Company
and thereafter become the beneficial owner of any additional shares of Class B
Common Stock, in the case of clause (a) of the definition of "Acquiring Person"
above, or Common Stock, in the case of clause (b) of the definition of
"Acquiring Person" above, then such person shall be deemed to be an "Acquiring
Person" unless upon the consummation of the acquisition of such additional
shares of Class B Common Stock or Common Stock, as the case may be, such person
does not own (a) 15% or more of the outstanding shares of Class B Common Stock
or (b) shares of Common Stock representing, in the aggregate, 15% or more of the
total number of votes entitled to be cast generally (other than in an election
of directors) by the holders of the Common Stock then outstanding.
"Exempt Person" shall mean (i) the Company, (ii) any Subsidiary (as
such term is defined in the Rights Agreement) of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, (iv) any entity
or trustee holding Common Stock for or pursuant to the terms of any such plan or
for the purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company, (v) Harcourt
General, Inc., a Delaware corporation, but only for the period beginning on the
Record Date and ending at 12:01 a.m. on October 23, 1999 or (vi) the "Xxxxx
Family Group" (as such term is defined in the Rights Agreement and which, in
general, includes Xxxxxxx X. Xxxxx, Chairman of the Company, Xxxxxx X. Xxxxx and
Xxxxx X. Xxxx, Co-Chief Executive Officers of the Company and certain members of
their families and certain related entities) with respect to the beneficial
ownership of shares of Common Stock on the Record Date and for so long as the
Xxxxx Family Group does not, subject to certain exceptions, acquire
C-2
120
after the Record Date beneficial ownership of either an additional 6% or more of
the Class B Common Stock outstanding or shares of Common Stock representing an
additional 6% or more of the total voting power of the Company represented by
the shares of Common Stock outstanding.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuances of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Class A Rights (the "Class A Right Certificates") and Class B Rights (the
"Class B Rights Certificates") will be mailed to holders of record of the Class
A Common Stock and Class B Common Stock, respectively, as of the close of
business on the Distribution Date and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on October 6, 2009 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of the
applicable series of Preferred Stock or other securities or property issuable,
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the applicable series of Preferred Stock,
(ii) upon the grant to holders of the applicable series of Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the applicable series of Preferred
Stock or (iii) upon the distribution to holders of the applicable series of
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights are also subject to adjustment in
the event of a stock split of the applicable class of Common Stock or a stock
dividend on the applicable class of
C-3
121
Common Stock payable in shares of Common Stock or subdivisions, consolidations
or combinations of the applicable class of Common Stock occurring, in any such
case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each share of Preferred Stock will be entitled, when, as
and if declared, to a minimum preferential quarterly dividend payment of $1.00
per share but will be entitled to an aggregate dividend of 1,000 times the
dividend declared per share of the applicable class of Common Stock. In the
event of liquidation, the holders of the Preferred Stock will be entitled to a
minimum preferential liquidation payment of $1,000 per share (plus any accrued
but unpaid dividends) but will be entitled to an aggregate payment of 1,000
times the payment made per share of the applicable class of Common Stock. Each
share of Preferred Stock will have 1,000 times the number of votes each share of
the applicable class of Common Stock has on matters such class is entitled to
vote on, which shall be voted together with the applicable class of Common
Stock. Finally, in the event of any merger, consolidation or other transaction
in which shares of Common Stock are converted or exchanged, each share of the
applicable series of Preferred Stock will be entitled to receive 1,000 times the
amount received per share of the applicable class of Common Stock. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Class A Right and Class B
Right, respectively, should approximate the value of one share of Class A Common
Stock and Class B Common Stock, respectively.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision will be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
or any affiliate or associate of the Acquiring Person or certain other
transferees (which will thereupon become void), will thereafter have the right
to receive upon exercise of a Right at the then current exercise price of the
Right, that number of shares of Class A Common Stock (in the case of a Class A
Right) or Class B Common Stock (in the case of a Class B Right), or that number
of one one-thousandths of a share of the applicable series of Preferred Stock,
having a market value of two times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
proper provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person or any affiliate or associate of the
Acquiring Person or certain other transferees which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the person with whom the Company has engaged in the foregoing transaction (or
its parent), which number of shares at the time of such transaction will have a
market value of two times the exercise price of the Right.
C-4
122
At any time after any person or group becomes an Acquiring Person
and prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Class B Common Stock, the acquisition by such person or
group of shares of Common Stock representing, in the aggregate, 50% or more of
the total number of votes entitled to be cast generally (other than in an
election of directors) by the holders of the Common Stock then outstanding or
the occurrence of an event described in the prior paragraph, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which will have become void), in whole or in part, at an
exchange ratio of one share of Class A Common Stock (in the case of a Class A
Right) or Class B Common Stock (in the case of a Class B Right), or one
one-thousandth of a share of Preferred Stock (or of a share of a class or series
of the Company's preferred stock having equivalent rights, preferences and
privileges), per Class A Right or Class B Right as the case may be (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
For so long as the Rights are then redeemable, the Company may,
except with respect to the redemption price, amend the Rights in any manner.
After the Rights are no longer redeemable, the Company may, except with respect
to the redemption price, amend the Rights in any manner that does not adversely
affect the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
October 15, 1999. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
as the same may be amended from time to time, which is hereby incorporated
herein by reference.
C-5
