DEPARTMENT 56, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as
Rights Agent
----------------------------
Rights Agreement
----------------------------
Dated as of April 23, 1997
TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions. 2
SECTION 2. Appointment of Rights Agent. 7
SECTION 3. Issue of Right Certificates. 7
SECTION 4. Form of Right Certificate. 10
SECTION 5. Countersignature and Registration. 11
SECTION 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificate. 12
SECTION 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. 13
SECTION 8. Cancellation and Destruction of Right
Certificates. 17
SECTION 9. Reservation and Availability of Capital
Stock. 18
SECTION 10. Preferred Shares Record Date. 19
SECTION 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of
Rights. 20
SECTION 12. Certificate of Adjusted Purchase Price
or Number of Shares. 32
SECTION 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. 32
SECTION 14. Fractional Rights and Fractional
Shares. 37
SECTION 15. Rights of Action. 39
SECTION 16. Agreement of Right Holders. 40
SECTION 17. Right Certificate Holder Not Deemed a
Stockholder. 41
SECTION 18. Concerning the Rights Agent. 41
SECTION 19. Merger or Consolidation or Change of
Name of Rights Agent. 42
SECTION 20. Duties of Rights Agent. 43
SECTION 21. Change of Rights Agent. 46
SECTION 22. Issuance of New Right Certificates. 48
SECTION 23. Redemption and Termination. 48
SECTION 24. Exchange. 51
SECTION 25. Notice of Certain Events. 53
SECTION 26. Notices. 54
SECTION 27. Supplements and Amendments. 55
SECTION 28. Determination and Actions by the
Board, etc. 57
SECTION 29. Successors. 57
SECTION 30. Benefits of this Agreement. 57
SECTION 31. Severability. 58
SECTION 32. Governing Law. 58
SECTION 33. Counterparts. 58
SECTION 34. Descriptive Headings. 58
EXHIBIT A - Certificate of Designation, Preferences and
Rights of Series A Participating Preferred Stock
of Department 56, Inc.
EXHIBIT B - Form of Right Certificate
EXHIBIT C - Revised Summary of Rights to Purchase Preferred
Shares
DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person................................. Section 1(a)
Act.............................................. Section 1(b)
Adjusted Number of Shares........................ Section 11(a)
Adjusted Purchase Price.......................... Section 11(a)
Adjustment Shares................................ Section 11(a)
Affiliate........................................ Section 1(c)
Agreement........................................ Preface
Associate........................................ Section 1(c)
beneficially own................................. Section 1(d)
Beneficial Owner................................. Section 1(d)
Board............................................ Preface
Business Day..................................... Section 1(e)
capital stock equivalent......................... Section 11(a)
Close of Business................................ Section 1(f)
Common Shares.................................... Section 1(g)
Company.......................................... Preface
current per share market price................... Section 11(d)
Disinterested Directors.......................... Section 1(h)
Distribution Date................................ Section 3(a)
equivalent preferred shares...................... Section 11(b)
Exchange Act..................................... Section 1(c)
Exchange Ratio................................... Section 24(a)
Final Expiration Date............................ Section 7(a)
Interested Stockholder........................... Section 1(i)
NASDAQ........................................... Section 11(d)
Permitted Offer.................................. Section 1(j)
Person........................................... Section 1(k)
Preferred Shares................................. Section 1(l)
Principal Party.................................. Section 13(b)
Proration Factor................................. Section 11(a)
Purchase Price................................... Section 4(a)
Record Date...................................... Preface
Redemption Date.................................. Section 7(a)
Redemption Price................................. Section 23(a)
Revised Summary of Rights........................ Section 3(b)
Right............................................ Preface
Right Certificate................................ Section 3(a)
Rights Agent..................................... Preface
Rights Agreement................................. Section 3(c)
Section 11(a)(ii) Event......................... Section 1(m)
Section 13 Event................................. Section 1(n)
Security......................................... Section 11(d)
Shares Acquisition Date.......................... Section 1(o)
Subsidiary....................................... Section 1(p)
Summary of Rights................................ Section 3(b)
then outstanding................................. Section 1(d)
Trading Day...................................... Section 11(d)
Transaction...................................... Section 1(q)
Transaction Person............................... Section 1(r)
Triggering Event................................. Section 1(s)
voting securities................................ Section 13(a)
RIGHTS AGREEMENT, dated as of April 23, 1997, between
Department 56, Inc., a Delaware corporation (the "COMPANY"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company ("RIGHTS AGENT").
The Board of Directors of the Company (the "BOARD")
authorized and declared a dividend of one preferred share
purchase right (a "RIGHT") for each Common Share (as hereinafter
defined) of the Company outstanding at the Close of Business (as
hereinafter defined) on May 7, 1997 (the "RECORD DATE"), each
Right representing the right to purchase one one-thousandth
(subject to adjustment as provided herein) of a Preferred Share
(as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized the
issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the
Distribution Date (as such term is hereinafter defined);
provided, however, that Rights may be issued with respect to
Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date in accordance with the provisions
of Section 23 hereof.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
SECTION 1. Certain Definitions. For purposes of
this Agreement, the following terms shall have the meanings
indicated:
(a) "ACQUIRING PERSON" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the then
outstanding Common Shares (other than as a result of a Permitted
Offer) or was such a Beneficial Owner at any time after the date
hereof, whether or not such person continues to be the Beneficial
Owner of 20% or more of the then outstanding Common Shares.
Notwithstanding the foregoing, (i) the term "Acquiring Person"
shall not include (A) the Company, (B) any Subsidiary of the
Company, (C) any employee benefit plan of the Company or of any
Subsidiary of the Company, or (D) any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan acting in such capacity; and (ii) no
Person shall become an "Acquiring Person" (x) as a result of the
acquisition of Common Shares by the Company which, by reducing
the number of Common Shares outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person,
provided, that if (1) a Person would become an Acquiring Person
(but for the operation of this clause (x)) as a result of the
acquisition of Common Shares by the Company, and (2) after such
share acquisition by the Company, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed an
Acquiring Person, or (y) if (1) within five Business Days after
such Person would otherwise have become or, if such Person did so
inadvertently, after such Person discovers that such Person would
otherwise have become, an Acquiring Person (but for the operation
of this clause (y)), such Person notifies the Board that such
Person did so inadvertently, and (2) within two Business Days
after such notification (or such greater period of time as may be
determined by action of the Board, but in no event greater than
five Business Days), such Person divests itself of a sufficient
number of Common Shares so that such Person is the Beneficial
Owner of such number of Common Shares that such Person no longer
would be an Acquiring Person.
(b) "ACT" shall mean the Securities Act of 1933, as
amended and as in effect on the date of this Agreement.
(c) "AFFILIATE" and "ASSOCIATE" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and as in effect on the date of this
Agreement (the "EXCHANGE ACT").
(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 such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange,
or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement
or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules
and regulations promulgated under the Exchange Act and
(2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities) relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to
Section l(d)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of a
Beneficial Owner to the contrary, the phrase "THEN OUTSTANDING",
when used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(e) "BUSINESS DAY" shall mean any day other than a
Saturday, Sunday, U.S. federal holiday or any day on which
banking institutions in New York are authorized or obligated by
law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean
5:00 P.M., New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 P.M., New
York time, on the next succeeding Business Day.
(g) "COMMON SHARES" when used with reference to the
Company shall mean the shares of Common Stock, of par value $.01
per share, of the Company or, in the event of a subdivision,
combination or consolidation with respect to such shares of
Common Stock, the shares of Common Stock resulting from such
subdivision, combination or consolidation. "Common Shares" when
used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest
combined economic and voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned Person.
(h) "DISINTERESTED DIRECTORS" shall mean the members
of the Board who are not (i) employees of the Company,
(ii) Acquiring Persons or their Affiliates or Associates or
representatives of any of them, or (iii) any Person who was
directly or indirectly proposed or nominated as a director of the
Company by a Transaction Person.
(i) "INTERESTED STOCKHOLDER" shall mean any Acquiring
Person or any Affiliate or Associate of an Acquiring Person or
any other Person in which any such Acquiring Person, Affiliate or
Associate has an interest which represents in excess of 5% of the
total combined economic or voting power of such Person, or any
other Person acting directly or indirectly on behalf of, or in
concert with, any such Acquiring Person, Affiliate or Associate.
(j) "PERMITTED OFFER" shall mean a tender or exchange
offer for all outstanding Common Shares which is at a price and
on terms determined, prior to the purchase of such shares under
such tender or exchange offer, by at least a majority of the
Disinterested Directors, to be adequate and otherwise in the best
interests of the Company and its stockholders (other than the
Person, or any Affiliate or Associate thereof, on whose behalf
the offer is being made) taking into account all factors that
such Disinterested Directors may deem relevant.
(k) "PERSON" shall mean any individual, firm,
partnership, corporation, trust, association, joint venture or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
(l) "PREFERRED SHARES" shall mean shares of Series A
Junior Participating Preferred Stock, of par value $.01 per
share, of the Company having the relative rights, preferences and
limitations set forth in the Form of Certificate of Designation,
Preferences and Rights attached to this Agreement as Exhibit A.
(m) "SECTION 11(A)(ii) EVENT" shall mean any event
described in Section 11(a)(ii) hereof.
(n) "SECTION 13 EVENT" shall mean any event described
in clause (i), (ii) or (iii) of Section 13(a) hereof.
(o) "SHARES ACQUISITION DATE" shall mean the first
date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(p) "SUBSIDIARY" of any Person shall mean any
corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
(q) "TRANSACTION" shall mean any merger, consolidation
or sale of assets described in Section 13(a) hereof or any
acquisition of Common Shares of the Company which would result in
a Person becoming a Transaction Person.
(r) "TRANSACTION PERSON" with respect to a Transaction
shall mean (i) any Person who (A) is or will become an Acquiring
Person if the Transaction were to be consummated and (B) directly
or indirectly proposed or nominated a director of the Company
which director is in office at the time of consideration of the
Transaction, or (ii) an Affiliate or Associate of such a Person.
(s) "TRIGGERING EVENT" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
SECTION 2. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it may
deem necessary or desirable.
SECTION 3. Issue of Right Certificates. (a) The
Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and the right to receive
Right Certificates will be transferable only in connection with
the transfer of the underlying Common Shares (including a
transfer to the Company) until the earlier to occur of (i) the
Shares Acquisition Date or (ii) the Close of Business on the
tenth Business Day (or such later date as may be determined by
action of the Board) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of
the Company or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan) to commence (which intention to commence
remains in effect for five (5) Business Days after such
announcement), a tender or exchange offer the consummation of
which would result in any Person becoming an Acquiring Person
(including, in the case of both clauses (i) and (ii) of this
Section 3(a), any such date which is after the date of this
Agreement and prior to the issuance of the Rights), the earlier
of such dates being herein referred to as the "DISTRIBUTION
DATE"; provided, however, that if the tender offer is terminated
prior to the occurrence of a Distribution Date, then no
Distribution Date shall occur as a result of such tender offer.
As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign and
send, or cause to be sent, by first-class, insured, postage
prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right
Certificate, substantially in the form of Exhibit B hereto (a
"RIGHT CERTIFICATE"), evidencing one Right for each Common Share
so held. As of and after the Distribution Date, the Rights will
be evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record
Date, the Company shall send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form of Exhibit C
hereto (the "SUMMARY OF RIGHTS"), by first-class, postage prepaid
mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown
on the records of the Company. Upon the execution and delivery
of this Agreement, or as soon as practicable thereafter, the
Company shall file the full text of this Agreement and the
Summary of Rights with the Securities and Exchange Commission.
With respect to certificates for Common Shares outstanding as of
the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with such Common Shares. As a result of the
execution of this Agreement on April 23, 1997, each Common Stock
outstanding as of the Close of Business on April 23, 1997 shall,
subject to the terms and conditions of this Agreement, also
represent one Right and shall, subject to the terms and
conditions of this Agreement, represent the right to purchase one
one-thousandth of a share of Preferred Stock.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this Section 3(c))
after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date shall be deemed also to be certificates for Rights and from
and after the date hereof shall bear the following legend:
This certificate also evidences and entitles
the holder hereof to certain rights as set
forth in a Rights Agreement between
Department 56, Inc. and ChaseMellon
Shareholder Services, L.L.C., dated as of
April 23, 1997 (the "RIGHTS AGREEMENT"), the
terms of which are hereby incorporated herein
by reference and a copy of which is on file
at the principal executive offices of
Department 56, Inc. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. Department
56, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement
without charge after receipt of a written
request therefor from such holder. Under
certain circumstances 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 defined in the Rights Agreement) and
certain related persons, whether currently
held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares
shall be deemed canceled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
SECTION 4. Form of Right Certificate. (a) The
Right Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Sections 11
and 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the price per
one one-thousandth of a Preferred Share set forth therein (the
"PURCHASE PRICE"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to
Section 3(a) or 22 hereof that represents Rights which are null
and void pursuant to Section 7(e) hereof and any Right
Certificate issued pursuant to Section 6 or 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right
Certificate are or were beneficially owned by
a Person who was or became an Acquiring
Person or an Affiliate or Associate thereof
(as such terms are defined in the Rights
Agreement). Accordingly, this Right
Certificate and the Rights represented hereby
are null and void.
Provisions of Section 7(e) hereof shall be operative whether or
not the foregoing legend is contained on any such Right
Certificate.
SECTION 5. Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall
be countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by the
Rights Agent and issued and delivered by the Company with the
same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated as the
appropriate place for surrender of such Right Certificate for
transfer, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the certificate number and the date
of each of the Right Certificates.
SECTION 6. Transfer, Split-Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificate. Subject to the provisions of
Sections 4(b), 7(e) and 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close
of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may
be transferred, split-up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-thousandths of a
Preferred Share (or, following a Triggering Event, other
securities, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split-up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred,
split-up, combined or exchanged at the 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 Right Certificate until the registered holder shall
have completed and signed the certificate contained in the form
of assignment on the reverse side of such Right Certificate and
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.
Thereupon the Rights Agent shall, subject to the provisions of
Sections 4(b), 7(e) and 14 hereof, countersign and deliver to the
Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split-up, combination or exchange of Right
Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e) hereof,
the registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase and the 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, together with
payment of the aggregate Purchase Price for the total number of
one one-thousandths of a Preferred Share (or other securities, as
the case may be) as to which such surrendered Rights are
exercised, at or prior to the earliest of (i) the Close of
Business on April 23, 2007 (the "FINAL EXPIRATION DATE"),
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "REDEMPTION DATE"), (iii) the time at
which the Rights are exchanged as provided in Section 24 hereof,
or (iv) the consummation of a transaction contemplated by
Section 13(d) hereof.
(b) From and after the date hereof, the Purchase Price
for each one-thousandth of a Preferred Share pursuant to the
exercise of a Right shall be $100.00, subject to adjustment from
time to time as provided in the third sentence of this Section
7(b) and in Sections 11 and 13(a) hereof. The Purchase Price
shall be payable in accordance with Section 7(c) below. Anything
in this Agreement to the contrary notwithstanding, in the event
that at any time after the date hereof and prior to the
Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or
(ii) effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) into a greater or lesser number of
Common Shares, then in any such case, each Common Share
outstanding following such subdivision, combination or
consolidation shall continue to have one Right (subject to
adjustment as provided herein) associated therewith and the
Purchase Price following any such event shall be proportionately
adjusted to equal the result obtained by multiplying the Purchase
Price immediately prior to such event by a fraction the numerator
of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
outstanding immediately following the occurrence of such event.
The adjustment provided for in the preceding sentence shall be
made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment of the Purchase
Price for the Preferred Shares (or other securities, as the case
may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof by certified
check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly
(i)(A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or
(B) requisition from the depositary agent (if the Company, in its
sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a
depositary) depositary receipts representing such number of one
one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary
agent to comply with such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver
such cash to or upon the order of the registered holder of such
Right Certificate. In the event that the Company is obligated to
issue other securities (including Common Shares) of the Company
pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when
appropriate.
In addition, in the case of an exercise of the Rights
by a holder pursuant to Section 11(a)(ii) hereof, the Rights
Agent shall return such Right Certificate to the registered
holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Right Certificate no
longer include the rights provided by Section 11(a)(ii) hereof
and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on
the Right Certificate the number of Rights represented thereby
which continue to include the rights provided by
Section 11(a)(ii) hereof.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of
Section 14 hereof, or the Rights Agent shall place an appropriate
notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate thereof, (ii) a
transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any Affiliate or Associate thereof) 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 to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has a continuing
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board has determined is part
of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), 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. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
SECTION 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise (other than a partial exercise), transfer, split up,
combination or exchange shall, if surrendered to the Company or
to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the
Rights Agent, shall be canceled by it, and no Right Certificates
shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
SECTION 9. Reservation and Availability of Capital
Stock. The Company covenants and agrees that at all time prior
to the occurrence of a Section 11(a)(ii) Event it will cause to
be reserved and kept available out of its authorized and unissued
Preferred Shares, or any authorized and issued Preferred Shares
held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of a Section 11(a)(ii) Event,
shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in full
of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the
occurrence of a Section 11(a)(ii) Event, Common Shares, or any
other securities, as the case may be) issuable upon the exercise
of the Rights may be listed on any national securities exchange,
the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred
Shares (or Common Shares and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares or
securities.
The Company further covenants and agrees that it will
pay when due and payable any and all U.S. federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any
Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts for the Preferred Shares
(or Common Shares and/or other securities, as the case may be) in
a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to
issue or to deliver any certificates or depositary receipts for
Preferred Shares (or Common Shares and/or other securities, as
the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable
satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, as
soon as practicable following the Shares Acquisition Date (or, if
required by law, at such earlier time following the Distribution
Date as so required), a registration statement under the Act with
respect to the securities purchasable upon exercise of Rights on
an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act and
the rules and regulations thereunder) until the date of the
expiration of the rights provided by Section 11(a)(ii) hereof.
The Company will also take such action as may be appropriate
under the blue sky laws of the various states.
SECTION 10. Preferred Shares Record Date. Each
Person in whose name any certificate for Preferred Shares (or
Common Shares and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred
Shares (or Common Shares and/or other securities, as the case may
be) represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if
the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as
the case may be) transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) 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) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on
the Preferred Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books
of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person, alone or together
with its Affiliates and Associates, shall become an
Acquiring Person, then proper provision shall be made so
that each holder of a Right (except as provided below and in
Section 7(e) hereof) shall, for a period of sixty (60) days
after the later of (i) the occurrence of any such event or
(ii) the effective date of an appropriate registration
statement under the Act pursuant to Section 9 hereof, have a
right to receive, upon exercise thereof at a price equal to
the then current Purchase Price, in accordance with the
terms of this Agreement, such number of Common Shares (or,
in the discretion of the Board, one one-thousandths of a
Preferred Share) as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the then
number of one one-thousandths of a Preferred Share for which
a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event and (B) dividing
that product by 50% of the then current per share market
price of the Company's Common Shares (determined pursuant to
Section 11(d) hereof) on the date of such first occurrence
(such number of shares being referred to as the "ADJUSTMENT
SHARES"); provided, however, that if the transaction that
would otherwise give rise to the foregoing adjustment is
also subject to the provisions of Section 13 hereof, then
only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that there shall not be
sufficient treasury shares or authorized but unissued (and
unreserved) Common Shares to permit the exercise in full of
the Rights in accordance with the foregoing
Section 11(a)(ii) and the Rights become so exercisable (and
the Board has determined to make the Rights exercisable into
fractions of a Preferred Share), notwithstanding any other
provision of this Agreement, to the extent necessary and
permitted by applicable law, each Right shall thereafter
represent the right to receive, upon exercise thereof at the
then current Purchase Price in accordance with the terms of
this Agreement, (A) a number of (or fractions of) Common
Shares (up to the maximum number of Common Shares which may
permissibly be issued) and (B) a number of one
one-thousandths of a Preferred Share or a number of (or
fractions of) other equity securities of the Company (or, in
the discretion of the Board, debt) which the Board has
determined to have the same aggregate current market value
(determined pursuant to Sections 11(d)(i) and 11(d)(ii)
hereof, to the extent applicable) as one Common Share (such
number of (or fractions of) Preferred Shares (or other
equity securities or debt of the Company) being referred to
as a "CAPITAL STOCK EQUIVALENT"), equal in the aggregate to
the number of Adjustment Shares; provided, however, if
sufficient Common Shares and/or capital stock equivalents
are unavailable, then the Company shall, to the extent
permitted by applicable law, take all such action as may be
necessary to authorize additional Common Shares or capital
stock equivalents for issuance upon exercise of the Rights,
including the calling of a meeting of stockholders; and
provided, further, that if the Company is unable to cause
sufficient Common Shares and/or capital stock equivalents to
be available for issuance upon exercise in full of the
Rights, then each Right shall thereafter represent the right
to receive the Adjusted Number of Shares upon exercise at
the Adjusted Purchase Price (as such terms are hereinafter
defined). As used herein, the term "ADJUSTED NUMBER OF
SHARES" shall be equal to that number of (or fractions of)
Common Shares (and/or capital stock equivalents) equal to
the product of (A) the number of Adjustment Shares and (B) a
fraction, the numerator of which is the number of Common
Shares (and/or capital stock equivalents) available for
issuance upon exercise of the Rights and the denominator of
which is the aggregate number of Adjustment Shares otherwise
issuable upon exercise in full of all Rights (assuming there
were a sufficient number of Common Shares available) (such
fraction being referred to as the "PRORATION FACTOR"). The
"ADJUSTED PURCHASE PRICE" shall mean the product of the
Purchase Price and the Proration Factor. The Board may, but
shall not be required to, establish procedures to allocate
the right to receive Common Shares and capital stock
equivalents upon exercise of the Rights among holders of
Rights.
(b) In case the Company shall fix a record date for
the issuance of rights (other than the Rights), options or
warrants to all holders of Preferred Shares entitling them (for a
period expiring within forty-five (45) calendar days after such
record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights and privileges as the Preferred
Shares ("EQUIVALENT PREFERRED SHARES") or securities convertible
into Preferred Shares or equivalent preferred shares at a price
per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record date,
the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current per share market price, and the denominator of which
shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise of one
Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be determined in good
faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such
rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price (as determined pursuant to Section 11(d) hereof) of the
Preferred Shares on such record date, less the fair market value
(as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Preferred
Share and the denominator of which shall be such current per
share market price of the Preferred Shares; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise
of one Right. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "CURRENT PER SHARE MARKET PRICE" of any security (a
"SECURITY" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however,
that in the event that the current per share market price of
the Security is determined during a period following the
announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares
of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of thirty (30)
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such
case, the current per share market price shall be
appropriately adjusted to reflect the current per share
market price equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of
the closing bid and asked prices, 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 Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system
then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market
maker, selected by the Board, making a market in the
Security. If on any such date no such market maker is
making a market in the Security, the fair value of the
Security on such date as determined in good faith by the
Board shall be used. The term "TRADING DAY" shall mean a
day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open
for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities
exchange, a Business Day. Subject to Section 11(d)(ii)
hereof, if any Security is not publicly held or so listed or
traded, "current per share market price" of such Security
shall mean the fair market value per share as determined in
good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent.
(ii) For the purpose of any computation hereunder,
the "CURRENT PER SHARE MARKET PRICE" of the Preferred Shares
shall be determined in accordance with the method set forth
in the foregoing Section 11(d)(i). If the Preferred Shares
are not publicly traded, the current per share market price
of the Preferred Shares shall be conclusively deemed to be
the current per share market price of the Common Shares as
determined pursuant to the foregoing Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof), multiplied by one thousand (1,000). If neither the
Common Shares nor the Preferred Shares are publicly held or
so listed or traded, "current per share market price" shall
mean the fair value per share as determined in good faith by
the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding
on the Rights Agent.
(e) Notwithstanding anything herein to the contrary,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1%
in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one one-thousandth of a
Preferred Share or one hundred-thousandth of any other share or
security, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years
from the date of the transaction which mandates such adjustment
or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Section 11(a)(ii) or 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock of the Company other than Preferred Shares,
thereafter the number of other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in
Sections 11(a) through 11(c) hereof, inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one-thousandths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations
made in Sections 11(b) and 11(c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-thousandths of a Preferred
Share (calculated to the nearest one hundred-thousandth of a
Preferred Share) obtained by (i) multiplying (A) the number of
Preferred Shares covered by a Right immediately prior to this
adjustment of the Purchase Price by (B) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price
and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-thousandths of
a Preferred Share purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths
of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value,
if any, of the number of one one-thousandths of a Preferred
Share, Common Shares or other securities 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 such number of fully
paid and nonassessable one one-thousandths of a Preferred Share,
Common Shares or other securities at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of one one-thousandths of a Preferred Share, Common Shares or
other securities of the Company, if any, issuable upon such
exercise over and above the number of one one-thousandths of a
Preferred Share, Common Shares or other securities of the
Company, if any, issuable upon 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.
(m) Notwithstanding anything in this Section 11 to the
contrary, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its
sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Shares,
(ii) issuance wholly for cash of Preferred Shares at less than
the current market price, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock
dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in
a transaction which does not violate Section 11(o) hereof),
(ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which does not violate
Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(o)
hereof), if (A) at the time of or immediately after such
consolidation, merger, sale or transfer there are any charter or
by-law provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect or other actions
taken, which would materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (B) prior to,
simultaneously with or immediately after such consolidation,
merger or sale, the stockholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and such other Person shall have executed and delivered
to the Rights Agent a supplemental agreement evidencing
compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or 27 hereof, take (or permit any Subsidiary to take) any action
the purpose of which is to, or if at the time such action is
taken it is reasonably foreseeable that the effect of such action
is to, materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii)
hereof shall only result in the reduction of rights under
Section 11(a)(ii) hereof to the extent so exercised and shall not
otherwise affect the rights represented by the Rights under this
Agreement, including the rights represented by Section 13 hereof.
SECTION 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as provided
in Section 11 or 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for
the Common Shares and the Preferred Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not
be deemed to have knowledge of such adjustment unless and until
it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. (a) In the event that, on
or following the Shares Acquisition Date, directly or indirectly,
(i) the Company shall consolidate with, or merge with and into,
any Interested Stockholder or, if in such merger or consolidation
all holders of Common Shares are not treated alike, any other
Person, (ii) the Company shall consolidate with, or merge with,
any Interested Stockholder or, if in such merger or consolidation
all holders of Common Shares are not treated alike, any other
Person, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a
case of any transaction described in clause (i) or (ii) above of
this Section 13(a), a merger or consolidation which would result
in all of the securities generally entitled to vote in the
election of directors ("VOTING SECURITIES") of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
securities of the surviving entity) all of the voting securities
of the Company or such surviving entity outstanding immediately
after such merger or consolidation and the holders (and relative
percentage holdings of each such holder) of such securities not
having changed as a result of such merger or consolidation), or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in
one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any Interested Stockholder or Stockholders or, if in such
transaction all holders of Common Shares are not treated alike,
any other Person, (other than the Company or any Subsidiary of
the Company in one or more transactions each of which does not
violate Section 11(o) hereof), then, and in each such case
(except as provided in Section 13(d) hereof), proper provision
shall be made so that (A) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the
then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of freely
tradable Common Shares of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result
obtained by (1) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which
a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) hereof)
and dividing that product by (2) 50% of the then current per
share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of
consummation of such Section 13 Event; (B) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (D) such Principal Party
shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) 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 Common Shares thereafter deliverable upon the
exercise of the Rights.
(b) "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in
clause (i) or (ii) of the first sentence of Section 13(a)
hereof, the Person that is the issuer of any securities into
which Common Shares of the Company are converted in such
merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or
consolidation (including, if applicable, the Company if it
is the surviving corporation); and
(ii) in the case of any transaction described in
clause (iii) of the first sentence of Section 13(a) hereof,
the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any of the foregoing cases, (1) if the
Common Shares of such Person are not at such time, and have not
been continuously over the preceding twelve (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
Shares of which are and have been so registered, "Principal
Party" shall refer to such other Person; (2) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares 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 Shares having the greatest
aggregate market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in clauses (1) and (2) above of this
Section 13(b) shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers, and the
Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of its authorized Common
Shares which have not been issued or 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 providing for the terms set forth
in Sections 13(a) and 13(b) hereof and further providing that, as
soon as practicable after the date of any consolidation, merger,
sale or transfer mentioned in Section 13(a) hereof, the Principal
Party at its own expense shall:
(i) prepare and file a registration statement
under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and use its best efforts to cause such registration
statement to (A) become effective as soon as practicable
after such filing, and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of
the Rights under the blue sky laws of such jurisdictions as
may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other
transfers. The rights under this Section 13 shall be in addition
to the rights to exercise Rights and adjustments under
Section 11(a)(ii) hereof and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, the provisions of this Section 13 shall not be
applicable to a transaction described in clause (i) or (ii) of
Section 13(a) hereof if (A) such transaction is consummated with
a Person or Persons who acquired Common Shares pursuant to a
Permitted Offer (or a wholly owned Subsidiary of any such Person
or Persons), (B) the price per Common Share offered in such
transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant
to such Permitted Offer, and (C) the form of consideration
offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
SECTION 14. Fractional Rights and Fractional
Shares. (a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker, selected by the Board, making a market
in the Rights. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are one
one-thousandths or integral multiples of one one-thousandth of a
Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other
than fractions which are one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share). Fractions
of Preferred Shares in integral multiples of one one-thousandth
of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of
such depositary receipts shall have the rights, privileges and
preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In
lieu of fractional Preferred Shares that are not one
one-thousandths or integral multiples of one one-thousandth of a
Preferred Share, the Company shall pay to the registered holders
of Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of
the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share
(as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the
transactions or events specified in Section 11 hereof giving rise
to the right to receive Common Shares, capital stock equivalents
(other than Preferred Shares) or other securities upon the
exercise of a Right, the Company shall not be required to issue
fractions of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractions of such Common
Shares, capital stock equivalents or other securities. In lieu
of fractional shares or units of such Common Shares, capital
stock equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share or unit of
such Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in
Section 11(d) hereof for the Trading Day immediately prior to the
date of such exercise and, if such capital stock equivalent is
not traded, each such capital stock equivalent shall have the
value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional Rights
or any fractional share upon exercise of a Right (except as
provided above).
SECTION 15. Rights of Action. All rights of action
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right
Certificate and in this 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:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right
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 purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Sections 6 and 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name
the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate
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(e) hereof, shall
be required to 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 a beneficial interest in a
Right or other Person as a result of its inability to perform any
of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.
SECTION 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or other
distributions, or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 18. Concerning the Rights Agent. The
Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability in the premises. Anything in this
Agreement to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever, even if the
Rights Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of
Name of Rights Agent. Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or all or substantially all of
the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided, that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Right Certificates so
countersigned, and in case at that time any of the Right
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in
the name of the predecessor or in the name of the successor
Rights Agent. In all such cases such Right Certificates shall
have the full force provided in the Right Certificates and in
this Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned, and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name. In all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of the
current per share market price of any Security) be proved or
established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed
by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for, or by
reason of, any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates or be required to
verify the same (except its countersignature thereof). All such
statements and recitals are, and shall be deemed to have been
made, by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or 13
hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after
receipt of the certificate described in Section 12 hereof); nor
shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Preferred Shares or Common Shares or other securities to
be issued pursuant to this Agreement or any Right Certificate or
as to whether any Preferred Shares or Common Shares or other
securities will, when issued, be validly authorized and issued,
fully paid and nonassessable; nor shall it be under any duty to
make any independent investigation or determination of the
identity of any Acquiring Person or any Affiliate or Associate
thereof, but shall be entitled to rely, in the absence of
instructions identifying any such Person, on representations made
by holders of Right Certificates.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, 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
shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company, or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company,
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however,
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 hereunder if there
shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Right Certificates
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 not been completed,
the Rights Agent shall not take any further action with respect
to such requested exercise of 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 thirty (30) days'
notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or Common Shares by registered or
certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon sixty (60) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Preferred Shares or
Common Shares by registered or certified mail, and to holders of
the Right 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 sixty (60) days after giving notice of such removal
or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then
the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be either (i) a corporation
organized and doing business under the laws of the United States
or of the State of New York or the State of Minnesota (or of any
other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State
of New York or the State of Minnesota), in good standing, which
is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 (or such lower number as approved
by the Board) or (ii) an affiliate of such a corporation. 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 Preferred Shares or Common Shares
and mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
SECTION 22. Issuance of New Right
Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at
its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the
provisions of this Agreement.
In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earliest of the Redemption Date, the Final Expiration Date and
the consummation of a transaction contemplated by Section 13(d)
hereof, the Company (a) shall, with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued
by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Right Certificates
representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that no Right
Certificates shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
SECTION 23. Redemption and
Termination. (a) (i) The Board may, at its option, 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 hereinafter referred to as the "REDEMPTION
PRICE"), at any time prior to the earlier of (A) the occurrence
of a Section 11(a)(ii) Event or (B) the Final Expiration Date,
and the Company may, at its option, pay the Redemption Price
either in Common Shares (based on the "current per share market
price", as defined in Section 11(d) hereof, of the Common Shares
at the time of redemption) or cash; provided, however, that if
the Company elects to pay the Redemption Price in Common Shares,
the Company shall not be required to issue any fractional Common
Shares, and the number of Common Shares issuable to each holder
of Rights shall be rounded down to the next whole share.
(ii) In addition, the Board may, at its option, at any
time following a Shares Acquisition Date but prior to any
Section 13 Event redeem all, but not less than all, of the then
outstanding Rights at the Redemption Price (x) in connection with
any merger, consolidation or sale or other transfer (in one
transaction or in a series of related transactions) of assets or
earning power aggregating 50% or more of the earning power of the
Corporation and its subsidiaries (taken as a whole) (A) in which
all holders of Common Shares are treated alike and (B) not
involving (other than as a holder of Common Shares being treated
like all other such holders) a Transaction Person, or (y)(A) if
and for so long as the Acquiring Person is not thereafter the
Beneficial Owner of 5% of the Common Shares, and (B) at the time
of redemption no other Persons are Acquiring Persons.
(iii) Notwithstanding anything to the contrary in
this Agreement, including, without limitation, the provisions of
Sections 23(a)(i) and (a)(ii) hereof, in the event that a
majority of the Board is comprised of persons elected at a
meeting or by written consent of stockholders who were not
nominated by the Board in office immediately prior to such
meeting or action by written consent (including successors of
such persons elected to the Board) for the purpose of either
facilitating a Transaction with a Transaction Person or
circumventing directly or indirectly the provisions of this
Section 23(a)(iii), then (1) the Rights may not be redeemed for a
period of 365 days following the effectiveness of such election
if such redemption is reasonably likely to have the purpose or
effect of facilitating a Transaction with a Transaction Person,
and (2) the Rights may not be redeemed following such 365-day
period if (x) such redemption is reasonably likely to have the
purpose of facilitating a Transaction with a Transaction Person
and (y) during such 365-day period, the Company enters into any
agreement, arrangement or understanding with any Transaction
Person which is reasonably likely to have the purpose or effect
of facilitating a Transaction with any Transaction Person.
(b) In the case of a redemption permitted under
Section 23(a)(i) hereof, immediately upon the date for redemption
set forth in (or determined in the manner specified in) a
resolution of the Board ordering the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent,
and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. In the case of a
redemption permitted only under Section 23(a)(ii) hereof,
evidence of which shall have been filed with the Rights Agent,
the right to exercise the Rights will terminate and represent
only the right to receive the Redemption Price upon the later of
ten (10) Business Days following the giving of notice or the
expiration of any period during which the rights under
Section 11(a)(ii) hereof may be exercised. The Company shall
promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice shall not affect the validity of such redemption. Within
ten (10) days after such date for redemption set forth in a
resolution of the Board ordering the redemption of the Rights,
the Company shall mail a notice of redemption to all the holders
of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23 and other than in connection with the purchase
of Common Shares prior to the Distribution Date.
(c) In the case of a redemption permitted under
Section 23(a)(i) hereof, the Company may, at its option,
discharge all of its obligations with respect to the Rights by
(i) issuing a press release announcing the manner of redemption
of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent of the Common Shares,
and upon such action, all outstanding Rights and Right
Certificates shall be null and void without any further action by
the Company.
SECTION 24. Exchange. (a) The Board may, at its
option, at any time after the time that any Person becomes an
Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Sections 7(e) and
11(a)(ii) hereof) for Common Shares of the Company at an exchange
ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
involving either the Common Shares or the Preferred Shares
occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "EXCHANGE RATIO").
Notwithstanding the foregoing, the Board shall not be empowered
to effect such exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, any entity holding
Common Shares for or pursuant to the terms of any such plan or
any trustee, administrator or fiduciary of such a plan), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board ordering
the exchange of any Rights pursuant to Section 24(a) hereof and
without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such rights held
by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void
pursuant to the provisions of Sections 7(e) and 11(a)(ii) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Shares (or
equivalent preferred shares, as such term is defined in
Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one-thousandth of
a Preferred Share (or equivalent preferred share) for each Common
Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as
one Common Share.
(d) The Board shall not authorize any exchange
transaction referred to in Section 24(a) hereof unless at the
time such exchange is authorized there shall be sufficient Common
Shares or Preferred Shares issued but not outstanding, or
authorized but unissued, to permit the exchange of Rights as
contemplated in accordance with this Section 24.
SECTION 25. Notice of Certain Events. (a) In case
the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to
make any other distribution to the holders of its Preferred
Shares (other than a regularly quarterly cash dividend), (ii) to
offer to the holders of its Preferred Shares rights or warrants
to subscribe for or to purchase any additional Preferred Shares
or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with any other Person (other than
a Subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(o)
hereof), 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 Certificate, in accordance with
Section 26 hereof, a notice of such proposed action to the extent
feasible and file a certificate with the Rights Agent to that
effect, which shall specify the record date for the purposes of
such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the
Preferred Shares, if any such date is to be fixed. Such notice
shall be so given in the case of any action covered by clause (i)
or (ii) above of this Section 25(a) at least twenty (20) days
prior to the record date for determining holders of the Preferred
Shares for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the
taking of such proposed action or the date of participation
therein by the holders of the Preferred Shares, whichever shall
be the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the
Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof and (ii) all
references in the foregoing Section 25(a) to Preferred Shares
shall be deemed thereafter to refer also, if appropriate, to
Common Shares and/or, if appropriate, other securities of the
Company.
SECTION 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or by
the holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, and addressed (until another address is filed in writing
with the Rights Agent) as follows:
Department 56, Inc.
One Village Place
0000 Xxxx Xxxx Xxxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Corporate Secretary and
General Counsel
Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made
by the Company or by the holder of any Right Certificate to or on
the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, and addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxx 00xx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attention: Account Administrator
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of
any Right Certificate or, if prior to the Distribution Date, to
the holder of certificates representing Common Shares, shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, and addressed to such holder at the address of such
holder as shown on the registry books of the Company.
SECTION 27. Supplements and Amendments. Prior to
the Distribution Date, 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 Common Shares. From and after the Distribution
Date, 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 (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of
the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate thereof); provided, however, that
this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. 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, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or 20 of this Agreement. Prior
to the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of
Common Shares. Notwithstanding anything contained in this
Agreement to the contrary, in the event that a majority of the
Board is comprised of persons elected at a meeting or by written
consent of stockholders who were not nominated by the Board in
office immediately prior to such meeting or written consent
(including successors of such persons elected to the Board) for
the purpose of either facilitating a Transaction with a
Transaction Person or circumventing directly or indirectly the
provisions of this Section 27, then (A) for a period of 365 days
following the effectiveness of such action, this Agreement shall
not be amended or supplemented in any manner reasonably likely to
have the purpose or effect of facilitating a Transaction with a
Transaction Person and (B) no amendments or supplements may be
made following such 365-day period if (1) such amendment or
supplement is reasonably likely to have the purpose of
facilitating a Transaction with a Transaction Person and
(2) during such 365-day period, the Company enters into any
agreement, arrangement or understanding with any Transaction
Person which is reasonably likely to have the purpose or effect
of facilitating a Transaction with any Transaction Person.
SECTION 28. Determination and Actions by the Board,
etc. The Board shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be
necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation,
a determination to redeem or not redeem the Rights or to amend
this Agreement and whether any proposed amendment adversely
affects the interests of the holders of Right Certificates). For
all purposes of this Agreement, any calculation of the number of
Common Shares or other securities outstanding at any particular
time, including for purposes of determining the particular
percentage of such outstanding Common Shares or any other
securities of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Right Certificates and all other
parties, and (y) not subject the Board to any liability to the
holders of the Right Certificates.
SECTION 29. 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 30. Benefits of this Agreement. This
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares), and 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 Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement.
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.
SECTION 32. Governing Law. This Agreement, each
Right and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts made and to
be 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 but one and
the same instrument.
SECTION 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
DEPARTMENT 56, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C.
the Rights Agent
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
EXHIBIT A
---------
DEPARTMENT 56, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
We, Xxxxxxx X. Xxxxxxx, Vice President - Finance, and
Xxxxx X. Xxxxxx, Senior Vice President, Legal and Human
Resources, and Secretary, of Department 56, Inc., a corporation
organized and existing under the General Corporation Law of the
State of Delaware (the "Corporation"), in accordance with the
provisions of Section 103 thereof, do hereby certify:
That pursuant to the authority conferred upon the Board
of Directors by the Corporation's Restated Certificate of
Incorporation (the "Certificate of Incorporation"), the Board of
Directors, by a unanimous written consent dated April 23, 1997,
adopted the following resolution creating a series of 400,000
shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
WHEREAS, the Certificate of Incorporation provides that
the Corporation is authorized to issue 20,000,000 shares of
preferred stock, none of which are outstanding, now therefore it
is.
RESOLVED, that pursuant to the authority vested in the
Board of Directors of the Corporation by Article FOURTH of the
Certificate of Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created out of the authorized
but unissued shares of the capital stock of the Corporation, such
series to be designated Series A Junior Participating Preferred
Stock (the "Participating Preferred Stock"), to consist of four
hundred thousand (100,000) shares, of par value $.01 per share,
of which the preferences and relative and other rights, and the
qualifications, limitations or restrictions thereof, shall be as
follows:
1. Future Increase or Decrease. Subject to
paragraph 4(e) of this resolution, the number of shares of said
series may at any time or from time to time be increased or
decreased by the Board of Directors notwithstanding that shares
of such series may be outstanding at such time of increase or
decrease.
2. Dividend Rate.
-------------
(a) The holders of shares of Participating
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 in cash on the first
day of each November, February, May and August in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $10.00
or (b) 1,000 times the aggregate per share amount of all cash
dividends and 1,000 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, of
par value $.01 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of
Participating Preferred Stock.
(b) On or after the first issuance of any share
or fractional share of Participating Preferred Stock, no dividend
on Common Stock shall be declared unless concurrently therewith a
dividend or distribution is declared on the Participating
Preferred Stock as provided in paragraph (a) above; and the
declaration of any such dividend on the Common Stock shall be
expressly conditioned upon payment or declaration of and
provision for a dividend on the Participating Preferred Stock as
above provided. In the event no dividend or distribution shall
have been declared on the Common Stock during the period between
any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10.00 per share
on the Participating 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 Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Participating Preferred Stock, unless
the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Participating Preferred
Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. The Board of Directors may fix a record
date for the determination of holders of shares of Participating
Preferred Stock entitled to receive payment of a dividend
distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
3. Dissolution, Liquidation and Winding Up. In the
event of any voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Corporation (hereinafter
referred to as a "Liquidation"), the holders of Participating
Preferred Stock shall receive at least $100,000.00 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 that the holders of shares of
Participating Preferred Stock shall be entitled to receive at
least an aggregate amount per share equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common
Stock (the "Participating Preferred Liquidation Preference").
4. Voting Rights. The holders of shares of
Participating Preferred Stock shall have the following voting
rights:
(a) Each share of Participating Preferred Stock
shall entitle the holder thereof to one thousand (1,000) votes on
all matters submitted to a vote of the stockholders of the
Corporation.
(b) Except as otherwise provided herein, or by
law, the Certificate of Incorporation or the Restated By-laws of
the Corporation (the "By-laws"), the holders of shares of
Participating Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(c) If and whenever dividends on the
Participating Preferred Stock shall be in arrears in an amount
equal to six quarterly dividend payments, then and in such event
the holders of the Participating Preferred Stock, voting
separately as a class (subject to the provisions of
subparagraph (d) below), shall be entitled at the next annual
meeting of the stockholders or at any special meeting to elect
two (2) directors. Each share of Participating Preferred Stock
shall be entitled to one vote, and holders of fractional shares
shall have the right to a fractional vote. Upon election, such
directors shall become additional directors of the Corporation
and the authorized number of directors of the Corporation shall
thereupon be automatically increased by such number of directors.
Such right of the holders of Participating Preferred Stock to
elect directors may be exercised until all dividends in default
on the Participating Preferred Stock shall have been paid in
full, and dividends for the current dividend period declared and
funds therefor set apart, and when so paid and set apart, the
right of the holders of Participating Preferred Stock to elect
such number of directors shall cease, the term of such directors
shall thereupon terminate, and the authorized number of directors
of the Corporation shall thereupon return to the number of
authorized directors otherwise in effect, but subject always to
the same provisions for the vesting of such special voting rights
in the case of any such future dividend default or defaults. The
fact that dividends have been paid and set apart as required by
the preceding sentence shall be evidenced by a certificate
executed by the President and the Chief Financial Officer of the
Corporation and delivered to the Board of Directors. The
directors so elected by holders of Participating Preferred Stock
shall serve until the certificate described in the preceding
sentence shall have been delivered to the Board of Directors or
until their respective successors shall be elected or appointed
and qualify.
At any time when such special voting rights have been
so vested in the holders of the Participating Preferred Stock,
the Secretary of the Corporation may, and upon the written
request of the holders of record of 10% or more of the number of
shares of the Participating Preferred Stock then outstanding
addressed to such Secretary at the principal office of the
Corporation in the State of Illinois, shall, call a special
meeting of the holders of the Participating Preferred Stock for
the election of the directors to be elected by them as
hereinabove provided, to be held in the case of such written
request within forty (40) days after delivery of such request,
and in either case to be held at the place and upon the notice
provided by law and in the By-laws of the Corporation for the
holding of meetings of stockholders; provided, however, that the
Secretary shall not be required to call such a special meeting
(i) if any such request is received less than ninety (90) days
before the date fixed for the next ensuing annual or special
meeting of stockholders or (ii) if at the time any such request
is received, the holders of Participating Preferred Stock are not
entitled to elect such directors by reason of the occurrence of
an event specified in the third sentence of subparagraph (d)
below.
(d) If, at any time when the holders of
Participating Preferred Stock are entitled to elect directors
pursuant to the foregoing provisions of this paragraph 4, the
holders of any one or more additional series of Preferred Stock
are entitled to elect directors by reason of any default or event
specified in the Certificate of Incorporation, as in effect at
the time of the certificate of designation for such series, and
if the terms for such other additional series so permit, the
voting rights of the two or more series then entitled to vote
shall be combined (with each series having a number of votes
proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of Participating
Preferred Stock and of all such other series then entitled so to
vote, voting as a class, shall elect such directors. If the
holders of any such other series have elected such directors
prior to the happening of the default or event permitting the
holders of Participating Preferred Stock to elect directors, or
prior to a written request for the holding of a special meeting
being received by the Secretary of the Corporation from the
holders of not less than 10% of the then outstanding shares of
Participating Preferred Stock, then such directors so previously
elected will be deemed to have been elected by and on behalf of
the holders of Participating Preferred Stock as well as such
other series, without prejudice to the right of the holders of
Participating Preferred Stock to vote for directors if such
previously elected directors shall resign, cease to serve or fail
to stand for reelection while the holders of Participating
Preferred Stock are entitled to vote. If the holders of any such
other series are entitled to elect in excess of two (2)
directors, the Participating Preferred Stock shall not
participate in the election of more than two (2) such directors,
and those directors whose terms first expire shall be deemed to
be the directors elected by the holders of Participating
Preferred Stock; provided that, if at the expiration of such
terms the holders of Participating Preferred Stock are entitled
to vote in the election of directors pursuant to the provisions
of this paragraph 4, then the Secretary of the Corporation shall
call a meeting (which meeting may be the annual meeting or
special meeting of stockholders referred to in subparagraph (c))
of holders of Participating Preferred Stock for the purpose of
electing replacement directors (in accordance with the provisions
of this paragraph 4) to be held on or prior to the time of
expiration of the expiring terms referred to above.
(e) Except as otherwise set forth herein or
required by law, the Certificate of Incorporation or the By-laws,
holders of Participating 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 the taking of any corporate action. No
consent of the holders of outstanding shares of Participating
Preferred Stock at any time outstanding shall be required in
order to permit the Board of Directors to: (i) increase the
number of authorized shares of Participating Preferred Stock or
to decrease such number to a number not below the sum of the
number of shares of Participating Preferred Stock then
outstanding and the number of shares with respect to which there
are outstanding rights to purchase; or (ii) to issue Preferred
Stock which is senior to the Participating Preferred Stock,
junior to the Participating Preferred Stock or on a parity with
the Participating Preferred Stock.
5. Redemption. The shares of Participating Preferred
Stock shall not be redeemable.
6. Conversion Rights. The Participating Preferred
Stock is not convertible into Common Stock or any other security
of the Corporation.
IN WITNESS WHEREOF, the undersigned Vice President-
Finance and Secretary of the Corporation each declares under
penalty or perjury the truth, to the best of his or her
knowledge, of this Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock.
Executed this 23rd day of April, 1997 in Eden Prairie,
Minnesota.
By:/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Attest:
/s/ Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx, Secretary
EXHIBIT B
---------
Form of Right Certificate
Certificate No. R- Rights
------
NOT EXERCISABLE AFTER APRIL 23, 2007, OR
EARLIER IF REDEEMED BY THE CORPORATION. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES 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 DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN RELATED
PERSONS, WHETHER CURRENTLY HELD BY OR ON
BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
HOLDER, SHALL BECOME NULL AND VOID.
Right Certificate
DEPARTMENT 56, INC.
This certifies that , or registered assigns,
is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of
April 23, 1997 (the "RIGHTS AGREEMENT"), between Department 56,
Inc., a Delaware corporation (the "COMPANY"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability
company (the "RIGHTS AGENT"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., New York, New York
time, on April 23, 2007, unless the Rights evidenced hereby shall
have been previously redeemed by the Company, at the principal
office or offices of the Rights Agent designated for such
purpose, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid non-assessable share of Series A
Junior Participating Preferred Stock, of par value $.01 per share
(the "PREFERRED SHARES"), of the Company, at a purchase price of
$100.00 per one one-thousandth of a Preferred Share (the
"PURCHASE PRICE"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
, based on the Preferred Shares as constituted at
such date.
Upon the occurrence of a Section 11(a)(ii) Event (as
such term is defined in the Rights Agreement), if the Rights
evidenced by this Right Certificate are beneficially owned by
(i) an Acquiring Person or an Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate
who becomes a transferee after the Acquiring Person becomes such,
or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person, 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
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number of one one-thousandths of a Preferred Share or
other securities which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the
Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are 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
Right 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 principal
executive offices of the Company and the principal office or
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall
have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at a redemption price of $0.01 per Right (subject to
adjustment as provided in the Rights Agreement) payable in Common
Shares or cash.
The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right as defined in the Rights
Agreement.
The Company will not be required to issue fractions of
Preferred Shares (other than fractions which are one one-
thousandths or integral multiples of one one-thousandth of a
Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other
than fractions which are one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share). In lieu
of fractional Preferred Shares other than fractions that are
multiples of one one-thousandth of a Preferred Share, the Company
will pay to the registered holders of Right Certificates at the
time such Rights are exercised an amount in cash equal to the
same fraction of the current market value of one Preferred Share
as defined in the Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in
the Rights Agreement), or to receive dividends or other
distributions or to exercise any preemptive or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the signature of the proper officers of the
Company and its corporate seal. Dated as of , .
-------- ------
[SEAL]
ATTEST: DEPARTMENT 56, INC.
Attest:
By By
---------------------------- ----------------------------
Name: Name:
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By
----------------------------
Authorized Signatory
Name:
Title:
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
----------------------------------------------
hereby sells, assigns and transfers unto
-------------------------
-----------------------------------------------------------------
(Please print name and address of transferee)
-----------------------------------------------------------------
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full
power of substitution.
Dated:
------------, --------
-----------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank,
savings association, credit union or trust company having an
office or correspondent in the United States or other eligible
guarantor institution which is a participant in a signature
guarantee medallion program.
----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights
evidenced by this Right Certificate are not being sold, assigned
or transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due
inquiry and to the best knowledge of the undersigned, the
undersigned did not acquire the Rights evidenced by this Right
Certificate from any Person who is or was an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement).
------------------------
Signature
----------------------------------------------------------------
Form of Reverse Side of Right Certificate--
Continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder desires
to exercise Rights represented by the Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the
Preferred Shares, Common Shares or such other securities issuable
upon the exercise of such Rights at this time as follows:
Please Insert
Number of Rights
To Be Exercised
----------------
(i) Preferred Shares Exercise
----------------
(ii) Section 11(a)(ii) Exercise
----------------
(iii) Section 13 Exercise
----------------
The undersigned requests that certificates for such
Preferred Shares, Common Shares or other securities be issued in
the name of:
Please insert social security
or other identifying number
--------------------------------------
-----------------------------------------------------------------
(Please print name and address of transferee)
-----------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
-------------------------------------
-----------------------------------------------------------------
(Please print name and address of transferee)
-----------------------------------------------------------------
Form of Reverse Side of Right Certificate--
Continued
Dated: , 19
--------- --
-------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank,
savings association, credit union or trust company having an
office or correspondent in the United States or other eligible
guarantor institution which is a participant in a signature
guarantee medallion program.
Form of Reverse Side of Right Certificate--
Continued
-----------------------------------------------------------------
The undersigned hereby certifies that (1) the Rights
evidenced by this Right Certificate are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement) and (2) after due inquiry and to the best
knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
-------------------------
Signature
-----------------------------------------------------------------
NOTICE
The signature on the foregoing Forms of Assignment and
Election and certificates must conform to the name as written
upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights Agent
will deem the Beneficial Owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not
be honored.
EXHIBIT C
May __, 1997
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
UNDER CERTAIN CIRCUMSTANCES 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 DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN RELATED
PERSONS, WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR
BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
The Board of Directors of Department 56, Inc., a
Delaware corporation (the "COMPANY"), declared a dividend of one
preferred share purchase right (a "RIGHT") for each outstanding
share of Common Stock, of par value $.01 per share (the "COMMON
SHARES"), of the Company. The dividend is payable to the
stockholders of record as of 5:00 P.M., New York, New York time,
on May 7, 1997 (the "RECORD DATE"), and with respect to Common
Shares issued thereafter until the Distribution Date (as
hereinafter defined) and, in certain circumstances, with respect
to Common Shares issued after the Distribution Date. Except as
set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series A Participating Preferred
Stock, of par value $.01 per share (the "PREFERRED SHARES"), at a
price of $100.00 per one one-thousandth of a Preferred Share (the
"PURCHASE PRICE"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement, dated as
of April 23, 1997 (the "RIGHTS AGREEMENT"), between the Company
and ChaseMellon Shareholder Services, L.L.C. (the "RIGHTS
AGENT").
The Rights are attached to all certificates
representing outstanding Common Shares, and no separate Right
Certificates (as hereinafter defined) have been distributed. The
Rights will separate from the Common Shares on the earliest to
occur of (i) the first date of public announcement that a person
or "group" has acquired beneficial ownership of 20% or more of
the outstanding Common Shares (except pursuant to a Permitted
Offer, as hereinafter defined); or (ii) ten (10) business days
(or such later date as the Board of Directors of the Company may
determine) following the commencement of, or announcement of an
intention to commence, a tender offer or exchange offer the
consummation of which would result in a person or group becoming
an Acquiring Person (as hereinafter defined) (the earliest of
such dates being called the "DISTRIBUTION DATE"). A person or
group whose acquisition of Common Shares causes a Distribution
Date pursuant to clause (i) above is an "ACQUIRING PERSON". The
first date of public announcement that a person or group has
become an Acquiring Person is the "SHARES ACQUISITION DATE".
The Rights Agreement provides that until the
Distribution Date the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new
issuance of Common Shares have contained and will continue to
contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the
Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("RIGHT
CERTIFICATES") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares issued
after the Distribution Date), and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date and will expire at 5:00 P.M., New York, New York time, on
April 23, 2007, unless earlier redeemed by the Company as
described below.
In the event that any person becomes an Acquiring
Person (except pursuant to a Permitted Offer as hereinafter
defined), each holder of a Right will have (subject to the terms
of the Rights Agreement) the right (the "FLIP-IN RIGHT") to
receive upon exercise the number of Common Shares, or, in the
discretion of the Board of Directors of the Company, the number
of one one-thousandths of a Preferred Share (or, in certain
circumstances, other securities of the Company) having a value
(immediately prior to such triggering event) equal to two times
the Purchase Price. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person or any affiliate
or associate thereof will be null and void. A "PERMITTED OFFER"
is a tender or exchange offer for all outstanding Common Shares
which is at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by a
majority of Disinterested Directors (as hereinafter defined) to
be adequate (taking into account all factors that such
Disinterested Directors deem relevant) and otherwise in the best
interests of the Company and its stockholders (other than the
person or any affiliate or associate thereof on whose basis the
offer is being made) taking into account all factors that such
Disinterested Directors may deem relevant. "DISINTERESTED
DIRECTORS" are directors of the Company who are not officers of
the Company and who are not Acquiring Persons or affiliates or
associates thereof, or representatives of any of them, or any
person who was directly or indirectly proposed or nominated as a
director of the Company by a Transaction Person (as hereinafter
defined).
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding Common Shares immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in
either case with or to an Acquiring Person or any affiliate or
associate thereof, or any other person in which such Acquiring
Person, affiliate or associate has an interest, or any person
acting on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all holders of
Common Shares are not treated alike, any other person, then each
holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right (the
"FLIP-OVER RIGHT") to receive, upon exercise, common shares of
the acquiring company having a value equal to two times the
Purchase Price. The holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
The Purchase Price payable, and the number of one-
thousandths of a Preferred Share or other securities issuable,
upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred
Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into
Preferred Shares with a conversion price, less than the then
current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than
those referred to above).
The Purchase Price is also subject to adjustment in the
event of a stock split of the Common Shares, or a stock dividend
on the Common Shares payable in Common Shares, or subdivisions,
consolidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
one-thousandths of a Preferred Share will be issued, and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.
Preferred Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of
$10.00 per share but, if greater, will be entitled to an
aggregate dividend per share of 1,000 times the dividend declared
per Common Share. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100,000 per Preferred Share, provided
that they will be entitled to an aggregate payment per share of
at least 1,000 times the aggregate payment made per Common Share.
Each Preferred Share will have one thousand votes, voting
together with the Common Shares. These rights are protected by
customary antidilution provisions. In the event that the amount
of accrued and unpaid dividends on the Preferred Shares is
equivalent to at least six full quarterly dividends, the holders
of the Preferred Shares shall have the right, voting as a class,
to elect two directors in addition to the directors elected by
the holders of the Common Shares until all dividends in default
on the Preferred Shares have been paid in full and dividends for
the current dividend period declared and funds therefor set
apart.
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "REDEMPTION PRICE"),
which redemption shall be effective upon the action of the Board
of Directors of the Company. Additionally, the Company may
redeem the then outstanding Rights in whole, but not in part, at
the Redemption Price after the triggering of the Flip-In Right
and before the expiration of any period during which the Flip-In
Right may be exercised in connection with a merger or other
business combination transaction or series of transactions
involving the Company in which all holders of Common Shares are
treated alike but not involving a Transaction Person (as
hereinafter defined). Upon the effective date of the redemption
of the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive
the Redemption Price.
In the event that a majority of the directors serving
on the Board following a meeting of stockholders or stockholder
action by written consent are not nominated by the Board of
Directors of the Company serving immediately prior to such
meeting or action, then for 365 days following such meeting or
action the Rights may not be redeemed if such redemption is
reasonably likely to facilitate a combination or sale of assets
or earning power (a "TRANSACTION") with a person (or its
affiliate or associate) who (A) is or will become an Acquiring
Person if the Transaction were to be consummated and (B) who has
directly or indirectly proposed or nominated a member of the
Board of Directors of the Company who is in office at the time
the Transaction is being considered (a "TRANSACTION PERSON").
The Rights may not be redeemed thereafter if during such 365 day
period the Company enters into any agreement reasonably likely to
facilitate a Transaction with a Transaction Person and the
redemption is reasonably likely to facilitate a Transaction with
a Transaction Person.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders of the Company, stockholders may,
depending upon the circumstances, recognize taxable income should
the Rights become exercisable or upon the occurrence of certain
events thereafter.
