EXHIBIT 99.4
RIGHTS AGREEMENT
AMENDMENT NO. 1
This Amendment No. 1 dated as of April 29, 2003 (the "Amendment")
amends the Rights Agreement dated as of August 11, 1995 (the "Rights
Agreement"), by and between Crown Crafts, Inc., a Georgia corporation (the
"Company"), and SunTrust Bank (successor by merger to Trust Company Bank) (the
"Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one common share purchase right (a "Right") for each
Common Share of the Company outstanding at the close of business on August 22,
1995, each Right representing the right to purchase one Common Share, upon the
terms and subject to the conditions set forth in the Rights Agreement, as
amended hereby, and has further authorized and directed the issuance of one
Right with respect to each Common Share that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date;
WHEREAS, pursuant to Section 27 of the Rights Agreement the Company
may, subject to certain limitations, amend the Rights Agreement without the
approval of any holders of Rights to make any provisions with respect to the
Rights which the Company deems necessary or desirable;
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and its shareholders to effect certain
amendments to the Rights Agreement to discourage any Person from acquiring
Common Shares or additional Common Shares in a transaction that may be expected
to result in the loss to the Company of its net operating loss carryforwards and
the use of such net operating loss carryforwards to offset the taxable income of
the Company in current or future years; and
WHEREAS, the Company and the Rights Agent wish to amend the Rights
Agreement in the manner set forth below;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree that the Rights Agreement
is amended as follows:
1. Amendment.
(a) All capitalized terms used herein, unless otherwise
defined herein, shall have the meanings given them in the Rights Agreement, and
each reference in the Rights Agreement to "this Agreement," "hereof," "herein,"
"hereunder" or "hereby" and each other similar reference shall be deemed to
refer to the Rights Agreement as amended hereby. All references to the Rights
Agreement in any other agreement between or among any of the parties hereto
relating to the transactions contemplated by the Rights Agreement shall be
deemed to refer to the Rights Agreement as amended hereby.
(b) Section 1(a) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
5% or more of the Common Shares of the Company then outstanding, but
shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit plan of
the Company or any Subsidiary of the Company, (iv) any entity holding
Common Shares for or pursuant to the terms of any such plan, or (v) any
Person whose ownership (together with all Affiliates and Associates of
such Person) of 5% or more of the Common Shares of the Company then
outstanding will, in the sole discretion of the Company's Board of
Directors, not jeopardize or endanger the availability to the Company
of its net operating loss carryforwards to be used to offset its
taxable income in such year or future years. The Persons described in
clauses (i) through (v) above are referred to herein as "Exempt
Persons." Notwithstanding the foregoing, (i) no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such
Person to 5% or more of the Common Shares of the Company then
outstanding, provided that if a Person shall become the Beneficial
Owner of 5% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner
of any additional Common Shares of the Company, then such Person shall
be deemed to be an "Acquiring Person"; (ii) any Person who would
otherwise qualify as an Acquiring Person as of the close of business on
April 29, 2003 pursuant to the foregoing provisions of this paragraph
(a) shall not be deemed to be an Acquiring Person for any purpose of
this Agreement on and after such date unless and until such Person,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of a percentage of Common Shares of the Company
then outstanding in excess of the sum of 1% and the percentage of
Common Shares of the Company Beneficially Owned by such Person and all
Affiliates and Associates of such Person as of the close of business on
April 29, 2003, provided that the foregoing exclusion shall cease to
apply with respect to any Person at such time as such Person, together
with all Affiliates and Associates of such Person, ceases to
Beneficially Own 5% or more of the Common Shares of the Company then
outstanding; and (iii) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an Acquiring Person as defined
pursuant to the foregoing provisions of this paragraph (a), then such
Person shall not be deemed to be an Acquiring Person for any purposes
of this Agreement."
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(c) Section 1(b) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
"(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement, and to the
extent not included within the foregoing clause of this paragraph (b),
shall also include, with respect to any Person, any other Person whose
Common Shares would be deemed constructively owned by such first Person
pursuant to the provisions of Section 382 of the Internal Revenue Code
of 1986, as amended (the "Code"), or any successor provision or
replacement provision; provided, however, that no Exempt Person shall
be deemed an Affiliate or an Associate."
(d) Section 1(c) of the Rights Agreement is hereby amended by
adding the following sentence as the last sentence thereof:
"Notwithstanding anything herein to the contrary, to the extent not
within the foregoing provisions of this Section 1(c), a Person shall be
deemed the "Beneficial Owner" of, and shall be deemed to "beneficially
own" or have "beneficial ownership" of, any securities which such
Person would be deemed to constructively own pursuant to Section 382 of
the Code, or any successor provision or replacement provision."
(e) Section 3(a) of the Rights Agreement is hereby amended by
deleting the first sentence thereof and substituting therefor the following:
"Until the earlier of the Close of Business on (i) the tenth day after
the Shares Acquisition Date or (ii) the tenth business day (or such
later date as may be determined by action of the Board of Directors)
after the date of the commencement by any Person (other than an Exempt
Person) of, or of the first public announcement of the intention of any
Person (other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 5% or more of the then
outstanding Common Shares (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common 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 (y) the Rights (and the right to receive Right
Certificates therefor) will be transferable only in connection with the
transfer of Common Shares."
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(f) Section 6 of the Rights Agreement is hereby amended by
replacing "Section 11(a)(ii)" with "Section 7(e)" in the first sentence thereof.
(g) Section 11(o) of the Rights Agreement is hereby amended
and restated in its entirety as follows:
"The Company covenants and agrees that after the Distribution Date, it
will not, except as permitted by Sections 23, 24 and 27 hereof, take
(or permit any Subsidiaries to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to
be afforded by the Rights."
(h) Section 15 of the Rights Agreement is hereby amended by
deleting the last sentence thereof.
(i) Section 24(a) of the Rights Agreement is hereby amended
and restated in its entirety as follows:
"The Board of Directors of the Company may, at its option, at any time
after 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 Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other
than an Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common
Shares then outstanding."
(j) Section 24(b) of the Rights Agreement is hereby amended by
replacing "Section 11(a)(ii)" with "Section 7(e)" in the last sentence thereof.
(k) Section 27 of the Rights Agreement is hereby amended by
deleting the last sentence thereof.
(l) Section 28 of the Rights Agreement is hereby amended by
deleting the first sentence thereof and substituting therefor the following:
"For all purposes of this Agreement, any calculation of the number of
Common Shares 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, as applicable, the
last sentence of Rule 13d-3(d)(1)(i) of the
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General Rules and Regulations under the Exchange Act or the provisions
of Section 382 of the Code, or any successor provision or replacement
provision."
(m) Section 31 of the Rights Agreement is hereby amended by
replacing "Section 24" as referenced therein with "Section 23".
(n) Exhibit B to the Rights Agreement is hereby amended and
restated in its entirety as set forth in Exhibit B hereto.
2. Miscellaneous.
(a) Choice of Law. This Amendment shall be deemed to be a
contract made under the laws of the State of Georgia and for all purposes shall
be governed and construed in accordance with the laws of such State applicable
to contracts to be made and performed entirely within such State.
(b) Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(c) Severability. If any term or provision of this Amendment
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms and provisions of this
Amendment shall in no way be affected, impaired or invalidated.
(d) Existing Terms. The existing terms and conditions of the
Agreement shall remain in full force and effect except as such terms and
conditions are specifically amended by, or conflict with, the terms of this
Amendment.
[Signature page follows.]
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IN WITNESS WHEREOF, this Amendment has been duly executed by the
respective authorized officers of the parties hereto, in each case as of the day
and year first above written.
ATTEST: CROWN CRAFTS, INC.
By: /s/ Xxxxx Xxxx By: /s/ E. Xxxxxxx Xxxxxxxx
---------------------------- --------------------------------------
Name: Xxxxx Xxxx Name: E. Xxxxxxx Xxxxxxxx
-------------------------- ------------------------------------
Title: Controller Title: President & CEO
------------------------- -----------------------------------
ATTEST: SUNTRUST BANK, SUCCESSOR BY
MERGER TO TRUST COMPANY BANK
By: /s/ Xxx Xxxxxxx By: /s/ Xxxxxx Xxxxxxxxx
---------------------------- --------------------------------------
Name: Xxx Xxxxxxx Name: Xxxxxx Xxxxxxxxx
-------------------------- ------------------------------------
Title: Vice President Title: Vice President
------------------------- -----------------------------------
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EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On August 8, 1995, the Board of Directors of Crown Crafts, Inc. (the
"Company") declared a dividend of one common share purchase right (a "Right")
for each outstanding share of common stock, par value $1.00 per share (the
"Common Shares"), of the Company. The dividend is payable on August 22, 1995
(the "Record Date") to the shareholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one Common Share at
a price of $86.50 per share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of August 11, 1995, as amended by Amendment No. 1 to the Rights Agreement
("Amendment No. 1") dated as of April 29, 2003 (as so amended, the "Rights
Agreement"), between the Company and SunTrust Bank (successor by merger to Trust
Company Bank), as Rights Agent (the "Rights Agent").
The purpose of the Rights, as amended by Amendment No. 1, is to protect
the Company's ability to carry forward its net operating losses ("NOLs") and,
thus, protect shareholder value. The Company has experienced substantial
operating losses in previous years. Under the Internal Revenue Code and rules
promulgated by the Internal Revenue Service, the Company can "carry forward"
these losses in certain circumstances to offset current and future earnings and
thus reduce its federal income tax liability (subject to certain requirements
and restrictions). The Company believes that it will be able to carry forward
several million dollars of NOLs and that these NOLs, therefore, constitute a
substantial asset of the Company. If the Company experiences an "Ownership
Change," as defined in Section 382 of the Internal Revenue Code, its ability to
use the NOLs could be substantially limited or lost altogether.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons, with
certain exceptions as set forth in the Rights Agreement, have acquired
beneficial ownership of 5% or more of the outstanding Common Shares (any such
person or group being referred to as an "Acquiring Person") or (ii) 10 business
days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person or group of affiliated persons
becomes an Acquiring Person) following the commencement of or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 5% or more of
the outstanding Common Shares (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with a copy of this Summary of Rights attached thereto.
Notwithstanding the foregoing, any Person who would otherwise qualify as an
Acquiring Person as of the close of business on April 29, 2003, as described in
the immediately preceding sentence, will not qualify as an Acquiring Person
unless that Person Beneficially Owns in excess of the sum of 1% and that
Person's percentage Beneficial Ownership as of the close of business on April
29, 2003, provided that, once any Person qualifying under the immediately
preceding clause reduces its Beneficial Ownership to less than 5%, the foregoing
exclusion will thereafter not apply.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common 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 will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for 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 such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on August 22, 2005 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or securities
convertible into Common Shares with a conversion price, less than the
then-current market price of the Common Shares or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings or retained earnings or
dividends payable in Common Shares) or of subscription rights or warrants (other
than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are 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.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will
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thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price.
No fractional Common Shares will be issued (other than fractions which
are integral multiples of one Common Share, which may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an adjustment
in cash will be made based on the market price of the Common Shares on the last
trading day prior to the date of exercise.
Until the tenth day following a public announcement that a person or
group of affiliated or associated persons has acquired beneficial ownership of
5% or more of the outstanding Common Shares, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors, in its sole discretion, may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of Amendment No. 1 has been filed with the Securities and Exchange
Commission as an Exhibit to Amendment No. 1 to the Registration Statement on
Form 8-A. A copy of the Rights Agreement and Amendment No. 1 is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement and Amendment No. 1, which is hereby incorporated herein by
reference.
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