Execution Copy
RIGHTS AGREEMENT
dated March 4, 1998
and effective as of
March 16, 1998
between
INTERFACE, INC.
and
WACHOVIA BANK, N.A.
as Rights Agent
TABLE OF CONTENTS (1)
Page
Section 1. Definitions .......................................... 1
Section 2. Appointment of Rights Agent .......................... 6
Section 3. Issue of Rights Certificates ......................... 6
Section 4. Form of Rights Certificate ........................... 7
Section 5. Countersignature and Registration .................... 7
Section 6. Transfer and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights
Certificates ............................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights ............................................. 9
Section 8. Cancellation and Destruction of Right
Certificates ............................................... 10
Section 9. Reservation and Availability of Capital Stock ........ 11
Section 10. Preferred Stock Record Date ......................... 12
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights ................................. 12
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares .................................................. 17
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power .................................... 17
Section 14. Fractional Rights and Fractional Shares ............. 20
Section 15. Rights of Action .................................... 21
Section 16. Agreement of Right Holders .......................... 21
Section 17. Right Certificate Holder Not Deemed a
Shareholder ................................................ 22
Section 18. Concerning the Rights Agent.......................... 22
Section 19. Merger or Consolidation or Change of Name of
Rights Agent .............................................. 23
Section 20. Duties of Rights Agent............................... 24
____________________________________
1 The Table of Contents is not a part of this Agreement.
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Section 21. Change of Rights Agent .............................. 25
Section 22. Issuance of New Right Certificates .................. 26
Section 23. Redemption .......................................... 26
Section 24. Exchange............................................. 27
Section 25. Notice of Proposed Actions .......................... 28
Section 26. Notices ............................................. 29
Section 27. Supplements and Amendments .......................... 30
Section 28. Successors .......................................... 30
Section 29. Determinations and Actions by the Board of
Directors, etc. ............................................ 30
Section 30. Benefits of this Agreement .......................... 31
Section 31. Severability ........................................ 31
Section 32. Governing Law ...................................... 31
Section 33. Counterparts......................................... 32
Section 34. Descriptive Headings................................. 32
Exhibit A - Form of Board Resolution Establishing and
Designating Preferred Stock
Exhibit B -Form of Rights Certificate
Exhibit C -Summary of the Rights
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RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into on March 4, 1998, with
an effective date of March 16, 1998 (the "Effective Date"), by and
between INTERFACE, INC., a Georgia corporation (the "Company"), and
WACHOVIA BANK, N.A., as Rights Agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has approved
the execution of this Agreement and has authorized and declared a
dividend distribution of one Right (as defined below) for each
outstanding share of Common Stock (as defined below) of the
Company at the close of business on the Effective Date and has
authorized the issuance of one Right for each share of Common
Stock, each Right representing the right to purchase, one one-
hundredth of a share of Series B Participating Cumulative
Preferred Stock of the Company having the rights, powers and
preferences set forth in the resolution of the Board of Directors
establishing and designating the Series B Preferred Stock
attached hereto as Exhibit A, upon the terms and subject to the
conditions contained herein (individually, a "Right," and
collectively, the "Rights");
NOW, THEREFORE, for and in consideration of the premises and
the mutual agreements contained herein, the parties hereto agree
as follows:
SECTION 1. DEFINITIONS. The following capitalized
terms, as used herein, have the following meanings:
(a) "ACQUIRING PERSON" means any Person who or which,
together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding; provided, however, that, an "ACQUIRING
PERSON" shall not include the following Persons: (i) any
Excluded Person, (ii) any Person who is the Beneficial Owner of
15% or more of the shares of Common Stock outstanding as of the
Effective Date, (iii) any Person, together with all Affiliates
and Associates of such Person, who would be an Acquiring Person
by reason of a reduction in the number of issued and outstanding
shares of Common Stock of the Company approved by the Board of
Directors of the Company, or (iv) any Person, who alone or
together with its Affiliates or Associates becomes the Beneficial
Owner of 15% or more of the shares of Common Stock then
outstanding as a result of an Approved Acquisition; provided,
further, that in the event that a Person is not an Acquiring
Person by reason of clauses (ii), (iii) or (iv) above, such
Person nonetheless shall become an Acquiring Person if such
Person thereafter becomes the Beneficial Owner of an additional
2% or more of the Common Stock then outstanding, unless the
acquisition of such Common Stock is an Approved Acquisition.
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith (but only if at the time of such
determination by the Board of Directors there are then in office
not less than two Continuing Directors and such action is
approved by a majority of the Continuing Directors then in
office) that a Person who would otherwise be an "ACQUIRING
PERSON" as defined pursuant to the foregoing provisions of this
Section 1(a) has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an
"ACQUIRING PERSON" as defined pursuant to the foregoing
provisions of this Section 1(a), then such Person shall not be
deemed an Acquiring Person for purposes of this Agreement.
(b) "AFFILIATE" and "ASSOCIATE" have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange
Act as in effect on the date hereof.
(c) "APPROVED ACQUISITION" means any acquisition of Common
Stock that (i) causes a Person to become the Beneficial Owner of
(A) 15% or more of the shares of Common Stock then outstanding,
or (B) if already a Beneficial Owner of 15% or more of the shares
of Common Stock then outstanding, an additional 2% or more of the
shares of Common Stock then outstanding, and (ii) is approved in
advance by a majority of the Continuing Directors.
(d) A Person shall be deemed the "BENEFICIAL OWNER" of, and
shall be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of its Affiliates or
Associates beneficially owns (as determined pursuant to Rule
13d-3 under the Exchange Act as in effect on the date
hereof), directly or indirectly;
(ii) which such Person or any of its Affiliates or
Associates, directly or indirectly, has
(A) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion
rights, exchange rights, rights (other than pursuant to
the Rights), warrants, options or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the
"BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN," any
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of its
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or
(B) the right to vote or dispose of (whether such
right is exercisable immediately or only upon the
occurrence of certain events or the passage of time or
both) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or otherwise;
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provided, however, that a Person shall not be deemed
the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN,"
any security under this clause (B) as a result of an
agreement, arrangement or understanding to vote such
security if such agreement, arrangement or
understanding (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 by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor
report);
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of its
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in CLAUSE (B) above) or disposing of any
such securities; PROVIDED, HOWEVER, that nothing in this
SECTION 1(d) shall cause any Person engaged in business as
an underwriter of securities who acquires any securities of
the Company through such Person's participation in good
faith in a firm commitment underwriting to be deemed the
"BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN," such
securities until the expiration of 40 days after the date of
such acquisition; or
(iv) notwithstanding the foregoing, for purposes of
determining beneficial ownership of securities under this
Agreement, officers and directors of the Company shall not
constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a
group for purposes of the Exchange Act) and shall not be
deemed to own shares owned by another officer or director of
the Company.
(e) "BUSINESS DAY" means any day other than a Saturday,
Sunday or a day on which banking institutions in the State of
Georgia are authorized or obligated by law or executive order to
close.
(f) "CLASS A COMMON STOCK" means the Class A Common Stock,
par value $0.10 per share, of the Company.
(g) "CLASS B COMMON STOCK" means the Class B Common Stock,
par value $0.10 per share, of the Company.
(h) "CLOSE OF BUSINESS" on any given date means 5:00 P.M.,
Atlanta, Georgia time, on such date; provided, however, that if
such date is not a Business Day, then it shall mean 5:00 P.M.,
Atlanta, Georgia time, on the next succeeding Business Day.
(i) "COMMON STOCK" means the Class A Common Stock and the
Class B Common Stock of the Company, except that, when used with
respect to any Person other than the Company, "Common Stock"
means the capital stock (or other equity interests) of such
Person with the greatest voting power, or the equity securities
or other equity interests having the power to control or direct
the management of such Person.
(j) "COMMON STOCK EQUIVALENTS" has the meaning set forth in
Section 24(c).
(k) "COMPANY" has the meaning set forth in the Recitals.
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(l) "CONTINUING DIRECTOR" means any member of the Board of
Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or a representative or nominee
of an Acquiring Person or of any such Affiliate or Associate, or
otherwise affiliated with an Acquiring Person or of any such
Affiliate or Associate, and who either (i) was a member of the
Board on the Effective Date, or (ii) subsequently becomes a
member of the Board, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of
the Continuing Directors serving at the time of such nomination
or election.
(m) "DISTRIBUTION DATE" means the earlier of (i) the Close
of Business on the tenth day (or such later day as may be
designated by action of a majority of the Continuing Directors)
after the Share Acquisition Date, and (ii) the Close of Business
on the tenth Business Day (or such later day as may be designated
by action of a majority of the Continuing Directors) after the
date of the commencement by any Person (other than an Excluded
Person) of, or of the first public announcement of the intention
by any Person (other than an Excluded Person) to commence, a
tender or exchange offer if, upon consummation thereof, such
Person, together with all Affiliates and Associates of such
Person, would be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding.
(n) "EFFECTIVE DATE" has the meaning set forth in the
Recitals.
(o) "EMPLOYEE BENEFIT PLAN" means any employee benefit plan
of the Company or any of its Subsidiaries or any Person
organized, appointed or established by the Company or any of its
Subsidiaries for or pursuant to the terms of any such plan.
(p) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(q) "EXCHANGE RATIO" has the meaning set forth in Section
24(a).
(r) "EXCLUDED PERSON" means the Company, any of its
Subsidiaries or any Employee Benefit Plan.
(s) "EXPIRATION DATE" means the earlier of (i) the Final
Expiration Date, and (ii) the time at which all Rights are
redeemed as provided in Section 23 or exchanged as provided in
Section 24.
(t) "FAIR MARKET VALUE" has the meaning set forth in
Section 11(b).
(u) "FINAL EXPIRATION DATE" means the Close of Business on
March 15, 2008.
(v) "FLIP-IN EVENT" means an acquisition of shares of
Common Stock which causes any Person to become an Acquiring
Person (other than pursuant to a Qualifying Tender Offer).
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(w) "FLIP-OVER EVENT" means any event described in Section
13(a)(w), (x), (y) or (z).
(x) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or any other entity
or organization.
(y) "PREFERRED STOCK" means the Series B Participating
Cumulative Preferred Stock, par value $1.00 per share, of the
Company having the terms set forth in the form of certificate of
designation attached hereto as Exhibit A.
(z) "PRINCIPAL PARTY" has the meaning set forth in Section
13(b).
(aa) "PURCHASE PRICE" means the price (subject to adjustment
as provided herein) at which a holder of a Right may purchase one
one-hundredth of a share of Preferred Stock (subject to
adjustment as provided herein) upon exercise of a Right, which
price shall initially be $180.
(bb) "QUALIFYING TENDER OFFER" means a tender or exchange
offer for all outstanding shares of Common Stock of the Company
approved by a majority of the Continuing Directors then in
office, after taking into account the potential long-term value
of the Company and all other factors that they consider relevant.
(cc) "REDEMPTION PRICE" has the meaning set forth in Section
23(a).
(dd) "RIGHT" AND "RIGHTS" have the respective meanings set
forth in the Recitals.
(ee) "RIGHTS AGENT" has the meaning set forth in the
Recitals.
(ff) "RIGHTS CERTIFICATES" has the meaning set forth in
Section 3(a).
(gg) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(hh) "SHARE ACQUISITION DATE" means the date of the first
public announcement (including the filing of a report on Schedule
13D under the Exchange Act (or any comparable or successor
report)) by the Company or an Acquiring Person indicating that an
Acquiring Person has become such.
(ii) "SUBSIDIARY" means, with respect to any Person, any
other Person of which securities or other ownership interests
having ordinary voting power, in the absence of contingencies, to
elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or
indirectly owned or controlled by such first Person.
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(jj) "TRANSFER TAX" means any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental
or regulatory authority in respect of any transfer of any
security, instrument or right, including Rights, shares of Common
Stock and shares of Preferred Stock.
(kk) "TRADING DAY" means a day on which the principal
national securities exchange or inter-dealer quotation system on
which the security in question is listed, admitted to trading or
quoted is open for the transaction of business or, if the
security in question is not listed, admitted to trading or quoted
on any national securities exchange or inter-dealer quotation
system, a Business Day.
(ll) "TRIGGERING EVENT" means any Flip-in Event or any Flip-
over Event.
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,
shall prior to the Distribution Date also be the holders of the
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. If the Company appoints one or
more co-Rights Agents, then the respective duties of the Rights
Agent and any co-Rights Agents shall be as the Company shall
determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Prior to
the Distribution Date, (i) the Rights will be evidenced (subject
to SECTION 3(b)) by the certificates for the Common Stock and not
by separate Rights Certificates, and the registered holders of
the Common Stock shall be deemed to be the registered holders of
the associated Rights, and (ii) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as
practicable after the Company has notified the Rights Agent of
the occurrence of a Distribution Date, the Rights Agent will,
subject to SECTION 7(d), send, by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the
Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more
Rights Certificates, in substantially the form of EXHIBIT B
attached hereto (the "RIGHTS CERTIFICATES"), evidencing one Right
(subject to adjustment as provided herein) for each share of
Common Stock so held.
(b) As soon as practicable after the Effective Date, the
Company will send a summary of the Rights substantially in the
form of EXHIBIT C attached hereto, by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the
Close of Business on the Effective Date at the address of such
holder shown on the records of the Company. Until the
Distribution Date, the Rights shall be evidenced by such
certificates evidencing the Common Stock, and the registered
holders of such Common Stock shall also be the registered holders
of the associated Rights.
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(c) Rights shall be issued in respect of all shares of
Common Stock that become outstanding (on original issuance or out
of treasury) after the Effective Date but prior to the earlier of
the Distribution Date or the Expiration Date. Certificates for
the Common Stock that become outstanding or shall be transferred
or exchanged after the Effective Date but prior to the earlier of
the Distribution Date or the Expiration Date shall also be deemed
to be certificates for Rights, and registered holders of Common
Stock shall also be the registered holders of the associated
Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common
Stock represented thereby. If the Company purchases or acquires
any shares of Common Stock after the Effective Date but prior to
the Distribution Date, any Rights associated with such Common
Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the
Common Stock that are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATE. (a) The Rights
Certificates (and the forms of assignment, election to purchase
and certificates to be printed on the reverse thereof) shall be
substantially in the form of Exhibit B attached 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, rule or regulation or with any rule or
regulation of any stock exchange or inter-dealer quotation system
of a registered national securities association on which the
Rights may from time to time be listed, traded or quoted or to
conform to usage. Subject to SECTIONS 11 AND 22, the Rights
Certificates, whenever distributed, shall be dated as of the
Distribution Date, shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of Preferred Stock
as shall be set forth therein at the price set forth therein, but
the number of such one one-hundredths of a share of Preferred
Stock and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate representing Rights beneficially
owned by any Person referred to in SECTION 7(d)(i), (ii) OR (iii)
shall (to the extent feasible) contain the following legend:
The Rights represented by this Rights
Certificate are or were beneficially owned by
a Person who was or became an Acquiring
Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined
in the Rights Agreement). This Rights
Certificate and the Rights represented hereby
may be or may become null and void in the
circumstances specified in Section 7(d) of
the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The
Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by the Rights Agent
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and shall not be valid for any purpose unless so countersigned.
If any officer of the Company whose manual or facsimile signature
is affixed to the Rights Certificates shall cease to be such
officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, then such Rights
Certificates may, nevertheless, be countersigned by the Rights
Agent and issued and delivered with the same force and effect as
though the individual who signed such Rights Certificates had not
ceased to be such officer of the Company. Any Rights Certificate
may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be
a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such
Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise, transfer or exchange, books for
registration and transfer of the Rights Certificates. Such books
shall show with respect to each Rights Certificate the name and
address of the registered holder thereof, the number of Rights
indicated on the certificate, and the certificate number.
SECTION 6. TRANSFER AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to SECTION 4(b), 7(d), AND 14, at any time after the
Close of Business on the Distribution Date and prior to the Close
of Business on the Expiration Date, any Rights Certificate(s)
may, upon the terms and subject to the conditions set forth in
this SECTION 6(a), be transferred or exchanged for another Rights
Certificate(s) evidencing a like number of Rights as the Rights
Certificate(s) surrendered. Any registered holder desiring to
transfer or exchange any Rights Certificate(s) shall make such
request in writing delivered to the Rights Agent, and shall
surrender such Rights Certificate(s) (with, in the case of a
transfer, the form of assignment and certificate on the reverse
side thereof duly executed) to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate(s) until the
registered holder of the Rights has complied with the
requirements of SECTION 7(e). Upon satisfaction of the foregoing
requirements, the Rights Agent shall, subject to SECTIONS 4(b),
7(d), 14 AND 24, countersign and deliver to the Person entitled
thereto a Rights Certificate(s) as so requested. The Company may
require payment of a sum sufficient to cover any Transfer Tax
that may be imposed in connection with any transfer or exchange
of any Rights Certificate(s).
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
8
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will issue and deliver a new Rights
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF
RIGHTS; RESTRICTIONS ON TRANSFER. (a) Subject to SECTION 7(d),
the registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein,
including, without limitation, SECTIONS 7(e), 9(c), 11(a), 13,
23, AND 24), in whole or in part, at any time after the
Distribution Date and prior to the Expiration Date upon surrender
of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed
(with signatures guaranteed), to the Rights Agent at the
principal office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase
Price (in lawful money of the United States of America by
certified check or bank draft payable to the order of the
Company) with respect to the Rights then to be exercised and an
amount equal to any applicable Transfer Tax.
(b) Upon satisfaction of the requirements of SECTION 7(a)
and subject to SECTION 20(k), the Rights Agent shall thereupon
promptly (i)(A) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the
transfer agent therefor) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be purchased (and
the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests), or (B) if the Company shall have
elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights with a depository agent, requisition from
the depository agent depository receipts representing such number
of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the
transfer agent with the depository agent), and the Company will
direct the depository agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with
SECTION 14, and (iii) after receipt of such certificates or
depository receipts and cash, if any, cause the same to be
delivered to or upon the order of the registered holder of such
Rights Certificate (with such certificates or receipts registered
in such name or names as may be designated by such holder). If
the Company is obligated to deliver Class A Common Stock, Class B
Common Stock, other securities or assets pursuant to this
Agreement, the Company will make all arrangements necessary so
that such other securities and assets are available for
distribution by the Rights Agent, if and when appropriate.
(c) If the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, then a
new Rights Certificate evidencing the number of Rights remaining
unexercised shall be issued by the Rights Agent and delivered to,
or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of SECTION
14.
9
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Flip-in Event,
any Rights beneficially owed by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such,
or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person (or any such Associate
or Affiliate) to holders of equity interests in such Acquiring
Person (or in any such Associate or Affiliate) or to any Person
with whom the Acquiring Person (or any such Associate or
Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer
which the Continuing Directors have determined is part of a plan,
arrangement or understanding which has as a primary purpose or
effect the avoidance of this SECTION 7(d) shall become null and
void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise;
provided, however, that the foregoing provisions of this SECTION
7(d) shall not apply to Rights beneficially owned by an Acquiring
Person (or an Associate or Affiliate) of such Acquiring Person or
a transferee thereof if such Person became an Acquiring Person
pursuant to a Qualifying Tender Offer. The Company shall use all
reasonable efforts to insure that the provisions of SECTION 4(b)
and this SECTION 7(d) are complied with, but shall have no
liability to any holder of Rights Certificates or any other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates and Associates
or any transferee of any of them hereunder.
(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
pursuant to SECTION 6 or exercise pursuant to this SECTION 7
unless such registered holder (i) shall have completed and signed
the certificate contained in the form of assignment or election
to purchase, as the case may be, set forth on the reverse side of
the Rights Certificate surrendered for such transfer or exercise,
as the case may be, (ii) shall not have indicated an affirmative
response to clause 1 or 2 thereof, and (iii) shall have provided
such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
(f) No Rights Certificate shall be issued pursuant to
SECTION 3 that represents rights Beneficially Owned by an
Acquiring Person whose rights would be void pursuant to the
provisions of SECTION 7(d) or any Associate or Affiliate thereof.
No Rights Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose rights would
be void pursuant to the provisions of SECTION 7(d) or any
Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate. Any Rights Certificate
delivered to the Rights Agent for transfer to an Acquiring Person
whose rights would be void pursuant to the provisions of SECTION
7(d) shall be canceled.
10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT
CERTIFICATES. All Rights Certificates surrendered for exercise,
transfer or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the
Rights Agent, shall be canceled by it, and no Rights Certificates
shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall
cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates
to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in either such
case shall deliver a certificate of cancellation or destruction
thereof, as appropriate, to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL
STOCK. (a) The Company covenants and agrees that it will use
reasonable efforts to cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock a number
of shares of Preferred Stock that will be, except as provided in
SECTION 11(a)(iii), sufficient to permit the exercise in full of
all outstanding Rights as provided in this Agreement.
(b) The Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares
of Preferred Stock issued or reserved for issuance in accordance
with this Agreement to be listed, upon official notice of
issuance, upon the principal national securities exchange, if
any, upon which the Class A Common Stock is listed or, if the
principal market for the Class A Common Stock is not on any
national securities exchange, to be eligible for quotation in The
NASDAQ Stock Market or any successor thereto or other comparable
quotation system.
(c) The Company shall use its best efforts (i) to file, as
soon as practicable following the earliest date after the
occurrence of a Flip-in Event, or as soon as is required by law
following the Distribution Date, as the case may be, a
registration statement under the Securities Act with respect to
the securities issuable upon exercise of the Rights, (ii) to
cause such registration statement to become effective as soon as
practicable after such filing, and (iii) to cause such
registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date.
The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or blue sky
laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days after the date set forth in SECTION
9(c)(i), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall notify
the Rights Agent and 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 that the rights are currently exercisable.
Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable for securities in
any jurisdiction if the requisite qualification in such
11
jurisdiction shall not have been obtained, such exercise therefor
shall not be permitted under applicable law or a registration
statement in respect of such securities shall not 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 one one-
hundredths of a share of Preferred Stock issuable upon exercise
of the Rights shall, at the time of delivery of the certificates
for such Preferred Stock (subject to payment of the Purchase
Price), be duly authorized, validly issued, fully paid, and
nonassessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all Transfer Taxes which may be
payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for Preferred Stock upon the
exercise of Rights. The Company shall not, however, be required
to pay any Transfer Tax which may be payable in respect of any
transfer involved in the issuance or delivery of any Rights
Certificates or of any certificates for Preferred Stock (or Class
A Common Stock or other securities, as the case may be) to a
Person other than the registered holder of the applicable Rights
Certificate, and prior to any such transfer, issuance or delivery
any such Transfer Tax shall have been paid by the holder of such
Rights Certificate or it shall have been established to the
Company's satisfaction that no such Transfer Tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person
(other than the Company) in whose name any certificate for
Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of
such Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable Transfer Taxes) was made;
provided, however, that if the date of such surrender and payment
is a date upon which the transfer books of the Company relating
to the Preferred Stock are closed, such Person shall be deemed to
have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on
which the applicable transfer books of the Company are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND
OF SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number
and kind of shares covered by each Right, and the number of
Rights outstanding are subject to adjustment from time to time,
as provided in this SECTION 11.
(a)(i) If the Company shall at any time after the date
of this Agreement (A) declare or pay a dividend on the
Common Stock payable in shares of Common Stock (or other
capital stock), (B) subdivide or split the outstanding
Common Stock into a greater number of shares, (C) combine or
consolidate the outstanding Common Stock into a smaller
number of shares or effect a reverse split of the
outstanding shares of Common Stock, or (D) issue any shares
of its capital stock in a reclassification of the Common
Stock (including any such reclassification in connection
with a consolidation or merger involving the Company in
which the Company is the surviving or continuing
corporation), except as otherwise provided in SECTION 7(d)
12
and this SECTION 11(a), then and in each such event the
number of shares of Preferred Stock issued upon exercise of
a Right after the record date for such event (if one shall
have been established or, if not, after the date of such
event) shall be the number of shares of Preferred Stock
issuable upon exercise of a Right immediately prior to such
event multiplied by a fraction the numerator of which is the
number of Rights outstanding immediately prior to such event
and the denominator of which is the number of Rights
outstanding immediately after such event, and the Purchase
Price after such event shall be the Purchase Price in effect
immediately prior to such event multiplied by such fraction.
If an event occurs which requires an adjustment under both
this SECTION 11(a)(i) and SECTION 11(a)(ii), the adjustment
provided for in this SECTION 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required
pursuant to SECTION 11(a)(ii).
(ii) Subject to SECTIONS 23 and 24, upon the occurrence
of a Flip-in Event, proper provision shall promptly be made
so that each holder of a Right shall (except as otherwise
provided herein, including, without limitation, SECTION
7(d)) thereafter be entitled to receive, upon exercise of a
Right in accordance with the terms of this Agreement and
payment of the Purchase Price, the greater of (A) the number
of one one-hundredths of a share of Preferred Stock for
which such Right was exercisable immediately prior to the
first occurrence of the event described in this SECTION
11(a)(ii) or (B) such number of one one-hundredths of a
share of Preferred Stock, based on the per share Fair Market
Value of the Preferred Stock (determined pursuant to SECTION
11(b)) on the date of such first occurrence, as have a value
equal to twice the Purchase Price; provided, however, that
if the Flip-in Event is also a Flip-over Event, then only
the provisions of SECTION 13 shall apply and no adjustment
shall be made pursuant to this SECTION 11(a)(ii).
(iii) If the Company does not have available
sufficient authorized but unissued shares of Preferred Stock
to permit the adjustments required pursuant to the foregoing
subparagraph (i) or the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), then the
Company shall take all such action as may be necessary to
authorize and reserve for issuance such number of additional
shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all
Rights from time to time outstanding and, if necessary,
shall use its best efforts to obtain shareholder approval
thereof. In lieu of issuing shares of Preferred Stock in
accordance with the foregoing subparagraphs (i) and (ii),
the Company may, if the Board of Directors determines (but
only if at the time of such determination there are then in
office not less than two Continuing Directors and such
action is approved by a majority of the Continuing Directors
then in office) that such action is necessary or appropriate
and not contrary to the interests of the holders of Rights,
elect to issue or pay, upon the exercise of the Rights,
cash, property, shares of Preferred Stock or Common Stock,
or any combination thereof, having an aggregate Fair Market
Value equal to the Fair Market Value of the shares of
Preferred Stock which otherwise would have been issuable
pursuant to SECTION 11(a)(i) or 11(a)(ii), which Fair Market
13
Value shall be determined by an investment banking firm
selected by the Board of Directors (but only if at the time
of such selection there are then in office not less than two
Continuing Directors and such selection is approved by a
majority of the Continuing Directors then in office). For
purposes of the preceding sentence, the Fair Market Value of
the Preferred Stock shall be determined pursuant to SECTION
11(b). Subject to SECTION 23, any such election by the
Board of Directors of the Company must be made and publicly
announced within 30 days after the date on which the event
described in SECTION 11(a)(ii) occurs.
(b) For purposes of this Agreement, the "FAIR MARKET VALUE"
of any share of Preferred Stock or Common Stock or any Right or
other security or any other property on any date shall be
determined as provided in this SECTION 11(b). In the case of a
publicly traded stock or other security, the Fair Market Value on
any date shall be determined to be the average of the daily
closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days immediately prior to
such day; provided, however, that if the Fair Market Value per
share of any share of Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities exercisable for or
convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such
Common Stock, and prior to the expiration of the requisite 30
Trading Day period after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, split,
combination, consolidation, reverse stock split or
reclassification, then, and in each such case, the "FAIR MARKET
VALUE" shall be properly adjusted by the Board of Directors to
take into account ex-dividend or post-dividend trading. The
closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New
York Stock Exchange, on the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such other
system then in use or, if on any such date the shares of Common
Stock 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 Common Stock selected by the
Board of Directors of the Company, or, if at the time of such
selection there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no market maker is
making a market in the Common Stock, then the Fair Market Value
of such shares on such date as determined in good faith by the
Board of Directors of the Company (or, if at the time of such
determination there is an Acquiring Person, then by a majority of
the Continuing Directors) shall be used. If the Common Stock is
14
not publicly held or not so listed or traded, the "FAIR MARKET
VALUE" per share means the fair value per share as determined in
good faith by the Board of Directors of the Company, or, if at
the time of such determination there is an Acquiring Person, by a
majority of the Continuing Directors, or if there are no
Continuing Directors, by a nationally recognized investment
banking firm selected by the Board of Directors, which
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes; provided,
however, that for purposes of making the adjustment provided for
by SECTION 11(a)(ii), the Fair Market Value of a share of
Preferred Stock shall not be less than 100% of the product of the
Fair Market Value of a share of Common Stock multiplied by the
greater of the then current Dividend Multiple or Vote Multiple
applicable to the Preferred Stock (as such terms are then
currently defined in the Certificate of Designations relating to
the Preferred Stock) and shall not exceed 105% of the product of
the then current Fair Market Value of a share of Common Stock
multiplied by the greater of the then current Dividend Multiple
or Vote Multiple applicable to the Preferred Stock. In the case
of property other than securities, the "FAIR MARKET VALUE"
thereof shall be determined in good faith by the Board of
Directors of the Company (or, if at the time of such
determination there is an Acquiring Person, then by a majority of
the Continuing Directors) based upon such appraisals or valuation
reports of such independent experts as the directors making such
determination shall in good faith determine to be appropriate in
accordance with good business practices and the interest of the
holders of the Rights. Any such determination of Fair Market
Value shall be described in a statement filed with the Rights
Agent and shall be binding upon the Company, the Rights Agent and
the holders of the Rights.
(c) All calculations under this SECTION 11 shall be made to
the nearest cent or to the nearest one one-hundredth of a share,
as the case may be.
(d) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder but, nevertheless
shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value, if any, of the
number of one one-hundredths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
as fully paid and nonassessable such number of one one-hundredths
of a share of Preferred Stock at such adjusted Purchase Price.
(f) Anything in this SECTION 11 to the contrary
notwithstanding, in the event of any reclassification of stock of
the Company or any recapitalization, reorganization or partial
liquidation of the Company or similar transaction, the Company
shall be entitled to make such further adjustments in the number
of shares of Preferred Stock which may be acquired upon exercise
15
of the Rights, and such adjustments in the Purchase Price
therefor, in addition to those adjustments expressly required by
the other subparagraphs of this SECTION 11, as the Board of
Directors of the Company shall determine to be necessary or
appropriate in order for the holders of the Rights in such event
to be treated equitably and in accordance with the purpose and
intent of this Agreement or in order that any such event shall
not, but for such adjustment, in the opinion of counsel to the
Company, result in the shareholders of the Company being subject
to any United States federal income tax liability by reason
thereof.
(g) If the Company shall at any time after the Effective
Date make any distribution on the shares of Common Stock of the
Company, whether by way of a dividend or a reclassification of
stock, a recapitalization, reorganization or partial liquidation
of the Company or otherwise, in cash or any debt security, debt
instrument, real or personal property or any other property
(other than any shares of Common Stock or other capital stock of
the Company and other than any right or warrant to acquire any
such shares, including any debt security convertible into or
exchangeable for any such share, at less than the Fair Market
Value of such shares) and the amount of such cash dividend or the
Fair Market Value of such debt security, debt instrument or
property exceeds 150% of the aggregate amount of the cash
dividends declared or paid on the Common Stock of the Company in
the 15-month period immediately preceding such distribution, then
and in each such event, unless such distribution is part of or is
made in connection with a transaction to which SECTION 11(a)(ii)
or SECTION 13 applies, the Purchase Price shall be reduced by an
amount equal to the cash or the Fair Market Value of such
distribution, as the case may be, per share of Common Stock of
the Company.
(h) 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 issuance to the holder of
any Right exercised after such record date the number of one one-
hundredths of a share of Preferred Stock or other capital stock
of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred
Stock or other capital stock 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.
(i) The Company covenants and agrees that it will not at
any time after the Distribution Date, (i) consolidate with any
other Person, (ii) merge with or into any other Person, (iii)
effect a statutory share exchange with any Person, or (iv) sell,
lease or otherwise transfer (and/or permit any of its
Subsidiaries to sell, lease or otherwise transfer), in one
transaction or a series of related transactions, assets
aggregating more than 50% of the assets (measured by either book
value or Fair Market Value) or generating more than 50% of
operating income or cash flow of the Company and its
Subsidiaries, taken as a whole, to any other Person or Persons if
(x) at the time of or immediately after such consolidation,
16
merger, statutory share exchange, sale, lease or transfer there
are any rights, warrants or other instruments or securities
outstanding or any agreements or arrangements in effect which
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, or (y) prior to,
simultaneously with or immediately after such consolidation,
merger, statutory share exchange, sale, lease or transfer, the
shareholders of a Person who constitutes, or would constitute,
the "PRINCIPAL PARTY" for the purposes of SECTION 13 shall have
received a distribution of Rights previously owned by such Person
or any of its Affiliates and Associates.
(j) The Company covenants and agrees that after the
Distribution Date, it will not, except as permitted by SECTIONS
23, 24 or 27, 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 substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights,
unless such action is approved by a majority of the Continuing
Directors.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR
NUMBER OF SHARES. Whenever an adjustment is made as provided in
SECTIONS 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement
of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in
the manner set forth in SECTION 26. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment contained therein.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. (a) Except for any transaction with a
Person who has consummated a Qualifying Tender Offer which
transaction is approved by a majority of the Continuing
Directors, if following the Share Acquisition Date, directly or
indirectly, any of the following (a "FLIP-OVER EVENT") shall
occur:
(w) the Company shall consolidate with, merge
with or into, or otherwise combine with, any other
Person, and the Company shall not be the continuing or
surviving corporation of such consolidation, merger or
combination, or
(x) any Person shall consolidate with, merge with
or into, or otherwise combine with, the Company, and
the Company shall be the continuing or surviving
corporation of such consolidation, merger or
combination and, in connection with such consolidation,
merger or combination, all or part of the outstanding
shares of Common Stock shall be changed into or
exchanged for other stock or securities of the Company
or any other Person or cash or any other property, or
(y) the Company shall be a party to any statutory
share exchange with any other Person after which the
Company is a Subsidiary of any other Person, or
17
(z) the Company and/or one or more of its
Subsidiaries shall sell, lease or otherwise transfer,
in one transaction or a series of related transactions,
assets aggregating more than 50% of the assets
(measured by either book value or Fair Market Value) or
generating more than 50% of the operating income or
cash flow of the Company and its Subsidiaries, taken as
a whole, to any other Person or Persons or any
Affiliate or Associate of such Person(s),
then, and in each such case, proper provision shall promptly be
made so that
(i) each holder of a Right, except as provided in
SECTION 7(d), shall thereafter be entitled to receive, upon
exercise thereof and payment of the Purchase Price in
accordance with the terms of this Agreement, such number of
duly authorized, validly issued, fully paid and
nonassessable shares of freely tradable Common Stock of the
Principal Party, not subject to any rights of call or first
refusal, liens, encumbrances or other claims, as shall
(based on the Fair Market Value of the Common Stock of the
Principal Party) be equal to on the date of consummation of
such consolidation, merger, combination, statutory share
exchange, sale, lease or transfer twice the Purchase Price;
(ii) the Principal Party shall thereafter be liable
for, and shall assume, by virtue of such consolidation,
merger, combination, statutory share exchange, sale, lease
or transfer, all the obligations and duties of the Company
pursuant to this Agreement;
(iii) the term "COMPANY" shall thereafter be deemed
to refer to such Principal Party, it being specifically
intended that the provisions of SECTION 11 shall apply only
to such Principal Party following the first occurrence of a
Flip-over Event;
(iv) such Principal Party shall take such steps
(including, without limitation, the authorization and
reservation of a sufficient number of shares of its Common
Stock to permit exercise of all outstanding Rights in
accordance with this SECTION 13(a)) in connection with the
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 deliverable upon
the exercise of the Rights; and
(v) the provisions of SECTION 11(a)(ii) shall be of no
effect following the first occurrence of a Flip-over Event.
However, upon the subsequent occurrence of any consolidation,
merger, combination, statutory share exchange, sale, lease,
transfer, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of
such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the
Purchase Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive
had it, at the time of such transaction, owned the shares of
18
Common Stock of the Principal Party purchasable upon the exercise
of a Right, and such Principal Party shall take such steps
(including, without limitation, 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" means:
(i) in the case of any transaction described in
SECTIONS 13(a) (w), (x) or (y), (A) the Person that is the
issuer of any securities into which shares of Common Stock
of the Company are converted in such merger, consolidation,
or combination or for which shares of Common Stock of the
Company are exchanged in such statutory share exchange, or,
if there is more than one such issuer, the issuer of the
Common Stock of which has the greatest aggregate market
value, or (B) if no securities are issued, (x) the Person
that survives such consolidation or is the other party to
the merger, combination or statutory share exchange, or, if
there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value, 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); and
(ii) in the case of any transactions described in
SECTIONS 13(a)(z), the Person that is the party receiving
the greatest portion of the assets, operating income or cash
flow 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, operating income or cash flow so transferred, or, if
the Person receiving the greatest portion of the assets,
operating income or cash flow cannot be determined, the
Person the Common Stock of which has the greatest aggregate
market value;
PROVIDED, HOWEVER, that in any such case, (A) if the Common Stock
of such Person is not at such time and has not been continuously
over the preceding 12-month period registered under SECTION 12 of
the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has
been so registered, "PRINCIPAL PARTY" shall refer to such other
Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stock of two or
more of which are and have been so registered, "PRINCIPAL PARTY"
shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, combination, statutory share exchange,
sale, lease or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which
are not outstanding or otherwise reserved for issuance to permit
the exercise in full of the Rights in accordance with this
SECTION 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement confirming that the Principal
Party shall, upon consummation of such consolidation, merger,
combination, statutory share exchange, sale, lease or transfer,
assume this Agreement in accordance with SECTION 13(a) and that
19
all rights of first of refusal or preemptive rights in respect of
the issuance of shares of Common Stock of the Principal Party
upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal
Party under this Agreement, and further providing that, as soon
as practicable after the date of any consolidation, merger,
combination, statutory share exchange, sale, lease or transfer
mentioned in SECTION 13(a), the Principal Party will (i) prepare
and file a registration statement under the Securities Act with
respect to the Rights and the securities issuable upon exercise
of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement (A) to become
effective as soon as practicable after such filing, and (B) to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the securities issuable upon exercise of the
Rights on a national securities exchange or to meet the
eligibility requirements for quotation on The NASDAQ Stock
Market; and (iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the
Exchange Act.
(d) The provisions of this SECTION 13 shall similarly apply
to successive mergers, consolidations, combinations, statutory
share exchanges, sales, leases or other transfers. If any Flip-
over Event shall occur at any time after the occurrence of a
Flip-in Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner
described in SECTION 13(a).
(e) If the Principal Party which is to be a party to a
transaction referred to in this SECTION 13 has a provision in any
of its authorized securities or in its certificate or articles of
incorporation or bylaws or other instrument governing its
corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as
a consequence of, the consummation of a transaction referred to
in this SECTION 13, shares of Common Stock of such a Principal
Party at less than the Fair Market Value per share (determined
pursuant to SECTION 11(b) hereof) or securities exercisable for,
or convertible into, Common Stock of such Principal Party at less
than such then Fair Market Value (other than to holders of Rights
pursuant to this SECTION 13), or (ii) providing for any special
tax or similar payment in connection with the issuance to any
holder of a Right of Common Stock of such Principal Party
pursuant to the provisions of this SECTION 13 then, in such
event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental
agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived, amended or
that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or
as a consequence of, consummation of the proposed transaction.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a)
The Company shall not be required to issue fractions of Rights,
or to distribute Rights Certificates which evidence fractional
Rights, unless such fractional Rights result from a transaction
20
referred to in SECTION 11(a)(i). In lieu of any such fractional
Rights, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional Rights
would otherwise be issuable an amount in cash equal to the same
fraction of the Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are
multiples of one one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of
Preferred Stock). In lieu of any such fractional shares of
Preferred Stock, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as
provided herein an amount in cash equal to the same fraction of
the Fair Market Value of one one-hundredth of a share of
Preferred Stock.
(c) Upon any exchange pursuant to SECTION 24, the Company
shall not be required to issue fractions of shares of Common
Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company shall pay to the registered holders of Rights
Certificates at the time such Rights are exchanged as provided
herein an amount in cash equal to the same fraction of the Fair
Market Price of a share of Common Stock.
(d) 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
permitted by this SECTION 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of Common Stock), and
any registered holder of any Rights Certificate (or, prior to the
Distribution Date, of any Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of any Common Stock), may,
in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights 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 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:
21
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent
if surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to SECTIONS 6(a) and 7(e), the Company and the
Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, a certificate
representing Common Stock) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificate or
the certificate representing shares of Common Stock made by
anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of SECTION 7(d), shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining performance of
such obligation; provided, however, that the Company must use its
best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
SHAREHOLDER. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the shares of capital stock which may at
any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in SECTION 25), or to receive
dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the execution or
administration of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify
22
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 or the
exercise or performance of its duties hereunder, including the
costs and expenses of defending against any claim of liability.
(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 the administration of this
Agreement or the exercise or performance of its duties hereunder
in reliance upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
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
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of SECTION 21. In case at the time such successor
Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and if at that
time any of the Rights Certificates shall not have been
countersigned, then any successor Rights Agent may countersign
such Rights 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 Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, then the Rights Agent
may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and if at that time any of
the Rights Certificates shall not have been countersigned, then
the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases,
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
23
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Rights Agent or 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 (including, without limitation, the
identity of any Acquiring Person and the determination of Fair
Market Value) be proved or established by the Company prior to
taking, suffering or omitting to take any action hereunder, such
fact or matter (unless other evidence in respect thereof is
specifically prescribed herein) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of
the Board, the President, any Vice President, the Secretary or
any Assistant Secretary of the Company and delivered to the
Rights Agent. Any such certificate shall be full authorization
to the Rights Agent for any action taken, suffered or omitted in
good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to SECTION 7(d)) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided
for in SECTIONS 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when
issued, be duly authorized, validly issued, fully paid and
nonassessable.
24
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President any Vice
President, the Secretary or any Assistant 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, suffered or omitted to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not the
Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the
Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights
resulting from any such act, default, neglect or misconduct;
provided, however, that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 or 2 thereof, the
Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with
the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' written notice mailed
to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and, subsequent
to the Distribution Date, to the holders of the Rights
Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' written
25
notice, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Stock
and Preferred Stock by registered or certified mail, and
subsequent to the Distribution Date, to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of 30 days of giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the
registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States
or of the State of Georgia (or any other state of the United
States so long as such corporation is authorized to do business
as a banking institution in the State of Georgia), in good
standing, having a principal office in the State of Georgia,
which is authorized under such laws to exercise stock transfer or
corporate trust 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 $50,000,000 or (b) an Affiliate of a
corporation described in SECTION 21(a). After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and the
Preferred Stock, and, subsequent to the Distribution Date, mail a
notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this
SECTION 21, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may
be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities issuable or property purchasable upon
exercise of the Rights made in accordance with the provisions of
this Agreement.
SECTION 23. REDEMPTION AND TERMINATION. (a) The Company
may, at its option, but only upon the vote of a majority of the
Board of Directors then in office, at any time prior to the
earlier of (i) the Close of Business on the tenth day after the
Share Acquisition Date (or, subject to SECTION 27, such later
26
date as a majority of the Continuing Directors may designate), or
(ii) the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $0.01 per
Right, as such amount may be appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being referred to
herein as the "Redemption Price"), and the Company may, at its
option, pay the Redemption Price in shares of Common Stock (based
on the Fair Market Value of the shares of Common Stock at the
time of redemption), cash or any other form of consideration
deemed appropriate by the Board of Directors; provided, however,
that after the occurrence of a Flip-in Event, any redemption of
the Rights shall be effective only if there are Continuing
Directors then in office, and such redemption shall have been
approved by a majority of such Continuing Directors; provided,
further, that any redemption of Rights shall also be subject to
any additional approval procedures required by the articles of
incorporation or bylaws of the Company. Notwithstanding anything
in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Flip-in Event until
such time as the Company's right of redemption hereunder has
expired.
(b) If, following the occurrence of a Share Acquisition
Date and following the expiration of the right of redemption
hereunder (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common
Stock in one transaction or series of transactions, not directly
or indirectly involving the Company or any of its Subsidiaries,
which did not result in the occurrence of a Triggering Event,
such that such Person is thereafter the Beneficial Owner of 10%
or less of the outstanding Common Stock, and (ii) there are no
other Persons immediately following the occurrence of the event
described in clause (i) who are Acquiring Persons, then the right
of redemption shall be reinstated and thereafter be subject to
the provisions of this SECTION 23.
(c) Immediately upon the action of the Board of Directors
of the Company electing to redeem the Rights with, where
required, the concurrence of the Continuing Directors, and
without any further action and without any notice, the right to
exercise the Rights will terminate and thereafter the only right
of the holders of Rights shall be to receive the Redemption Price
for each Right so held. The Company shall promptly thereafter
give notice of such redemption to the Rights Agent and the
holders of the Rights in the manner set forth in SECTION 26;
provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such redemption.
Any notice which is mailed in the manner provided herein shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
SECTION 24. EXCHANGE. (a) At any time after the
occurrence of a Flip-in Event, a majority of the Continuing
Directors may, at their option, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to SECTION 7(d)) for shares
of Class A Common Stock at an exchange ratio of one share of
Class A Common Stock per Right held by the holder of Class A
Common Stock and for shares of Class B Common Stock at an
27
exchange ratio of one share of Class B Common Stock per Right
held by the holder of Class B Common Stock, in each case,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "EXCHANGE
RATIO"). If a holder owns both Class A Common Stock and Class B
Common Stock, then the shares of Common Stock issued to such
holder in exchange for Rights shall be apportioned pro rata based
upon the ratio of shares of Class A Common Stock and Class B
Common Stock held by such Person.
(b) Immediately upon the action of the Continuing Directors
electing to exchange any Rights pursuant to SECTION 24(a) and
without any further action and without any notice, the right to
exercise such Rights will terminate and thereafter the only right
of a holder of such Rights shall be to receive that number of
shares of Class A Common Stock or Class B Common Stock (as
applicable) equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly thereafter give notice of such exchange to the Rights
Agent and the holders of the Rights to be exchanged in the manner
set forth in SECTION 26; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity
of such exchange. Any notice which is mailed in the manner
provided herein shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
SECTION 7(d)) held by each holder of Rights.
(c) If there shall not be sufficient Class A Common Stock
or Class B Common Stock issued but not outstanding or authorized
but unissued to permit any exchange of Rights as contemplated by
this SECTION 24, the Company shall take all such action as may be
necessary to authorize additional Class A Common Stock or Class B
Common Stock (as applicable) for issuance upon exchange of the
Rights. If the Company shall, after a good faith effort, be
unable to take all such action as may be necessary to authorize
such additional Class A Common Stock or Class B Common Stock (as
applicable), the Company may substitute other equity securities
of the Company which a majority of the Continuing Directors has
determined to be essentially equivalent to shares of Class A
Common Stock or Class B Common Stock (as applicable) in respect
to dividend, liquidation and voting rights (such securities being
referred to herein as "COMMON STOCK EQUIVALENTS") for shares of
Class A Common Stock or Class B Common Stock (as applicable)
exchangeable for Rights, at the initial rate of one Common Stock
Equivalent for each share of Class A Common Stock or Class B
Common Stock (as applicable).
SECTION 25. NOTICE OF PROPOSED ACTIONS. (a) If the
Company shall propose, at any time after the Distribution Date,
(i) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any other distribution to the
holders of Common Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company),
(ii) to offer to the holders of its Common Stock rights or
warrants to subscribe for or to purchase any additional shares of
Common Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
28
reclassification of its Common Stock or Preferred Stock (other
than a reclassification involving only the subdivision or
combination of outstanding shares of Common Stock), (iv) to
effect any consolidation or merger with or into any other Person,
or to effect a statutory share exchange with any Person, or to
effect and/or to permit one or more of its Subsidiaries to effect
any sale, lease or other transfer, in one transaction or a series
of related transactions, of assets aggregating more than 50% of
the assets (measured by either book value or fair market value)
or generating more than 50% of the operating income or cash flow
of the Company and its Subsidiaries, taken as a whole, to any
other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right, to the
extent feasible and in accordance with SECTION 26, a notice of
such proposed action, which shall specify the record date for the
purposes of any such dividend, distribution or offering of rights
or warrants, or the date on which any such reclassification,
consolidation, merger, statutory share exchange, sale, lease,
transfer, liquidation, dissolution or winding up is to take place
and the date of participation therein by the holders of Common
Stock or Preferred Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the Common Stock or Preferred
Stock entitled to participate in such dividend, distribution or
offering, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of Common Stock
or Preferred Stock, whichever shall be the earlier. The failure
to give notice required by this SECTION 25 or any defect therein
shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a public filing by the
Company with the Securities and Exchange Commission shall
constitute sufficient notice to the holders of securities of the
Company, including the Rights, for purposes of this Agreement and
no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter
give to each holder of a Right, in accordance with SECTION 26, a
notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights
under SECTION 11(a)(ii) or 13, as the case may be, and (ii) upon
consummating such transaction, shall similarly give notice
thereof to each holder of Rights. The failure to give the notice
required by this SECTION 25 or any defect therein shall not
affect the legality or validity of the action taken by the
Company or the vote upon any such action.
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 to or on the Company shall be sufficiently
given or made if sent by postage prepaid mail to the address of
the Company indicated on the signature page hereof or such other
address as the Company shall specify in writing to the Rights
Agent. Subject to the provisions of SECTION 21, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right to or on the Rights Agent
29
shall be sufficiently given or made if sent by postage prepaid
mail to the address of the Rights Agent indicated on the
signature page hereof or such other address as the Rights Agent
shall specify in writing to the Company. Notices or demands
authorized by this Agreement to be given or made by the Company
or the Rights Agent to the holder of any Rights Certificate (or,
prior to the Distribution Date, to the holder of any certificate
representing shares of Common Stock) shall be sufficiently given
or made if sent by postage prepaid mail to the address of such
holder shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date and subject to the penultimate sentence of this
SECTION 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the
Distribution Date, and subject to the penultimate sentence of
this SECTION 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates in order (a) to
cure any ambiguity, (b) to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions herein, (c) to shorten or lengthen any time
period hereunder (which shortening or lengthening shall be
effective only if there are Continuing Directors in office and
shall require the concurrence of a majority of such Continuing
Directors), or (d) to change or supplement the provisions hereof
in any manner which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the holders
of Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended pursuant to SECTION
27(c) to lengthen (i) a time period relating to when the Rights
may be redeemed at such time as the Rights are not then
redeemable, or (ii) any other time period, unless lengthening
such other time period is for the purpose of protecting,
enhancing, or clarifying the rights of, or benefits to the
holders of, the Rights. Notwithstanding the foregoing, after any
Person has become an Acquiring Person, any supplement or
amendment shall be effective only if there are Continuing
Directors then in office, and such supplement or amendment shall
have been approved by a majority of such Continuing Directors.
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.
Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes
the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable. Prior to the
Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of Common
Stock.
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. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS. For all purposes of this Agreement, any calculation
30
of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under
the Exchange Act as in effect on the date of this Agreement. The
Board of Directors of the Company (or, after any Person has
become an Acquiring Person, a majority of the Continuing
Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (a)
interpret the provisions of this Agreement, and (b) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or exchange or not to redeem or exchange the Rights or to
amend this Agreement); provided, however, that any redemption of
Rights shall also be subject to any additional approval
procedures required by the articles of incorporation or bylaws of
the Company. All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made
by the Board (or, after any Person has become an Acquiring
Person, by the Continuing Directors) in good faith, shall (x) be
final, conclusive and binding on the Company (subject to any
additional redemption approval procedures referred to in the
proviso to the immediately preceding sentence), the Rights Agent,
the holders of the Rights and all other parties, and (y) not
subject the Board of Directors of the Company or the Continuing
Directors to any liability to the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the
certificates representing the shares of Common Stock) any legal
or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the
certificates representing the shares of Common Stock).
SECTION 31. SEVERABILITY. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, 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;
provided, however, that, notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company
(or, after any Person has become an Acquiring Person, a majority
of the Continuing Directors) determines in its good faith
judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in SECTION 23 hereof shall be
reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the
Board of Directors or Continuing Directors, as the case may be.
SECTION 32. GOVERNING LAW. This Agreement, each Right
31
and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Georgia and for
all purposes shall be governed by and construed in accordance
with the laws of such State (other than its conflicts of laws
rules) applicable to contracts to be made and performed entirely
within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute one and the same
instrument.
SECTION 34. DESCRIPTIVE HEADINGS. The captions herein
are included for convenience of reference only, do not constitute
a part of this Agreement and shall be ignored in the construction
and interpretation hereof.
[Remainder of page intentionally left blank]
32
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
INTERFACE, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
Interface, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
WACHOVIA BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Wachovia Bank, N.A.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, XX 00000
33
Exhibit A
FORM OF
BOARD RESOLUTION ESTABLISHING AND DESIGNATING
SERIES B PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
INTERFACE, INC.
Pursuant to SECTION 14-2-602 of the Georgia
Business Corporation Code
SECTION 1. DESIGNATION AND NUMBER OF SHARES. The
shares of such series shall be designated as "Series B
Participating Cumulative Preferred Stock" (the "SERIES B
PREFERRED STOCK"), and the number of shares constituting such
series shall be 1,000,000 The par value of each share of Series
B Preferred Stock shall be $1.00. If more than a total of
1,000,000 shares of Series B Preferred Stock shall be issuable
upon the exercise of rights (the "RIGHTS") issued pursuant to the
Rights Agreement dated March 4, 1998 and effective as of March 16,
1998, between the Corporation and Wachovia Bank, N.A., as rights
agent (as such agreement may be amended from time to time, the "RIGHTS
AGREEMENT"), the Board of Directors of the Corporation, pursuant
to SECTION 14-2-602 of the Georgia Business Corporation Code, as
amended, and in accordance with the provisions of the Articles of
Incorporation, shall adopt a resolution or resolutions increasing
the previously determined total number of shares of Series B
Preferred Stock authorized to be issued (to the extent that the
Articles of Incorporation then permit) to the largest number of
whole shares (rounded to the nearest whole number) issuable upon
exercise of the Rights and directing that a statement of Articles
of Amendment with respect to such increase in authorized shares
of the Series B Preferred Stock be executed and filed with the
Secretary of State of the State of Georgia. The number of shares
of the Series B Preferred Stock may be increased or decreased by
resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series B Preferred
Stock to a number less than the number of shares then outstanding
plus the number of shares issuable upon exercise of the
outstanding Rights.
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SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking
prior and superior to the shares of Series B Preferred Stock with
respect to dividends, if any, the holders of shares of 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 the purpose, quarterly dividends payable on the last day of
March, June, September and December of each year (each such date
being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"),
commencing on the first Quarterly Dividend Payment Date after the
first issuance of any 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) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount (payable in kind) of all cash
dividends or other distributions and 100 times the aggregate per
share amount of all non-cash dividends or other distributions
(other than (i) a dividend payable in shares of Common Stock (as
defined below) of the Corporation or (ii) a subdivision of the
outstanding shares of Common Stock (by reclassification or
otherwise)) , declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B
Preferred Stock. The multiple of such cash and non-cash
dividends and distributions on the Common Stock applicable to the
determination of the dividends to be paid on the Series B
Preferred Stock, which shall initially be 100, but which shall be
adjusted from time to time as provided herein, is referred to
herein as the "DIVIDEND MULTIPLE." If the Corporation shall at
any time after March 16, 1998 (the "RIGHTS DECLARATION DATE"),
declare or pay any dividend or make any distribution on Common
Stock payable in shares of Common Stock or effect a subdivision
or split or combination, consolidation or reverse stock split of
the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case the Dividend Multiple thereafter
applicable to the determination of the amount which holders of
shares of Series B Preferred Stock shall be entitled to receive
shall be the Dividend Multiple applicable immediately prior to
such event multiplied by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event. For purposes hereof, "COMMON STOCK" means the
Corporation's Class A Common Stock, par value $0.10 per share,
and Class B Common Stock, par value $0.10 per share.
(B) The Corporation shall declare a dividend or
distribution on the Series B Preferred Stock as provided in
SECTION 2(A) immediately after it declares a dividend or
distribution on the Common Stock (other than as described in
clauses (i) and (ii) of the first sentence of SECTION 2(A));
provided, however, that if no dividend or distribution shall have
been declared on the Common Stock during the period between any
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Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date (or, with respect to the first Quarterly
Dividend Payment Date, the period between the first issuance of
any share or fraction of a share of Series B Preferred Stock and
such first Quarterly Dividend Payment Date), a dividend of $1.00
per share on the Series B Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series B Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series B Preferred Stock, unless the date of
issue of such shares is on or before the record date for the
first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue 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 on or before such Quarterly Dividend Payment Date,
in which case dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on 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 not be more than 60 days prior to the date fixed for the
payment thereof.
SECTION 3. VOTING RIGHTS. In addition to any other
voting rights required by law, 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, each share of Series B Preferred Stock
shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of shareholders of the Corporation. The
number of votes which a holder of a share of Series B Preferred
Stock is entitled to cast, as the same may be adjusted from time
to time, is hereinafter referred to as the "VOTE MULTIPLE." If
the Corporation shall at any time after the Rights Declaration
Date declare or pay any dividend on Common Stock payable in
shares of Common Stock or effect a subdivision or split or
combination, consolidation of reverse stock split of the
outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common
Stock, then in each such case, the Vote Multiple thereafter
applicable to the determination of the number of votes per share
to which holders of shares of Series B Preferred Stock shall be
entitled after such event shall be the Vote Multiple applicable
immediately prior to such event multiplied by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series B Preferred Stock and the holders of
shares of Common Stock shall vote together as a single class on
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all matters submitted to a vote of shareholders of the
Corporation; provided, however, that, except as set forth in
SECTION 3(C), the holders of shares of Series B Preferred Stock
shall vote with the holders of the Class A Common Stock in the
election of directors.
(C) (i) If at any time dividends on any Series B
Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon (whether or not consecutive), the
occurrence of such contingency shall xxxx the beginning of a
period (herein called a "DEFAULT PERIOD") which shall extend
until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series B Preferred Stock then
outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of Series B
Preferred Stock and any other series of Preferred Stock then
entitled as a class to elect directors, voting together as a
single class, irrespective of series, shall have the right to
elect one Director.
(ii) During any default period, such voting right of
the holders of Series B Preferred Stock may be exercised
initially at a special meeting called pursuant to SECTION
3(C)(iii) or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders; provided, however,
that neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be
exercised unless the holders of 10% in number of shares of
Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of holders of Common Stock shall
not affect the exercise by holders of Preferred Stock of such
voting right. At any meeting at which holders of Preferred Stock
shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to
elect Directors to fill such vacancy, if any, in the Board of
Directors as may then exist up to one Director or, if such right
is exercised at an annual meeting, to elect one Director. If the
number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of
the required number. After the holders of the Preferred Stock
shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to
or pari passu with the Series B Preferred Stock.
(iii) Notwithstanding anything to the contrary
contained in the Corporation's Articles of Incorporation or
Bylaws, unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any
shareholder(s) owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of
a special meeting of holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President or
the Secretary of the Corporation. Notice of such meeting and of
A-4
any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this SECTION 3(C)(iii) shall be
given to each holder of record of Preferred Stock by mailing a
copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 10 days and not later than 60
days after such order or request or in default of the calling of
such meeting within 60 days after such order or request. Such
meeting may be called on similar notice by any shareholder(s)
owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this
SECTION 3(C)(iii), no such special meeting shall be called during
the period within 60 days immediately preceding the date fixed
for the next annual meeting of shareholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock shall
have exercised their right to elect one Director voting as a
class, after the exercise of which right (x) the Director so
elected by the holders of Preferred Stock shall continue in
office until his or her successor shall have been elected by such
holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
SECTION 3(C)(ii)) be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the
class of stock which elected the Director whose office shall have
become vacant. References in this SECTION 3(C) to Directors
elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock, voting
as a separate class, to elect Directors shall cease, (y) the term
of any Director elected by the holders of Preferred Stock, voting
as a separate class, shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the
Articles of Incorporation or Bylaws irrespective of any increase
made pursuant to the provisions of SECTION 3(C)(ii) (such number
being subject, however, to change thereafter in any manner
provided by law or in the Articles of Incorporation or Bylaws).
Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may
be filled in any manner provided for in the Articles of
Incorporation or Bylaws.
(D) Except as otherwise provided herein, holders of
Series B Preferred Stock shall have no special voting rights, and
their consent shall not be required (except to the extent they
are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
SECTION 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 declared, on
outstanding shares of Series B Preferred Stock shall have been
paid in full, the Corporation shall not:
A-5
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series B Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and
all such other 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, purchase or otherwise acquire for
value any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred Stock; provided, however, that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for
shares of stock of the Corporation ranking junior (as to
dividends and upon dissolution, liquidation or winding up)
to the Series B Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value
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 Series B Preferred
Stock and all such other parity stock upon such terms as the
Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any Subsidiary
(as defined below) of the Corporation to purchase or otherwise
acquire for value any shares of stock of the Corporation unless
the Corporation could, under SECTION 4(A), purchase or otherwise
acquire such shares at such time and in such manner.
(C) A "SUBSIDIARY" of Corporation shall mean any
corporation or other entity of which securities or other
ownership interests entitled to cast as least a majority of the
votes that would be entitled to be cast in an election of the
Board of Directors of such corporation or other entity or other
persons performing similar functions are beneficially owned,
directly or indirectly, by the Corporation or by any corporation
or other entity that is otherwise controlled by the Corporation.
(D) The Corporation shall not issue any shares of
Series B Preferred Stock except upon exercise of Rights issued
pursuant to the Rights Agreement.
SECTION 5. REACQUIRED SHARES. Any shares of Series B
Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares
A-6
shall upon their cancellation become authorized but unissued
shares of Preferred Stock without designation as to series and
may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors as
permitted by the Articles of Incorporation or as otherwise
permitted under Georgia law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP
(A) Upon any liquidation, dissolution or winding up of
the Corporation, no distribution shall be made:
(i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series B Preferred Stock unless, prior
thereto, the holders of shares of Series B Preferred Stock
shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment;
provided, however, 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 100 times the aggregate
amount to be distributed per share to holders of Common
Stock, or
(ii) to the holders of stock ranking on a parity
(either as to dividends or 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 other 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. The
amount to which holders of Series B Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the
Corporation pursuant to the proviso to clause (i) above is
hereinafter referred to as the "PARTICIPATING LIQUIDATION
AMOUNT," and the multiple of the amount to be distributed to
holders of Common Stock upon the liquidation, dissolution or
winding up of the Corporation applicable pursuant to said
proviso, as such multiple may be adjusted from time to time
as hereinafter provided, is hereinafter referred to as the
"LIQUIDATION MULTIPLE." If the Corporation shall at any
time after the Rights Declaration Date pay any dividend on
Common Stock payable in shares of Common Stock or effect a
subdivision or split or combination, consolidation or
reverse stock split of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such
case the Liquidation Multiple thereafter applicable to the
determination of the amount to which holders of shares of
Series B Preferred Stock shall be entitled to receive after
such event shall be the Liquidation Multiple immediately
prior to such event multiplied by a fraction the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) For purposes of this XXXXXXX 0, xxxx of the
following events shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation: (i)
A-7
the voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the
Corporation; (ii) the combination, consolidation or merger of the
Corporation with or into one or more other corporations or other
associations; (iii) the consolidation or merger of one or more
corporations or other associations with or into the Corporation;
or (iv) participation by the Corporation in a share exchange.
SECTION 7. CERTAIN RECLASSIFICATION AND OTHER EVENTS
(A) If, after the Rights Declaration Date, holders of
shares of Common Stock receive in respect of their shares of
Common Stock any share of capital stock of the Corporation (other
than any share of Common Stock of the Corporation), whether by
way of reclassification, recapitalization, reorganization,
dividend or other distribution or otherwise (a "TRANSACTION"),
then, and in each such event, the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the
Corporation of the shares of Series B Preferred Stock shall be
adjusted so that after such event the holders of Series B
Preferred Stock shall be entitled, in respect of each share of
Series B Preferred Stock held, in addition to such rights in
respect thereof to which such holder was entitled immediately
prior to such adjustment, to
(i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such Transaction
multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue
of the receipt in the Transaction of such capital stock,
(ii) such additional voting rights as equal the Vote
Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights to which the
holder of a share of Common Stock shall be entitled by
virtue of the receipt in the Transaction of such capital
stock, and
(iii) such additional distributions upon
liquidation, dissolution or winding up of the Corporation as
equal the Liquidation Multiple in effect immediately prior
to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be
entitled to receive upon liquidation, dissolution or winding
up of the Corporation by virtue of the receipt in the
Transaction of such capital stock, as the case may be, all
as provided by the terms of such capital stock.
(B) If, after the Rights Declaration Date, holders of
shares of Common Stock receive in respect of their shares of
Common Stock any right or warrant to purchase Common Stock
(including as such a right, for all purposes of this SECTION
7(B), any security convertible into or exchangeable for Common
Stock at a purchase price per share less than the Fair Market
Value (as defined below) of a share of Common Stock on the date
of issuance of such right or warrant, then, and in each such
event, the dividend rights, voting rights and rights upon the
liquidation dissolution or winding up of the Corporation of the
shares of Series B Preferred Stock shall each be adjusted so that
after such event the Dividend Multiple, the Vote Multiple and the
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Liquidation Multiple shall each be the product of the Dividend
Multiple, the Vote Multiple and the Liquidation Multiple, as the
case may be, in effect immediately prior to such event multiplied
by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such
issuance of rights or warrants plus the maximum number of shares
of Common Stock which could be acquired upon exercise in full of
all such rights or warrants and the denominator of which shall be
the number of shares of Common Stock outstanding immediately
before such issuance of rights or warrants plus the number of
shares of Common Stock which could be purchased, at the Fair
Market Value of the Common Stock at the time of such issuance, by
the maximum aggregate consideration payable upon exercise in full
of all such rights or warrants.
(C) If, after the Rights Declaration Date, holders of
shares of Common Stock receive in respect of their shares of
Common Stock any right or warrant to purchase capital stock
(other than shares of Common Stock), including as such a right,
for all purposes of this SECTION 7(C), any security convertible
into or exchangeable for capital stock of the Company (other than
Common Stock), at a purchase price per share less than the Fair
Market Value of a share of such capital stock on the date of
issuance of such rights or warrant, then, and in each such event,
the dividend rights, voting rights and rights upon the
liquidation, dissolution or winding up of the Corporation of the
shares of Series B Preferred Stock shall each be adjusted so that
after such event holders of Series B Preferred Stock shall be
entitled, in respect of each share of Series B Preferred Stock
held, in addition to such rights in respect thereof to which such
holder was entitled immediately prior to such event, to receive
(i) such additional dividends as equal the Dividend Multiple in
effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Common
Stock shall be entitled upon exercise of such right or warrant by
virtue of the capital stock which could be acquired upon such
exercise, and multiplied again by the Discount Fraction (as
defined below), (ii) such additional voting rights as equal the
Vote Multiple in effect immediately prior to such event
multiplied, first, by the additional voting rights to which the
holder of a share of Common Stock shall be entitled upon exercise
of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise, and multiplied again by the
Discount Fraction, and (iii) such additional distributions upon
liquidation, dissolution or winding up of the Corporation as
equal the Liquidation Multiple in effect immediately prior to
such event multiplied, first, by the additional amount which the
holder of a share of Common Stock shall be entitled to receive
upon liquidation, dissolution or winding up of the Corporation
upon exercise of such right or warrant by virtue of the capital
stock which could be acquired upon such exercise, and multiplied
again by the Discount Fraction. For purposes of this SECTION
7(C), the "DISCOUNT FRACTION" shall be a fraction the numerator
of which shall be the difference between (x) the Fair Market
Value of a share of the capital stock subject to a right or
warrant distributed to holders of shares of Common Stock of the
Corporation as contemplated by this SECTION 7(C) immediately
after the distribution thereof and (y) the purchase price per
share for such share of capital stock pursuant to such right or
warrant, and the denominator of which shall be the Fair Market
Value of a share of such capital stock immediately after the
distribution of such right or warrant.
A-9
(D) For purposes of this SECTION 7, the "FAIR MARKET
VALUE" of a share of capital stock of the Corporation (including
a share of Common Stock) on any date shall be deemed to be the
average of the daily closing price per share thereof over the 30
consecutive Trading Days (as defined below) immediately prior to
such date; provided, however, that in the event that such Fair
Market Value of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading
Days after (i) the ex-dividend date for a dividend or
distribution on stock payable in shares of such stock or
securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination,
consolidation, reverse stock split or reclassification of such
stock, then, and in each such case, the Fair Market Value shall
be appropriately adjusted by the Board of Directors of the
Corporation to take into account ex-dividend or post-effective
date trading. The closing price for any day shall be the last
sale price, regular way, or in case no such sale takes place on
such day, the average of the closing bid and asked prices,
regular way (in either case, as reported in the applicable
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, or, if the
shares are not listed or admitted to trading on the New York
Stock Exchange, as reported in the applicable transaction
reporting system with respect to securities listed on the
principal national securities exchange on which the shares are
listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported
by The Nasdaq Stock Market or such other system then in use, or
if on any such date the shares are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
shares selected by the Board of Directors of the Corporation.
The term "TRADING DAY" shall mean a day on which the principal
national securities exchange on which the shares are listed or
admitted to trading is open for the transaction of business or,
if the shares are not listed or admitted to trading on any
national securities exchange, on which the New York Stock
Exchange or such other national securities exchange as may be
selected by the Board of Directors of the Corporation is open.
If the shares are not publicly held or not so listed or traded on
any day within the period of 30 Trading Days applicable to the
determination of Fair Market Value, "FAIR MARKET VALUE" shall
mean the fair market value thereof per share as determined in
good faith by the Board of Directors of the Corporation. In
either case referred to in the foregoing sentence, the
determination of Fair Market Value shall be described in a
statement filed with the Secretary of the Corporation.
SECTION 8. CONSOLIDATION OR MERGER. If the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the
shares of Series B Preferred Stock shall at the same time be
similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities,
cash or any other property, as the case may be, into which or for
which each share of Common Stock is exchanged or changed. If the
A-10
Corporation shall at any time after the Rights Declaration Date
pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or split or combination,
consolidation or reverse stock split of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case
the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series B Preferred Stock
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 9. EFFECTIVE TIME OF ADJUSTMENTS.
(A) Adjustments to the Series B Preferred Stock required by
the provisions hereof shall be effective as of the time at which
the event requiring such adjustments occur.
(B) The Corporation shall give prompt written notice to
each holder of a share of outstanding Series B Preferred Stock of
the effect of any adjustment to the voting rights, dividend
rights or rights upon liquidation, dissolution or winding up of
the Corporation of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the
Corporation to give such notice shall not affect the validity of
or the force or effect of or the requirement for such adjustment.
SECTION 10. NO REDEMPTION. The Series B Preferred
Stock shall not be redeemable.
SECTION 11. RANK. The Series B Preferred Stock shall
rank junior (as to dividends and upon liquidation, dissolution
and winding up) to all other series of the Corporation's
preferred stock, except any series that specifically provides
that such series shall rank junior to the Series B Preferred
Stock.
SECTION 12. FRACTIONAL SHARES. Series B Preferred
Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
SECTION 13. AMENDMENT. The Articles of Incorporation
of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or
special rights of the Series B Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series B Preferred
Stock, voting separately as a class.
A-11
Exhibit B
Form of Rights Certificate
Certificate No. R- __________Rights
NOT EXERCISABLE AFTER THE EARLIER OF MARCH 15, 2008, AND THE DATE
ON WHICH THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY
THE COMPANY AS SET FORTH IN THE RIGHTS AGREEMENT. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO
IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON
OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF THE RIGHTS
AGREEMENT.)] (1)
RIGHTS CERTIFICATE
INTERFACE, INC.
This Rights Certificate certifies that _______________,
or registered assigns, is the registered holder of the number
of Rights set forth above, each of which entitles the holder
(upon the terms and subject to the conditions set forth in the
Rights Agreement, dated March 4, 1998 and effective as of March 16,
1998 (the "RIGHTS AGREEMENT"), between Interface, Inc., a Georgia
corporation (the "COMPANY"), and Wachovia Bank, N.A. (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 the Expiration Date (as such term is defined in the Rights
Agreement), one one-hundredth(s) of a fully paid, non-assessable
share of Series B Participating Cumulative Preferred Stock (the
"PREFERRED STOCK") of the Company, at a purchase price of $180.00
per one one-hundredth of a share (the "PURCHASE PRICE"), payable
in lawful money of the United States of America, upon surrender
of this Rights Certificate, with the form of election to purchase
and related certificate duly executed, and payment of the
Purchase Price at an office of the Rights Agent designated for
such purpose.
_______________________________
1 If applicable, insert this portion of the legend and delete
the preceding sentence.
B-1
Terms used herein and not otherwise defined herein have
the meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Rights
Certificate (and the number and kind of shares issuable upon
exercise of each Right) and the Purchase Price set forth above
are as of March 16, 1998, and may have been or in the future may
be adjusted as a result of the occurrence of certain events, as
more fully provided in the Rights Agreement.
Upon the occurrence of a Flip-in Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by
(a) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (b) a transferee of an Acquiring Person (or any
such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (c) under certain circumstances
specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such, such Rights shall become null and void, and no
holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Flip-in Event.
This 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
Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the
Company and are also available upon written request to the
Company.
Upon surrender at the principal office or offices of
the Rights Agent designated for such purpose and subject to the
terms and conditions set forth in the Rights Agreement, any
Rights Certificate(s) may be transferred or exchanged for another
Rights Certificate(s) evidencing a like number of Rights as the
Rights Certificate(s) surrendered. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate(s) for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Board of Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the
Close of Business on the Share Acquisition Date and
(ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption
price of $0.01 per Right; or
(b) at any time after any Person becomes an
Acquiring Person, exchange all or part of the then
outstanding Rights (other than Rights held by the
Acquiring Person and certain related Persons) for
shares of Common Stock at an exchange ratio of one
share of Class A Common Stock per Right held by a
B-2
holder of Class A Common Stock and one share of Class B
Common Stock per Right held by a holder of Class B
Common Stock. If the Rights shall be exchanged in
part, the holder of this Rights Certificate shall be
entitled to receive upon surrender hereof another
Rights Certificate(s) for the number of whole Rights
not exchanged.
After the expiration of the redemption period, the
Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to ten percent (10%) or
less of the outstanding shares of Common Stock in a transaction
or series of transactions not involving the Company and there is
no other Acquiring Person.
No fractional shares of Preferred Stock are required to
be issued upon the exercise of any Right(s) evidenced hereby
(other than fractions which are multiples of one one-hundredth of
a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of the shares of capital stock which may at any time be
issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right(s) evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned
by the Rights Agent.
B-3
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal by its
authorized officers.
Dated as of ______________, __
INTERFACE, INC.
By: __________________________
Title:
(SEAL)
Attest:
______________________________
Secretary
Countersigned:
Wachovia Bank, N.A., as Rights Agent
By:___________________________
Authorized Signature
B-4
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________________________
hereby sells, assigns and transfers unto ________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated: _________________________ _________________________
Signature
Signature Guaranteed:
B-5
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
___ are ___ are not being assigned by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it ___ did ___ did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
person.
Dated: ____________________ _________________________
Signature
NOTICE
THE SIGNATURES TO THE FOREGOING ASSIGNMENT AND
CERTIFICATE MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE
OF THIS RIGHTS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
B-6
===================
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Rights Certificate.)
To: Interface, Inc.
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Rights Certificate to
purchase shares of Preferred Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be
issued in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________
(Please print name and address)
________________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
Please insert social security
or other identifying number
_____________________________________________
(Please print name and address)
_____________________________________________
Dated: ____________________, _______
______________________________
Signature
Signature Guaranteed:
B-7
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE INTERFACE PREFERRED STOCK
Effective March 16, 1998, Interface, Inc. (the "COMPANY")
issued a dividend to shareholders of record of one Preferred
Stock Purchase Right (a "RIGHT") on each share of Interface
Common Stock.
The Board of Directors of the Company believes that the
Rights are a reasonable and appropriate means of protecting the
interests of the Company and its shareholders. The Rights are
not intended to prevent a takeover of the Company on terms
beneficial to shareholders. They may, however, deter an attempt
to acquire control of the Company on terms that the Board
determines are not in the best interests of the Company and its
shareholders. The Rights may be redeemed by the Company at a
nominal price, so they will not prevent a negotiated merger or
other business combination approved by the Board.
The Rights will expire in ten years unless they are redeemed
before that time. Initially, the Rights are not exercisable, and
they automatically attach to and trade in tandem with the Common
Stock. However, ten days after a person or group (an "ACQUIRING
PERSON") acquires 15% or more of the Common Stock, or ten
business days after a person or group starts a tender or exchange
offer for 15% or more of the Common Stock (or, in either case,
such later date as may be approved by the continuing directors),
the Rights will detach from the Common Stock, the Rights not
owned by an Acquiring Person or its affiliates and associates
will become exercisable and separate Right Certificates will be
distributed. The Rights will then trade independently.
If the Rights become exercisable, their holders other than
the Acquiring Person and its affiliates and associates (whose
Rights become void) will be entitled to buy, for the exercise
price of $180, one one-hundredth (1/100) of a share of Series B
Participating Cumulative Preferred Stock (the "PREFERRED STOCK")
of the Company for each Right then held, subject to certain
antidilution adjustments. Each one one-hundredth (1/100) of a
share of Preferred Stock is referred to herein as a "UNIT." In
lieu of exercise, the Company may decide to exchange a share of
Common Stock for each valid Right. Each Unit will have dividend,
voting and other rights that make it approximately equivalent in
value to a share of Class A Common Stock. In general, each Unit
will be entitled to a quarterly dividend equal to the greater of
$0.01 or the dividend, if any, declared on a share of Common
Stock. In the event of liquidation, Unit holders will be
entitled to receive a preferential liquidation payment in an
amount equal to $0.01 per Unit, plus all accrued and unpaid
dividends and distributions In the event of a merger or similar
transaction, each Unit will be entitled to receive the same
payment as a share of Common Stock.
C-1
If an Acquiring Person were to acquire 15% or more of the
Common Stock without the approval of the Board of Directors, then
each Right not owned by such Acquiring Person or its affiliates
and associates will become exercisable at a price of $180 for
such number of Units as have a market value equal to two times
the exercise price. Alternatively, if after the time an
Acquiring Person were to acquire 15% or more of the Common Stock,
the Company were to be acquired in a merger or other business
combination (in which the Common Stock is exchanged for other
securities or assets), or if more than 50% of the Company's
assets, earning power or cash flow are sold, the Rights require
that their holders will be entitled to buy such number of shares
of Common Stock of the acquiring company as have a market value
equal to two times the exercise price. In other words, that
acquiring company's common stock could be purchased by a Rights
holder at a 50% discount. In those situations, Interface
shareholders would benefit at the expense of the acquiring
company.
The terms of the Rights are set out in a Rights Agreement,
as the same may be amended from time to time (the "RIGHTS
AGREEMENT") between the Company and Wachovia Bank, N.A. (the
"RIGHTS AGENT"), dated March 4, 1998 and effective as of March 16,
1998. This Summary highlights only certain terms and is qualified
in its entirety by reference to and incorporates by reference the
definitive documents which are on file with the Securities and Exchange
Commission in a Report on Form 8-K dated March 4, 1998, and a
Registration Statement on Form 8-A filed the same date pertaining
to the Rights. If you have questions about the Rights, please
write to the Office of the Secretary of Interface at the above
address. A free copy of the Rights Agreement is available on
written request.
UNDER CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO AN ACQUIRING PERSON AND ITS
AFFILIATES AND ASSOCIATES (AS DEFINED IN THE RIGHTS AGREEMENT)
WILL BECOME VOID AND WILL NO LONGER BE TRANSFERABLE.
C-2
INTERFACE, INC.
SUMMARY OF
SHAREHOLDER RIGHTS PLAN
Rights Term: Stated 10 year term, set to expire March 15,
2008, unless amended.
Exercisable for After the Rights become exercisable, each
Purchase of Right will entitle the holder (other than
Preferred Stock: holders whose Rights have become void) to
purchase one one-hundredth of a share of
Series B Participating Cumulative Preferred
Stock, par value $1.00 per share, of the
Company (the "PREFERRED STOCK"). Each one
one-hundredth of a share of Preferred Stock
is referred to herein as a "UNIT."
Series B Participating The Preferred Stock is designed so that each
Cumulative Preferred Unit has the same economic value as one share
Stock: of Class A Common Stock, including voting
rights. Each Unit will entitle the holder to
a minimum preferential dividend of $0.01 or
the dividend, if any, declared on each share
of Common Stock. In the event of
liquidation, each Unit will be entitled to a
minimum preferential liquidation payment of
$0.01 plus accrued and unpaid dividends and
distributions thereon, but will be entitled
to an aggregate payment equal to the payment
made per share of Common Stock. In the event
of any merger, consolidation or other
transaction in which Common Stock is
exchanged for or changed into other stock or
securities, cash or other property, each Unit
will be entitled to receive the amount
received per share of Common Stock.
Each Unit will be entitled to one vote on all
matters submitted to a vote of the
shareholders of the Company, and shares of
Preferred Stock will generally vote together
as one class with the Common Stock on all
matters submitted to a vote of the Company's
shareholders. While the Company's Class B
Common Stock remains outstanding, holders of
Preferred Stock will vote as a single class
with the Class A Common Stock for the
election of directors. In addition, whenever
dividends on the Preferred Stock are in
arrears in an amount equal to six quarterly
payments, the Preferred Stock, together with
any other shares of preferred stock then
entitled to elect directors, shall have the
right, voting as a single class, to elect one
director until the default has been cured.
C-3
Rights Represented Prior to the "DISTRIBUTION DATE" (the day
by Common Stock that a distribution of separate Rights
Certificates Initially: Certificates is triggered), the Rights are
non-exercisable, will be evidenced by the
certificates for the Common Stock, will be
transferred with the Common Stock, and the
registered holders of the Common Stock will
be deemed to be the registered holders of the
Rights.
Adjustments: The purchase price payable, the number of
shares of Preferred Stock or other securities
or property issuable upon exercise, and the
redemption price of the Rights are subject to
adjustment from time to time to prevent
dilution relating to stock dividends,
distributions, recapitalizations, stock
splits and similar corporate events.
Rights Detach and The Rights detach and become exercisable on
Become Exercisable the earlier of:
(1) The 10th day after a public
announcement that any person or group
has become the beneficial owner of 15%
or more of the Company's Common Stock.
Inadvertent 15% ownership can be waived
by the Company.
(2) The 10th business day after the
date of the commencement of a tender or
exchange offer by any person which
would, if consummated, result in such
person becoming the beneficial owner of
15% or more of the Common Stock, even
if no shares are actually purchased
pursuant to such offer.
In either case, the Continuing Directors (as
defined below) may extend this 10-day waiting
period.
The following transactions will not cause a
distribution of separate Rights Certificates:
(1) an acquisition by the Company, any
subsidiary or any employee benefit plan of
the Company, and (2) an acquisition of 15% or
more of the Common Stock then outstanding by
any person approved in advance by a majority
of the Continuing Directors.
Right to Purchase Once the Rights are distributed, unless they
Company Stock: are redeemed or the transaction is approved
by the Continuing Directors, if an Acquiring
Person acquires 15% or more of the Common
Stock, each Right not owned by an Acquiring
Person or its affiliates and associates
becomes exercisable at $180 to buy $360 worth
of Preferred Stock.
C-4
Right to Purchase Once the Rights are distributed, unless they
Acquiring are redeemed or the transaction is approved
Person Stock: by the Continuing Directors, if the Company
is merged with or into or combined or
consolidated with another entity (whether or
not related to an Acquiring Person); merged
with or into or combined or consolidated with
another entity and is the surviving
corporation, but the Company's Common Stock
is changed into or exchanged for other
securities or assets; is a party to a
statutory share exchange; or more than 50% of
the Company's assets, earning power or cash
flow is sold, then each Right will permit its
holder to buy, at the $180 exercise price,
$360 worth of shares of Common Stock of the
acquiring company as prescribed in the Rights
Agreement.
Exchange: At any time after any person has become an
Acquiring Person, a majority of the
Continuing Directors may exchange all or part
of the Rights (other than the Rights
beneficially owned by the Acquiring Person
and certain affiliated persons) for shares of
Common Stock at an exchange ratio of one
share of Class A Common Stock per Right held
by a holder of Class A Common Stock and one
share of Class B Common Stock per Right held
by a holder of Class B Common Stock.
Redemption: The Rights are redeemable by the Company at a
price of $0.01 per Right at any time prior to
the close of business on the tenth day after
the date of the public announcement that any
person has become an Acquiring Person
(subject to extension by a majority of the
Continuing Directors). After any person has
become an Acquiring Person, the Rights may be
redeemed only with the approval of a majority
of the Continuing Directors.
Continuing Directors: Means any member of the Board of Directors
who was a member of the Board prior to the
time an Acquiring Person becomes such (other
than pursuant to a tender offer for all
outstanding shares of Common Stock approved
by a majority of the Continuing Directors) or
any person who is subsequently elected to the
Board if such person is recommended or
approved by a majority of the Continuing
Directors. Continuing Directors do not
include an Acquiring Person, an affiliate or
associate of an Acquiring Person or any
representative or nominee of the foregoing.
Voting Rights: Holders of Rights have no rights as a
shareholder of the Company, including the
right to vote and to receive dividends. The
Preferred Stock will have 100 votes per share
or one vote per Unit.
C-5
Amendments: Prior to the Distribution Date, the Rights
Agreement may be amended in any respect,
other than to change the Redemption Price,
the expiration date of the Rights Agreement,
the Purchase Price or the number of shares of
Preferred Stock for which a Right is
exercisable. After the Distribution Date,
the Rights Agreement may be amended in any
respect that does not adversely affect the
Rights holders (other than any Acquiring
Person and certain affiliated persons).
After any person has become an Acquiring
Person, the Rights Agreement may be amended
only with the approval of a majority of the
Continuing Directors.
